The Challenge of Organizational Renewal and Change

Aguipo | Jarabelo | Orteza July 4, 2013

Objectives
Recognize the factors contributing to accelerating rate of change Identify the ways an organization uses renewing processes to adapt to change Determine the individual and group methods of coping with change

The 5 Stages of Organizational Development

The Challenges of Change

Market Product Competition Downsizing Reengineering Flattening structures Globalization Technological Upgrade

Renewal
Organizational renewal requires that top managers make adaptive changes to the environment. Manager must analyze the organization, its departmental system interrelationships, and the possible effects on the internal environment.

Constant Change
Organizations exist in constant changing environment and therefore must have the capacity to adopt. Managers must do more than react; they must be able to anticipate the changing patterns of people, markets, product, and technology

The 6 Areas of Organizational Development

1. 2. 3. 4. 5. 6. Organizational Renewal The Systems Approach The Sociotechnical System Future Shock Organizational Transformation Organizational Development

Organizational Renewal: Adapting to Change

Organizational renewal may be defined as an ongoing process of building innovation and adaptation into the organization.
Entropy the principle of physics stating that everything that is organized will break down unless it is maintained.

4 Ways for Organization to Adapt to Change

Sluggish Thermostat Management. Satisficing Management. Reactive Management. Renewing/Transformation Management.
Environment vs Adaptation
Where a hyper-turbulent environment is characterized by rapid changing product lines and increasing and changing set of competitors, rapid and continual technological innovation and rapid market growth.

A Model of Adaptive Orientation

Sluggish-Thermostat Management
Stable environment, low adaptation. Management style is based on low risk. Organizations using this style:
Have very stable goals. Highly centralized structure

Satisficing Management
Stable environment, high adaptation. Adequate and average. Planning and decision-making concentrated at top.

Reactive Management
Hyperturbulent environment, low adaptation. Reacting after conditions change. Short-term, crisis type of adaptation. Usually involves:
Replacing key people. Hasty reorganization.

Renewing / Transformation Management

Hyperturbulent environment, high adaptation. Deal with future conditions before they occur. Faster at developing new ideas. More participative.

The Systems Approach

The system approach to managing change views the organization as a unified system composed of interrelated units. Managers look at the organization as part of a larger external environment where it breaks the company into key processes and it creates teams from different departments to run them.

Basic Qualities of Systems

It is designed to accomplish objectives. Elements have established arrangement. Interrelationships exist among elements. Ingredients of process more vital than elements. Organization more important than elements.

Organization as an Open System

In continual interaction with environment. Continually receives feedback from environment.

Organization as an Open System

The Sociotechnical System

Where an organization is viewed as an open system which coordinates human and technical activities.

The Sociotechnical System uses the following approaches:

Organized around process not tasks. Flatten the hierarchy. Use of teams to manage everything. Let customers drive performance. Reward team performance.

The Sociotechnical System

It consists of:
Goals and Values Basic mission and vision of the organization

The Technical Subsystem

Activities; operations; techniques and equipment Formal design; policies; procedures; organizational chart; division of work; patterns of authorities

The Structural Subsystem

The Psychosocial Subsystem (Culture)

The Managerial Subsystem

Social relationship; behavioral patters of members; norms; roles; communications

Directing; organizing and coordinating

High Performance Systems

Occur by design, not by chance. Key variables are:
Business situation. Strategy. Design elements. Culture. Results.

The Sociotechnical System

Future Shock of Change

Most people are utterly unprepared to cope with accelerated rate of change. Future shock is a time phenomenon, a product of a greatly accelerated rate of change in society Too much change in too short a time affects managers and organizations as well When change occurs rapidly, the capacity of management to react is strained, creating the danger of future shock

Organization Transformation and Development

OT and OD are both major approaches to managing change in organization

Organizational Transformation
Organization transformation may be defined as the action of changing an organizations form, shape, or appearance, or changing the organizations energy from one to another.

Organizational Development
OD, or the planned organizational change, is a deliberate attempt to modify the functioning of the total organization or one of its major parts in order to bring about improved effectiveness

ORGANIZATION TRANSFORMATION
OT changes organizations form or appearance. OT is a revolution. Transforms framework of organization. Unplanned changes in response to pressures. Change occurs in short time frame.

ORGANIZATIONAL DEVELOPMENT
OD like an evolution. Planned change on large scale. Longer time frame than OT. Gradual implementation. Modifies total organization or major parts.

What OD Focuses On
1. Individual effectiveness. 2. Team effectiveness. 3. Organization effectiveness.

Individual Effectiveness
Organization is made of individual members, and each members has unique values, beliefs and motivations.

The goals are to improve the following:

Managerial skills. Technical skills. Interpersonal competence.

Team Effectiveness
Change efforts may also focus on the fundamental unit of an organization, team or work group, as means for improving the organizations effectiveness. Emphasis on: Improving problem-solving. Working through conflicts. Team effectiveness.

Team Effectiveness
Two separate dimensions of teams are
Task activitieswhat the team does. Team processhow the team works.

Process observations examine:

The way the group functions. Leadership, decision making, communication.

Team Effectiveness
OD practitioners need to develop skills and observations to learn to be a participant-observer, that is to actively participate and at the same time be aware of group process.

Organizational Effectiveness
The focus is on total organization system. Improve effectiveness by changes in:
Structure. Technology. Management.

SUMMARY
Organizational renewal can occur as an ongoing, continuous process or as episodic change. Organizations need continuous renewal because it adds a level of stability in the midst of internal and external triggers of change.

Reference:

Experiential Approach to Organizational Development 8/E

by Donald Brown

Feel free to ask questions!

Aguipo, James Jarabelo, Kristelle Orteza, Aldrin
The Challenge of Organizational Renewal and Change
July 4, 2013