ORGANIZATION

EFFECTIVENESS &
CHANGE MANAGEMENT
BM-301- MBA 3RD
SEMESTER
 Unit I

An Overview of
Concepts of
Organizational Change ,
Effectiveness and
Development
Chapters:-1,4,14
 Chapter 1
Organization Effectiveness
Organizational Effectiveness, being
broad term, is also used to denote
organizational Success

It is the extent to which an

organization achieves its goals with
the given resources and means.
 Definitions
An organization is said to be effective if it
is able to achieve its goals- S.P.
Robbins

Effectiveness is commonly referred to

as the degree to which predetermined
goals are achieved. Efficiency refers to
the economical manner in which goal
oriented operations are carried out-
something of an input/output ratio-
Jackson,Morgan, and Palillo.
ORGANIZATIONAL EFFICIENCY ORGANIZATIONAL
EFFECTIVENESS

1. Measurable 1. Difficult to
Measure(Multidimensional)

2. Criterion – Internal Life of the 2. Criterion – External Life of the

Organization, Economic and Organization, Broad Aspects
Technical

3. Narrow concept- sub part of 3. Broad concept encompasses

Organizational Effectiveness efficiency

4. Actual 4. Futuristic
Effectiveness is a very broad concept
as it considers the survival prospects
of the organization, which are not
determined solely by the efficiency of
the internal system.

Effectiveness considers the

organization environment interface
and also takes care of the human
aspect of the organization.

It is desirable that an effective

organization should also be efficient.
Organizational effectiveness is
expressed by the following
factors
1. Production
2. Quality
3. Efficiency
4. Flexibility
5. Satisfaction
6. Competitiveness
7. Development
8. Survival
APPROACHES TO
EFFECTIVENESS
There are four main approaches to
attain/measure effectiveness.

A. Goal Attainment approach

B. Systems Theory Approach

C. Strategic Constituency Approach

D. Behavioural Approach
 Goal Attainment approach
In Present Competitive era, without
Effectiveness , existence itself is
impossible for Organizations.
The Goal Approach has been
practised since long.
According to this approach, an
organization exists to accomplish the
goals set .
 { who will set goals for Individuals &
Organizations }
 In Management Concepts, a
mission is set for the
organization
From the mission,
organizational goals are
derived
The goals set should be
attainable & realistic

Goals must be within the

Organization’s capability

Eg:- MBO; In service industry – Budgeting,Cost-

Benefit analysis,linear Programming,& Incentive
pay system
 Mission Statements of
Reputed Companies
Tata Steel Limited
Tata Steel recognizes that while honest
and integrity are the essential
ingredients of a strong and stable
enterprise, profitability provides the
main spark for economic activity.
Overall, the company seeks to scale the
heights of excellence in all that it does
in an atmosphere free from fear, and
thereby reaffirms its faith in
democratic values.
Maruti Suzuki India Ltd
To be the leader in the Indian
automotive sector, creating customer
delight and shareholder wealth

Infosys Technologies Ltd

To achieve our objectives in an
environment of fairness, honesty , and
courtesy towards our clients,
employees , vendors, and society at
large.
Tata Consultancy Services Ltd

To help customers achieve their

business objectives by providing
innovative , best-in-class consulting,
IT solutions, and services. Make it a
joy for all stakeholders to work with us.
 Goals Set in the
FUNCTION Organization
GOALS/OBJECTIVES

SALES To Achieve 20 per cent growth during the

current year over the previous year
PRODUCTION To achieve 90 per cent of installed capacity
PRODUCT To introduce two new products as identified by
the marketing group
HR To train specific groups for specific skills
identified for achieving production and sales
targets
FINANCE To provide necessary financial resources for
achieving the company’s goals
ADMIN To protect the assets of the company and
monitor the sensitive transactions, which are
conducive to achievements of companies goals
Basic activities determine the
Organizational Effectiveness
1. Identification and procurement of
various resources needed for the
production
2. Efficient use of inputs
3. Production of tangible
assets/services
4. Performance of various technical
and administrative functions
5. Scanning the environment,
identifying various factors which
impact organization
6. Developing growth oriented
policies for production, finance,HR,
R & D etc.
7. Market survey and modification
of goals (if required)
8. Training and Development
9. Evaluation of Human Capital
10. Development of organizational
culture, ethos, and climate
11. Ensuring quality of worklife
12. Maintaining an ideal worklife
balance
Limitations of Goal Attainment
Approach
1.It cannot be applied to organizations
to intangible products.
Ex:- Measuring the services provided by
the transport agency( such as
Railways), it cannot be measured in
terms of quality but the same can
be measured reasonably closer to
reality by use of various scales.
2. It is difficult to measure the
performance of different units/sub
units and individuals in a quantifiable
manner.
3. Most of the organizations have dual
objectives/goals which are in conflict
with each other. Hence, Organizational
Effectiveness cannot be measured.
Ex:- Production Unit vs Marketing Unit
4. It is based on the consensus of all the
employees. Usually the every member in
the organization follow his own personal
goals to large extent.
5. Amitai Etzioni author of the article “
Two Approaches of organizational
Analysis: A Critique and a Suggestion”
believes that goals , as ideal states,
do not offer the possibility of
realistic assessment,goals,as
cultural entities, arise outside the
organization as a social system and
cannot arbitrarily be attributed as
properties of the organization itself.
Systems Theory Approach
1. It is based on the open system
model as applied to social system.
2. An organization is a system and is a
part of the environmental supra
system.
3. In this approach , the nature of
interaction between the organization
and the environment to determine its
Organization effectiveness.
4. In the systems theory, an
organization remains effective as long
as it uses its resources in an efficient
manner and continues to contribute to
the larger systems.

( B.P. Singh & T.N.Chopra,

“Organization Theory and Behaviour”)
The organization’s effectiveness is also
dependent on optimizing the input
process- output cycle in an efficient
manner.

It should be able to adjust with the

external environmental systems and
should contribute to the supra
environmental system and thus be able
to be progressive.

Organizational effectiveness is a very

vital system and all its elements should
Managers should have the skills to
understand the nature of the
environment and adapt to the social
systems such as environment
protection and fulfillment of social
responsibilities.
Organizations are effective when they are
able to change the organization
structure, and regroup the resources.
Key Buzzwords
- Incorporate changes in technology
- Reorientation of organization policies
- Flexibility and willingness to adapt to the
 Criteria determine
Organizational Effectiveness
1. Adaptability and ability to solve
problems.
2. Ability and flexibility to react to
change.
3. A sense of identity
4. Capacity to test reality –accurately
perceive and correctly interpret the
properties of the environment.
5. State of integration among the sub-
parts of the Organization to avoid
cross-purpose working.
Limitations of Systems Theory
Approach
1. Difference in Organizational Goals with
operational goals.
2. Organization’s survival depends on the
ability of the manager to analyze,
interpret, and cater for the
environmental needs.
3. Creation of organizational systems to
approach the environment with
appropriate readiness to avoid conflict
with operative and actual organizational
objectives.
Strategic Constituency
Approach
The strategic constituencies that
determine effectiveness are
owners,
managers,
employees,
customers,
suppliers &
The Govt.
The strategic approach integrates both
the goal and systems approaches to
effectiveness by viewing these
approaches as special cases of
multiple- constituency effectiveness.
{ Connollly T., Conlon E.J. and Deutsch
S.J.,
Organizational Effectiveness: A Multiple
Constituency Approach, Academy of
Management Review}
Important Factors of Strategic
Constituency Approach
1. Identify critical constituencies .
Similar to systems approach in this
method.
2. Prioritize the critical constituencies
3. Identify the expectations of various
competing groups
4. Identify the environmental changes
5. Satisfying all the constituencies
which are critical. Human element is
very critical factor.
Behavioural Approach
According to this, the extent to which
individual and organizational goals
are integrated affects the degree of
organizational effectiveness.
McGregor Douglas in his Book “
Leadership and Motivation” :- True
integration of goals , when all
individuals share the organization
goals.
Chapter 4:- Foundation of
Organizational Development
Salient points
1. Definitions
2. Features of Organizational
Development
3. Objectives of Organizational
Development
4. Organizational Development
strategies for personal concern
5. Job Related interventions
Organizational Development
strategies for personal concern
Sensitivity Training
Kurt Lewin(1945) introduced
sensitivity Training as T-Groups or lab
training.
The method is used to train teams
with the ultimate objective of
organizational development.
It envisages the formation of
unstructured small groups.
Group Interactions- learn-
interpersonal dynamics
 Target objectives
1. Individual attitudinal changes with
help of groups
2. Understand human nature
3. Modify behaviour to suit a particular
situation
4. Useful member of the team
Transactional Analysis
Eric Berne first introduced TA in 1964.
1. Three Ego states in varying degrees
in every individual
a. Parent ego:- Superiority, Authority,
judgemental
b. Adult ego:- maturity, objectivity,logic
and rationality
c. Child ego:- dependent,impulsive, and
rebellious nature of behaviour
 Organization Change
 Change refers to any alteration that
occurs in the overall work environment of
an organization. It may relate to change
in
 technology
 Organizational structure
 Working processes
 Work environment
 Organizational policy and
 Even the roles people play
 Greiner’s change model
Greiner has evolved a theory of change by
considering “growth” as a factor for
change.
He has identified various problems at each
stage of evolution. ( Five Stages)
1. Crisis of Leadership-Growth thru
creativity
2. Crisis of Autonomy- Growth thru
direction
3. Crisis of Control- Growth thru delegation
4. Crisis of Red tape- Growth thru
coordination
Forces of Change
An Organization is an open system that
has to interact with the environment
and is solely dependent on it.
Any change in the environment makes it
necessary for the organization to
incorporate change in the internal
systems, sub systems and processes.
An Organization must interact with the
external environment in order to
survive.
 Kurt Lewin Change process
Kurt Lewin proposed the three- stage
model of the change process for moving
the organization from the present position
to the changed position.
Stage 1:- Unfreezing- Creating motivation
and readiness to change
Stage 2: Changing through Cognitive
restructuring- Help the client see
things,judge things and feel things in new
view point.
Stage 3: Refreezing- Help the client to
integrate the new view point
 Kellman Change process
1. Compliance:- Rewards &
Punishments
2. Identification :- Role model and
modifying the behaviour
3. Internalization:- Individual’s
thought processes change for new
environmental adjustment.
 Ronald Lippitt, J Watson & B
Westley Change model
Lewin 3 stage to 7 stage model
Stage 1. Development of need for change
Stage 2. Establishing relationship-client and
change agent
Stage 3. Diagnosis of the client system’s
problems
Stage 4. Examination of alternative
routes/goals
Stage 5. Transformation of moving intentions
into actual change efforts
Stage 6. Generalization & refreezing
stablization of change
Stage 7. Achieving a terminal relationship
 Change Agents
Change agents are responsible for the
change in individual behaviour.

Change in human behaviour is

acomplex phenomenon and it may
require a number of strategies to
make a desirable change

They may be either the initiator of

change or serve as a catalyst for such
Four types of change agents have
been identified by Tichy, N.

1. Outside Pressures
2. Change from top management
3. Internal Organizational
Development
4. Individual Level Change
 Skills of Change Agent-
Havelock & Shaskin identified ten factors
about the skills that are required by the
change agent.
The change agent – Help client system to
solve organizational problems and bring
about the change.
HELP SCORES are abbreviation of ten skill
factors –
HOMOPHILY,EMPATHY,LINKAGE,
PROXIMITY,STRUCTURING,CAPACITY,
OPENNESS,REWARD,ENERGY &
Factors which resist change
Reasons for resistence Management of change
JOB SECURITY PARTICIPATION AND
INVOLVEMENT
LACK OF COMMUNICATION COMMUNICATION &
EDUCATION
RAPIDITY & EXTENT OF LEADERSHIP
CHANGE
GROUP RESISTENCE NEGOTIATIONS &
AGREEMENTS
EMOTIONAL TURMOIL WILLINGNESS FOR THE SAKE
OF GROUP
LOSS OF POWER & CONTROL TIMING OF CHANGE,
EMPOWERMENT
TECHNOLOGY TRAINING & DEVELOPMENT
NEW PRACTICES NEGOTIATIONS & CROSS
CULTURAL CHANGE
 ORGANIZATION CULTURE

Edgar Schien defines culture as “ a pattern

of basic assumptions
invented,
discovered or
developed by given group as it learns to
cope with its problems of external
adoption
and internal integration worked well
enough to be considered valuable and
therefore , to be taught to new members
as a correct way to perceive, think and
feel, in relation to those problems”,
Wager III and Hollenbeck have
defined organizational culture as
“ the shared attitude
and perceptions in an organization
that are based on
a set of fundamental norms and
values, and help members
understand the Organization”
 FUNCTIONS OF ORG.
CULTURE
1. It gives members an organizational
identity
2. It facilitates collective commitment’
3. It promotes systems stability
4. It shapes behaviour by helping
members make sense of their
surroundings
5. It provides a boundary
6. It helps organization members stick to
conformity and expected mode of
behaviour.
Levels of Culture
Edgar Schein has identified three
levels

1. Observable artifacts of culture

2. Shared value

3. Common assumptions
Organization Climate
Bowditch & Buono said – “
Organizational Culture is with the
nature of belief and expectations
about organizational life,
While climate is an indicator of
whether those beliefs and
expectations are being fulfilled.
 The following factors of org.
culture
1. Selection process of the employees
2. Leadership style and approach to
solve problems of the employees
3. Wage administration
4. Attitude to implement change &
incorporate latest technology
5. Job description
6. Organizational structure and
frequency to modify the same based
on need
7. Performance evaluation
8. Promotion policy and its
implementation
9. Efforts involved in promoting creativity
& innovations
10. Availability of resources for R & D
11. Organizational Values & promotion of
culture
Richard M Hodgetts
He classified the Organizational culture
into two factors:-
1. OVERT Factors
a. Hierarchy
b. Goals of the organization
c. Financial resources
d. Skills & abilities of employees
e. Technological state of the organization
f. Performance standards adopted
g. Efficiency measurement
2. COVERT Factors
a. Values
b. Attitude
c. Norms
d. Feelings
e. Interaction
f. Supportiveness
g. Satisfaction
 Power
Rosabeth Kanter says- Power is
the ability to get things done.
- Power is a tool & resource
- Leaders use power as a means of
attaining group goals.
- Power is also used to control
various activities of individuals and
groups.
Bases of Power
As per French & Raven 6 bases of
power
1. Rewards
2. Coercive
3. Legitimate
4. Referent
5. Expert
6. Information
 Politics
Politics is a process whereby power is
acquired and used to influence the
behaviour of others.
People play politics for power where
Ethics
Moral Values
Organizational goals are little concern
Pfeffer defines Politics as those
activities taken within organizations to
Acquire,
Develop and
Use power & other resources to obtain
One’s preferred outcome in a situation
in which there is uncertainity or
dissensus about choices.
Organizational Politics
Miles has identified five major reasons
that have strong influence on political
orientation of organizations
1. Scarcity of resources
2. Non- programmed decisions
3. Ambiguous goals
4. Organizational change
5. External environment
Techniques Politics
Mintzberg has suggested the following
strategies to wield political power in
the organizations:-
1. Cultivate right allies
2. Be Positive towards others
3. Reciprocity
4. Be Persuasive
5. Image Building
6. Control information
 UNIT III
 The Process of Empowerment
 Organizational Learning
 Creativity and Innovation
 Conflict and Negotiation
 Inter group behaviour and
Collaboration
 Empowerment
Empowerment is an effective management
tool to achieve maximum potential of the
employee.
Max Weber – concept of bureaucracy is no
more valid now.
Empowerment is the process of passing
authority and responsibility to individuals
at lower levels in the organizational
hierarchy to enhance the feeling of self-
efficacy and a sense of owning a job.
Factors favourable for Empowerment
1. Technology
2. Customers
3. Organizational Structure
4. Organizational Culture
Why we need Empowerment:-
 To stimulate commitment &
Innovation,
 To have Competitive edge, Flexible
production system,
 To implement Change & stimulate
decision making,
Process of Empowerment
Dobbs suggests that four prerequisities
of empowering people like
1. Participation
2. Innovation
3. Access to information
4. Accountability
It is by multi-skilling, giving people more
authority and full responsibility from
the inception to completion of the
job.
Randolph said “ giving people the
 Process of Empowerment
Giving Taking
Demonstrating Mgt
Empowering E
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 ORGANIZATIONAL
LEARNING(OL)
OL has been associated with individuals.

It involves identification of problems in an

organization,
Recommending and
Implementing a solution by a specialist
( Change Agent)
Evaluating transformation(Change)
Concept of OL
It relates to behaviour modification and
thereby achieving the resultant
growth.

The process is continuous and

incremental in nature.
Elements of OL
1. Study of internal & external
environment
2. Management of Knowlegde
3. Utilize existing talent , skills and
experience of employee to achieve
effeciency
4. Behaviour modification
5. Continuous process based on
performance
Process of Organizational
Learning
Acquiring – reflecting Systems/
Innovation/ Unfreezing
Retaining- intergrating
System/Implementation/Moving
Using- adapting System/ Stabilization/
Refreezing
Factors contributing to
successful Organizational
Learning
a. Leadership
b. Planning & flexibility
c. Teamwork & Mutual support
d. Autonomy & Accountability
e. Networking / Synthesizing
Creativity & Innovation

Creative-
Thinking

Intrinsic
Expertise task
Motivation
 Creativity
It generates unique and novel responses
to problems.
Group is an Important resource for
improving creativity in decision- making.
Creative exercises
Brainstorming
Nominal groups
Delphi method
Decision making tools- MIS & DSS
Stages of Creative Thinking
Five Stages
1. Preparation
2. Concentration
3. Incubation
4. Illumination
5. Verification
 CORPORATE
GOVERNANCE
It is a system by which companies are
run.
It relates to the set of the incentives,
safeguards and the dispute resolution
processes that are used to control and
coordinate the actions of the agents on
behalf of the shareholders by the Board
of Directors.
Who appoint Board of Directors and
Auditors.
 Need for Better Corporate
Governance
The factors are as follows
1. Mismanagement
2. Promote Investment
3. Promotion of small investors and
subsidiaries
4. National Growth
Structure of Corporate
Governance
It Includes
1. Board of Directors
2. Shareholders
3. Creditors
4. Employees
Structure of Company Board
1. Ownership Structure
2. Institutional Environment
3. Control
4. CEO
Conflict Resolution Model
x axis- Assertiveness
y-axis- Cooperative Behaviour

Accommodating Collaborating

Compromising

Avoidance Competing
 Cross Culture Dynamics
What is Culture?

-Collective Programme

-Mind level

-distinguishing factor

-Between the members of one category to

another.
Organizational Culture
It is the collection of
shared beliefs,
values,
stories,
rituals,
myths and
a common language that foster the
feeling of oneness
Culture also takes into account the
invisible factors that influence the
behaviour of organization members

Learning of Culture?
Through Experience and is shared.

Passed from one generation to another

and develops over time.
 Levels of Culture
Edger H. Schein in “Organizational
Culture, American Psychologist ”
suggests a view of organizational culture
based on distinguishing three levels of
culture :

1.Artifacts

2. Creations