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Course : MGMT8046 – Project and Change

Management

Why Organizations Change and


What Changes in Organizations

Session 7
Acknowledgement

These slides have been adapted from:


1.Nadler and Tushman, 1995
2. Dean Anderson& L.A. Anderson,“Beyond Change Management”
3.Leana and Barry, 2000
4. Ian Palmer; Richard Dunford; Gib Akin . (2009) ”Managing
Organizational Change: A Multiple Perspectives Approach” 2
edition, McGraw-Hill/Irwin;Chapter3and4
Learning Objectives

Explain why organizations change and


what is change management
Contents

 Why Need Change Management


 Pressures for Change: Environmental and
Organizational
 Drivers of Change
 Type of Changes: Incremental and Discontinuous
 Downsizing, Technological Change, Mergers and
Acquisitions
The Impacts to Us
 Project related work become more critical to
organizations’ success.
 Projects are increasingly complex and
interconnected in unexpected ways.
 Tolerance for failure is near to none as the cost of
poor project implementation can easily run into
millions of dollars
 Speed to market can yield a short term advantage to
organizations that implement projects faster

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Project Management and
Change Management
 The emphasis of most project management
activities is more on technical issues, with
significant lack of attention to the human aspects.
 These human elements are addressed by
another management disciplines, known as
“Change Management”.

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Change Management Defined
 The application of behavioral science
to the decision making, planning,
execution, and evaluation phases of
the change process, all focused on
the management of unnecessary
disruption.

 Change Management does not focus on what is to be


changed, but on how the solution is to be implemented.
 Its purpose is to substantially increase the likelihood of
successful project implementation by addressing the human
aspects of the change.
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Change Management Defined:

Methodology + Process + Discipline = Strategy + ROI

Change management can be defined as a


methodology, a process, and a discipline for
facilitating and accelerating business initiatives by
aligning resources in a timely manner to efficiently
execute a chosen strategy and accelerate ROI.

8
Why managers participate in change
Perspectives of organizational change:
 Management as control  economic perspective.
 Manager conduct change to produce better organizational
performance, better quarterly results, hence better company share
prices that will satisfy the shareholders
 Firm survival depends on shareholders; failure to do this, will lead
them to move their capital to other companies or replace the senior
management
 Management as shaping  organizational learning perspective
 Manager conduct change to build capacity in response to external
changes
 Organizations and human systems are complex and evolving
 Need to increase organization’s adaptive capacity
Pressures for Change
Environmental Organizational

1. Fashion Pressures 1. Growth Pressures


2. Mandated Pressures 2. Integration and
Collaboration Pressures
3. Geopolitical Pressures
3. Identity Pressures
4. Market Decline Pressures
4. New Broom Pressures
5. Hyper competition Pressures
5. Power and Political
6. Reputation and Credibility
Pressures
Pressures
Organizational Pressures for Change
1. Growth Pressures
 Business organizations grow from small to medium and
large at a different speed
2. Integration and Collaboration Pressures
 Change made to better integrate the organization and
create economic of scale
3. Identity Pressures
4. New Broom Pressures
 When new CEO (or manager) change the old ways
5. Power and Political Pressures
 Internal political pressures associated with changes of
board and CEO levels
Forces for Change vs. Forces for Stability
Forces for Change
Forces for Stability
 Adaptability (of organizations to
 Institutionalism (of current practices due to
their environment) solidity of past practices and power
 Cost containment (making HR as structures)
variable rather than fixed cost)  Transaction cost (stability in employment
 Impatient capital market enables firms to invest in employee
development)
(demanding more immediate
investment returns)  Sustained advantage (stable organizational
relationship not easily imitated or substituted)
 Control (greater control and power
 Organizational social capital (trust among
through managerially imposed
co-workers as org asset)
performance targets)
 Predictability & uncertainty reduction (the
 Competitive advantage need that may inhibit change)
(responsive to changing market)

Source: Derived from Leana and Barry, 2000


social speed of delivery
business
customization
& economics capability
environment political
level of quality
governmental
need for innovation
technological
level of customer services
demographic
etc.
marketplace req.
legal
for successnatural environment

company’s mission
strategy business
goals imperatives organization’s structure
business model systems
products processes
organizational collective way of being
technology
services working
pricing imperatives resources
branding skillrelating
base
staffing
The Drivers of Change cultural
imperatives

leader and employee


style
worldview behavior
tone
assumptions
character
beliefs
mental models leader and employee
mindset
environment
external &
impersonal
marketplace req.
for success

business
imperatives

organizational
imperatives

The Drivers of Change cultural


imperatives

leader and employee


behavior
internal &
personal
leader and employee
mindset
Dean Anderson & L.A. Anderson, “Beyond Change Management”. (San Francisco: Jossey-Bass/Pfei
First Order and Second Order Changes
 First order change  incremental change.
 Adjustment in systems, processes or structures
 Does not involve fundamental change in strategy, core values,
or corporate identity
 Maintain and develop the organization to support continuity
and order
 Second order change  discontinuous change
 Transformational, radical and fundamentally alter the
organization at its core
 Not developing but transforming the nature of the organization
Key Challenges in Destabilized Environments
Key Challenge Rationale
Increase quality and customer value To increase customer expectations

Decrease costs of internal coordination To decrease production costs

Enhance innovation To meet customers expectations

Reduce market response time To respond quickly to shifts in the market

Motivate staff To gain effective contributions

Create scale without mass To compete globally but without adding costs

Change more quickly To decrease periods of equilibrium

Enhance competitive advantage To develop factors not easily replicated by competitors

Source: Adapted from Nadler and Tushman, 1995


5. Why Organizations Change and
What Changes in Organizations
 Why Need Change Management
 Pressures for Change: Environmental and
Organizational
 Drivers of Change
 Type of Changes: Incremental and Discontinuous
 Three Common Changes:
Three Common Changes
1. Downsizing: form of organizational restructuring
 Retrenchment: centralizing or specializing; re-engineering; outsourcing
 Downscaling: restructuring, closing or selling BU,
 Downscoping: divest activities or market
2. Technological Change: implementation of new technology
 ERP / CRM:
 Six Sigma
 BPR (Business Process Reengineering)
3. Mergers and Acquisitions: form of organizational growth
 Excessive capacity(A): consolidate operation in more mature industries
 Neighboring market expansion (A): acquired neighboring areas to
lower cost and increase customer value
 New product or market investment (M): two firms explores to extend
product line or global scope
 Leveraging to create new industry (M): two firms pooled and
reconstructed to create new industry
References
1. Ian Palmer; Richard Dunford; Gib Akin . (2009)
”Managing Organizational Change: A Multiple
Perspectives Approach” 2 edition, McGraw-Hill/Irwin;
Chapter 3 and 4
2. http://www.herridgegroup.com/pdfs/managing_org_cha
nge.pdf