Assign 5: In the spectrum of organizational change, which is the most radical type of change: automation, rationalization of procedures, business reengineering, or paradigm shifts? (you are expected to read an article about this question) ..
Principles of Organizational Change
Written by Jack Welch & Suzy Welch
Thursday, 15 October 2009 20:22
Change is an absolutely critical part of business. And yes, your company does need to change—preferably now and not later, when you have no other choice.
The problem is that people hate it when their bosses announce a “transformation initiative.” They run back to their cubicles and start frantically e-mailing one another, complaining that the changes are going to ruin everything.
People love familiarity and patterns. They cling to them. The phenomenon is so entrenched it can only be chalked up to human nature. But while managing change can sometimes feel like moving a mountain, it can also be incredibly rewarding, particularly when you start seeing results.
Ultimately, implementing change comes down to embracing the following four practices:
1. Attach every change initiative to a clear purpose or goal. Change for change’s sake is stupid and enervating. Change should be a relatively orderly process, but for that to occur, people have to understand why change is necessary and how changes will affect them. This is easier, of course, when the problems are obvious—earnings are collapsing or a competitor has dropped prices 20 percent.
But sometimes the need for change isn’t immediately apparent. Competitive threats seem to be emerging, but you don’t know for certain, and still, you have to respond. In those cases, relentless communication about the business rationale for change, reinforced with lots of data, is the best ammunition you have.
The larger your company, the more challenging it will be to communicate the need for change. In big companies, calls for change are often greeted noncommittally. After all, if the company has been through enough change programs, employees will assume you’ll go away if they just wait long enough.
Stick to your guns—your solid, persuasive business case. Over time, logic will win out.
2. Hire and promote only true believers and get-on-with-it types. Everyone in business claims to like change. To say otherwise would be career suicide. But by my estimate, less than 10 percent of all businesspeople are true change agents. Once the next group—about 70 to 80 percent of people working in business—is convinced that change is necessary, they’ll say, “OK already, get on with it.” The rest are resisters.
To make change happen, companies must actively hire and promote only true believers and get-on-with-it. But with everyone claiming to like change, how can you tell who is for real?
Luckily, change agents usually make themselves known. They’re typically brash, high-energy and more than a little paranoid about the future. They often invent change initiatives on their own or ask to lead them. Invariably, they are curious and forward-looking.
These people have a certain fearlessness about the unknown. If they fail, they know they can pick themselves up, dust themselves off and move on. They’re thick-skinned about risk, which allows them to make bold decisions without a lot of data.
3. Ferret out and remove the resisters, even if their performance is satisfactory. This is the hardest of the four practices to implement. It’s tough to let anyone go, but it’s particularly difficult to fire people who are not actually screwing up and may in fact be doing quite well.
But in any organization, there are people who will not accept change, no matter how sound your case is. They are so invested—emotionally, intellectually, or politically—in the status quo that they cannot see a way to improve anything. These people usually have to go.
That may sound harsh, but you’re not doing anyone a favor by keeping resisters in your organization. They foster an underground resistance and lower the morale of the people who support change. They’re wasting their own time: They’re working at a company where they don’t agree with or share in the vision, and they should be encouraged to find one where they do.
4. Look at car wrecks. Most companies capitalize on obvious opportunities. When a competitor fails, they move in on their customers. When a new technology emerges, they invest in it and create product line extensions.
But to be a real change organization, you also have to have to look at bolder, scarier, more unpredictable events, assess the opportunities they present and make the most of them. Fostering this capability takes a certain determination, but the rewards can be huge.
Take the 1997 Asian financial crisis. Currency traders certainly capitalized on this awful event; they live on exploiting change. But they’re not the only ones who should do this. GE had real success buying undervalued Thai auto loans in this period. Others prospered by buying real estate at fire sale prices.
Bankruptcies are another type of calamity that reveals all kinds of opportunities. Of course, they’re tragic to the employees. Jobs are lost, and pensions disappear into thin air. But jobs and futures can also be created from the cinders.
With all the noise out there about change, it’s easy to get overwhelmed and confused. But these are the only four practices that matter. That’s it. There’s nothing to be afraid of.
What is organizational change?
Organizational change is any action or set of actions resulting in a shift in direction or process that affects the way an organization works. Change can be deliberate and planned by leaders within the organization (i.e., shift from inpatient hospital focus to outpatient primary care model), or change can originate outside the organization (i.e., budget cut by Congress) and be beyond its control. Change may affect the strategies an organization uses to carry out its mission, the processes for implementing those strategies, the tasks and functions performed by the people in the organization, and the relationships between those people. Naturally, some changes are relatively small, while others are sweeping in scope, amounting to an organizational transformation. Change is a fact of organizational life, just as it is in human life. An organization that does not change cannot survive long Ð much less thrive Ð in an unpredictable world. Several factors may make organizational change necessary, including new competition in the marketplace or new demands by customers. These types of external forces may create expectations of improved efficiency, better service, or innovative products. When organizational change is well planned and implemented, it helps assure the organizations continued survival. It can produce many tangible benefits, including improved competitiveness, better financial performance, and higher levels of customer and employee satisfaction. These benefits may take some time to achieve; however, and the transition period that accompanies major organizational change usually is a time of upheaval and uncertainty. Not every individual in the organization will benefit personally from change; some will be casualties of change, especially if jobs are cut or realigned. But change should make the organization as a whole stronger and better equipped for the future.
Organizational change occurs when a company makes a transition from its current state to some desired future state. Managing organizational change is the process of planning and implementing change in organizations in such a way as to minimize employee resistance and cost to the organization, while also maximizing the effectiveness of the change effort.
Today's business environment requires companies to undergo changes almost constantly if they are to remain competitive. Factors such as globalization of markets and rapidly evolving technology force businesses to respond in order to survive. Such changes may be relatively minor—as in the case of installing a new software program—or quite major—as in the case of refocusing an overall marketing strategy. "Organizations must change because their environments change, " according to Thomas S. Bateman and Carl P. Zeithaml in their book Management: Function and Strategy. "Today, businesses are bombarded by incredibly high rates of change from a frustratingly large number of sources…. Insidepressures come from top managers and lower-level employees who push for change. Outside pressures come from changes in the legal, competitive, technological, and economic environments."
Organizational change initiatives often arise out of problems faced by a company. In some cases, however, companies are encouraged to change for other, more positive reasons. "Change commonly occurs because the organization experiences some difficulty, " Bateman and Zeithaml wrote. "But sometimes the most constructive change takes place not because of problems but because of opportunities." The authors used the term "performance gap" to describe the difference between a company's actual performance and the performance of which it is capable. Recognition of a performance gap often provides the impetus for change, as companies strive to improve their performance to expected levels. This sort of gap is also where many entrepreneurs find opportunities to begin new businesses.
Unfortunately, as Rick Mauer noted in an article for HR Focus, statistics show that many organizational change efforts fail. For example, 50 percent of quality improvement programs fail to meet their goals, and 30 percent of process reengineering efforts are unsuccessful. The most common reason that change efforts fail is that they encounter resistance from employees. Change appears threatening to many people, which makes it difficult to gain their support and commitment to implementing changes. Consequently, the ability to manage change effectively is a highly sought-after skill in managers. Companies need people who can contribute positively to their inevitable change efforts.
SPECTRUM OF ORGANIZATIONAL CHANGE
• AUTOMATION: Using technology to perform tasks efficiently / effectively
• RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks
• BUSINESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology
• PARADIGM SHIFT: A new perspective on things.
:Is a complete mental model of how a complex system functions.
:Involves rethinking the nature of business, the organization; a complete reconception of how the system should function.
Areas of Organizational Change
Bateman and Zeithaml identified four major areas of organizational change: strategy, technology, structure, and people. All four areas are related, and companies often must institute changes in the other areas when they attempt to change one area. The first area, strategy changes, can take place on a large scale—for example, when a company shifts its resources to enter a new line of business—or on a small scale—for example, when a company makes productivity improvements in order to reduce costs. There are three basic stages for a company making a strategic change:1) realizing that the current strategy is no longer suitable for the company's situation; 2) establishing a vision for the company's future direction; and 3) implementing the change and setting up new systems to support it.
Technological changes are often introduced as components of larger strategic changes, although they sometimes take place on their own. An important aspect of changing technology is determining who in the organization will be threatened by the change. To be successful, a technology change must be incorporated into the company's overall systems, and a management structure must be created to support it. Structural changes can also occur due to strategic changes—as in the case where a company decides to acquire another business and must integrate it—as well as due to operational changes or changes in managerial style. For example, a company that wished to implement more participative decision making might need to change its hierarchical structure.
People changes can become necessary due to other changes, or sometimes companies simply seek to change workers' attitudes and behaviors in order to increase their effectiveness. "Attempting a strategic change, introducing a new technology, and other changes in the work environment may affect people's attitudes (sometimes in a negative way), " Bateman and Zeithaml wrote. "But management frequently initiates programs with a conscious goal of directly and positively changing the people themselves." In any case, people changes can be the most difficult and important part of the overall change process. The science of organization development was created to deal with changing people on the job through techniques such as education and training, team building, and career planning.
Resistance to Change
A manager trying to implement a change, no matter how small, should expect to encounter some resistance from within the organization. Resistance to change is a normal reaction from people who have become accustomed to a certain way of doing things. Of course, certain situations or tactics can increase resistance. "Individuals, groups, and organizations must be motivated to change. But if people perceive no performance gap or if they consider the gap un-important, they will not have this motivation. Moreover, they will resist changes that others try to introduce, " Bateman and Zeithaml explained.
The authors outlined a number of common reasons that people tend to resist change. These include: inertia, or the tendency of people to become comfortable with the status quo; timing, as when change efforts are introduced at a time when workers are busy or have a bad relationship with management; surprise, because people's reflex is to resist when they must deal with a sudden, radical change; or peer pressure, which may cause a group to resist due to anti-management feelings even if individual members do not oppose the change. Resistance can also grow out of people's perceptions of how the change will affect them personally. They may resist because they fear that they will lose their jobs or their status, because they do not understand the purpose of the change, or simply because they have a different perspective on the change than management.
Fortunately, Bateman and Zeithaml noted, there are a number of steps managers can take to help overcome resistance to change. One proven method is education and communication. Employees can be informed about both the nature of the change and the logic behind it before it takes place through reports, memos, group presentations, or individual discussions. Another important component of overcoming resistance is inviting employee participation and involvement in both the design and implementation phases of the change effort. "People who are involved in decisions understand them better and are more committed to them, " Bateman and Zeithaml explained. Another possible approach to managing resistance to change is through facilitation and support. Managers should be sure to provide employees with the resources they need to make the change, be supportive of their efforts, listen to their problems with empathy, and accept that their performance level may drop initially.
Some companies manage to overcome resistance to change through negotiation and rewards. They offer employees concrete incentives to ensure their cooperation. Other companies resort to manipulation, or using subtle tactics such as giving a resistance leader a prominent position in the change effort. A final option is coercion, which involves punishing people who resist or using force to ensure their cooperation. Although this method can be useful when speed is of the essence, it can have lingering negative effects on the company. Of course, no method is appropriate to every situation, and a number of different methods may be combined as needed. As Bateman and Zeithaml stated, "Effective change managers are familiar with the various approaches and capable of flexibly applying them according to the situation."
WHAT IS THE HUMAN SIDE OF CHANGE AND WHY IS IT IMPORTANT ?
Organizational change is about people changing. Organizational change, then, is a highly complex process that must take into account how people respond psychologically when asked to make major changes at work. Their reactions inevitably vary. While some people embrace change, others will resist it Ð sometimes passively, giving the impression that they support it. A small number of people are energized by change, but many others feel threatened and anxious. This is particularly true if, under the change initiative, people may be transferred to new positions or work sites or even lose their jobs. The human side of change is frequently ignored or handled inadequately despite managers’ best intentions or their intellectual understanding of how difficult change is. Recognizing the pain and insecurity that change can cause in the workplace is not enough; managers must devise ways for responding effectively to these feelings. This may involve engaging employees more actively in change efforts, communicating with them more frequently and comprehensively about new developments, creating a forum for them to vent their frustrations and fears, or simply maintaining an "open door" environment, where employees can approach their managers individually to discuss concerns.
Amongst the spectrum of organizational change identified above, the most radical type of change is automation, rationalization of procedures, business reengineering, or paradigm shifts. Yes, all of these fields can be treated as a major change in an organization. As what I have read from the article written by Jack Welch & Suzy Welch in the Principles of Organizational Change, “The problem is that people hate it when their bosses announce a “transformation initiative”.” And it is merely true; there is really a resistance in every act of change. And the vital factor of this change is people, the ones that will apply the change.
References:
http://www.zturk.com/edu/zagreb/podiplomski/slides/02-1-short-IT-strategies.pdf
http://www.answers.com/topic/managing-organizational-change
http://www.hsrd.research.va.gov/publications/internal/organizational_change_primer.pdf
http://www.businessmirror.com.ph/home/pf/17334-principles-of-organizational-change.html
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