Organization Change /

Organization Development
Professor Alexander Settles

Structure should follow strategy

Growth
Concentration
Diversification

Stability
No change

Retrenchment
Turnaround
Divestment
Liquidation

Definition of OD
Organization Development (OD) is
a planned process of change in an
organizations culture through the
utilization of behavioral science
technology, research, and theory.

Definition of OD
OD refers to a long-range effort to
improve an organizations
problem-solving capabilities and
its ability to cope with changes in
its external environment with the
help of external or internal
behavioral-scientist consultants.

Definition of OD
OD is an effort (1) planned, (2)
organization-wide, and (3)
managed from the top, to (4)
increase organization
effectiveness and health through
(5) planned interventions in the
organizations processes,
using behavioral science
knowledge.

Organization Development is...

a systemwide application and
transfer of behavioral science
knowledge to the planned
development, improvement,
and reinforcement of the
strategies, structures, and
processes that lead to
organization effectiveness.

Action Research Model

Problem Identification

Joint diagnosis

Consultation with a
behavioral scientist

Joint action planning

Data gathering &

preliminary diagnosis

Action

Feedback to
Client

Data gathering
after action

Positive Model
Initiate the
Inquiry
Inquire into Best
Practices
Discover Themes
Envision a Preferred
Future

Design and Deliver

Ways to Create the
Future

Comparison of
Planned Change Models
Similarities

Change preceded by diagnosis or

preparation
Apply behavioral science knowledge
Stress involvement of organization
members
Recognize the role of a consultant

Differences

General vs. specific activities

Centrality of consultant role
Problem-solving vs. social constructionism

General Model of Planned Change

Entering
and
Contracting

Diagnosing

Planning
Evaluating
and
and
Implementing Institutionalizing
Change
Change

Processes for Planned

Organization Change
Process Model
Planned organization change requires a systematic
process of movement from one condition to another
Unfreezing
Process by which people become aware of the need for
change

Change
Movement from the old way of doing things to a new way

Refreezing
Process of making new behaviors relatively permanent and
resistant to further change

Process of Organizational Change

Processes for Planned

Organization Change
The Continuous Change Process Model
Incorporates the forces for change, a problem-solving
process, a change agent, and transition management
Takes a top management perspective
Perceives forces and trends that indicate need for
change
Determines alternatives for change
Selects the appropriate alternative

Continuous Change Process Model of

Organization Change

Processes for Planned

Organization Change
The Continuous Change Process Model
Change agent: a person responsible for managing a change
effort

Assists management with problem recognition/definition

Can be involved in generating/evaluating potential action plans
Can be from inside or outside of the organization
Implements the change
Measures, evaluates, controls the desired results

Transition management
Process of systematically planning, organizing, and
implementing change

OD: Group and Individual

Change
Team
Team Building
Building Goals
Goals

To
Toset
setteam
team
goals
goalsand
and
priorities
priorities

To
Toanalyze
analyze
and
andallocate
allocate
the
theway
waywork
work
isisperformed
performed

To
Toexamine
examine
how
howaagroup
group
isisworking
working

To
Toexamine
examine
relationships
relationships
among
amongthose
those
doing
doingthe
the
work
work

Resistance to Change
The Resistance to Change Paradox
Organizations invite change when change offers
competitive advantage
Organizations resist change when change threatens
the organizations structure and control systems
Organizations must balance stability (permanence)
with the need to react to external shifts (change)
Resistance can warn of the need to reexamine the
need for change

Resistance to Change:
Sources of Resistance to Change
Organizational
Sources
Overdetermination
Narrow focus of change
Group inertia
Threatened expertise
Threatened power
Resource allocation
changes

Individual Sources
Habit
Security
Economic factors
Fear of the
unknown
Lack of awareness
Social factors

Managing Successful Organization

Change and Development

Keys to Managing Change in Organizations

Consider international issues
Take a holistic view
Start small
Secure top management support
Encourage participation by those affected by the change
Foster open communication
Reward those who contribute to change

Different Types of
Planned Change
Magnitude of Change
Incremental
Quantum

Degree of Organization
Over organized
Underorganized

Domestic vs. International

Settings

Diagnosing
Organizational Systems
The key to effective diagnosis is
Know what to look for at each
organizational level
Recognize how the levels affect each
other

Organization-Level
Diagnostic Model
Inputs

Design Components

Industry
Structur
e

Strategy
Structure

HR
Measurement
Systems
Systems

Culture

General
Environm
ent

Organization
Effectiveness

Technology

Outputs

Organization Environments
and Inputs
Environmental Types

General Environment
Task Environment and Industry Structure
Rate of Change and Complexity
Enacted Environment

Environmental Dimensions
Information Uncertainty
Resource Dependency

Organization Design Components

Strategy
the way an organization uses its resources
(human, economic, or technical) to gain
and sustain a competitive advantage

Technology
the way an organization converts inputs
into products and services

Structure
how attention and resources are focused
on task accomplishment

Organization Design Components

Human Resource Systems
the mechanisms for selecting, developing,
appraising, and rewarding organization
members

Measurement Systems
methods of gathering, assessing, and
disseminating information on the activities of
groups and individuals in organizations

Organization Design Components

Organization Culture
The basic assumptions, values, and norms
shared by organization members
Represents both an outcome of organization
design and a foundation or constraint to
change

Outputs
Organization Performance
e.g., profits, profitability, stock price

Productivity
e.g., cost/employee, cost/unit, error rates,
quality

Stakeholder Satisfaction
e.g., market share, employee satisfaction,
regulation compliance

Group-Level Diagnostic Model

Inputs

Design Components

Outputs

Goal Clarity
Organizat
ion
Design

Task
Group
Structure
Functioning
Group
Performance
Composition

Group
Effectiveness

Norms

Group-Level Design Components

Goal Clarity
extent to which group understands its objectives
Task Structure
the way the groups work is designed
Team Functioning
the quality of group dynamics among members
Group Composition
the characteristics of group members
Performance Norms
the unwritten rules that govern behavior

Group-Level Outputs
Product or Service Quality
Productivity
e.g., cost/member, number of decisions

Team Cohesiveness
e.g., commitment to group and
organization

Work Satisfaction

Possible Effects of Feedback

Feedback
occurs
No
Change
Energy
to deny or
fight data

Anxiety,
resistance,
no change

NO Is the energy created

by the feedback?
Energy to use
data to
identify and
solve problems

YES
What is the
direction of the
feedback?
Failure,
frustrati
on,
no
change

NO

Do structures
and
processes turn
energy
into action?
YES

Change

The Design of
Effective Interventions
Contingencies Related to the
Change Situation

Readiness for Change

Capability to Change
Cultural Context
Capabilities of the Change Agent

The Design of
Effective Interventions
Contingencies Related to the
Target of Change

Strategic Issues
Technology and structure issues
Human resources issues
Human process issues

Intervention Overview
Human Process Interventions
Technostructural Interventions
Human Resources Management
Interventions
Strategic Interventions

Human Process Interventions

Process Consultation and Team Building
Third-party Interventions (Conflict
Resolution)
Organization Confrontation Meeting
Intergroup Relationships
Large-group Interventions

Technostructural Interventions
Structural Design
Downsizing
Reengineering
Parallel Structures
High Involvement Organizations
Total Quality Management
Work Design

Human Resources Management

Interventions
Goal Setting
Performance Appraisal
Reward Systems
Coaching and Mentoring
Career Planning and Development
Management and Leadership
Managing Work Force Diversity
Employee Wellness Programs

Strategic Interventions
Transformational Change
Integrated Strategic Change
Organization Design
Culture Change

Continuous Change
Mergers and Acquisitions
Alliances and Networks

Strategic Interventions
Transorganizational Change
Self-designing Organizations
Organization Learning and Knowledge
Management
Built to Change Organizations

Change Management Activities

Motivating
Change
Creating Vision
Developing
Political Support
Managing the
Transition
Sustaining
Momentum

Effective
Change
Management

Motivating Change
Creating Readiness for Change
Sensitize the organization to pressures for change
Identify gaps between actual and desired states
Convey credible positive expectations for change

Overcoming Resistance to Change

Provide empathy and support
Communicate
Involve members in planning and decision making

Creating a Vision
Discover and Describe the Organizations
Core Ideology
What are the core values that inform members
what is important in the organization?
What is the organizations core purpose or
reason for being?

Construct the Envisioned Future

What are the bold and valued outcomes?
What is the desired future state?

Developing Political Support

Assess Change Agent Power
Identify Key Stakeholders
Influence Stakeholders

Change as a Transition State

Current
State

Transition
State

Desired
Future
State

Implementation and Evaluation

Feedback
Diagnosis
Design and
Implementat
ion
of
Intervention
Alternative
s
Intervention
s

Implementation
of
Intervention
Clarify Plan for
Intenti Next
on
Steps

Implementat
ion
Feedback
Measures of
the
Intervention
and
Immediate
Effects

Evaluati
on
Feedbac
Measure
k
of
Longterm
Effects

Institutionalization Framework

Organization
Characteristics

Intervention
Characteristics

Institutionalizati
on
Processes

Indicators of
Institutionaliz
ation

Organization Characteristics
Congruence
Extent to which an intervention supports or
aligns with the current environment, strategic
orientation, or other changes taking place

Stability of Environment and Technology

Unionization

Intervention Characteristics

Goal Specificity
Programmability
Level of Change Target
Internal Support
Sponsor

Institutionalization Processes

Socialization
Commitment
Reward Allocation
Diffusion
Sensing and Calibration

Indicators of Institutionalization
Knowledge
Performance
Preferences
Normative Consensus
Value Consensus

Contingencies Influencing
Structural Design
Environment
Organization
Size

Structural
Design

Technology

Worldwide
Operations

Organization
Goals

The Downsizing Process

Clarify the organizations strategy
Assess downsizing options and make
relevant choices
Implement the changes
Address the needs of survivors and those
who leave
Follow through with growth plans

Downsizing Tactics

The Reengineering Process

Prepare the organization
Specify the organizations strategy and
objectives
Fundamentally rethink the way work gets
done
Identify and analyze core business processes
Define performance objectives
Design new processes

Restructure the organization around the new

business processes.

Characteristics of
Reengineered Organizations
Work units change from functional departments to process
teams
Jobs change from simple tasks to multidimensional work
Peoples roles change from controlled to empowered
The focus of performance measures and compensation shifts
from activities to results.
Organization structures change from hierarchical to flat
Managers change from supervisors to coaches; executives
change from scorekeepers to leaders

Characteristics of
Transformational Change
Triggered by Environmental and Internal
Disruptions
Aimed at Competitive Advantage
Systemic and Revolutionary Change
Demands a New Organizing Paradigm
Driven by Senior Executives and Line
Management
Involves Significant Learning

Integrated Strategic Change

(ISC)
Integrated Strategic Change
is a deliberate coordinated process that
leads to gradually or radically systemic
realignments between the environment
and a firms strategic orientation resulting
in improvement in performance and
effectiveness.

The Integrated Strategic Change Process

Strategy
S1

Organization
O1
Strategic Analysis

Strategic
Change
Plan

Strategy
S2

Organization
Implementation
O2
Strategic Choice

ISC Application Stages

Strategic Analysis
Assess the readiness for change and top
managements ability to carry out change
Diagnose the Current Strategic Orientation

Strategic Choice
Top management determines the content of the
strategic change

Designing the Strategic Change Plan

Development of a comprehensive agenda to achieve
the change

Implementing the Strategic Change Plan

Organizational Design
Conceptual Framework

Strategy
Structure
Work Design
Human Resources Practices
Management and Information Systems

Key Point
Fit, Congruence, Alignment among
Organizational Elements

Organization Design Model

Organization Strategy
Strategic Fit

Organization Design
Management
and
Information
Systems

Structure
Design Fit

Human Resource
Practices

Work
Design

Organization Designs

Organization Design
Application Stages
Clarifying the Design Focus
Create the overall framework, begins with examining strategy
and objectives and determining organization capabilities needed

Designing the Organization

Results in an overall design for the organization, detailed designs
for the components, and preliminary plans for how to implement

Implementing the Design

Puts the new structures, practices and systems into place, draws
heavily leading and managing change methods

The Concept of Organization Culture

Artifacts
Norms
Values

Basic
Assumptions

Diagnosing Organization Culture

Behavioral Approach
Pattern of behaviors (artifacts) most related to
performance

Competing Values Approach

Pattern of values emphasis characterizing the
organization

Deep Assumptions Approach

Pattern of unexamined assumptions that solve
internal integration and external adaptation
problems well enough to be taught to others

Flexibility & Discretion

Clan

Hierarchy

Adhocracy

Mark
et

Stability & Control

External Focus & Diferentiation

Internal Focus & Integration

Competing Values Approach

Culture Change Application Stages

Establish a clear strategic vision

Get top-management commitment
Model culture change at the highest level
Modify the organization to support change
Select and socialize newcomers; downsize
deviants
Develop ethical and legal sensitivity

Self-Designing Organizations
Systemic change process altering most
features of the organization
Process is ongoing, never finished
continuous improvement and change
Learning as You Goon-site innovation
Need support of multiple stakeholders
All levels of the organization adopt new
strategies and change behaviors

Organization Learning &

Knowledge Management
Organization Learning interventions
emphasize the structures and social
processes that enable employees and
teams to learn and share knowledge
Knowledge Learning focuses on the tools
and techniques that enable organizations
to collect, organize, and translate
information into useful knowledge

Organization Learning:
An Integrative Framework
Organization Learning
Knowledge Management
Competiti
ve
Strategy
Organizatio
n
Characteris
Structure
tics
Information
Systems
HR Practices
Culture
Leadership

Organization
Learning
Processes
Discovery
Invention
Production
Generalization

Organizat
ion
Knowledg
Tacit
e
Explicit

Organizat
ion
Performa
nce

Characteristics of a
Learning Organization
Structures emphasize teamwork, information
sharing, empowerment
Information systems facilitate rapid acquisition
and sharing of complex information to manage
knowledge for competitive advantage
Human resources reinforce new skills and
knowledge
Organization culture encourages innovation
Leaders model openness and freedom to try new
things while communicating a compelling vision

Organization Learning Processes

Single loop learning

Most common form of learning

Aimed at adapting and improving the status quo

Double loop learning

Generative learning
Questions and changes existing assumptions
and conditions

Deuterolearning

Learning how to learn

Learning how to improve single and double loop
learning

Knowledge and Performance

Organization knowledge must be relevant
and applied effectively to the competitive
strategy
Link organization learning processes to
organization performance
Growing emphasis on the value of
intellectual assets and services

Knowledge Management
Interventions
Generating Knowledge

Identify knowledge for competitive strategy

Develop ways to acquire or create that
knowledge

Organizing Knowledge

Put knowledge into a usable form

Codification and Personalization

Distributing Knowledge

Making knowledge easy to access, use &

reuse

Built-To-Change Organizations
Organizations are designed with the
ability to change constantly to create
the best sustainable source of
competitive advantage.
Organizations operate in complex
and rapidly changing environments

Built to Change
Application Stages

Create a Change-Friendly Identity

Pursue Proximity
Build an Orchestration Capability
Establish Strategic Adjustment a Normal
Condition
Seek Virtuous Spirals

Application Stages for

Transorganizational Development
Identificatio
n

Who should
belong to the
transorganizatio
nal
System (TS)?
Relevant skills,
knowledge,
and resources
Key
stakeholders

Conventio
n
Should a
TS
be
created?
Costs
and
benefits
Task
perception
s

Organizatio
n
How to organize
for task
performance?
Communication
Leadership
Policies and
procedures

Evaluatio
n
How is the TS
performing?
Performance
outcomes
Quality of
interaction
Member
satisfaction

Mergers and Acquisitions

Merger - the integration of two previously
independent organizations into a completely
new organization
Acquisition - the purchase of one organization
by another for integration into the acquiring
organization.
Distinct from transorganizational systems,
such as alliances and networks, because at
least one of the organizations ceases to exist.

Merger and Acquisition Rationale

Diversification
Vertical integration
Gaining access to global markets,
technology, or other resources
Achieving operational efficiencies,
improved innovation, or resource
sharing

Merger and Acquisition

Application Stages
Pre-combination Phase
The organization must identify a candidate
organization, work with it to gather information
about each other, and plan the implementation
and integration activities

Legal Combination Phase

The two organizations settle on the terms of the
deal, gain approval from regulatory agencies and
shareholders, and file appropriate legal
documents

Operational Combination Phase

Implementing the operational, technical and
cultural integration activities

Strategic Alliances
When two organizations formally agree to
pursue a set of goals
There is sharing of resources, intellectual
property, people, capital, technology,
capabilities or physical assets
Common alliances are licensing
agreements, franchises, long-term
contracts, and joint ventures

Alliance Intervention
Application Stages
Alliance Strategy Formulation
Clarify the business strategy and why an alliance is
needed

Partner Selection
Leverage similarities and differences to create
competitive advantage

Alliance Structuring and Start-up

Build and leverage trust in the relationship

Alliance Operation and Adjustment

Network Interventions
Involves three or more companies joined
together for a common purpose
Each organization in the network has goals
related to the network as well as those
focused on self-interest
Characterized by two types of change:
creating the initial network
(transorganizational development) and
managing change within an established
network

Cultural Context for Change

Context Orientation
Power Distance
Uncertainty Avoidance
Achievement Orientation
Individualism

Context
The extent to which meaning in
communication is carried in the words
Organizations in high context cultures
tend to value ceremony and ritual, the
structure is less formal, there are fewer
written policies, and people are often late
for appointments

Power Distance
Extent to which members of a society
accept that status and power are
distributed unequally in an organization
Organizations in these cultures tend to be
autocratic, possess clear status
differences, and have little employee
participation

Uncertainty Avoidance
The extent to which members of a
society tolerate the unfamiliar and
unpredictable
Organizations in these cultures tend to
value experts, prefer clear roles, avoid
conflict, and resist change

Achievement Orientation
The extent to which people in a society
value assertiveness and the acquisition of
material goods
Organizations in these cultures tend to
associate achievement with wealth and
recognition, value decisiveness, and
gender roles are clearly differentiated.

Individualism
The extent to which people in a society
believe they should be responsible for
themselves and their immediate family
Organizations in these cultures tend to
encourage personal initiative, value time
and autonomy, accept competition, and
autonomy is highly valued

International Strategic
Orientation
Characteristics of the International Design
Sell existing products/services to nondomestic
markets
Goals of increased foreign revenues

Implementing the International Orientation

OD facilitates extending the existing strategy
into the new market
Cross-cultural training and strategic planning

The Global Strategic Orientation

Characteristics of the Global Design
Centralized with a global product structure
Goals of efficiency through volume

Implementing the Global Orientation

OD supports career planning, role clarification,
employee involvement, conflict management and
senior management team building to help achieve
improved operational efficiency
OD helps the organization transition to global
integration from local responsiveness

The Multinational
Strategic Orientation
Characteristics of the Multinational Design
Operate a decentralized organization
Goals of local responsiveness through
specialization
Implementing the Multinational Orientation
OD helps with intergroup relations, local
management selection and team building
OD facilitates management development,
reward systems, and strategic alliances

Transnational Strategic
Orientation
Characteristics of the Transnational Design
Tailored products
Goals of learning and responsiveness through
integrations

Implementing the Transnational Orientation

Extensive selection and rotation
Acquire cultural knowledge and develop intergroup
relations
Build corporate vision

Global Social Change Organizations

Their primary task is a commitment to serve as an agent of

change in the creation of environmentally and socially
sustainable world futures

They have discovered and mobilized innovative socialorganizational architectures

They hold values of empowerment in the accomplishment of

their global change mission

They are globally-locally linked in structure, membership, or

partnership and thereby exist as entities beyond the nationstate

They are multi-organizational and often cross-sectoral

Application Stages of
Global Social Change Organizations
Build the local organization
Using values to create the vision
Recognizing that internal conflict is often a function of external
conditions
Understanding the problems of success

Create horizontal linkages

Build a network of local organizations with similar views and
objectives

Develop vertical linkages

Create channels of communication and influence upward to
governmental and policy-level, decision-making processes