CHAPTER 5
CHAPTER 5
The term Change refers to any alternation which occurs in the overall work environment of
an organisation.
Keith Davis
Meaning of Change
A change in any one part of organisation effects the whole organization. For example any
change in production department will effect the finance department, marketing department,
personal department and other departments.
It effects all the parts in the organisation but at varying degree of significance and at
varying speed.
Change is inevitable.
Importance of Change
Organizations must adapt to various internal and external forces that drive change. Below are
key forces along with relevant examples:
Example:
Example:
a) Apple Under Tim Cook: After Steve Jobs, Tim Cook’s leadership focused on
supply chain optimization, employee inclusivity, and environmental
responsibility.
b) Tata Group Leadership Changes: The transition from Ratan Tata to Cyrus
Mistry and later to N. Chandrasekaran led to strategic shifts in business
operations.
3. Market Conditions: Competitive pressures and changing consumer preferences force
businesses to adjust.
a) Example:
a. Coca-Cola vs. Pepsi: Coca-Cola introduced healthier options like Diet Coke
and Coca-Cola Zero to adapt to changing consumer preferences toward low-
sugar beverages.
b. Nokia’s Downfall: Nokia failed to adapt to the rise of smartphones while
competitors like Apple and Samsung embraced touchscreen technology.
Example:
5. Social Changes: Changing cultural values, demographics, and social norms influence
business operations.
Example:
Example:
Example:
a) Reliance Jio’s Market Disruption: Entered the telecom market with low-cost
4G services, forcing competitors like Airtel and Vodafone to revise pricing
strategies.
b) Tesla’s Electric Cars: Capitalized on the demand for sustainable vehicles and
pioneered the shift to electric mobility.
Example:
Example:
10. Globalization: Companies must adapt to international competition, trade policies, and
diverse consumer expectations.
Example:
Levels of Change
Individual Level Change: For example, change in job assignment, physical move to different
location, change in attitude and personality of person. Significant changes at individual level
have its repercussions on the group to which individual belongs and further to the
organisation.
Group -Level Change: For example, change in work flow, work design, communication
pattern. Group has powerful influence on Individual. Informal group and formal group may
resist for change. Effective implementation of change at the group level can overcome
resistance at the individual level.
Organisation-Level Change: For example Change in goals and strategies, entry to new
business, change in management, Joint venture, merger. These big changes in the
organisation are required to adapt to environmental changes.
Types of Change
Reactive or Proactive -Change may be reactive or proactive. When change is brought about
due to pressure of external forces it is called reactive change. Proactive change is initiated by
the management on its own to increase organizational effectiveness. For example if any
technology of production becomes obsolete and organisation shifts to new technology as a
consequence, it is r,eactive change but if organisation introduces new technology of
production by its own to improve efficiency, it is proactive change.
Structural Change- change in whole structure and in the pattern of relationship among
various positions.
1. Recognizing the Need for Change: Change is often driven by external (market trends,
competition, technological advancements) and internal factors (leadership shifts, declining
performance).
Example: Nokia recognized the need for change when smartphone technology overtook its
feature phones, though its response was delayed.
a) Performance metrics and feedback loops are used to assess the success of the change.
b) Adjustments are made based on real-time results.
6. Institutionalizing the Change: Changes must be reinforced through policies, cultural shifts,
and leadership alignment.
a) This step is about breaking the existing habits, mindsets, and structures that
people are used to.
b) The goal is to make people realize why change is necessary and create an
environment where they are ready to accept it.
How to do it?
Example:
Netflix’s transition from DVD rentals to online streaming
Earlier, Netflix used to rent DVDs by mail, but with increasing internet speeds,
online streaming became the future. To "unfreeze" its old business model, Netflix
gradually reduced its focus on DVDs and promoted streaming services through
advertisements and customer-friendly subscriptions.
Step 2: Changing (Moving) – Implementing the Change
a) This is the stage where the actual change happens—new technologies, policies, or
strategies are introduced.
b) Employees learn new ways of working, and the company ensures proper support
and training.
How to do it?
How to do it?
a) Introduce rewards and policies to encourage employees to stick to the new system.
b) Keep reinforcing the benefits of change through regular communication and
success stories.
c) Create a supportive work culture so that the new change feels natural.
Before Steve Jobs, Apple struggled with product identity and innovation. Jobs
introduced a design-first approach that focused on simplicity, user experience, and
premium quality. Over time, this "refreezing" happened as Apple made innovation,
design excellence, and customer experience its core values—resulting in iPhones,
iPads, and MacBooks becoming global hits.
Why is this model important?
a) Change can be stressful and difficult, but a structured approach like Lewin’s model
makes it easier to manage.
b) It ensures that organizations prepare people for change, implement it effectively,
and make sure it lasts.
c) Companies like Google, IBM, Tesla, and Reliance have used change management
strategies to stay ahead in business.
Resistance to Change
Resistance to Change: Egos are fragile, and change can feel threatening.
Example: In a company implementing a new performance management system, employees
who are comfortable with the old system may resist the change due to fear of being judged or
evaluated differently.
Study Findings: Employees often cling to data that supports their current state, avoiding the
need to change.
Example: In an organization transitioning to remote work, employees might ignore research
showing productivity increases with remote work, instead focusing on data suggesting that
face-to-face interactions are crucial.
Negative Reactions: Employees coping with negative feelings about change may disengage,
increase sick time, or quit, draining the organization’s energy.
Example: Employees in a company undergoing a merger might increase absenteeism or leave
the company due to uncertainty about their roles and the company's future direction.
Positive Resistance: Resistance can be valuable if it sparks open discussion and debate,
leading to engagement and opportunities for change agents to explain or adjust changes.
Example: In a company rolling out a new software system, employees voice concerns during
meetings, prompting a discussion that helps the IT department make adjustments, leading to a
more user-friendly system.
Managing Resistance: Resistance can be overt (e.g., complaints, strikes) or subtle (e.g.,
decreased motivation, absenteeism). Implicit and deferred resistance is harder to manage.
Example: Overt resistance might be a union strike in response to proposed wage cuts, while
subtle resistance could include employees showing less enthusiasm for work, leading to
decreased team performance over time.
Deferred Resistance: Resistance may not appear immediately and can surface later,
sometimes triggered by minor changes that accumulate over time.
Example: A company constantly reorganizing departments might not see immediate
pushback, but after months of uncertainty, employees may start leaving the organization or
reduce their work quality due to accumulated frustration.
Caution with Change: Not all change is beneficial; speed may result in poor decisions, and
rapid transformational changes can be risky and costly.
Example: A company rushes to implement a new customer relationship management (CRM)
system without adequate testing, resulting in technical glitches and frustration among the
sales team, which harms customer relationships and sales performance.
Example: In a company where employees have been using a specific software for
years, a sudden switch to a new software system can cause resistance. Employees are
used to the old system’s layout and shortcuts, and the change feels like a disruption to
their well-established work habits.
2. Security: Individuals with a high need for security are more likely to resist change
because it creates uncertainty, making them feel unsafe or threatened.
3. Economic Factors: Changes in job tasks or work routines can provoke economic
fears, especially when pay is tied to productivity or performance. Employees may fear
they won’t perform new tasks to the same standard, which could affect their earnings.
Example: If an organization introduces a new performance metric or restructuring
that reduces commissions for sales staff, employees may resist the change out of
concern for their income and career progression.
4. Fear of the Unknown: Change often brings ambiguity and uncertainty, which many
people find uncomfortable. This fear of the unknown can lead to resistance.
Example: A company that introduces new technology for its marketing department
might face resistance from other departments like sales and IT, whose operations are
impacted by the change but weren't consulted or prepared for it, leading to
inefficiencies and lack of cooperation.
3. Group Inertia: Even if individual employees want to change, group norms and
dynamics within teams or departments can act as barriers to change.
Eight tactics to overcome resistance to change, with relevant examples from organizational
behavior:
Example: A company undergoing a merger can hold town hall meetings to explain
the benefits of the merger, reassuring employees about job security and addressing
concerns directly.
3. Building Support and Commitment: Providing emotional support and new skills
training helps employees adjust and commit to change, especially in times of
uncertainty.
5. Implementing Changes Fairly: Employees are more accepting of change when they
perceive it as fair and justified.
Example: If a company needs to reduce staff to cut costs, implementing the layoffs
transparently, with clear criteria for selection and a fair process, reduces resentment
and resistance.
Example: If employees resist a pay cut, management might "co-opt" a respected team
leader by offering them a special role in the change process, thus gaining their
endorsement for the change. However, these tactics can backfire if employees feel
manipulated.
7. Selecting People Who Accept Change: Hiring individuals who are adaptable and
open to change can ease the transition.
These tactics can help manage resistance, but their effectiveness varies depending on the
organization's culture, the scale of the change, and the personalities involved.
Organisational Culture
1. Organizational Culture refers to a system of shared values, beliefs, and norms held by
members of an organization.
2. It helps in distinguishing one organization from another.
3. Culture affects how members behave, make decisions, and interact within the
organization.
Seven Primary Characteristics of Organizational Culture
2. Attention to Detail
3. Outcome Orientation
4. People Orientation
5. Team Orientation
6. Aggressiveness
7. Stability
Researchers have identified four major types of culture, each with distinct characteristics:
1. Clan Culture
2. Adhocracy Culture
3. Hierarchy Culture
4. Market Culture
6. Decentralized Organizations
a. While they benefit from strong culture, it’s harder to establish due to:
i. Reduced formal authority
ii. Shared decision-making
b. Culture must act as the unifying force.
7. Virtual Organizations
Individual-Organization Fit
Organizational culture doesn't develop overnight. It evolves over time, shaped by a range of
internal and external factors. These factors are known as determinants of organizational
culture. Understanding them helps explain why organizations behave differently, even
within the same industry.
1. Founder's Philosophy and Vision: The beliefs, values, and goals of an organization’s
founder serve as the foundation of its culture. Founders often create the core purpose and tone
of the organization, influencing how it will operate and grow.
Example:
a) Steve Jobs (Apple) – Focused on innovation, simplicity, and design, which shaped
Apple’s creative and product-centric culture.
b) Dhirubhai Ambani (Reliance) – Cultivated a risk-taking and opportunity-driven
culture rooted in entrepreneurial zeal.
2. Leadership Style and Behaviour: The attitude, decisions, and example set by top leaders
shape the organizational climate. Employees tend to model their behavior on how leaders
behave, especially in ethical matters, decision-making, or communication.
Example:
a) Ratan Tata encouraged ethical conduct and social responsibility at the Tata Group.
b) Satya Nadella (Microsoft) brought a cultural shift focusing on empathy,
collaboration, and continuous learning.
Example:
a) Startups like Swiggy or Zomato – Often have flat structures that promote open
communication and fast decisions.
b) Public Sector Units (PSUs) – Typically follow a hierarchical structure emphasizing
discipline and control.
4. Rules, Policies, and Procedures: Formal systems such as policies, standard operating
procedures (SOPs), and rules influence what behaviors are accepted and rewarded.
Example:
a) Google encourages employee flexibility through its policy of "20% time" for personal
projects.
b) Banks and Insurance Firms have strict rules that create a culture of compliance and
caution.
Example:
a) Infosys gives performance bonuses and recognition for innovation and efficiency.
b) Sales firms like Amway reward top performers through contests, bonuses, and trips,
reinforcing a competitive culture.
6. Work Environment and Physical Layout: The design of the office space and the overall
work environment can reflect and reinforce cultural elements like openness, collaboration, or
formality.
Example:
a) Google’s open and colorful office design promotes creativity and informality.
b) Traditional law firms often have closed cabins, signaling authority and formality.
Example:
a) Tata Group has a legacy of over 150 years promoting service, trust, and nation-
building.
b) HCL Technologies celebrates stories where employees challenged norms to benefit
clients, fostering a "Employee First" culture.
8. Nature of Business and Technology Used: The type of industry or business (e.g.,
manufacturing vs. IT) and the technology used often dictate the pace, style, and values of the
organization.
Example:
a) BPOs and IT companies require adaptability and quick learning due to fast-changing
technologies.
b) Construction companies might emphasize discipline, safety, and time-bound
execution.
Example:
a) The liberalization of the Indian economy in 1991 forced many PSUs and Indian
companies to adopt competitive and customer-oriented cultures.
b) COVID-19 pandemic shifted organizations toward remote work, flexibility, and
digital collaboration.
10. Employee Composition (Demographics and Diversity): The age, gender, cultural
background, and education level of employees also shape the workplace culture, influencing
values like inclusivity, creativity, or tradition.
Example:
a) Startups with young workforces often foster informal, fast-paced, and innovation-
driven cultures.
b) Multinational firms with diverse employees focus on inclusion and global thinking.
Founder's Philosophy Sets initial tone and values Steve Jobs at Apple
1. Shared Perception
3. Existence of Subcultures
Example: In Tata Group, while the dominant culture focuses on ethics and social
responsibility, a sales team in Tata Motors may develop a subculture that
emphasizes target achievement and aggressiveness, reflecting their field challenges.
4. Nature of Subcultures : Subcultures align with the dominant culture but include
additional values specific to their group or function.
Organizational socialization is the process by which new employees acquire the knowledge,
behaviors, attitudes, and skills needed to become effective members of the organization.
What it is: Repeated tales of organizational heroes, challenges overcome, and major
achievements.
Why it matters: Stories communicate underlying values, norms, and what is admired or
discouraged in the organization.
Example: At Apple, stories of Steve Jobs’s obsession with product perfection are
commonly shared, reinforcing a culture of innovation and excellence.
What it is: Repetitive activities that reinforce key values of the organization (e.g., award
functions, annual days, onboarding programs).
Why it matters: These rituals create a sense of identity and celebrate desired behaviors.
Example: Infosys conducts an elaborate training ceremony at its Mysore campus for new
hires, emphasizing learning and discipline from day one.
What it is: Visual elements of an organization that carry meaning (office layout, dress
code, logos, mission statements, etc.).
Why it matters: They reflect the priorities and style of the organization.
What it is: Unique terms, acronyms, slogans, or language specific to the company.
Example: At Amazon, phrases like “customer obsession” and “Day 1” are frequently
used to remind employees of core values.
What it is: Senior leaders and colleagues act as role models by living out the culture in
everyday actions.
Why it matters: Employees observe and imitate behaviors that are rewarded or admired.
What it is: Programs designed to educate employees about the company’s mission,
history, values, and expected behaviors.
Why it matters: It provides a structured way to learn about the organizational culture.
Example: Wipro’s induction program not only focuses on job roles but also discusses
corporate values and client-centricity.
7. Reward Systems
Why it matters: It sends a clear message about what the organization values.
Example: At Google, employees are rewarded for innovation, encouraging them to take
risks and think differently.
Why it matters: These shape employee behavior and perception of power and freedom.
Reward Systems Signal what is appreciated and valued Innovation rewards at Google
• Most employees have same opinion about organisation’s mission and values;
• The more members who accept core values and the greater their commitment, the stronger
will be the culture, for example Tata steel has strong organisational culture than their
competitors because its employees knows what is expected of them in ethical situation and
this develops their behaviour; and
• A strong culture faces low absenteeism because in such organisation there is cohesiveness,
loyalty and organisational commitment with agreed and unanimous purposes. On the other
hand in weak cultures opinions of employees and management vary widely and
organisational values are not widely shared.
1. Encourages Risk-Taking and Innovation: Employees with high risk tolerance and
moderate aggressiveness are more likely to act ethically when culture supports it.
2. Focus on Both Methods and Results: Ethical cultures value not just outcomes, but
also the ways in which outcomes are achieved.
Example: Tata Group integrates ethical conduct with CSR, benefiting multiple
stakeholders.
Creating an ethical culture is not just about setting rules—it's about influencing values,
guiding behavior, and setting the tone from the top. Here’s how managers can actively
shape an ethical culture:
a) Managers set the tone for ethical behavior through their own actions.
b) Employees closely observe their leaders—ethical leadership creates a ripple effect
across the organization.
c) Managers must consistently demonstrate:
a. Integrity
b. Fairness
c. Accountability
Example: Ratan Tata, by always prioritizing ethics over profit, established Tata Group’s
reputation for high integrity and social responsibility.
Example: IBM’s Global Code of Conduct outlines the company's values and provides
guidance on ethical decision-making.
b) Can include:
Example: Wipro offers structured ethics training to all its employees to reinforce values like
honesty and customer-centricity.
Promotions
Incentives
Recognition programs
Example: Johnson & Johnson evaluates managers on how they achieve targets—not just the
results—ensuring values are upheld.
b) Tools include:
Whistleblower hotlines
Ethical ombudsmen
Anonymous reporting systems
Example: Infosys has a confidential whistleblower policy that encourages ethical reporting
and protects informants.
a) Ethical values must originate from top leadership and flow down through the
hierarchy.
b) If top management is ethical:
Supervisors adopt ethical practices
Line employees follow suit
Example: Unilever’s leadership has committed to sustainability and ethics, creating a global
culture of responsibility.
Communicate Expectations Provide ethical codes and clear values Reduces confusion
Provide Protective
Create safe systems for reporting Encourages integrity
Mechanisms