ORGANIZATIONAL CHANGE, DEVELOPMENT, AND TRANSITION

Organizational Change - is the process by which organizations move from their current or present state to some desired future state to increase their
effectiveness

o Goal to find new or improved ways of using resources and capabilities to increase an organization's ability to create value and improve returns to its
stakeholders.
o Planned
o Mainly restructuring the org structure

TARGETS OF CHANGE

1. Human Resources
o New investment in training and development activities
o Socializing employees into the organizational culture so they learn the new routines on which organizational performance depends
o changing organizational norms and values to motivate a multicultural and diverse workforce
o An ongoing examination of the way in which promotion and reward systems operate in a diverse workforce
o changing the composition of the top-management team to improve organizational learning and decision making
2. Functional Resources - As the environment changes, organizations often transfer resources to the functions where the most value can be created.
o Change in structure
o Change in technology
o Change in culture
3. Technological Capabilities
o IBM, for example, changed its organizational structure to better capitalize on its new strengths in providing IT consulting.
o Before they are focused on selling hardware
4. Organizational Capabilities - Organizational change often involves changing the relationships between people and functions to increase their ability to
create value.

These four levels at which change can take place are obviously interdependent; it is often impossible to change one without changing another

WHY CHANGE? (Forces for and resistance to organizational change)

FORCES FOR CHANGE

1. Competitive Forces - unless an organization matches or surpasses its competitors in efficiency, quality, or its capability to innovate new or improved
goods or services, it will not survive.
o Adopting the latest technology (e.g. Al)
o The adoption of new technology usually brings a change to task relationships as workers learn new skills or techniques to operate the new
technology.
2. Economic, political, and global forces - compel organizations to change how and where they produce goods and services.
Will they contract, expand, relocate, or outsource?
o Pandemic
o War in Ukraine
o European Union changes
o ASEAN Changes
3. Demographic and Social Forces - Managers have had to abandon the stereotypes they unwittingly may have used in making promotion decisions.
o Empowering employees so that orgs can utilize their human resources to their full potential
4. Ethical Forces - it is also critical for an organization to take steps to promote ethical behavior in the face of increasing government, political, and social
demands for more responsible and honest corporate behavior.
o Xinjiang
o Carbon Neutral Initiative
o
RESISTANCE FOR CHANGE
1. Organization-Level Resistance to change
o Power Conflict - Change usually benefits some people, functions, or divisions at the expense of others. More power struggle, more
resistance to change
o Differences in Functional Orientation - Different functions and divisions often see the source of a problem differently because they see an
issue or problem primarily from their own viewpoint. (Sales vs Logistics, Sales vs Engineering)
o Mechanistic Structure - Hierarchical/Bureaucracy
o Organizational Culture - If organizational change disrupts taken-for-granted values and norms and forces people to change what they do
and how they do it, an organization's culture will cause resistance to change.
2. Group-Level Resistance to Change
o Often, change alters task and role relationships in a group; when it does, it disrupts group norms and the informal expectations that group
members have of one another.
o A highly cohesive group may resist attempts by management to change what it does or even who is a member of the group.
o Groupthink
3. Individual-Level Resistance to Change
o People tend to resist change because they feel uncertain and insecure about what its outcome will be
o Workers' resistance to the uncertainty and insecurity surrounding change can cause organizational inertia
 o When change takes place, workers tend to focus only on how it will affect them or their function or division personally.
4. Lewin's Force-Field Theory of Change - A theory of organizational change that argues that two sets of opposing forces within an organization determine
how change will take place

HOW TO CHANGE?

TYPES OF CHANGE

1. Evolutionary change (gradual, incremental, and narrowly focused) - involves not a drastic or sudden altering of the basic nature of an organization's
strategy and structure but a constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate to changes taking place
in the environment
o Sociotechnical Systems Theory - proposed the importance of changing role and task or technical relationships to increase organizational
effectiveness.
• Coal-mining technology; introduction of word processors
• Training the employees to use modern technology for efficiency
o Total Quality Management (TQM) - A technique developed by W. Edwards Deming to continuously improve the effectiveness of flexible
work teams.
• Quality Circles - Groups of workers who met regularly to discuss the way work is performed in order to find new ways to
increase performance
• Coordinating the design of the various inputs so they fit together smoothly and operate effectively together is one area of
TQM
• Customer satisfaction - how to improve it?
o Six Sigma - Approach to quality management that provides training for employees and managers in statistical analysis, project
management, and problem-solving methods in order to reduce the defect rate of products.
o Flexible workers and Flexible work teams
• Flexible workers - workers who trained in all aspects of production/services
• Flexible work teams - A group of workers who assume responsibility for performing all the operations necessary for
completing a specified stage in the manufacturing process.
 Performing more than one task also cuts down on repetition, boredom, and fatigue and raises workers' incentives to improve
product quality
 When workers learn one another's tasks, they also learn how the different tasks relate to one another.
2. Revolutionary change (rapid, dramatic, and broadly focused) - involves a bold attempt to quickly find new ways to be effective. It is likely to result in a
radical shift in ways of doing things, new goals, and a new structure.
o Reengineering - process by which managers redesign how tasks are bundled into roles and functions to improve organizational
effectiveness.
 fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical,
contemporary measures of performance such as cost, quality, service, and speed.
 Instead of focusing on an organization's functions, the managers of a reengineered organization focus on business
processes.
Function focused - rearranging Manufacturing Team/Division roles
Process focused - reengineering how production would work
• Business Process - An activity that cuts across functional boundaries and is vital to the quick delivery of goods and services or
that promotes high quality or low costs
• How can I reorganize the way we do our work, our business processes, to provide the best quality, lowest cost goods and
services to the customer?
• Guidelines for Reengineering
1. Organize around outcomes, not tasks
2. Have those who use the output of the process perform the process
3. Decentralize decision making to the point where the decision is made
• Hallmark Greeting cards took 3 years on average to release a greeting card
• Reengineered the process: instead of functional structure, they created divisions for different occasions
(Christmas Division, Birthday Division, Graduation division) each with their own writing, graphic designing,
printing and materials department.
o E-Engineering - refers to companies' attempts to use all kinds of information systems to improve their performance.
• New IT can be employed in all aspects of an organization's business and for all kinds of reasons.
• Automation and databases
o Restructuring - refers to the process by which managers change task and authority relationships and redesign organizational structure and
culture to improve organizational effectiveness.
• Happens hand-in-hand with reengineering
• From functional structure to divisional
o Downsizing - the process by which managers streamline the organizational hierarchy and lay off managers and workers to reduce
bureaucratic costs.
• Often a response to increasing competitive pressures in the environment as companies fight to increase their performance
and introduce new information technology
• Anorexic Organizations - over-downsizing to the point of loss in productivity
o Innovation - the successful use of skills and resources to create new technologies or new goods and services so an organization can
change and better respond to the needs of customers
• Internet is a catalyst for innovation
 • Produced social media
• Social media managers
OTHER CHANGES
1. Merger and Acquisition Change - often involves combining resources, personnel, and operations from multiple organizations into one.
2. De-merger Change - change that involves the splitting of an organization into two or more separate entities
o often used when an organization has grown too large, and there is a need to streamline operations and simplify structures in order to
improve efficiency.
3. Relocation Change - change that involves the moving of an organization or parts of it to a new location
o This could be the physical relocation of staff, offices, and departments or the transfer of operations to another jurisdiction or country.
o Tax incentives, cheaper labor, cheaper real estate
4. Rebranding Changes - change that involves making modifications to the organization's brand or public image, in order to create a more compelling and
attractive image.
o Smart Money > PayMaya > Maya
o The Facebook > Facebook > Meta

MANAGING CHANGES
How to implement changes?

LEWIN’S THREE-STEP CHANGE PROCESS

1. Unfreeze from present state
2. Make the desired type of Change
3. Refreeze in the new, desired state

• Lewin warns that resistance to change will quickly cause an organization and its members to revert to their old ways of doing things unless the
organization actively takes steps to refreeze the organization with the changes in place.
• To get an organization to remain in its new state, managers must actively manage the change process.

MANAGING CHANGE: ACTION RESEARCH

• A strategy for generating and acquiring knowledge that managers can use to define an organization's desired future state and to plan a change
program that allows the organization to reach that state
• The techniques and practices of action research, developed by experts, help managers unfreeze an organization, move it to its new, desired position,
and refreeze it so the benefits of the change are retained.
STEPS IN ACTION RESEARCH
1. Diagnosing the Organization
• Recognize that the org has a problem and they need something to change to solve it
• Just like in therapy, managers have to distinguish between symptoms and causes
• Questionnaire surveys given to employees, customers, and suppliers, and interviews with workers and managers at all levels,
can provide information that is essential to a correct diagnosis of the organization's present state (Assessment lol)
2. Determining the desired future state
• Where should the organization go and how to achieve it?
• Again, just like in therapy. This is goal setting for the therapy
• In organizations, they should decide if there needs to be some changes in:
I. Structure
II. Strategy
III. Cost reduction
IV. Increasing efficiency
3. Implementing action
• Three-Step Process:
1. Managers need to identify possible impediments to change that they will encounter as they go about making
changes-impediments at the organization, group, and individual levels.
I. Changing structures would bring about problems
2. Determine who would be responsible to make the change and control the change process
I. External change agents - consultants (Better choice to avoid politics)
II. Internal change agents - managers within the company
3. Decide which specific change strategy will most effectively unfreeze, change, and refreeze the organization
I. Top-down change - implemented by managers at a high level in the organization
II. Bottom-up change - implemented by employees at low levels in the organization and gradually rises until
it is felt throughout the organization.
i. Managers involve employees at all levels in the change process, to obtain their input and to
lessen their resistance.
ii. Action-research-oriented change usually do this especially in early process (diagnosis)
iii. Best option overall
• Poorly run organizations, those that rarely change or postpone change until it is too late, are forced to engage in top-down
restructuring simply to survive.

4. Evaluating the action

• Assessing the degree to which the changes have accomplished the desired objectives.
i. Develop measures or criteria that allow managers to assess whether the organization has reached its desired objectives.
 ii. They can compare costs before and after the change to see whether efficiency has increased
iii. They can survey workers to see whether they are more satisfied with their jobs.
iv. They can survey customers to see whether they are more satisfied with the quality of the organization's products
• Reengineering and restructuring take months or years, and total quality management, once under way, never stops
• Managers need valid and reliable measures that they can use to evaluate performance
5. Institutionalizing action research
• Make it a required habit or a norm adopted by every member of an organization.
• Because change is so difficult and requires so much thought and effort to implement, members at all levels of the organization
must be rewarded for being part of successful change efforts.
• Tangible, performance-related rewards help refreeze an organization in its new state because they help people learn and sustain
desired behaviors.

WHAT HAPPENS TO EMPLOYEES DURING ORGANIZATIONAL CHANGE?

ORGANIZATIONAL TRANSITIONS

Effects of Organizational Change

• Change is inevitable but as we have learned, not everyone is accepting of change
• If they do accept change, it does not necessarily mean that it is a pleasurable experience
• What are the psychological processes that happen to individual during organizational change?

Organizational Transition - a three-part psychological process that extends over a long period of time and cannot be planned or managed by the same rational
formulae that work with change.
• They have to let go of the old situation and (what is more difficult) of the old identity that went with it
• They have to go through the "neutral zone" between their old reality and a new reality that may still be very unclear.
• They have to make a new beginning, a beginning that is much more than the relatively simple "new start" required in a change.
o The ability to change frequently and rapidly is a requirement for survival.
o However, successful change requires many individual transitions.
o Since unmanaged transitions lead to unmanageable change, transition management must rank as one of the key executive skills that will
be needed

PHASES OF ORGANIZATIONAL TRANSITION

1. Ending Phase - the realization that one needs to leave their old identity behind or that they are already in transition
• Disengagement - there is a break, an "unplugging," a separation of the person from the subjective world he or she took for granted.
o people whose personal security is tied to relationships and feelings of belonging, to status and role, are quite undone by disengagement.
• Disidentification - lost of identity in the transition process
• Disenchantment - reality check
• Sample in Downsizing/Layoffs/restructuring
2. Neutral Zone Phase - with time there is a shift from the old task of letting go to the new task of crossing the "neutral zone" that wilderness that lies between
the past reality and the one that the leadership claims is just around the corner
• The empty zone, empty feeling, the wilderness
• With time there is a shift from the old task of letting go to the new task of crossing the "neutral zone, "that wilderness that lies between the past
reality and the one that the leadership claims is just around the corner
o Disorientation - The neutral zone is an interim period between one orientation that is no longer appropriate and another that does not yet
exist.
 People do not know their place
o Disintegration - "everything has fallen apart."
 The breakdown of the old structure and the reality it held in place creates a sort of vacuum, a "low-pressure area" in the person
and the organization, that will attract bad intra- and interpersonal weather from all sides.
3. The Vision or New Beginning
• Whatever the reason, we often fail to understand that their main difficulties with making new beginnings come not from a difficulty with beginnings
per se, but from a difficulty with endings and neutral zones.
• The new beginning, must be built upon the new orientation and identity that emerge in the neutral zone.
• The catchword for that new reality is "the vision," and an organization's vision of itself-as articulated by its leadership - is the foundation upon which
its future must be formed.

ORGANIZATIONAL DEVELOPMENT
Making Action Research more bearable, manageable

ORGANIZATIONAL DEVELOPMENT
• Organizational development (OD) - is a series of techniques and methods that managers can use in their action research program to increase the
adaptability of their organization.
• Complex educational strategy intended to change beliefs, attitudes, values, and structure of organizations so that they can better adapt to new
technologies, markets, and challenges and the dizzying rate of change itself.

ORGANIZATIONAL DEVELOPMENT TECHNIQUES TO DEAL WITH RESISTANCE TO CHANGE

1. Education and Communication - internal and external agents of change can provide organizational members with information about the change and
how it will affect them
 • This is especially true for downsizing
• Change agents can communicate this information in:
o Formal group meetings
o Memo
o One-on-one meetings
o Email or Zoom
2. Participation and Empowerment - Participation complements empowerment, increases workers' involvement in decision-making, and gives them
greater autonomy to change work procedures to improve organizational performance.
a. New non-manager managers - lost their middle-management power (given to the operating core) but gained new responsibility to
manage the bigger picture (employees, processes, customers)
3. Facilitation - Many companies employ psychologists and consultants who specialize in helping employees to handle the stress associated with change
a. During organizational restructuring, when large layoffs are common, many organizations employ consultants to help laid-off workers deal
with the stress and uncertainty of being laid off and having to find new jobs
4. Bargaining and Negotiations - By using action research, managers can anticipate the effects of change on interpersonal and intergroup relationships
which they can use in bargaining and negotiations with individuals and groups who are resistant to change
5. Coercion - The ultimate way to eliminate resistance to change is to coerce the key players into accepting change and threaten dire consequences if
they choose to resist
• Workers and managers at all levels can be threatened with reassignment, demotion, or even termination if they resist or threaten the
change process
• Just like punishment, effective in the short run, troublesome in the long run

OD TECHNIQUES TO PROMOTE CHANGE

1. Counseling, Sensitivity Training, and Process Consultation
o Counseling and sensitivity training are techniques that organizations can use to help individuals to understand the nature of their own and
other people's personalities and to use that knowledge to improve their interactions with others
 The highly-motivated boss must learn that their underlings are not lazy. They just have their own sets of priorities
o Sensitivity Training - An OD technique that consists of intense counseling in which group members, aided by a facilitator, learn how others
perceive them and may learn how to deal more sensitively with others.
2. Process Consultation - An OD technique in which a facilitator works closely with a manager on the job to help the manager improve his or her
interactions with other group members.
o The outside consultant acts as a sounding board so the manager can gain a better idea about what is going on in the group setting and can
discover the interpersonal dynamics that are determining the quality of work relationships within the group
3. Teambuilding - An OD technique in which a facilitator first observes the interactions of group members and then helps them become aware of ways to
improve their work interactions.
o The goal of team building is to improve the way group members work together to improve group processes to achieve process gains and
reduce process losses that are occurring because of shirking and freeriding.
o Team building is important when reengineering reorganizes the way people from different functions work together.
o New teams = new norms and team building can give that
4. Intergroup Training - An OD technique that uses team building to improve the work interactions of different functions or divisions
o Its goal is to improve organizational performance by focusing on a function's or division's joint activities and output.
o Organizational Mirroring - An OD technique in which a facilitator helps two interdependent groups explore their perceptions and relations
in order to improve their work interactions
5. Organizational Confrontation Meeting - An OD technique that brings together all of the managers of an organization at a meeting to confront the
issue of whether the organization is meeting its goals effectively
o Change agent will facilitate an open-forum with top management
o They will be heterogeneously grouped
o Each group presents their discussions
o Task forces are formed from the small groups to take responsibility for working on the problems identified, and each group reports back to
top management on progress that has been made.