Organization Development Session 1

METHODOLOGY: LECTURES CASE STUDY ASSIGNMENTS & PRESENTATIONS EVALUATION Midterm -25 Assignments /case study-25 Quiz/Exercises -10 Endterm-40 COURSE OUTLINE Introduction to OD- Overview Action research model OD Interventions, OD Process Managing OD process and approach Team Interventions, Learning organizations and organizational transformation Future of OD

Managing Organizational Change

Change Management

The process of renewing the organizations direction, structure and capabilities to serve the ever-changing needs of the market place, customers and employees. http://www.youtube.com/watch?v=0Cd7 Bsp3dDo&feature=related

Environmental triggers of change - PETS

Government legislation Government ideology International law Universal rights Wars Local regulations Taxation Trade union activities Competitors Suppliers Currency exchange rates Employment rates Wage rates Government economic policies Other countries economic policies Lending policies of FIs Changes from public to private ownership

Political factors ORGANIZATION Socio-cultural factors

Demographic trends (customers & employees) Lifestyle changes Skills availability Attitudes to work & employment Gender issues Willingness & ability to move Concern for the environment Business ethics

Economic factors

Technological factors
Information technology / the internet New production processes Computerization of processes Changes in transport technology

Examples
L& T - Restructuring Hindustan Unilever from Hindustan Lever Ltd. Hutch- Vodafone Pepsi- Environmental issues Satyam Infosys-leadership changes

Conditions that influence organizational change

A dramatic crisis

Leadership turnover
Stage of life-cycle Age of the organization Size of organization Strength of current culture

Attitudes towards change:

A long-term perspective

Assumptions:
Change involves not only learning something new but

unlearning something that is integrated into an individuals self / social system

No change unless there is motivation to change

Most adult changes involve attitudes/values/self

concept and can be painful and threatening

Organizational changes effected through individual

changes in key members

Change is a multistage cycle and all stages must be

planned and negotiated

Management of change is not necessarily only rational

management but also emotional management of people

Varieties of change
Smooth incremental change (transactional)
Evolves slowly in a systematic and predictable way. Change happens at a constant rate. Change in the means and ways by which organizations achieve their goals.

Bumpy incremental change

Periods of relative tranquility punctuated by acceleration in the pace of change. Change in means by which organizations achieve their goals. Periodic reorganizations.

Discontinuous change (frame-breaking change)

Change marked by rapid shifts in either strategy, structure or culture, or in all three. Often, implies change in organizations goals themselves.

Varieties of change
Discontinuous

Rate of change

Smooth incremental

Bumpy incremental

Time

Differences between Strategic and Grassroots change

Top Management
A Select few

Leadership
Infrastructure

Local management
Management, employees and the masses Specific sites

The entire organization

Diagnostics

Comparison of external benchmarking and best practices to internal

Introduction and application of data collection tools and techniques to a select few Assessment of overall needs

Comparison points

Implementation of best practices

Tools (process mapping, activity based costing etc)

Application of implementation tools to the masses

Training

Assessment of needs, & extensive design & delivery

Recommendations for change and momentum building

Outcome goals

Implementation of changes

Resistance to change
Individual resistance
Habit Security Economic factors Fear of the unknown Selective information processing Structural inertia Limited focus of change Group inertia Threat to expertise Threat to established power relationships Threat to established resource allocations

Organizational resistance

Overcoming resistance to change

Education and communication

Participation
Facilitation and support Negotiation

Manipulation and cooptation

Coercion

Resistance to change
Sources of resistance Coping mechanisms
Perceived peripherality of change Participation in diagnosis Perception of imposition Indifference of top management Fear of large-scale disturbance Fear of inadequate resources Fear of obsolescence Fear of loss of power Fear of overload

Participation and involvement Active support from the top Phasing of change Provision of resources Development of skills Role definition and reorientation Role clarity and definition

Other change management approaches

Action research: change process based on systematic
collection of data and then selection of a change action based on what analyzed data indicate.

Organizational development: change process built on

humanistic-democratic values, to improve organizational effectiveness and employee well-being.

Sensitivity training: training groups to change behavior

through unstructured group interaction

Survey feedback: use of questionnaires to identify

discrepancies among member perceptions

Process consultation: a consultant helps client understand

process events and identify processes for improvement

Comparison of Theories of Change Beer and Nohria

Theories
Goals

Dimensions of change
Leadership Focus Process Reward system
Motivate through financial incentives

Use OD
consultants Consultants analyze problems and shape solutions Consultants support management in shaping their own solutions Consultants are expert resources who empower employees

Theory E

Maximize shareholder value

Manage change from top down

Emphasize structure and systems

Plan & Establish programmes

Theory O

Develop organizational capabilities

Encourage change from bottom up

Build up corporate culture: employee behavior & attitudes Focus simultaneou sly on the hard (structures and systems) and the soft (corporate culture)

Experiment and evolve

Motivate through commitment use pay as fair exchange Use incentives to reinforce change but not to drive it

Theory E +O

Embrace paradox between E and O

Set direction from top & engage people from below

Plan for spontaneity

Roles in organizational change

The Corporate Management
Legitimizing function Energizing function Gate-keeping function

The Consultant

Implanting function Transcending function Generating alternatives Process-facilitating function Shock-absorbing function Resource-sharing function Resource-building function Self-liquidating function

Roles (contd.)
The Counterpart
Collaborating with consultant Implementing policies Stabilizing the change

The Implementation team

Collaboration-building function Gate-keeping function Reviewing function Policy-formulating function

The Chief Implementer

Monitoring function Diagnostic function Executive function Policy-formulating function

Managing organizational change

Scan the organization :

Scan the environment :

Align with external forces of change

Diagnose areas needing change Use organizational inertia as levers of change

Assess/align the capabilities Of change agents : Challenge personal Assumptions Attitudes styles

Effective implementation of change

1. Planning
o o o o o o o Phasing Processes Strategies Implementation team Minimum control Review and feedback Dissemination of information

2. Monitoring

3. Action

Effective implementation of change (contd.)

4. Adaptation (dealing with consequence of change) 5. Support

o Training o Resources

6. Top management's commitment to the change

Ten Organizational Prerequisites for Transformational Change

Priority
1 2 3 4

Prerequisite
Ensuring senior management commitment to the proposed changes which needs to be visible to all participants throughout the organization Producing a written statement about the future direction of the organization that makes clear its new objectives, values and policies. Creating a shared awareness of conditions to produce a common perception that change must be implemented. Assembling a body of key managers and other important opinion-formers to gain their commitment to the change process so that this may be disseminated more widely. Generating an acceptance that this type of change will require a long time to implement fully even though there may be short-term, dramatic changes as part of the overall process of transformation. Recognizing that resistance to change is part of the normal process of adaptation so that managers can be educated to be aware of this and equipped to manage this reaction. Educating participants about the need for change and training them with the necessary competence to be effective, to overcome resistance and gain commitment. Persevering with the change process and avoiding blame where an attempt to implement a facet of this process fails. Such negative action will generate resistance and reduce necessary risk-taking behavior.

5 6 7 8

9 10

Facilitating the change process with necessary resources. Maintaining open communication about progress, mistakes and subsequent learning.

What is successful change?

Improved business performance in chosen domain / market place Positive financial performance and sustained growth Customers notice no drop in service levels, but do notice improvements in service or products Customer delight leads to their ongoing loyalty Organization benefits from continuous innovation and an increase in knowledge capital Organization has a successful image in the market place, a good market position

Enabling conditions:

Employees willingly modify their skills, behaviors and performance to what is required Employees enhance their sills and experience as a result of the change

Employees learn to become flexible and adaptable to ongoing change efforts.

Employees remain committed to the organization

Organizational Life Cycle (Richard Daft)

maturity Decline

Formation

Growth

Entrepreneurial stage: Ambiguous goals High creativity

Collectivity stage:
Informal communication High commitment

F & C stage:
Formalization of rules Stable structure Emphasis on efficiency

E of S stage:
More complex str decentralizn Diversified markets

Decline stage:
High employee turnover
Increased conflict centralization