ORGANIZATIONAL CHANGE

• When an Organization system is disturbed by

some Internal or External forces, Change
occurs
• Change as a process, is simply, modification of
the Structure / Technology / Strategy /
Physical Layout / System / Process / People
 Organizational Change
• Planned Change
• Unplanned Change
• I Order Change
• II Order Change
• Change Agents
• Reasons for Change
• Resistance to Change
• Nature & direction of Change
• Kurt Lewin’s 3 steps Change process
• Methods of Change
• Change Management Strategies
 ORGANIZATIONAL CHANGE
Modifying the structure, Technology, Physical Setting, People,
System, Process of Organization is called Org. change.
PLANNED CHANGE : Change activities that are Intentional &
goal oriented
FIRST ORDER CHANGE : Linear & Continuous
No fundamental changes
II ORDER CHANGE : Change that is Multi level,
Multidimensional, discontinuous & radical. Changes occur
in strategy, Structure, System, Process, People.
CHANGE AGENTS : Top Mgmt., Consultants, Employees.
People who act as catalysts & assume reponsibility for
Managing change.
Mckenzy’s 7 S Business Model

Structure

Strategy System

Shared Values

Staff Skills

Style
Reasons for Organizational Change
External
• Technology
• Resources getting scare & dearer
• Competition hotting up
• Change in Managerial Personnel & Style
• Deficiency in existing situations
• Consumers tastes & preferences
• Communication
• Political & Economic conditions
Reasons for Organizational Change
Internal
Growth of Organization
New Personnel
Change in Corporate Strategy
Declining performance
Change of Managerial Style
 Resistance to Change
• Individual Resistance
Habit, Security, Economical Factors, Fear
of unknown, misunderstanding, Fear of losing
Freedom & Autonomy, Mistrust, Inconvenience
• Organizational Resistance
Strong org. culture, Structural inertia, limited
focus of change, Group inertia, Threat to
expertise, Threat to power, Threat to resource
allocation
 To overcome Resistance
• Individual Level
Involvement, obtaining commitment,
leadership, training & psychological
counseling
• Group Level
Group contact, participation, Group
dynamics training
• Organizational Level
Organization Development
 Kurt Lewin’s 3 Step Change Process:
Field Force Theory
Change NEW

Restraining CHANGED
Forces STATUS

Equilibrium
Status Quo

Change
Driving
Forces
 Kurt Lewin’s 3 Step Change Process

Resisting Aids in
Forces changing

CHANGE
INTRODUCTION Changing/
Unfreezing Refreezing
Moving
Driving Response of
Forces Employees
 Nature & Direction of Change
Nature of Change
Individual & Organizational
Evolutionary & Revolutionary
Proactive & Reactive
Direction of Change
Formal to Informal
Structured to Flexible
Deterministic to Probabilistic
Conservative to Opportunistic
 Three Types of Companies
• Those who MAKE things happen –
Proactive, Leaders
• Those who WATCH things happen –
Reactive, Followers
• Those who WONDER what happened –
Procrastinating Losers
 Change Management Strategies
• Adapt to External Change
• Avoid External Dependence
• Control Environment Forces

CHANGE IMPLEMENTATION STRATEGY

• Top down
• Bottom up
• Combined
Steps in Managing Organizational Change

Assess
Assessneed
needfor
for
change
change
Find
Findsource
sourceofofproblem
problem

Decide
Decideon
onthe
the
change
change
Identify
Identifyobstacles
obstacles

Implement
ImplementChange
Change
Top-down
Top-downor
or
Bottom-up
Bottom-up

Evaluate
EvaluateChange
Change
IsIsititsuccessful?
successful?
Benchmark
Benchmarktotoothers
others
Managing Organizational Change
• Assess need for change: recognize a problem exists and
find its source.
– Look inside and outside the firm for sources.
• Decide on the change to make: determine the ideal
future state.
– Decide exactly what the future company will look like.
– What obstacles (among 7 S) need to be changed to get there.
• Implement the change: a top-down change is quickest,
bottom-up is more gradual.
– Bottom-up is more effective at eliminating obstacles.
• Evaluate Change: was it successful? Benchmark
(compare) your change to others.
 Methods of Change
I. Earth Quake Approach
Gradual Approach
II. Packaged Approach
Means & Resources Approach
Informal Approach
Comparison Approach
Ideal Approach
Quantitative Approach
Organizational Audit
 Organizational Development
• O.D is a response to Organizational Change
• It is a complex educational strategy intended
to change attitudes, values & structure of an
Organization so that
• Organization can better ADAPT to new
technologies, markets, & changes &
speed of change itself.
 O D Techniques
• M.B.O
• Grid Training – Managerial Grid, Group dev.,
Intergroup dev., org goal setting, implementation of
strategy, systemic critique
• Survey Feedback
• Team Building
• Sensitivity (T – Group) Training
• Process consultation
• Structural Techniques Change in personality
 Organizational Effectiveness
How well an organization discharges its obligations to its stakeholders
(promoters, employees, customers, suppliers, Govt., Society, financial
Institutions)

Ability to exploit its environment in the acquisition of scarce & valued

resources to sustain its functioning (Seashore & Yachtman)

Linda E Parry:
Effectiveness is the degree to which Organization realises its Goal.
Efficiency is the amount of resources used to produce a unit of output.
 OE

OE reflected in how well the Organization is

equipped to handle its current survival & its
future growth through creative / adaptive
strategies
 Organizational Effectiveness
INPUTS PROCESS OUTPUTS

Buildings, Utility, Work environment,

Infrastructure, Aesthetics, productivity,
Machinery, Maintenance, profit,
Finance, Controls, cash flow, empowerment,
HR, Resource Allocation, HRM team work,
Environment, Technology, & D, job satisfaction, objectives,
Raw Materials Environment scanning, mission,
MIS, quality,
Operations, quantity
Systems,
Processes
 Traditional approaches to OE
Goal Approach:
Goals: official goal, operative goals
Operative Goals: Overall performance, Resources,
Market, Employee Development, Innovation,
Productivity
Purpose of Goals: Legitimacy, Employee direction &
motivation, Decision guidelines, criteria of
performance evaluation
 Goal Approach

Focus on Outputs,
Identifying output goals
Assessing how well organization achieved these
goals
Benefit: Outputs are readily measured
Limitations:
Multiple & contradicting goals
Subjective indicators of performance
 System Resources Approach
Focus on Inputs
Bargaining position,
Ability to predict external environment,
Maintenance of day-to-day activities,
Ability to respond to changes in environment
Benefits: Useful when performance measures are
difficult to measure
Limitations: Important & difficult to track how
resources are used
 Internal Process Approach
Measures internal processes, measures internal health & efficiency
Indicators of good process:
Strong orgn. Culture
Positive work environment
Team spirit
Communication & trust between workers & mgmt
Decision making near sources of information
Rewards for performance
Growth & sub-ordinate development
Benefits:
Promote efficient use of resources
Harmonious internal functioning
Limitations:
Total output not measured
Relationship to environ not measured
Evaluation of harmony subjective
 Modern OE approaches
1.Stakeholder approach (measures satisfaction of each
stakeholder)
2.Competing values approach: Benefits: Integrate diverse
concepts, Calls attention to Managers values
STRUCTURE FLEXIBILITY

HR MODEL OPEN SYSTEM Model

GOAL VALUES Growth, Resource

(IT Cos.) Acquisition
(Reliance)
FOCUS (Internal) (External)

INTERNAL PROCESS RATIONAL GOAL

MODEL MODEL
Stability, Equilibrium Productivity,
(TVS) Efficiency, Profit
 Achieving OE
Corporate
CorporateCulture
Culture
Trust,
Trust,
Productivity
Productivitythrough
through
People,
People, LTview
LT view
Organizational
OrganizationalDesign
Design

Simple,
Simple,Decentralised
Decentralised
Lose/Tight
Lose/Tightcontrol
control
Top
TopManagement
Management

Leadership
Leadership
Vision,
Vision,Rational
Rational

Strategic
StrategicOrientation
Orientation

Close
ClosetotoCustomer
Customer