CH-15-16 Organizational Culture – Organizational Behavior: Managing People and Organizations : Book Guide

This Document Contains Chapters 15 to 16 Chapter Fifteen – Organizational Culture Chapter Overview Organizational culture is essential to organizational performance. Not only does it influence the decisions and behaviors of employees, but it also explains what is happening in an organization and why it is happening. Just as organizational structure can be thought of as an organization’s skeleton, organizational culture can be thought of as its personality because it influences the way employees behave. Understanding and managing organizational culture is an important management role that can improve your own and your organization’s performance. After reading this chapter, you should better understand organizational culture and how to manage it. Learning Outcomes After studying this chapter, students should be able to: 1. Describe the meaning, importance, and origins of organizational culture. 2. Discuss cultures of conflict and cultures of inclusion. 3. Identify and discuss how technology and innovation affect organizational culture. 4. Describe how effective organizations manage their culture. Real World Challenge: Culture Change at Avaya Summary: Avaya is a global business communications company that was spun off from Lucent. When the company was taken private by two private equity firms, Avaya’s strategy needed to focus on being a business collaborator and provider of unified communication including web conferencing rather than just voice telephony. Real World Challenge: How can Avaya change its business culture to better support creativity and collaboration? Real World Response: Avaya began its culture change initiative by identifying its desired culture and comparing it to its current culture. Avaya learned that loyalty, integrity, and trust were a strong part of its culture and that innovation was truly valued by employees. Success profiles and performance management were identified and communicated which have led to Avaya making strides towards changing its culture. Chapter Outline I. THE MEANING AND DETERMINANTS OF ORGANIZATIONAL CULTURE Organizational culture is a system of shared values, norms, and assumptions that guides members’ attitudes and behaviors3 and influences how they perceive and react to their environment. An organization’s culture is reflected in how it gets work done and how employees interact with each other. When a positive culture becomes strong enough, employee interactions become more efficient. When culture supports business strategy, the firm can become high performing. Common organizational culture themes include ethics, innovation, being casual or formal, and collaboration. Cultures are made up of formal and informal practices, artifacts, espoused values and norms, and assumptions. Artifacts are physical manifestations of the culture including the myths and stories told about the organization or its founder, awards, ceremonies and rituals, decorations, office space allocations, the dress code, how people address each other, published lists of organizational values, and so on. Espoused values and norms are those that are explicitly stated by the organization. Nokia communicates its espoused values through videos, its intranet, and in its communications on company strategy. Enacted values and norms are those that employees exhibit based on their observations of what actually goes on in the organization. Performance management, feedback, and compensation systems all help align espoused and enacted values and norms. Assumptions are those organizational values that have become so taken for granted over time that they become the core of the company’s culture. These basic assumptions are highly resistant to change, and guide organizational behavior. Figure 15.1 illustrates these four levels of culture. Formal practices that influence culture include compensation strategies like profit sharing, benefits, training and development programs, and even the use of teleconferencing to enable some employees to work from home. Informal practices include “open-door management” to promote upward communication and the sharing of ideas, employees helping each other, and employees of different ranks eating lunch together to share ideas. A. Does Culture Matter? Research has shown that by actively managing culture, your organization and its employees will be more likely to deliver on strategic objectives over the long run. In particular, culture boosts organizational performance when it (1) is strategically relevant, (2) is strong, and (3) emphasizes innovation and change to adapt to a changing environment. The effects of culture on a firm’s effectiveness are even stronger when employees have positive attitudes. A company’s culture should reinforce its business strategy, and can give a firm a competitive advantage. Creating a culture that supports sharing and helping other employees can have positive performance results. Organizational cultures can be strong or weak. Strong cultures can enhance organizational performance in two ways. First, they improve performance by energizing employees. Second, strong cultures improve performance by coordinating employee behavior. This makes strong cultures particularly helpful for dealing with changing environments. Strong cultures are not always better than weak cultures, however—whether the culture is positive or negative also matters. A strong positive culture promotes employee commitment to the firm’s value system and helps to align employee and company values. In a strong negative culture, employees have shared norms and values that are not consistent with what the organization wants or values. Because strong cultures create stable and consistent employee values and behaviors, they are slow to change. Research has found that long-term financial performance is highest for organizations with an adaptive culture receptive to change and innovation. Strong ethical cultures are known to influence employees’ ethical behavior and commitment through formal and informal organizational structures and systems. Culture matters to organizations because it influences employees’ discretionary behaviors, including what they do in situations when the rules and expectations are unclear or when there is no direct supervision. Understanding your corporate culture can create a personal competitive advantage by reducing the chances of your offending superiors or making a social blunder. B. How Leaders Create and Maintain Culture Different industries develop different cultures. Company founders and leaders also influence a firm’s culture. Shaping an organization’s culture is harder to learn in school and takes personal involvement. It can be very time-consuming to create and maintain an organizational culture. An organization’s founder and early management team shape a firm’s culture, which then influences the company’s structure, compensation system, customer relations policies, human resources policies, and individual behavior and motivation, which reinforce the culture. So how can leaders create, maintain, or change an organization’s culture? Table 15.1 highlights some tactics several experts recommend. Changes in strategy, technology, and organizational structure all trigger a need for changes in employees’ attitudes, behaviors, values, and skills. This can require changes in the organization’s culture to reinforce these new employee behaviors and values. Organizational culture has many layers. Outer layers of the culture, such as marketing strategies and customer service perceptions, can change fairly quickly. Inner layers, including fundamental values and ideologies, are much slower to change. Organizations can also have different cultures in different areas. Different business units or subgroups of organizations can develop unique cultures supporting their unique business needs. II. CULTURES OF CONFLICT AND CULTURES OF INCLUSION To better understand organizational culture, let’s now discuss two specific types of culture: cultures of conflict and cultures of inclusion. A. Cultures of Conflict Conflict cultures are one example of a specific type of culture. Firms develop distinct conflict cultures, or shared norms for managing conflict, which reflect different degrees of active versus passive and agreeable versus disagreeable conflict management norms. Active conflict management norms resolve conflict openly, whereas passive conflict management norms tend to avoid addressing conflict. Agreeable conflict management norms resolve conflict in a cooperative manner, whereas disagreeable conflict management norms resolve conflict competitively. This results in four types of conflict cultures: dominating, collaborative, avoidant, and passive-aggressive, as shown in Figure 15.2. 1. Dominating Conflict Cultures Dominating conflict cultures are active and disagreeable—open confrontations are accepted as well as heated arguments and threats. 2. Collaborative Conflict Cultures Collaborative conflict cultures are active and agreeable. Employees actively manage and resolve conflicts cooperatively to find the best solution for all involved parties. 3. Avoidant Conflict Cultures Avoidant conflict cultures are passive and agreeable. This type of culture strives to preserve order and control and/or to maintain harmony and interpersonal relationships. Typical behaviors include accommodating or giving in to the other’s point of view, changing the subject, or evading open discussion of the conflict issue. 4. Passive-Aggressive Conflict Cultures Passive-aggressive conflict cultures are both passive and disagreeable. Rather than dealing openly with conflict, this culture develops norms to handle it via passive resistance such as refusing to participate in conflict-related discussions, giving the silent treatment, withholding information, or withdrawing from work and from interactions with coworkers. National and regional culture can influence which type of conflict culture develops in an organization. Global Issues: Cross-Cultural Influences on Conflict Cultures Summary: Societal culture influences aspects of an organization’s culture, including its conflict cultures. Dominating conflict cultures may occur more often in national cultures emphasizing individualism, as in the U.S. In the U.S. media and institutions, for example, conflict is often referred to adversely as “a war” or something that should be “won.” Collaborative-conflict cultures may be more common in egalitarian and collectivistic cultures and those that value cooperation over competition, such as the Netherlands. Conflict-avoidant cultures occur in cultures higher in uncertainty avoidance and collectivism, where people are motivated to submit to authorities and maintain group harmony, as in Asian cultures. Passive-aggressive conflict cultures are more likely in societal cultures with higher power distance, or where less powerful members of society and organizations and accept unequal power distribution. Passive-aggressive cultures may also be more prevalent in societies where there are abusive leaders. B. Cultures of Inclusion Organizational culture is an important part of effective diversity management. An organization’s values and culture interact with its demographic composition to influence social interaction, conflict, productivity, and creativity. Research has supported the idea that pro-diversity cultures are related to lower turnover among blacks, whites, and Hispanics. An organization’s culture of inclusion reflects the extent to which majority members value efforts to increase minority representation, and whether the qualifications and abilities of minority members are questioned. These perceptions may be affected by the firm’s diversity actions as well as by the extent to which diversity is salient to a particular individual. CASE STUDY: Building a Culture for Inclusion at Whirlpool Summary: Diversity and inclusion are central to Whirlpool Corporation’s goal of placing its appliances in “every home, everywhere.” Whirlpool believes that differences create value, and they practice inclusion because it enables the company to best respond to the needs of its diverse customers. Whirlpool understands that its leaders must first show an understanding of and interest in diversity before it can become part of the company culture. 1. Do you agree that Whirlpool can realize a competitive advantage through its diverse employees? Yes. Whirlpool can gain a competitive advantage by making use of everyone’s talents. Whirlpool believes that differences create value, and they practice inclusion because it enables them to best respond to the needs of its diverse customers. 2. How else can technology be used to enhance Whirlpool’s culture of inclusion? Whirlpool uses technology to enhance the culture of inclusion. To involve busy senior leadership and middle management in diversity efforts, Whirlpool creates podcasts that report on diversity initiatives and gives iPod Shuffles to upper management to listen to on the go. Executives can also print them out. 3. Do you feel that Whirlpool’s efforts to create a culture of inclusion are worthwhile? Explain your answer. Yes, Whirlpool was among Diversity Inc’s Top 10 Companies for Lesbian Gay Bisexual and Transgender (LGBT) employees in 2007. In addition, Whirlpool has received a 100 percent rating in the Human Rights Campaign Corporate Equality Index. These ratings translate into an enhanced corporate image and increased sales of Whirlpool products, which in turn increases shareholder profits. III. EFFECTS OF TECHNOLOGY AND INNOVATION ON CULTURE Creating and maintaining a desired culture can be facilitated by technology, but at the same time can be made more difficult by the consequences of using technology to work remotely. Innovation and culture also have major impacts on each other. A. Using Intranets to Build and Maintain Culture By building and fostering a sense of community among employees, intranets can help reinforce an organization’s culture. The key issue for organizations is not about using the latest information technologies, but about leveraging the right technologies for creating and maintaining a culture of trust, openness, relationship building, and information sharing. Each intranet design reflects a different type of organizational culture, and in turn reinforces the firm’s culture by controlling the flow of information and establishing norms of behavior. Following are some of the ways intranets can both reflect and influence organizational culture: 1. Their scope – narrow intranets reinforce a culture of secrecy and information hoarding 2. Their openness to employee feedback and contributions – tools allowing feedback and participation reflect a participative culture 3. The frequency with which they are updated – rarely updated intranets are unlikely to influence the company’s culture 4. The number of intranets – one company intranet, or several, serving different groups 5. The use of symbols, stories, and ceremonies – expresses a company’s culture B. Building and Maintaining Culture with Remote Employees Being virtual challenges an organization’s identity and culture, particularly when the company relies on free agents or alliances with other firms that have their own cultures. It is also harder for the organization to reinforce its cultural values among remote employees. This has important implications for employee identification with the organization and for the management of employee behaviors. C. Innovation and Culture Innovation is the process of creating and doing new things that are introduced into the marketplace as products, processes, or services. One of the organization’s biggest challenges is to bring innovative technology to the needs of the marketplace in the most cost-effective manner possible. Note that innovation does not just involve the technology to create new products: true organizational innovation is pervasive throughout the organization. Many risks are associated with being an innovative company. The most basic is the risk that decisions about new technology or innovation will backfire. For this reason, organizations commit considerable resources to testing innovations. A second risk is the possibility that a competitor will make decisions enabling it to get an innovation to the market first. Some feel “innovation,” has become a cliché and call for the term to be reserved for major disruptive or radical shifts in products, services, or processes. While these criticisms may have some merit, organizations still need to be wary of simply maintaining the status quo and risk getting surpassed by more innovative practices by their competition or by new technological breakthroughs. 1. Types of Innovation A radical innovation (sometimes called disruptive innovation) is a major breakthrough that changes or creates whole industries. Systems innovation creates a new functionality by assembling parts in new ways. Incremental innovation continues the technical improvement and extends the applications of radical and systems innovations. There are many more incremental innovations than there are radical and systems innovations. Incremental innovations force organizations to continuously improve their products and keep abreast or ahead of the competition. 2. New Ventures New ventures based on innovations require entrepreneurship and good management to work. Entrepreneurship can occur inside or outside large organizations. Outside entrepreneurship requires all of the complex aspects of the innovation process. Inside entrepreneurship occurs within a system that usually discourages chaotic activity. For a large organization to be innovative and develop new ventures, it must actively encourage entrepreneurial activity within the organization. This form of activity, often called intrapreneurship, usually is most effective when it is a part of everyday life in the organization and occurs throughout the organization rather than in the research and development department alone. 3. Corporate Research The most common means of developing innovation in the traditional organization is through corporate research, or research and development. Corporate researchers are responsible for keeping the company’s products and processes technologically advanced. The corporate culture can be instrumental in fostering an environment in which creativity and innovation occur. IV. MANAGING ORGANIZATIONAL CULTURE The three elements of managing organization culture are (1) taking advantage of the existing culture, (2) teaching the organization culture, and (3) changing the organization culture. A. Taking Advantage of the Existing Culture Most managers are not in a position to create an organization culture; rather, they work in organizations that already have cultural values. Here, the central issue in managing culture is how best to use the existing cultural system. To take advantage of an existing cultural system, managers must develop a deep understanding of how organizational values operate in the firm—an understanding that usually comes only through experience. This understanding, once achieved, can be used to evaluate the performances of others in the firm. Senior managers who understand their organization’s culture can communicate that understanding to lower-level individuals. B. Teaching the Organization Culture: Socialization Socialization is the process through which individuals become social beings. In complex societies, the socialization process takes many years. Organizational socialization is the process through which employees learn about their organization’s culture and pass their knowledge and understanding on to others. They learn both through observation and through efforts by managers to communicate this information to them. A variety of organizational mechanisms can affect the socialization of workers in organizations. Through observing examples, new employees develop a repertoire of stories they can use to guide their actions. In some organizations, the culture described in pamphlets and presented in formal training sessions conflicts with the values of the organization as they are expressed in the actions of its people. Employees who are socialized into this system usually come to accept the actual cultural values rather than those formally espoused. C. Changing the Organization Culture Much of our discussion to this point has assumed that an organization’s culture enhances its performance. Research suggests that while some firms have performance- enhancing values, others have performance-reducing values. What should a manager who works in a company with performance-reducing values do? The answer to this question is, of course, that top managers in such firms should try to change their organization’s culture. However, this is a difficult thing to do. When managers attempt to change organization culture, they are attempting to change people’s basic assumptions about what is and is not appropriate behavior in the organization. Changing from a traditional organization to a team-based organization is one example of an organization culture change. Some organizations have changed their cultures from performance-reducing to performance-enhancing. 1. Managing Symbols Managers interested in changing cultures should attempt to substitute stories and myths that support new cultural values for those that support old ones. They can do so by creating situations that give rise to new stories. An upper-level manager interested in creating a new story, one that shows lower-level managers that their ideas are valuable, might ask a subordinate to prepare to lead a discussion in a meeting and follow through by asking the subordinate to take the lead when the topic arises. 2. The Difficulty of Change Changing a firm’s culture is a long and difficult process. A primary problem is that upper-level managers, no matter how dedicated they are to implementing some new cultural value, may sometimes inadvertently revert to old patterns of behavior. This mistake generates a story that supports old values and beliefs. 3. The Stability of Change In the long run, a firm that successfully changes its culture will find that the new values and beliefs are just as stable and influential as the old ones. If a firm can change its culture from performance-reducing to performance-enhancing, the new values are likely to remain in place for a long time. Summary and Application Organizational culture is a system of shared values, norms, and assumptions that guides members’ attitudes and behaviors and influences how they perceive and react to their environment. Creating and maintaining a desired culture can be facilitated by technology, but at the same time can be made more difficult by the consequences of using technology to work remotely. Innovation is the process of creating and doing new things that are introduced into the marketplace as products, processes, or services. The three elements of managing organization culture are (1) taking advantage of the existing culture, (2) teaching the organization culture, and (3) changing the organization culture. DISCUSSION QUESTIONS 1. Describe three different types of organizational cultures. When would each be most and least effective for a research and development company dependent on employee innovation? Dominating conflict cultures have open confrontations are accepted as well as heated arguments and threats (e.g., The Digital Equipment Corporation). Collaborative conflict cultures are active and agreeable. Employees actively manage and resolve conflicts cooperatively to find the best solution for all involved parties (e.g., Southwest Airlines). Avoidant conflict cultures are passive and agreeable. This type of culture strives to preserve order and control and/or to maintain harmony and interpersonal relationships (e.g., Wang Laboratories). For an R&D company, dependent on employee innovation, the most effective culture would be a collaborative conflict culture, the least effective would be an avoidant conflict culture, and a dominating conflict culture falls in between. 2. Do you think that culture is important to organizational performance? Why or why not? Yes. Culture is important to organizational performance because it is a source of competitive advantage. Creating a culture that supports sharing and helping other employees has positive performance results. In particular, culture boosts organizational performance when it (1) is strategically relevant, (2) is strong, and (3) emphasizes innovation and change to adapt to a changing environment. 3. How do you learn about prospective employers’ cultures? How important is a company’s culture to you when you decide to apply or to accept a job offer? You learn about prospective employers’ cultures by talking to current employees and studying the company website. The culture is an important part of the decision to accept a job because the fit between an applicant and the company’s values often determine how successful an applicant will be on the job. 4. Which of the four conflict management cultures would be the best fit for you? Why? I prefer the collaborative conflict culture because it is active and agreeable. Employees actively manage and resolve conflicts cooperatively to find the best solution for all involved parties. This provides for a satisfying work environment and a more productive employee. 5. What can companies do to create and reinforce a culture of inclusion? Companies can create a culture of inclusion by effectively managing diversity to bring out the best in each employee, allowing them to contribute maximally to the firm’s performance. Companies can reinforce a culture of inclusion through the use of diversity assessment methods such as: the diversity of job applicants and new hires, the proportion of people with different demographics in a company’s business units at each level of employment, the pay levels and attrition rates of people with different demographics in comparable positions, and the ratio of people with different demographics promoted to those eligible for promotion. 6. In what ways can the influence of the founder of an organization be assessed after that founder is no longer a part of the organization? A founder influences and shapes a firm’s culture. The culture may endure forever if reinforced through current management’s philosophy, values, vision, and goals. If not enforced, it will still take some time to change the culture formed under the founder. 7. How are technology and innovation interrelated? Technology is a tool to facilitate innovation. One use of technology is the use of intranets to keep employees connected, communicating, and focused on the corporation’s objectives. Technology also enables the use of remote employees. Innovation is the process of creating and doing new thing that are introduced into the marketplace as products, processes, or services. Innovation does not just involve the technology to create new products but true organizational innovation is pervasive throughout the organization. Technology allows increased innovation by utilizing innovation input from remote employees and tapping the collective mind of all employees. 8. What current examples can you identify to reflect radical, systems, and incremental innovations? Students may think of other examples but cell phones could be considered a radical innovation as they have spurred an entire industry and changed the way people receive communication. An example of systems innovation, following the cell phone theme, phones have gone from a way of talking to other people to a way to stay connected through email, IM, and nearly any other form of communication. Finally, the incremental innovation is present every time a new ‘generation’ of phones are released. The new iPhone has pictures that move and enhanced touch-control. 9. Describe how you might go about taking advantage of an existing organizational culture. Student’s answers will vary due to the request for a personal response. There should be some mention of first fully understanding the current culture: its values, and behaviors or actions those values support. This deep understanding usually only comes through experience. Once this experience is achieved, the person is in a position to evaluate the performance of others in the firm. By articulating organizational values, the person can begin managing others’ behaviors. Managers who understand their organization’s culture can communicate that understanding to lower-level individuals. Over time, these lower-level managers will require less direct supervision. Their understanding of corporate values will guide their decision making. GROUP EXERCISE – Culture of the Classroom Learning Objective: This exercise will help students appreciate the fascination as well as the difficulty of examining culture in organizations. Summary: Each group analyzes the organization culture of a college class. Students in most classes that use this book will have taken many courses at the college they attend and therefore should have several classes in common. Task: Divide the class into groups of four to six on the basis of classes the students have had in common. 1. Each group should first decide which class it will analyze. Each person in the group must have attended the class. 2. Each group should list the cultural factors to be discussed. Items to be covered should include: a. Stories about the professor. b. Stories about the exams. c. Stories about the grading. d. Stories about other students. e. The use of symbols that indicate the values of the students. f. The use of symbols that indicate the values of the instructor. 3. Students should carefully analyze the stories and symbols to discover their underlying meanings. They should seek stories from other members of the group to ensure that all aspects of the class culture are covered. Students should take notes as these items are discussed. 4. After twenty to thirty minutes of work in groups, reconvene the entire class and ask each group to share its analysis with the rest of the class. Follow-Up Questions 1. What was the most difficult part of this exercise? Did other groups experience the same difficulty? 2. How did your group overcome this difficulty? How did other groups overcome it? 3. Do you believe your group’s analysis accurately describes the culture of the class you selected? Could other students who analyzed the culture of the same class come up with a different result? How could that happen? 4. If the instructor wanted to try to change the culture in the class you analyzed, what steps would you recommend that he or she take? VIDEO EXERCISE The Environment and Corporate Culture at Recycline Summary: Thanks to Eric Hudson’s perceptive scanning of the external environment in the mid-1990s, recycled products firm Recycline discovered an opportunity others missed. Hudson broke into the natural product arena with an innovative toothbrush made from recycled materials—a bold decision in 1996. Hudson named his first product the Preserve Toothbrush, and Recycline was born. Today, Preserve products can be found at top retail chains including Target, Whole Foods, and Wal-Mart. Recycline believes that customers are getting wise to the “green-washing effect” in which businesses cultivate a superficial green image without the substance to back it up. A close look at Recycline’s internal culture confirms that Hudson’s company is authentically green. But Recycline’s organizational culture isn’t just green—it’s effective. 1. What are some visible aspects of Recycline’s culture that reflect the company’s values and commitment to green issues? Visible aspects include some of the following: casual dress code, including flip-flops and Birkenstocks; the special biodiesel car CEO Eric Hudson drives to work; employee commitment to public transportation; the story of how Eric Hudson founded the company with an all-recycled-material toothbrush; and the organization's small size and accessible executive-level management. 2. What role do leaders play in shaping Recycline’s organizational culture? Explain. Cultural leadership is essential for establishing and maintaining culture. Leaders at Recycline shape the organizational culture by how they behave, what issues they pay attention to, the rewards they offer, and how they react to crisis. As seen in the video, leaders at Recycline have made environmental concerns part of daily operations and decision making. 3. Could Recycline easily change its organizational culture if the green products market encounters a backlash? How would management know if a permanent change in culture has occurred? Changing organizational culture is difficult. Since core assumptions are the deepest level of culture and are usually unconscious, they are often nonconfrontable and nondebatable. Moreover, since culture is deeply ingrained and behavioral norms are well learned, employees must unlearn old norms before they can learn new ones. To change a company's culture, leaders must make big adjustments to reward systems, goals, leader behaviors, artifacts, and organizational structures. Kurt Lewin’s force field analysis model identifies a three-stage change process of unfreezing the current system, moving to a desired new system, and refreezing the new system. However, big new initiatives will encounter common barriers to change, such as old habits, power and influence, limited resources, and fear of the unknown. The primary way for management to determine if a cultural shift has occurred is by looking at behavior. Cultural change can be assumed to be successful if desired behavior is automatic and intrinsically motivated, persistent when rewards are not present, and operative even during a crisis. Now What? Imagine attending a meeting with your boss and two coworkers to discuss declining sales for a previously popular product. A competitor introduced a similar but better product that has been taking your market share. The company knew about the competitor’s product, but underestimated the threat. Happy Time Toys wants to make sure it recognizes potential threats faster in the future. What do you say or do? Go to this chapter’s “Now What?” video, watch the challenge video, and choose a response. Be sure to also view the outcomes of the two responses you didn’t choose. One of the stated solutions is to conduct a competitor analysis and an after action review (AAR). This is a structured review or debriefing process that is used to analyze positive and negative outcomes of an action. The steps include analyzing: (a) what should have happened; (b) what actually happened; and (c) how the systems or process can be improved. A competitor analysis is related but focuses on an assessment of the strengths and weaknesses of current and potential competitors. OB Concepts Applied: resistance to change; after action review; organizational learning; ethics Discussion Questions 1. In what ways might culture influence how responsive Happy Time Toys is to competitor threats? If the company has a story about another time when they succumbed to a competitor’s threat the employees may be able to recognize an impending threat. The thought of placing spies in competitor companies was quickly nixed due to the espoused values and norms of the owners. This quick reaction maintains the enacted values and norms on display on a daily basis. The employees assumed their product would continue its good sales record and became blind to competitor threats. 2. How are ethics illustrated in these videos? What is the best way to ensure decisions are made ethically? Ethics is a code of moral principles and values that governs behavior with respect to what is right or wrong. The video shows that one way to outsmart the competition is to hire spies who provide intelligence on future threats (incorrect response #1). Alex says: “I think we need a better way to stay informed about what our competitors are up to. To me, the best way to do that is through espionage…” Alex uses the argument that it’s o.k. to spy because this behavior is accepted industry-wide. However, spying on competitors violates the company’s ethics code. Culture matters to organizations because it influences employees’ ethical behavior through formal organizational structures like a written code of ethics. Alex says, “They want to make sure we all understand the company’s code of ethics and follow it more closely in the future. This behavior is not consistent with our company’s culture or ethics code.” A code of ethics is the best first step to making sure employees make ethical decisions. To be effective, the code must be enforced. 3. Based on the chapter, what other suggestions would you make to change the culture to enhance responsiveness to the environment and why would you suggest them? Placing an emphasis on research and development and innovation may enhance responsiveness to competitor’s products. Make change a part of the culture so future changes will not be a surprise. Chapter Sixteen – Organization Change and Change Management Chapter Overview Companies that change appropriately can continue as viable businesses. Those that do not make the right changes, like Kodak, lose their ability to compete, cease to exist by going out of business, or get gobbled up by a more successful organization. This chapter is about how organizations need to face the prospect of change and develop processes to ensure their viability in a complex, ever-changing global environment. The chapter begins with a discussion of some of the forces that create pressures for change followed by a detailed explanation of the complex change process. Then we describe organization development and sources of resistance to change, finishing with a summary view of how to manage change in organizations. Learning Outcomes After studying this chapter, students should be able to: 1. Summarize the dominant forces for change in organizations and describe the process of planned organization change. 2. Discuss several approaches to organization development. 3. Explain resistance to change. 4. Identify the keys to managing successful organization change and development and describe organizational learning. Real World Challenge: Mismanaged Change at Kodak Summary: As recently as 1994 Eastman Kodak was among the top 20 companies in the Fortune 500. By 2015, Kodak was reporting revenues of $2.5 billion and its workforce had been reduced to 13,000. What had happened to the onetime corporate giant? The so-called Digital Revolution—the widespread transition from analog to digital. Real World Challenge: A former Kodak executive now working for a different company has asked for your thoughts on why Kodak failed to adapt. Real World Response: According to Harvard’s John Kotter, “Kodak’s problem … is that it did not move into the digital world well enough and fast enough.” It’s pretty much a consensus opinion. Kodak pioneered digital technologies throughout the 1970s and 1980s, including innovations in color digital cameras, digital print kiosks, and digital image compression. However, says Bill Fischer, CEO of the private equity firm Manzanita Capital, Kodak “failed to take advantage of their unique perspective. Kodak probably did not immediately imagine that it would be a ‘telephone’ that would ultimately be the most damaging agent of disruption to its core film- and camera-making businesses. Even on the brink of bankruptcy, Kodak managers failed—or refused—to acknowledge that many of the company’s products had been marginalized by digital substitutions. Kotter agrees with the consensus opinion that Kodak’s demise was a result of “strategic decisions either avoided or made poorly.” “The organization,” he charges, “overflowed with complacency.” In particular, says Kotter, Kodak failed to recognize that digital was a “huge opportunity” only if the company acted with equally “huge urgency.” Chapter Outline I. FORCES FOR CHANGE The four areas in which the pressures for change appear most powerful involve people, technology, information processing and communication, and competition. Table 16.1 gives examples of each of these categories. A. People The special characteristics of baby boomers show up in distinct purchasing patterns that affect product and service innovation, technological change, and marketing and promotional activities. Other population-related pressures for change involve the generations that sandwich the baby boomers: the increasing numbers of senior citizens and those born after 1960. The post-1960 generation of workers who entered the job market in the 1980s—often called generation X—was different from the baby boom generation. Sociologists and psychologists have identified another group, often called millennials, born from roughly between 1980 and 2000, who seem to be experiencing a distinct and separate life stage in between adolescence and adulthood in which young people may jump from job to job and relationship to relationship, often living at home with few responsibilities and experimenting with life. On the job, millennials seem to prefer positive reinforcement, like clarity in job assignments, want more flexibility in how to do their jobs, and want to be treated as different individuals rather than everyone being treated the same. The increasing diversity of the workforce in coming years will mean significant changes for organizations. In addition, employees are facing a different work environment in the twenty-first century. The most descriptive word for this new work environment is “change.” Employees must be prepared for constant change. B. Technology Not only is technology changing, but the rate of technological change is also increasing. Many schools, from kindergarten to graduate schools, are now BYOT— “bring your own technology”—and utilize online educational tools throughout the curriculum. Technological development is increasing so rapidly in almost every field that it is quite difficult to predict which products will dominate ten years from now. Interestingly, organization change is self-perpetuating. With the advances in information technology, organizations generate more information, and it circulates faster. New technology will affect organizations in ways we cannot yet predict. As organizations react more quickly to change, change occurs more rapidly, which in turn necessitates more rapid responses. C. Information Processing and Communication Advances in information processing and communication have paralleled each other. Social networking may be the most radical and fastest growing aspect of the advances in information processing and communication so far. Business uses of this phenomenon include advertising, marketing, market research and test marketing, recruiting, and more. Increasingly, people are working from home instead of going to the office every day. Taking advantage of this trend, some companies are reconfiguring traditional space by minimizing offices dedicated to one individual and creating communal spaces, unassigned cubicles, and shared spaces. Flexible work stations, both inside and outside of offices, are more electronic than paper and pencil. Orders used to take a week; now they are placed instantaneously, and companies can and must be able to respond immediately, all because of changes in information processing and communication. D. Competition Although competition is not a new force for change, competition today has some significant new twists. First, most markets are global because of decreasing transportation and communication costs and the increasing export orientation of business. The adoption of trade agreements have changed the way business operates. The Internet is creating new competitors overnight in ways that could not have been imagined five years ago. Consider, for example, the market for cell phones or smartphones. For consumers the choices are seemingly endless and extremely confusing. Manufacturers have to develop new equipment and software combinations to work on various platforms for a variety of carriers. Carriers must decide which instruments and platform combinations to offer to subscribers. And platform developers must show their platform can do more things, simpler and with fewer errors, with maximum flexibility. Global Issues: The Added Complexity of Global Change Summary: Making changes in a multinational corporation is very complex. Consider just a few points of change, for instance, related to organization design, leadership and motivation, and organizational control. Managers in an international business must address the basic issues of organization structure and design, and dealing with human resources. Strategically, organizing decisions can be used to help promote everything from organizational flexibility to the development of expatriate managers. Managers must understand how cultural factors affect individuals, how motivational processes vary across cultures, how the role of leadership changes in different cultures, how communication varies across cultures, and how interpersonal and group processes depend on cultural background. Managers in international organizations must also be concerned with control. Distances, time zone differences, and cultural factors also play a role in control. Basic control issues for the international manager revolve around operations management, productivity, quality, technology, and information systems. Clearly, managing change in a multinational organization is no small task. II. PROCESSES FOR PLANNED ORGANIZATION CHANGE External forces may impose change on an organization. Ideally, however, the organization will not only respond to change but will also anticipate it, prepare for it through planning, and incorporate it in the organization strategy. Organization change can be viewed from a static point of view, such as that of Lewin, or from a dynamic perspective. A. Lewin’s Process Model Kurt Lewin suggested that efforts to bring about planned change in organizations should approach change as a multistage process. His model of planned change is made up of three steps—unfreezing, change, and refreezing—as shown in Figure 16.1. Unfreezing is the process by which people become aware of the need for change. The key factor in unfreezing is making employees understand the importance of a change and how their jobs will be affected by it. Creating in employees the awareness of the need for change is the responsibility of the leadership of the organization. Change itself is the movement from the old way of doing things to a new way. Change may entail installing new equipment, restructuring the organization, or implementing a new performance appraisal system—anything that alters existing relationships or activities. Refreezing makes new behaviors relatively permanent and resistant to further change. Refreezing is necessary because without it, the old ways of doing things might soon reassert themselves while the new ways are forgotten. B. The Continuous Change Process Model A more complex, and more helpful, approach is illustrated in Figure 16.2. This approach treats planned change from the perspective of top management and indicates that change is continuous. It is important to note that as change becomes continuous in organizations, different steps are probably occurring simultaneously throughout the organization. In this approach, top management perceives that certain forces or trends call for change, and the issue is subjected to the organization’s usual problem-solving and decision-making processes. Early in the process, the organization may seek the assistance of a change agent—a person who will be responsible for managing the change effort. The change agent may be a member of the organization, an outsider such as a consultant, or even someone from headquarters whom employees view as an outsider. Under the direction and management of the change agent, the organization implements the change through Lewin’s unfreeze, change, and refreeze process. The final step is measurement, evaluation, and control. The change agent and the top management group assess the degree to which the change is having the desired effect; that is, they measure progress toward the goals of the change and make appropriate changes if necessary. Throughout the process, however, the change agent brings in new ideas and viewpoints that help members look at old problems in new ways. Transition management is the process of systematically planning, organizing, and implementing change, from the disassembly of the current state to the realization of a fully functional future state within an organization. One key role of transition management is to deal with unintended consequences. Transition management also ensures that business continues while the change is occurring; therefore, it must begin before the change occurs. Communication about the changes to all involved, from employees to customers and suppliers, plays a key role in transition management. CASE STUDY: Flexibility at KPMG Summary: Accounting firm KPMG wanted to decrease payroll costs while maintaining its commitment to employees. KPMG gave employees the choice of a four-day workweek at 90 percent of their salary; a sabbatical at 30 percent of their base pay; either or both; or neither. To educate employees about their options, KPMG held conference calls, trained managers, and posted questions and answers on its intranet. 1. How does this program help KPMG? This program cuts payroll costs while maintaining its commitment to employees. KPMG expects this to save it up to 15 percent of payroll costs and further boost employee morale. 2. How does this program help KPMG’s employees? It offers flexibility to employees. Flexible Futures gives employees greater job security and control over their own destiny. 3. If you were employed by KPMG, would this program appeal to you? Why or why not? I would take the four-day workweek because I prefer extra time over extra money. III. ORGANIZATION DEVELOPMENT On one level, organization development is simply the way organizations change and evolve. Thus, in the broadest sense, organization development means organization change. The term as used here, however, means something more specific. Our definition of organization development is an attempt to describe a very complex process in a simple manner. A. Organization Development Defined “Organization development (OD) is a system-wide application of behavioral science knowledge to the planned development and reinforcement of organizational strategies, structures, and processes for improving an organization’s effectiveness.” First, organization development involves attempts to plan organization changes, which excludes spontaneous, haphazard initiatives. Second, the specific intention of organization development is to improve organization effectiveness. Third, the planned improvement must be based on knowledge of the behavioral sciences such as organizational behavior, psychology, sociology, cultural anthropology, and related fields of study rather than on financial or technological considerations. The three most basic types of techniques for implementing organization development are system-wide, task and technological, and group and individual. B. System-Wide Organization Development The most comprehensive type of organization change involves a major reorientation or reorganization—usually referred to as a structural change or a system-wide rearrangement of task division and authority and reporting relationships. Reengineering and rethinking the organization are two contemporary approaches to system-wide structural change. Reengineering can be a difficult process, but it has great potential for organizational improvement. It requires that managers challenge long-held assumptions about everything they do and set outrageous goals and expect that they will be met. No system-wide structural change is simple. Employees may resist the change for a number of reasons; therefore, organizations must manage the change process. Another system-wide change is the introduction of quality-of-work-life programs, defined as the degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organization. Quality-of-work-life programs focus strongly on providing a work environment conducive to satisfying individual needs. Any movement with broad and ambiguous goals tends to spawn diverse programs, each claiming to be based on the movement’s goals. These programs vary substantially, although most espouse a goal of “humanizing the workplace.” Richard Walton divided them into the eight categories shown in Figure 16.3. Total quality management can also be viewed as a system-wide organization development program. The benefits gained from quality-of-work-life programs differ substantially, but generally they are of three types. A more positive attitude toward the work and the organization, or increased job satisfaction, is perhaps the most direct benefit. Another is increased productivity. A third benefit is increased effectiveness of the organization as measured by its profitability, goal accomplishment, shareholder wealth, or resource exchange. C. Task and Technological Change Another way to bring about system-wide organization development is through changes in the tasks involved in doing the work, the technology, or both. The direct alteration of jobs usually is called “task redesign.” Changing how inputs are transformed into outputs is called “technological change” and also usually results in task changes. Strictly speaking, changing the technology is typically not part of organization development whereas task redesign usually is. Several approaches to introducing job changes in organizations have been proposed. One approach is an integrative framework of nine steps that reflect the complexities of the interfaces between individual jobs and the total organization. The process, shown in Table 16.2, includes the steps usually associated with change, such as recognizing the need for a change, selecting the appropriate intervention, and evaluating the change. But this approach inserts four additional steps into the standard sequence: diagnosis of the overall work system and context, including examination of the jobs, workforce, technology, organization design, leadership, and group dynamics; evaluating the costs and benefits of the change; formulating a redesign strategy; and implementing supplemental changes. Diagnosis includes analysis of the total work environment within which the jobs exist. Diagnosis must also include evaluation of the work group and teams, as well as the intragroup dynamics. Furthermore, it must determine whether workers have or can easily obtain the new skills to perform the redesigned task. It is extremely important to recognize the full range of potential costs and benefits associated with a job redesign effort. Some are direct and quantifiable; others are indirect and not quantifiable. Implementing a redesign scheme takes careful planning, and developing a strategy for the intervention is the final planning step. Strategy formulation is a four-part process. First, the organization must decide who will design the changes. Next, the team undertakes the actual design of the changes based on job design theory and the needs, goals, and circumstances of the organization. Third, the team decides the timing of the implementation, which may require a formal transition period during which equipment is purchased and installed, job training takes place, new physical layouts are arranged, and the bugs in the new system are worked out. Fourth, strategy planners must consider whether the job changes require adjustments and supplemental changes in other organizational components such as reporting relationships and the compensation system. D. Group and Individual Change Groups and individuals can be involved in organization change in a vast number of ways. There are four popular types of people-oriented change techniques: training, management development, team building, and survey feedback. 1. Training Training generally is designed to improve employees’ job skills. Training may also be used in conjunction with other, more comprehensive organization changes. One important type of training that is becoming increasingly more common is training people to work in other countries. Among the many training methods, the most common are lecture, discussion, a lecture-discussion combination, experiential methods, case studies, films or videos, and online training modules. A major problem of training programs is transferring employee learning to the workplace. 2. Management Development Management development programs, like employee training programs, attempt to foster certain skills, abilities, and perspectives. Typically, management development programs use the lecture-discussion method to some extent but rely most heavily on participative methods such as case studies and role playing. Skills are not easily transferred to the workplace. In addition, rapid changes in the external environment can make certain managerial skills obsolete in a very short time. As corporate America invests hundreds of millions of dollars in management development, certain guiding principles are evolving: (1) management development is a multifaceted, complex, and long-term process to which there is no quick or simple approach; (2) organizations should carefully and systematically identify their unique developmental needs and evaluate their programs accordingly; (3) management development objectives must be compatible with organizational objectives; and (4) the utility and value of management development remain more an article of faith than a proven fact. 3. Team Building Team building emphasizes members working together in a spirit of cooperation and generally has one or more of the following goals: 1. To set team goals and priorities 2. To analyze or allocate the way work is performed 3. To examine how a group is working 4. To examine relationships among the people doing the work Total quality management efforts usually focus on teams, and the principles of team building must be applied to make them work. Team development can be a way to train the group to solve its own problems in the future. Research on the effectiveness of team building as an organization development tool so far is mixed and inconclusive. 4. Survey Feedback Survey feedback techniques can form the basis for a change process. In this process, data are gathered, analyzed, summarized, and returned to those who generated them to identify, discuss, and solve problems. A consultant or change agent usually coordinates the process and is responsible for data gathering, analysis, and summary. The three-stage process is shown in Figure 16.4. The use of survey feedback techniques in an organization development process differs from their use in traditional attitude surveys. In an organization development process, data are (1) returned to employee groups at all levels in the organization and (2) used by all employees working together in their normal work groups to identify and solve problems. In traditional attitude surveys, top management reviews the data and may or may not initiate a new program to solve problems the survey has identified. In the data-gathering stage, the change agent determines the key issues to be examined and develops a survey questionnaire. The change agent prepares a summary of the results for the group feedback sessions. The feedback meetings generally involve only two or three levels of management. During the feedback sessions, participants discuss reasons for the scores and the problems that the data reveal. In the process analysis stage, the group examines the process of making decisions, communicating, and accomplishing work, usually with the help of the consultant. Change agents should ensure that managers hold these sessions and that they are rewarded for doing so. The process analysis stage is important because its purpose is to develop action plans to make improvements. A follow-up survey can be administered several months to a year later to assess how much these processes have changed since they were first reported. The survey feedback method is probably one of the most widely used organization change and development interventions. A primary responsibility of the consultant or change agent, then, is to ensure that the method is fully and faithfully carried through. IV. RESISTANCE TO CHANGE Change is inevitable; so is resistance to change. Paradoxically, organizations both promote and resist change. A commonly held view is that all resistance to change needs to be overcome, but that is not always the case. Resistance to change can be used for the benefit of the organization and need not be eliminated entirely. By revealing a legitimate concern that a proposed change may harm the organization or that other alternatives might be better, resistance may alert the organization to reexamine the change. Resistance may come from the organization, the individual, or both. Determining the ultimate source is often difficult, however, because organizations are composed of individuals. Table 16.3 summarizes various types of organizational and individual sources of resistance. A. Organizational Sources of Resistance Daniel Katz and Robert Kahn have identified six major organizational sources of resistance: overdetermination, narrow focus of change, group inertia, threatened expertise, threatened power, and changes in resource allocation. Of course, not every organization or every change situation displays all six sources. 1. Overdetermination Organizations have several systems designed to maintain stability. Organizations control employees’ performance by screening new hires for specific skills. Then the new employee is given a job description, training, coaching, and counseling in job tasks. After a probationary period, the employee receives a performance review. Finally, rewards, punishment, and discipline are administered, depending on level of performance. Such a system is said to be characterized by overdetermination, or structural inertia in that one could probably have the same effect on employee performance with fewer procedures and safeguards. In other words, the structure of the organization produces resistance to change because it was designed to maintain stability. Another important source of overdetermination is the culture of the organization. 2. Narrow Focus of Change Many efforts to create change in organizations adopt too narrow a focus. Any effort to force change in the tasks of individuals or groups must take into account the interdependence among organizational elements such as people, structure, tasks, and the information system. 3. Group Inertia When an employee attempts to change his or her work behavior, group norms may act as a brake on individual attempts at behavior change. 4. Threatened Expertise A job redesign or a structural change may transfer responsibility for a specialized task from the current expert to someone else, threatening the specialist’s expertise and building his or her resistance to the change. 5. Threatened Power Any redistribution of decision-making authority, such as with reengineering or team-based management, may threaten an individual’s power relationships with others. 6. Resource Allocation Groups that are satisfied with current resource allocation methods may resist any change they believe will threaten future allocations. These six sources explain most types of organization-based resistance to change. All are based on people and social relationships. Many of these sources of resistance can be traced to groups or individuals who are afraid of losing something—resources, power, or comfort in a routine. B. Individual Sources of Resistance Researchers have identified six reasons for individual resistance to change: habit, security, economic factors, fear of the unknown, lack of awareness, and social factors (see Table 16.3). 1. Habit It is easier to do a job the same way every day if the steps in the job are repeated over and over. Learning an entirely new set of steps makes the job more difficult. For the same amount of return (pay), most people prefer to do easier rather than harder work. 2. Security Some employees like the comfort and security of doing things the same old way. People who believe their security is threatened by a change are likely to resist the change. 3. Economic Factors Change may threaten employees’ steady paychecks. Workers may fear that change will make their jobs obsolete or reduce their opportunities for future pay increases. 4. Fear of the Unknown Some people fear anything unfamiliar. Any disruption of familiar patterns may create fear because it can cause delays and foster the belief that nothing is getting accomplished. 5. Lack of Awareness Because of perceptual limitations such as lack of attention or selective attention, a person may not recognize a change in a rule or procedure and thus may not alter his or her behavior. They may therefore continue the current practice as long as possible. 6. Social Factors People may resist change for fear of what others will think. Employees may believe change will hurt their image, result in ostracism from the group, or simply make them “different.” V. MANAGING SUCCESSFUL ORGANIZATION CHANGE AND DEVELOPMENT In order to increase the chances of successful organization change and development, it is useful to consider seven keys to managing change in organizations. Table 16.4 lists the points and their potential impacts. A. Consider Global Issues Given the additional environmental complexities multinational organizations face, it follows that organization change may be even more critical to them than it is to purely domestic organizations. A second point to remember is that acceptance of change varies widely around the globe. B. Take a Holistic View Managers must take a holistic view of the organization and the change project. A holistic view encompasses the culture and dominant coalition as well as the people, tasks, structure, and information subsystems. C. Start Small Peter Senge claims that every truly successful, system-wide change in large organizations starts small. He recommends that change start with one team, usually an executive team. If the change makes sense, it begins to spread to other teams, groups, and divisions throughout the system. When others see the benefits, they automatically drop their inherent resistance and join in. D. Secure Top Management Support The support of top management is essential to the success of any change effort. As the organization’s probable dominant coalition, it is a powerful element of the social system, and its support is necessary to deal with control and power problems. E. Encourage Participation Problems related to resistance, control, and power can be overcome by broad participation in planning the change. F. Foster Open Communication Open communication is an important factor in managing resistance to change and overcoming information and control problems during transitions. A manager should always be sensitive to the effects of uncertainty on employees, especially during a period of change; any news, even bad news, seems better than no news. G. Reward Contributors Although this last point is simple, it can easily be neglected. Employees who contribute to the change in any way need to be rewarded. From a behavioral perspective, individuals need to benefit in some way if they are to willingly help change something that eliminates the old, comfortable way of doing the job. These seven keys to managing organization change may also serve as general guidelines for managing organizational behavior because organizations must change or face elimination. VI. ORGANIZATIONAL LEARNING A learning organization is an organization that facilitates the learning of all its members and continually transforms itself. In a learning organization, continual learning and change become part of the culture. To facilitate organizational learning, it is important that learning happen during a project and continue after the project ends. One of the best ways to encourage continual learning is through an after-action review, or a professional discussion of an event that enables discovery of what happened, why it happened, and how to sustain strengths and improve on weaknesses. After-action reviews are conducted for both successes and failures and occur after any identifiable event or milestone during a project or after the project is completed. In an open and honest meeting usually lasting twenty minutes or less, everyone who participated in the event or project discusses four simple questions: 1. What was supposed to happen? 2. What actually happened? 3. Why were there differences? 4. What did we learn? Building trust and team integrity are additional outcomes of after-action reviews. Another factor influencing an organization’s ability to learn is its approach to failure. More learning-oriented firms recognize the learning opportunities presented by “intelligent failures,” that is, the failures of events or projects that had a good chance of working, did not work out, but provide a good learning opportunity. Summary and Application Change may be forced on an organization, or an organization may change in response to the environment or an internal need. Planned organization change involves anticipating change and preparing for it. Lewin described organization change in terms of unfreezing, the change itself, and refreezing. In the continuous change process model, top management recognizes forces encouraging change, engages in a problem-solving process to design the change, and implements and evaluates the change. Organization development is the process of planned change and improvement of organizations through the application of knowledge of the behavioral sciences. Quality-of-work-life programs focus on providing a work environment in which employees can satisfy individual needs. Frequently used group and individual approaches to organization change are training and management development programs, team building, and survey feedback techniques. Resistance to change may arise from several individual and organizational sources. Top management support is needed, and those most affected by the change must participate. Open communication is important, and those who contribute to the change effort should be rewarded. A learning organization is an organization that facilitates the learning of all its members and continually transforms itself. In a learning organization, continual learning and change become part of the culture. DISCUSSION QUESTIONS 1. Is most organization change forced on the organization by external factors or fostered from within? Explain. Organization change is caused by both external and internal factors. However, most organization change seems to be due to external factors such as trends, competition, and technological developments. Effective organizations are able to anticipate and plan for these changes. Thus, although the changes may be forced by the external environment, organizations must anticipate them and incorporate them into their strategies. 2. What broad category of pressures for organization change other than the four discussed in the chapter can you think of? Briefly describe it. The chapter focuses on four categories of pressures for change: people, technology, information processing and communication, and competition. An additional category might be resources other than people. Future scarcity of natural resources will force organizations to make changes in their products, services, and processes. 3. Which sources of resistance to change present the most problems for an internal change agent? For an external change agent? For an internal change agent, individual sources of resistance present the most problems. For instance, if individuals are opposed to the proposed change, they may see the change agent as a traitor. Organizational sources of resistance pose greater problems for the external change agent, because she or he is less familiar with the unique characteristics of the organization that are causing problems. 4. Which stage of the Lewin model of change do you think is most often overlooked? Why? The Lewin model of change consists of three stages: unfreezing, change, and refreezing. Once change has been implemented, it often is considered permanent. If the old ways of doing things are well established, however, it is easy to forget the new ways and to drift back to old habits. Thus, it is important that new skills or processes be practiced and rewarded until they are resistant to further change or regression to the original state. 5. What are the advantages and disadvantages of having an internal change agent rather than an external change agent? An internal change agent is likely to know the organization’s people, work tasks, and political situations, which may prove very helpful in interpreting data and understanding the system. A disadvantage is that an insider may be too close to the situation to evaluate it objectively. Furthermore, if organization members are opposed to the potential change, they probably will view the inside change agent as a traitor. 6. How does organization development differ from organization change? The focus of organization development is much more specific than that of organization change. Three factors distinguish organization development. First, it is a distinct field of study and practice. Second, it is a process of planned change designed to improve organizations. Third, the planned improvement must be based on knowledge of the behavioral sciences. Because not all types of organization change meet these criteria, all change is not organization development. For example, the replacement of a manual personnel records system with a computerized personnel information system would not be considered an OD project. 7. How and why would organization development differ if the elements of the social system were not interdependent? If the elements of the social system were not interdependent, OD would be much less complex. If a change were implemented in one subsystem of a noninterdependent system, a change agent would not have to try to determine its impact on other subsystems. 8. Do quality-of-work-life programs rely more on individual or organizational aspects of organizational behavior? Why? Quality-of-work-life programs tend to rely more on individual aspects of organizational behavior, because their primary objective is to provide a work environment conducive to the satisfaction of individual needs. Yet several types of QWL programs, such as those aimed at improvements in jobs and work procedures, affect the organizational aspects of behavior. 9. Describe how the job of your professor could be redesigned. Include a discussion of other subsystems that would need to be changed as a result. Students may generate a number of ways in which the professor’s job could be redesigned. For instance, a professor might be given more authority and responsibility by being allowed to determine when to teach, where to teach, and which courses to teach. This type of change would affect other subsystems, such as the administrative and student subsystems. 10. Which of the seven keys for successfully managing an organizational change effort seem to be the most difficult to manage? Why? Depending on the situation, each of the seven could be quite difficult to manage. Making sure that top management supports the change can be quite a task in some organizations. On the other hand, taking a holistic view can be quite confusing, especially when the employees are so involved in the work of their own departments. It is easy for others to forget about an OD effort when they are having trouble getting their own work done. GROUP EXERCISE – Planning a Change at the University Learning Objective: This exercise will help students understand the complexities of change in organizations. Summary: Students are to plan the implementation of a major change in an organization. Task: Part 1: In small groups students will consider one of the following changes: 1. A change from the semester system to the quarter system (or the opposite, depending on the school’s current system) 2. A requirement that all work—homework, examinations, term papers, problem sets—be done on computers and submitted online 3. A requirement that all students live on campus 4. A requirement that all students have reading, writing, and speaking fluency in at least three languages, including English and Japanese, to graduate 5. A requirement that all students room with someone in the same major. First, students decide what individuals and groups must be involved in the change process. Then they decide how the change will be implemented using Lewin’s process of organization change (Figure 16.1) as a framework. They then consider how to deal with resistance to change, using Tables 16.3 and 16.4 as guides. They decide whether a change agent (internal or external) should be used. They develop a realistic timetable for full implementation of the change and decide if transition management is appropriate. Part 2: Using the same groups as in Part 1, students describe the techniques used to implement the change described in Part 1: structural changes, task and technology methods, group and individual programs, or a combination. They may need to gather more information on some techniques. They should also discuss how to utilize the seven keys to successful change management discussed at the end of the chapter. This exercise may be used as an in-class project. Each group should report on which change techniques are to be used, why they were selected, how they will be implemented, and how problems will be avoided. Follow-Up Questions Part 1 1. How similar were the implementation steps for each change? Generally, students will appropriately anticipate areas of student resistance. 2. Were the plans for managing resistance to change realistic? Students probably will not adequately anticipate resistance from other sources (professors, administrators, trustees, parents, potential employers, government agencies, and activist groups). 3. Do you think any of the changes could be successfully implemented at your school? Why or why not? The analysis will help students view the situation from more perspectives. Part 2 1. Did various groups use the same technique in different ways or to accomplish different goals? Groups can compare their answers. 2. If you did outside research on organization development techniques for your project, did you find any techniques that seemed more applicable than those in this chapter? If so, describe one of them. Students can share their research experience. VIDEO EXERCISE Mitchell Gold + Bob Williams: Organization Change and Development Summary: Kim Clay has followed an unusual career at the home furnishings company MG+BW Signature Stores which also sells furniture at Pottery Barn, Williams Sonoma, independent retailers. Kim started out in Consumer Inquiry and moved to Customer Care, having responsibility for handling orders and managing business-to-business relations. Now she manages the information technology department. 1. What forces for organization change are reflected at Mitchell Gold + Bob Williams? The company makes furniture and a computer tracking system tracks every piece of furniture through the manufacturing process. If the system goes down, there is trouble. This creates demands for new positions, the help desk and new training for all employees. Changing technology means the company has to keep up with new manufacturing processes and try to incorporate them as quickly as possible in order to stay competitive. Order and other information are now instantaneous through use of the internet, making the company responsible for faster reaction times, new products, and immediate responses to questions. The increase of companies selling globally increases the forces for change at all companies. 2. Suppose that there was a need to move Kim Clay out of her current job and into a new one. How might this change process be managed most effectively? The best way may be the use of the simpler Lewin’s process for planned organization change. First, the process would have to be unfrozen, and inform all employees of the upcoming change. Managers should stress the importance for changing Kim’s job and inform employees how the change may affect their job. Managers should then make the change and install a new person in Kim’s old position. After Kim starts her new job, managers can refreeze the process again with the new IT manager. 3. In what ways is Mitchell Gold + Bob Williams using organization development? The company planned the change for a new IT system where a piece of furniture is tracked electronically throughout the entire manufacturing process. They installed Kim as the head of the help desk, a new position opened to help avert and solve any arising computer issues. While this was a great career opportunity for Kim, it was also a great development for the company. Top management recognized Kim’s ability to get along with others, her tenacity, and her willingness to learn new ideas. Managers felt Kim’s personality was a fit for the new position. Now What? Imagine Happy Time Toys has been making changes to both toy product lines and quality goals. You find yourself listening to a coworker exhibiting resistance to Happy Time Toys’ quality and production goals for a new product line. She complains about the changes and states that the product is tricky to assemble and the goals are unrealistic. Also, because of recent changes, the coworker believes that the company is too concerned about quality at the expense of productivity. The coworker feels that the company could make a lot more money if they let some of the team’s borderline products go through. The coworker is going to continue to tell the team to pass borderline products to help the team meet its production goals to earn the bonus. This would reduce the employees’ stress and, after all, the products are not that bad. What do you say or do? Go to this chapter’s “Now What?” video, watch the challenge video, and choose a response. Be sure to also view the outcomes of the two responses you didn’t choose. OB Concepts Applied: Discussion Questions 1. What types of resistance to change did you see in the various situations? Organizational sources include a narrow focus of change. The company may have predicted their current production staff could produce the products but in fact, the production staff needed an extra person to meet their goals. It also seems there may have been some group inertia as no group member suggested any changes until Allison asked for employee input. Individual sources of resistance to change could include habit as employees were used to a relatively easy assembly process and now faced a tougher assembly process. Economic factors could play a part as employees were becoming frustrated thinking there were going to lose their bonuses for reasons beyond their control. 2. How did Alex unfreeze Allison’s perspective and what impact did that have? Allison thought the only way to meet production goals was to slip through some slightly defective products. Alex reminded her that defective products could hurt the company’s image for a long time and suggested asking the team for input. Allison was trying to solve the problem on her own but asking for input allowed a solution that was ultimately best for Happy Time Toys. 3. Using concepts from the chapter, what would you have done to make the transition to the new product line go more smoothly? Management could have anticipated the change of duties for production staff and helped them through the changes by providing additional resources and communication. Including production staff in the transition would be best. Open communication between production staff and management is essential during any new product introduction. Some type of reward system for contributors to a smooth transition may help motivate production staff. Solution Manual for Organizational Behavior: Managing People and Organizations Ricky W. Griffin, Jean M. Phillips, Stanley M. Gully 9781305501393, 9780357042502