This Document Contains Chapters 5 to 6 Chapter 5 The Diagnostic Process Learning Objectives 1. Identify system parameters and recognize the symptoms, problems, and causes of organizational ineffectiveness. 2. Recognize the various techniques for gathering information from client systems. 3. Describe the major diagnostic models and techniques used in OD programs. 4. Apply a systematic diagnosis to organizational situations. Student Premeeting Preparation 1. Read Chapter 5. 2. Prepare for OD Skills Simulation 5.1. Prior to class, form teams of six and select roles. Complete Step 1. 3. Read and analyze Case: The Old Family Bank. Instructor Preparation and Materials 1. Simulations: Duplicate answer to Simulation 5.1. The answer is located in the Simulation Procedures section of this manual. LECTURE OUTLINE 1) Learning objectives. (p. 116) a) Identify system parameters and recognize the symptoms, problems, and causes of organizational ineffectiveness. b) Recognize the various techniques for gathering information from client systems. c) Describe the major diagnostic models and techniques used in OD programs. d) Apply a systematic diagnosis to organizational situations. 2) Diagnosing problem areas. (pg. 116) a) Identification of areas for improvement and problems is an important element in developing a high-performance organization. b) Before implementing an OD program, it is important to assess the organization’s current quality or performance and to define the level of performance or quality it desires. c) Diagnosis provides information that allows a faster-reacting organization to emerge. d) Diagnosis rigorously analyzes the data on the structure, administration, interaction, procedures, interfaces, and other essential elements of the client system. e) Effective change must be based on a specific diagnosis of the problem. f) This chapter examines stage 3, the diagnostic process, of an OD program. (See Figure 5.1, Stage Three of Organization Development’s Five Stages) 3) What is diagnosis? (pg. 117) a) Diagnosis is a systematic approach to understanding and describing the present state of an organization. i) The purpose is to specify the nature of the problem requiring solution, to identify the underlying causal forces, and to provide a basis for selecting effective change strategies and techniques. ii) Diagnosis involves the systematic analysis of data regarding the organization structure and culture with the intention of discovering problems and areas for improvement. iii) Critical issues in diagnosis. (1) Simplicity. (2) Visibility. (3) Involvement. (4) Primary factors. (5) Measure what’s important. (6) Sense of urgency. b) The process. i) Diagnosis is a cyclical process involving data gathering, interpretation, identification of problem areas, and potential action programs. (See Figure 5.2, The Diagnostic Process) (1) Step 1: Tentative problem areas identified. (2) Step 2: Collect data. (3) Step 3: Analyze data. (4) Step 4: Feedback data. (5) Step 5: Is more data needed? (6) Step 6: Problems areas are identified. (7) Step 7: Is the client motivated to work on the problem? (8) Step 8: Diagnosis, target system identified, and work on the problem. (9) Step 9: Monitor and assess results. c) The performance gap. i) The difference between what the organization could do and what the organization is actually doing. (See Figure 5.3, The Performance Gap) ii) Self-assessment gap analysis of four key areas. (1) Organization’s strengths. (2) What can be done to take advantage of strengths. (3) Organization’s weaknesses. (4) What can be done to alleviate weaknesses. 4) The data-collection process. (pg. 120) a) OD is a data-based change activity. b) Data is an aggregation of all signs, signals, clues, facts, statistics, opinions, assumptions, and speculations, including items that are accurate and inaccurate, relevant and irrelevant c) Information is data that have form and structure. d) Data collection consists of three stages: i) Definition of objectives. ii) Selection of factors. iii) Selection of data-gathering method. e) The definition of objectives. i) Define the objectives of the change program. ii) Identify preliminary diagnosis and what further information is required. f) The selection of key factors. i) Identify the central variables involved in the situation. ii) May be necessary to increase the range of depth of data beyond what is readily available. g) The selection of data-gathering method. i) Selection of one or more methods of gathering data. (1) Because there is no one best method, a variety of methods may be used. (2) The nature of the problem helps to determine the method. ii) Types of methods include: (1) Secondary sources. (a) Organization and industry data already available. (2) Employee surveys and questionnaires. (a) Especially useful when a large number of people are involved. (b) However, the data may lack “richness.” (3) Other types of instrument: (a) Sociogram. (See Figure 5.5, Example of a Sociogram) (i) A sociogram is a visual method of recording and analyzing the choices or preferences within a group. (ii) Each member of the group is represented by a circle. (iii) Communication between individuals is represented by arrows indicating the direction of choice. (iv) Stars - the highly chosen individuals. (v) Isolates - those with few or no choices. (vi) Mutual choice - certain individuals who choose one another. (vii) One-way choice - when an individual chooses another but is not chosen in return. (viii) Clique - when three or more persons within a larger group select one another (mutual choices). (b) Thematic apperception test (TAT), and collages. (4) Direct observation. (a) Observing how people go about their tasks, norms, behaviors. (b) May use a sociogram to record observations. (5) Interviews. (a) Is one of the most widely used methods of gathering data. (b) It is direct, personal and flexible. (c) Directed interview. (i) Open-ended questions. (ii) Closed questions. (d) Nondirected interview. (i) Direction chosen by respondent. (ii) Questions, if any, are open ended. 5) The implementation of data collection. (pg. 126) a) Decide from whom data will be obtained. b) Select an appropriate technique to gather data. c) Implement data-collection program. The use of an outside collection agent is recommended so the respondents will feel more secure that candid answers will not be used again them. d) The analysis of data. i) The techniques used to analyze the data will be dictated by the method used to gather the data. ii) The type of analysis is decided prior to data collection. e) Guidelines for evaluating the effectiveness of data collection. i) The validity of the data. ii) The time to collect data. iii) The cost of data collection. iv) The organization culture and norms. v) The Hawthorne effect in data collecting. 6) Diagnostic models. (pg. 127) a) Diagnostic models may be used to analyze the structure, culture, and behavior of the organization. b) Models help provide a conceptual framework to understand the organization. c) Steps in implementation of model: i) Begins with study of degree of differentiation between units. ii) Then analyzes integration and cooperation required between units. iii) This provides a basis for structural and cultural changes in departments. d) The differentiation-integration model. i) Used for interdepartmental issues. ii) Examines four characteristics of departments. (See Table 5.1, Example of Survey Results Using the Differentiation and Integration Model) (1) Degree of departmental structure. (2) Time orientation of members. (3) Interpersonal orientation of members toward others. (4) Organization members’ orientation toward goals. iii) The model’s objective is to help departments achieve integration. e) The sociotechnical-systems model. i) Two systems contained in each organization: (1) Social system, which consists of interpersonal relationships. (2) Technical system, which consists of task, tools, and activities of organization. ii) The systems are interrelated. The diagnosis determines how the systems are interrelated and what type of feedback is required between the subsystems. f) The force-field analysis model. (See Figure 5.6 Force-Field Analysis Model and Figure 5.7, Example of the Use of Force-Field Analysis) i) Organizational behavior is a balance between forces working in opposite directions. ii) Restraining forces act to keep organization stable. iii) Driving forces act to change organization. iv) When two forces are equal, the organization is in a quasi-stationary state of equilibrium. v) Analysis of forces determines which force to increase or decrease to bring about change. 7) Warning signs in the diagnosis process. (pg. 130) a) Confidentiality of the data is paramount. b) The over-diagnosis. i) The diagnosis drags on and so many problems are identified that the diagnosis becomes a ritual of continual analysis. c) The crisis diagnosis. i) Attending only to the immediate, short-term crisis. ii) Important but less visible problems are missed. d) The threatening or overwhelming diagnosis. i) The client is confronted by problems to the extent that the relationship with the practitioner is damaged. ii) It is difficult for the client to accept so much information and deal with it in any meaningful way. e) The practitioner’s favorite diagnosis. i) The practitioner imposes a special or favorite diagnosis regardless of the problem. ii) The diagnosis may be made to fit the practitioner’s own special skill areas. f) The diagnosis of symptom. i) Focuses on symptoms of the problems rather than on the underlying problems. OD Applications The Performance Gap at eBAY (p. 120) SUMMARY eBay’s successful model of offering on-line auctions has become outdated. An analysis of customer data indicated that Internet buyers are moving to fixed-priced Internet stores such as Amazon. eBay now concentrates on fixed prices and is trying to specialize in product areas such as collectables and overstocked items. MAJOR POINTS • eBay’s business model was originally the auction of merchandise on the Internet. • eBay has no warehouses and does not take possession of the merchandise. • Revenue comes from listing fees, advertising, and its banking system (PayPal). • eBay believes that if you understand the data, you can decide where to spend money, where people are needed, and which projects are working and failing. • Understanding the data is the way eBay learns about its customers. • Analysis of data showed that eBay’s traditional strategy of on-line auctions had become obsolete. • Fixed-priced sales were accounting for about half of all transactions. • eBay is now focusing on fixed price sales in collectables, overstocked items, and last year’s models. • Though the company has attempted to change, the business continues to fall short of expectations. QUESTIONS 1. What was the performance gap at eBay? Answer: eBay was assuming that their model of on-line auctions would continue to be popular with customers. However, Internet commerce matured and customers were less willing to spend the time monitoring auctions to purchase an item. eBay had been gathering large quantities of customer data but the analysis did not show changes in customer behavior until revenue had declined significantly. 2. What are some advantages and disadvantages of gathering large quantities of data? Answer: Advantages include being capable of analyzing and identifying potential problem areas. Having collected detail data over years can reveal trend lines that otherwise might escape managers’ attention. This allows both problems and opportunities to be quickly identified. Disadvantages of collecting large quantities of data are that sophisticated systems need to be designed to analyze the data. Without proper analysis, managers can be overwhelmed with the volume of data and fail to take action. 3. Visit the eBay Web site at http://www.ebay.com/ to further your understanding of its business model. Answer: eBay’s business model revolves around being a global online marketplace where users can buy and sell a wide range of goods. It operates primarily on a commission-based revenue model, charging sellers fees based on sales. eBay also generates income through advertising and subscription services for enhanced seller tools and visibility. Data Collection and Diagnosis at McDonald’s (p. 125) SUMMARY Though for many years McDonald’s had been a successful restaurant, by the early 2000s they realized that they had a problem. However, a lack of customer data prevented the problem from being identified and solutions developed. Processes were developed to collect data over a long-term basis so that the data could be analyzed to solve problems. MAJOR POINTS • In 2002 McDonald’s top managers identified that they had a problem based on earnings and profitability. • An initial reaction might have been to build more stores, but managers realized that they did not have enough data to identify the problems. • Beginning in 2003 McDonald’s adopted a system of systematically gathering and analyzing customer data. • Data was obtained from trained “mystery diners” who graded stores in such things as service, food temperature, and cleanliness. • Simultaneously, McDonald’s conducted in-depth interviews with repeat customers. • Analysis of the data showed that the solution was in delivering a better experience for the customers rather than more restaurants. • Coffee stations with Starbucks style baristas are also part of the solution as the stations increase traffic at existing stores rather than McDonald’s opening more stores. QUESTIONS 1. Research McDonald’s and evaluate their strategy of separate beverage stations. Answer: McDonald’s strategy of separate beverage stations enhances operational efficiency and customer experience by reducing wait times and allowing for self-service. This approach streamlines the ordering process, increases customer satisfaction, and can boost sales by promoting upselling opportunities. Overall, it supports a faster, more flexible service model. 2. In lieu of in-depth interviews, what are some other methods McDonald’s could have used to gather data? What are some advantages and disadvantages of McDonald’s method and your suggestions? Answer: Other methods include survey cards completed by diners, telephone interviews, and on-the-street interviews. The data obtained from “mystery diners” could be compared to similar analysis of competing restaurants (Burger King, Taco Bell.) An advantage of the in-depth interviews is that the data has depth and richness. A disadvantage of interviewing repeat customers is that it does not include data from those who choose not to dine at McDonald’s. This could seriously compromise the validity of the data since McDonald’s is trying to expand their customer base. Review Questions 1. Describe the use of performance-gap analysis. Answer: A method in the diagnostic process to determine the difference between what the organization could do by virtue of its opportunities and what it actually does. Data are collected on the actual state of the organization on a varying set of dimensions and also on the ideal or desired state. The difference is the gap which may be the result of ineffective performance from within the organization or because of competitive changes. A performance gap may also occur when the organization fails to adapt to changes in its external environment. 2. Compare and contrast the interview and survey methods of data collection. Answer: Interviews are more personal, surveys are less so; interviews allow for more feedback, surveys more objective. Surveys are used to gather a large number of quantitative responses. The data generated from surveys tend to be impersonal and anonymous and often lack feeling and richness, but this method easily lends itself to quantitative analysis. The survey may lead the practitioner to problem areas which can be investigated more deeply through an interview. Interviews are more direct, personal, and flexible than surveys and are very well suited for studies of interaction and behavior. Interviews are flexible and can be used in many different situations. Interviewing also provides two-way communication. 3. List some possible types of organization data that you might find in your own organization or college that could be used in planning an OD program. Answer: Pay policies, promotion possibilities, work environment, group interactions. There are many possible correct answers depending on the organization. 4. Explain the difference between symptoms and causes. Answer: The symptom is the manifestation of some underlying problem. Cause is the reason for the problem. The client is often aware of the evidence of the symptoms of a problem, such as declining sales or high turnover. Through data collection and analysis the practitioner tries to identify what factors are causing the problem, and therefore what needs to be changed to fix it. 5. Identify and give examples of the force-field analysis model. Answer: It is a diagnostic technique that views organization behavior as a balance of forces that push for and restrain change. Restraining forces act on the organization to keep it stable and driving forces put pressure on the organization to change. If the forces for change and the forces against change are equal, the result is equilibrium and the organization remains stable. Change takes place when there is an imbalance between the two types forces and continues until the opposing forces are brought back into equilibrium. KEY WORDS AND CONCEPTS Define and be able to use the following words and concepts: Clique - in a sociogram, when three or more persons within a larger group select one another as a subgroup. (p. 124) Closed questions - specific questions that can normally be answered either yes or no. (p. 125) Data - unstructured, unformed facts. (p. 121) Diagnosis - analysis of problem(s). (p. 118) Diagnostic models - provide a conceptual framework to understand the organization, its many components, and how well they function as a system. (p. 127) Differentiation and integration model - a diagnostic model that stresses the importance of a sound analytical diagnosis as the basis for planned change in organizations. (p. 127) Directed interview - interview in which only specific information is sought. (p. 125) Driving forces - opposite forces to restraining forces. Driving forces put pressure on the organization to change. (p. 129) Equilibrium – a term used in the force-field analysis model that refers to the restraining forces and driving forces for change being equal or in balance. (p. 129) Force-field analysis model - this model weighs forces for and against change. Restraining forces keep the organization stable and driving forces put pressure on the organization for change. (p. 129) Hawthorne effect - the effect of the observer on the subject. The act of investigating or observing may influence the behavior of those being investigated. (p. 127) Information - data that has structure and form. (p. 121) Isolates – in a sociogram, it is those individuals within a group who are only chosen rarely by others. (p. 124) Mutual choice - in a sociogram, when certain individuals within a larger group choose one another. (p. 124) Nondirected interview - the interview direction is chosen by the respondent. There is little direction by the interviewer. (p. 125) One-way choice - in a sociogram, when an individual in a group chooses another but is not chosen in return. (p. 124) Open-ended questions - this type of question allows the respondent to be free and unrestrained and to direct the interview. (p. 125) Performance gap - this is the difference between the desired and the actual performance of an organization. (p. 118) Questionnaires - this method of gathering data is normally used for a large number of responses. Although this method is impersonal, it lends itself to quantitative analysis. (p. 123) Restraining forces - these forces act to keep an organization stable. (p. 129) Sociogram - this is a diagram of relationships and interactions within a group. (p. 123) Sociometric approach – a technique for collecting quantitative data on work groups. The data enable the investigator to diagram the structure and patterns of group interaction. The result of the approach is a sociogram. (p. 123) Sociotechnical-systems model - an organization has two systems that are interrelated—the social system and the technological system. This model determines how these systems interrelate and the feedback (or lack of it) between the subsystems. (p. 129) Stars – in a sociogram, it is those highly chosen individuals. (p. 123) Surveys - this method of gathering data is normally used for a large number of responses. Although this method is impersonal, it lends itself to quantitative analysis. (p. 123) ADDITIONAL RESOURCES Readings: Bensoussan, Babette E. and Craig S. Fleisher, Analysis Without Paralysis, 10 Tools to Make Better Strategic Decisions, (Upper Saddle River, New Jersey: Pearson Education, Inc., 2008. Lawrence, Paul and Jay Lorsch, Developing Organizations: Dia¬gnosis and Action (Reading, Mass.: Addison-Wesley, 1969.) This is one of the titles in the Addison-Wesley series on organization development. The series is considered a classic and ole copies might be found on eBay or Amazon. Nadler, David A., Feedback and Organization Development: Using Data-Based Methods, (Reading, MA, Addison-Wesley Pub. Co., 1977). This is another one of the Addison-Wesley series on OD. SIMULATION PROCEDURES Simulation 5.1 (p. 134) The Acquisition Decision 1. Student premeeting preparation: a. Form into teams and make role assignments in the preceding class period. b. Read S.O.S. Briefing Sheet and their role descriptions out of class. c. Stress that students do not read role descriptions for others. 2. Suggestion: a. Remind the observer not to take a part in the decision process, but he/she is a “process observer” and will provide feedback in Step 3. 3. Discussion points: a. The Decision Process—How was the decision made? During Steps 3 and 4, participants are usually more interested in the answers. Try to minimize this discussion and emphasize the process that was used to make the decision and how the process might have assisted or hindered in arriving at the answer. b. How effective was each team? c. Information Sharing—Was all information shared within the team? In diagnosis, determining what information is needed is a difficult task. Getting the information is also a different and difficult task. d. Leadership Items—Was one individual dominant? When groups are involved, issues of leadership and influence are another barrier to effective decision making. A few members may dominate the group, and consequently, the full utilization of resources is often not accomplished. 4. Solution: One possible answer is Altitude company. It is the only company that fits all the requirements. The answer sheet follows. 5. Total time suggested: 65 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Step 2 30 Step 3 15 Step 4 20 Total 65 Notes Answer: In addition to Table 5.2, Acquisition Alternative Summary Sheet in the textbook, the following table has additional columns that are highlighted. The data for the columns came from the information in the role descriptions. The Altitude company tends to meet more of the requirements found in the role descriptions though teams may easily come to a different conclusion based on the reasoning given by their members. CASE TEACHING NOTES The Old Family Bank (p. 141) I. Problems A. Macro 1. The lack of loyalty to the entire bank could affect the effectiveness (and profitability) of the bank. 2. The bank may have a poor process for setting pay policies. B. Micro 1. Though the personnel in the computer services department have a strong team, they are not loyal to the larger organization. 2. Computer services personnel believe that management does not appreciate them, their skills, and contributions. 3. Computer services personnel may be underpaid when compared to similar workers in other companies. II. Causes 1. The skilled workers in the computer services department do not recognize all of the factors that may affect pay and rewards. 2. The computer services personnel possibly have access to more company-wide information by virtue of the type of work their department does than do personnel in other departments. Consequently, they get a portion of the data without understanding how managers make decisions based upon that data. III. Systems affected The attitudes of the computer services personnel to the bank likely affect the entire bank’s operations. IV. Alternatives 1. H. Day gathers more data to confirm/disprove initial diagnosis. 2. Use a diagnosis model such as force-field analysis to understand better the problem. Working through the model may bring to light ways to change the situation in the computer services department. 3. Day checks on regional employment data to determine if computer services personnel are being paid competitively with similar workers in other companies. Adjust pay if warranted by the data. 4. Meet with the department and explain the bank’s procedures and rationale for how pay levels are set. V. Recommendations All of the alternatives listed above can be undertaken by Day. STUDENT PREPARATIONS FOR THE NEXT CHAPTER 1. Read Chapter 6. 2. Prepare for OD Skills Simulation 6.1. Complete Step 1 and read the Company Situation. 3. Read and analyze Case: The Hexadecimal Company. Chapter 6 Overcoming Resistance to Change Learning Objectives 1. Identify the forces within individuals and organizations that cause resistance to change programs. 2. Recognize strategies that can increase the motivation to change. 3. Diagnose the forces driving and resisting organization change. 4. Experience reactions to a change situation. Student Premeeting Preparation 1. Read Chapter 6. 2. Prepare for OD Skills Simulation 6.1. Complete Step 1 and read the Company Situation. 3. Read and analyze Case: The Hexadecimal Company. Instructor Preparation and Materials 1. Simulations: Duplicate answer to Simulation 6.1. The answer is located in the Simulation Procedures section of this manual. LECTURE OUTLINE 1) Learning objectives. (p. 144) a) Identify the forces within individuals and organizations that cause resistance to change programs. b) Recognize strategies that can increase the motivation to change. c) Diagnose the forces driving and resisting organization change. d) Experience reactions to a change situation. 2) Change and reinvent. (p. 144) a) Faced with continuing economic pressures and increasing competition, many organizations are being forced to radically change and reinvent their processes. b) Organizations face a major challenge in managing change effectively. c) Organizations must have the capacity to adapt quickly in order to survive. d) People are the focus of some of the most serious challenges. e) When the changes are on a large scale and involve many individuals and subunits, there are often significant problems and challenges. f) On a personal level, change represents the alteration of: i) Set patterns of behavior. ii) Defined relationships with others. iii) Work procedures, and job skills. g) On an organizational level, change means that the following will no longer be the same: i) Policies. ii) Procedures. iii) Organization structures. iv) Manufacturing processes. v) Work flows. 3) The life cycle of resistance to change. (p. 145) a) The response to change tends to move through a life cycle. b) Phase 1, Change Introduced. i) There are only a few people who see the need for change and take the reform seriously. ii) Resistance appears massive. c) Phase 2, Forces Identified. i) The forces for and against the change become identifiable. ii) The change is more thoroughly understood. iii) The novelty and strangeness of the change tends to disappear. d) Phase 3, Direct Conflict. i) There is a direct conflict and a showdown between the forces pro and con. ii) This phase will probably mean life or death to the change effort. e) Phase 4, Residual Resistance. i) If the supporters of the change are in power, the remaining resistance is seen as stubborn and a nuisance. ii) There is still a possibility that the resisters will mobilize enough support to shift the balance of power. f) Phase 5, Change Established. i) The resisters to the change are as few and as alienated as were the advocates in the first phase. 4) Leading change. (p. 146) a) The major factors affecting the success of change include advocates of change, degree of change, time frame, impact on culture, and evaluation of change.(See Figure 6.1, Change Factors) b) Advocates of change. i) The person spearheading a change program is often the most important force for change. ii) An internal or external OD practitioner may be brought in to assist in the change project. c) Degree of change. i) Is the change minor or major? ii) The greater the degree of change, the more difficult it is to implement successfully. d) Time frame. i) Usually, the more gradual the change and the longer the time frame, the greater the chance of success. ii) Some organizations have become so ineffective that any chance they have for survival depends on radical change introduced swiftly. e) Impact on culture. i) The greater the impact on the existing culture, the greater the amount of resistance that is likely to emerge and the more difficult it will be to implement the change. f) Evaluation on culture. i) Standards of performance are developed to measure the degree of change and its impact on the organization. 5) A change model. (p. 148) a) Two major considerations in organizational change are the degree of change and the impact on the organization’s culture. (See Figure 6.2, Change Model) b) Quadrant 1: Minor change, low impact on culture. i) When the change is minor and the impact on the culture is small, resistance will be at the lowest level and success will be most probable. c) Quadrant 2: Minor change, high impact on culture. i) When the change is minor but the impact on the culture is high, some resistance can be expected. d) Quadrant 3: Major change, low impact on culture. i) When the change is major, but the impact on existing culture is minor, some resistance is likely. ii) Good management can probably overcome it. e) Quadrant 4: Major change, high impact on culture. i) When the change is large and the impact on the existing culture is high, the greatest resistance can be predicted. ii) The probability of success is low. 6) Driving forces toward acceptance of a change program. (p. 149) a) Driving forces are anything that increases the inclination of an organization to implement a proposed change program. b) Dissatisfaction with the present situation. i) The more intense the dissatisfaction with the present situation, the greater the motivation to change. ii) Some members are aware of need for improvement; not satisfied to be average. iii) In other organizations, its members are not aware of the need to change. iv) Stockholders may be dissatisfied with current performance. c) External pressures toward change. i) As an organization is part of a larger external environment, external pressures sometimes will cause the organization to change. ii) The organization may need to adopt new technologies to remain competitive, or may be required by law to make a change. d) Momentum toward change. i) When a change program is under way, certain forces tend to push it along. ii) Those involved in orchestrating the change will probably become committed to the program. iii) When an organization has committed money to start a change program, it likely will want to continue in order to get its money’s worth. iv) Once change has begun in one part of an organization, it may set off a chain reaction in other parts of the organization. e) Motivation by management. i) The manager or advocate of change becomes a motivating force. ii) Top managements’ words of encouragement and behavior can motivate change. 7) Restraining forces blocking implementation of change programs. (p. 151) a) Implementation of any OD change program needs to take account of the restraining forces of change. b) Uncertainty regarding change: “The Comfort Zone.” i) Past ways of doing things are well known and predictable. ii) Unwillingness to give up familiar tasks or relationships may cause resistance. c) Fear of the unknown. i) Lack of information or understanding causes rumor, speculation, and insecurity. d) Disruption of routine. i) Human behavior is governed largely by habit and routine. ii) There is little incentive to change when the old way seems to work. e) Loss of benefits: “what’s in it for me?” i) People may interpret the change as a loss of individual security. ii) People affected by a change tend to resist unless they see how they will benefit. f) Threat to security. i) There may be concern about vested interests, such as loss of the job or reduced wages or bene¬fits. ii) People tend to resist change that threatens the security of their environment. g) Threat to position power. i) Change that causes a manager or group to “lose face” will be resisted. ii) To lower the status or prestige of the individual or group will probably meet with resistance even though the organization as a whole may benefit. h) Redistribution of power. i) If there is reorganization, it is implicit that there will be a redistribution of power and influence. ii) Individuals or groups who see a change as lessening their influence will strongly resist it. i) Disturb existing social networks. i) Friendships, social cliques, or informal teams may be threatened by changes. j) Conformity to norms and culture. i) Norms cannot easily be changed because of their strong group support. k) Driving forces and restraining forces act in tandem. i) Effective change programs try to increase the driving forces toward acceptance of change and simultaneously to decrease the restraining forces blocking the change. ii) The force-field analysis model (discussed in Chapter 5) provides a useful way to view the driving and restraining forces. 8) Strategies to increase motivation. (p. 153) a) An OD program is more likely to be successful if resistance to change can be minimized. i) Resistance to change can be predicted. ii) Resistance cannot be repressed effectively in the long run. iii) The objective is to turn the energies generated by the anti-change resistance to good advantage. iv) A manager can minimize the threat that underlies resistance. v) Listening to comments and criticisms provides information that can be used to adjust the tempo and extent of the change program. vi) Resistance can provide functional conflict that contributes to the quality of the change program. vii) Absence of resistance may indicate a degree of disengagement and an indication of future problems. b) Climate conducive to change. i) Climate and culture of organizations are decisive in sustaining organizational change. ii) Attitudes of respect and understanding will help to break a cycle of reciprocal threat and aggressiveness. c) Clearly articulated vision. i) Create a vision for a team, division, and organization that describes a desired future state ii) A vision helps to give direction to a change program and to provide a bench mark to evaluate the success of the change. d) Effective communications. i) Communication can minimize the uncertainty and fear of the unknown associated with change. ii) Lack of reliable information leads to rumors and uncertainty. iii) Information concerning the “what and why” of the change program should be provided to all organization members. iv) Open-book management is one way to educate and inform organization members. (1) It opens the books to employees. (2) They can see the company’s financial records, expenses, and sources of profit. (3) Advantages and rewards of the communication of proposed changes should be emphasized. v) Most managers underestimate the amount of communication needed, so it is better to use “overkill” than to understate the situation. e) Leadership of managers. i) Leadership of key managers is critical to the success of a change program. ii) Leaders with loyal followers set high standards and strive to attain exceptional results. iii) Through such methods as empowering employees, the leader can accomplish things that he or she could not accomplish if acting alone. f) Participation of members. i) The participation of employees in matters that concern them increases the probability that they will find the program acceptable. ii) If there is a union, it needs to be involved and supportive of the change program. g) Reward systems. i) Reinforcing the change by providing rewards and support for those involved can increase support for the change. ii) Rewards include promotions, financial, and public recognition. iii) Financial rewards include profit-sharing, knowledge-based pay, gain sharing, and stock-ownership plans. h) Negotiation, agreement, and politics. i) Negotiate with potential resisters. ii) Accommodation with the positions of resistors may be possible and could improve the change program. iii) Build a coalition of people who hold divergent points of view. iv) Compromise, reciprocity, and trade-offs may be necessary in building political alliances. i) Power strategies. i) OD practitioners have historically been reluctant to deal with the use of power in organizations. ii) But most organizations operate within a power structure and it may be necessary to use it to persuade members of an OD program’s worthiness. iii) Though not without risks, dismissal or transfer may be necessary with some employees in order to bring about change. iv) Coercion may make support for future change programs difficult to obtain. OD Applications The Five Phases of Resistance to Change (p. 146) SUMMARY The response to change tends to move through a life cycle that typically consists of five phases. The environmental movement over the past forty years illustrates these phases. MAJOR POINTS • PHASE 1 – Change Introduced. The environmental movement began to grow in the 1970s though the forces for change were small. • PHASE 2 – Forces Identified. By the 1980s the forces for and against the change became organized and identifiable. • PHASE 3 – Direct Conflict. The Clean Air Act of 1990 was an event that brought the two opposing groups into direct confrontation. • PHASE 4 – Residual Resistance. Though opposing groups continued to have conflicts through the first decade of the 2000s, the resistance became less intense as world opinion coalesced around environmental responsibility. • PHASE 5 – Change Established. Much of the world now sees environmental responsible behavior and energy conservation as a necessity. The challenge is how to implement the changes. QUESTIONS 1. Do you agree that the environmental movement has moved into the fifth phase? Answer: Yes, the environmental movement can be seen as entering the fifth phase, characterized by a focus on systemic change, sustainability integration, and innovative solutions. This phase emphasizes global collaboration, climate action, and integrating environmental considerations into all aspects of business and policy. 2. Where do you see the environmental movement going? Stronger or weaker? Answer: The environmental movement is likely to grow stronger, driven by increasing public awareness, regulatory pressures, and corporate commitments to sustainability. As climate change impacts become more evident, support for environmental initiatives and innovations is expected to intensify. 3. Will the environmental movement be worldwide or regional? Will developed nations have different responsibilities than developing nations? Answer: The environmental movement will be worldwide, but responsibilities may differ. Developed nations will likely focus on reducing their higher historical emissions and supporting sustainable technologies, while developing nations may prioritize economic growth and require support for green development. Global cooperation will be crucial for effective climate action. 4. Will there be lasting public and corporate support? Answer: Yes, lasting public and corporate support is likely as environmental issues become increasingly critical and integrated into long-term strategies. Growing awareness and regulatory pressures will drive sustained commitment to sustainability and environmental responsibility. The World of Business (p. 150) SUMMARY Globalization has and will continue to have a significant impact on businesses, competition, governments, workers, societies, and cultures. Learning as much as possible about globalization can help a business deal with the changes that will undoubtedly result from increased globalization. MAJOR POINTS • Globalization has been occurring for hundreds of years but the within the last 30 years globalization has experienced exponential growth. • Reasons for growth in globalization include improvement in communication and transportation, global banking system, surpluses in capital of some countries, and lowering of trade barriers. • The 1,000 largest multinational companies (MNCs) account for 80 percent of the world’s industrial production. • MNCs are base all over the world and are emerging in larger numbers in developing countries. (See Table 6.1, Fortune Top Global 500 Companies) • MNCs help create markets by employing workers worldwide. • The trend has been for MNCs to blend into the local landscape by adapting to the local culture. QUESTIONS 1. Why is it important for a business to understand globalization? Answer: A business, no matter its size, is going to be increasingly affected by globalization in some manner. To survive in a worldwide market place, it is prudent upon businesses to understand the challenges and potentials of globalization. 2. Do you think globalization is something that a business of any size can ignore? Support your position. Answer: No, businesses of any size cannot ignore globalization. It impacts market access, competition, and supply chains. Even small businesses can benefit from global opportunities and must adapt to international trends and regulations to stay competitive and relevant. 3. Research Fortune’s “Global 500” list of companies to see how trend lines are developing. The web site is at http://money.cnn.com/magazines and search for “global 500 list” or something similar. Answer: Fortune’s “Global 500” list highlights trends such as the growing dominance of technology and energy companies, with tech giants like Apple and Amazon rising rapidly. There is also an increasing presence of companies from emerging markets, particularly China, reflecting global economic shifts and regional growth. Review Questions 1. Trace the life cycle of change in an organization or an event occurring in society (suggestions are smoking in public places, energy conservation, or driving smaller automobiles). Answer: The answer will vary depending on the example chosen but it will generally follow the five phases discussed in the text. Taking energy conservation as an example: 1. Introduction: Awareness campaigns and initial regulations are introduced to promote energy efficiency. 2. Growth: Adoption of energy-saving technologies and practices increases, with more businesses and households implementing conservation measures. 3. Maturity: Energy conservation becomes standard practice, with widespread policies and infrastructure in place. 4. Decline: Focus shifts to new sustainability goals or innovations, though conservation remains a baseline expectation. Overall, energy conservation has evolved from a niche concern to a mainstream practice, driven by technological advancements and regulatory frameworks. 2. What are major forces in the change process? Answer: Forces can be driving and restraining. Driving forces are anything that increases the inclination of the client system to implement the proposed change program. Restraining forces hinder the development of the change program. 3. What strategies might be used in gaining acceptance for an OD program? Answer: A systematic plan, inclusion of members, education and communication of proposed changes, managers creating a vision of the organization, recognition of resistance to change, providing support and a reward system for those involved, leadership of key managers, negotiation, explicit and implicit coercion, and power. KEY WORDS AND CONCEPTS Define and be able to use the following words and concepts: Driving forces - anything that increases the inclination of the client system to implement the proposed change program. (p. 149) Employee stock ownership plan (ESOP) - use various types of formulas to grant stock or stock options to a broad section of employees. (p. 157) Gain sharing - a reward system used as a basis for calculating pay that recognizes the value of a specific group based on measurable characteristics. (p. 157) Knowledge-based pay - a reward system based on the knowledge or skills a worker has. Sometimes called skill based pay. (p. 157) Open-book management - opens the books to employees to see the company’s financial records, expenses, and sources of profit. A major benefit is that employees are able to analyze and understand the problems for themselves. (p. 156) Profit-sharing - uses the performance of the business to calculate employee pay. (p. 157) Restraining forces - forces that block the implementation of a change program. (p. 151) Vision - describes a desired future state for an organization and it can provide the members with a mental image of the future. (p. 154) ADDITIONAL RESOURCES Readings: Cash, L. and J. French Jr., “Overcoming Resistance to Change,” Human Relations, I (New York: Sage Publications, 1947). Ford Jeffrey D. and Laurie W. Ford, “Decoding Resistance to Change,” Harvard Business Review, April 2009, p. 99-103; Jeffrey D. Ford, Laurie W. Ford, and Angelo D'Amelio, “Resistance to Change: The Rest of the Story,” Academy of Management Review, April 2008, pp. 362-377 Friedman, Thomas L., The World Is Flat, A Brief History of the Twenty-First Century, (New York: Farrar, Straus and Giroux, 2007.) Greiner, Larry E. and Virginia E. Schein, Power and Organization Development, Mobilizing Power to Implement Change, (Reading, Mass.: Addison-Wesley Publishing Company, 1988.) Kotter, John P., “Leading Change, Why Transformation Efforts Fail,” Harvard Business Review, Jan. 2007, pp. 96-103. Schneider, Susan C. and Jean-Jouis Barsoux, Managing Across Cultures, (New York: Prentice Hall, 2003.) Video: The Express. (Universal, 2008.) This is the true story of Ernie Davis, the first African-American to win the Heisman Trophy. It is a good movie to trace the “life cycle of change” through the plot of the film and the characters. The movie takes place during the early 1960’s at a time when the civil rights movement was dividing America. The change in attitudes and values of Coach Ben Schwartswalder is particularly interesting to focus upon. Ernie Davis also serves as a good example of a change agent. Stand and Deliver. (Warner Home Video-VHS, 1988.) A high school teacher in a Hispanic community brings about change in the school and education system by teaching calculus to students many, including the students, considered incapable. Based on a true story. Looks at issues of motivation, negotiation, creating of a vision, facilitation, rewards, coercion, and power. Presents an excellent view of the five phases of resistance to change. This was a PBS-produced film that received Academy Award Nominations. One Flew Over the Cuckoo’s Nest. (Warner Home Video-DVD and Republic Pictures Home Video-VHS, 1975) A man is sent to a mental hospital and runs into conflict with the staff. Issues include an external person (McMurphy played by Jack Nicholson) bringing change to an organization with well-established values and culture. Won Academy Awards for best picture, director, actor, actress, and screenplay. The language is “colorful” and my suggestion is to review this film to see if it is appropriate for your students. SIMULATION PROCEDURES Simulation 6.1 (p. 160) Downsizing in the Enigma Company 1. Student premeeting preparation: a. Complete Step 1 before coming to class. 2. Suggestions: a. Discuss the concept of consensus decision making used in Step 2. b. I usually have students turn in an Enigma Rating Form from each team. I post the forms on a wall or class room bulletin board and leave the form up for several weeks. This “public exposure” tends to build more interests in the simulations and provides the teams a certain degree of motivation to operate at peak performance. 3. Discussion points: a. Degree of involvement - One basic issue is the degree of involvement in the decision process. b. How decision is made - Whether by consensus, majority, or by autocratic influence, the method for making decisions is important to the acceptance of the outcome. Having a voice increases individual commitment, while arbitrary decisions cause resistance, lack of involvement, etc. c. Decision quality - Another major consideration is the question of decision quality. There are conflicting views as to whether individuals or groups make higher-quality decisions. d. Time factor - Another variable is the time factor, the pressure to reach a decision within a time limit. The greater the involvement of members, the longer the time needed to make the decision. Thus, consensus usually takes longer than other decision methods. 4. Answers: See the end of this section for an answer sheet that you can reproduce to hand out in class. A. Banks 4 B. Brown 3 C. Newton 5 D. Fram 8 C. Peters 1 R. Salgado 2 V. Green 6 R. Chu 7 5. Total time suggested: 60 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Step 2 30 Step 3 20 Step 4 10 Total 60 Notes Answers for Simulation 6.1 Downsizing in the Enigma Company A. Banks 4 B. Brown 3 C. Newton 5 D. Fram 8 C. Peters 1 R. Salgado 2 V. Green 6 R. Chu 7 Simulation 6.2 (p. 164) Driving and Restraining Forces 1. Student premeeting preparation: None 2. Discussion point: a. Explore with the students any advantages and disadvantages that could occur as a result of acknowledging the driving and restraining forces. 3. Total time suggested: 50 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Step 1 25 Step 2 25 Total 50 Notes Simulation 6.3 (p. 166) Strategies for Change 1. Student premeeting preparation: None 2. Total time suggested: 60 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Steps 1 to 4 45 Step 5 15 Total 60 Notes CASE TEACHING NOTES The Hexadecimal Company (p. 167) I. Problems A. Macro 1. Company resistance to change. 2. “Us” versus “them” view of practitioners forms company’s viewpoint. B. Micro 1. Professor/external practitioner ended too soon; did not provide direction or continuity. 2. “In-group” image perpetuated by OD group. 3. President too involved in details at beginning. 4. “Internal” consulting group was mostly outsiders and not accepted by the company at large. 5. OD group had little familiarity with nature of firm (except maybe George Kessler). 6. OD program too ostentatious and too costly for company. 7. Lack of unity in purpose and techniques within OD group. 8. Kay and Indar’s isolation from others and closeness to president had negative effects in OD group. 9. Budgeting not clarified at beginning. 10. Evaluation late - 1 year later and then almost a do or die evaluation. II. Causes 1. Group too cohesive and creates images of “in-group.” 2. “Fancy” atmosphere perpetrated. 3. President too involved at first. 4. Company not prepared for OD and its needs and purposes. 5. OD groups consisted almost entirely of outsiders. III. Systems affected 1. Structural - changing whom the OD group reports to will only confuse purpose and goals; Blake is not prepared. 2. Psychosocial - the OD group has caused at least as much antagonism as it has good results. 3. Technical - no reference to OD group’s effectiveness. 4. Managerial - too top-down thus far. 5. Goals and values – No indication that the company including top management (other than the OD group) knew or bought-in to the OD program. It was just a management training program. IV. Alternatives 1. Keep as is. 2. Put under Blake. 3. Have professor help organize and budget for OD. V. Recommendations Alternative three with central contact person and clear budget. If size of Hexadecimal allows, make OD a separate department with its own vice president. Keep reporting to president but keep him personally removed from specific decisions. Also, make reports to the executive committee and gain their support. Bring several line employees into OD. STUDENT PREPARATIONS FOR THE NEXT CHAPTER 1. Read Chapter 7. 2. Prepare for OD Skill Simulation 7.1 and complete Step 1. Form teams of eight members and assign roles the preceding class. 3. Read and analyze Case: The Farm Bank. Instructor Manual for An Experiential Approach to Organization Development Donald R. Brown 9780136106890
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