CHANGE MANAGEMENT

INTRODUCTION AND THECHANGE MANAGEMENT MODEL

CHAPTER NO 1

Change Management*

Change Management

INTRODUCTION-Organizations are changing.-Change has always been a part of managers job and it has become more important in recent years.-Change is often closely tied to an organization innovation efforts.-Organizational change includes major changes like mergers, acquisitions, downsizing, launch of new products & services etc.-Lesser changes too like departmental reorganization, installation of new technology, incentive systems, shifting particular manufacturing lines and opening new branches in other parts of the country.-These changes are to improve the efficiency and operations of our organizations.-Organizational change is intentional and planned and change is an organizational reality.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

THE NATURE OF CHANGE AND INNOVATION-Change is an alteration to the status quo.

-Innovation is more specialized and innovation is a new idea used in initiating or enhancing a process, product and service.

-All innovations imply change but not all change is innovation.

-Organizational innovations range from radical breakthroughs (Laser technology) to a small improvements (an improved computer printer paper tray) and both have value.

- Change management is important for organizations, where managers make organizations more proactive in changing and innovation for competitive advantage.Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*

Copyright 2005 Prentice Hall, Inc. All rights reserved.

CHANGE MANAGEMENT*What Is Change?Organizational ChangeAny alterations in the people, structure, or technology of an organization.Planned alterations of organizational components to improve the effectiveness of organizations.

Managing change is an integral part of every managers job.

CHANGE MANAGEMENT

CHANGE MANAGEMENT* Forces for Change- There are some forces that bring about the need for change.-Much change starts with shift in an organizations environment.-The external forces that create the need for change come from various sources.- The internal forces also create a need for change and originate primarily from internal operations of the organizations or from the impact of external changes.

External forcesMarketplaceGovernmental laws and regulationsTechnologyLabor marketEconomic changesInternal ForcesChanges in organizational strategyWorkforce changesNew equipmentEmployee attitudes

CHANGE MANAGEMENT

CHANGE MANAGEMENT*The Manager as Change AgentChange AgentsPeople who act as catalysts and assume the responsibility for changing process are called change agents.Changes are initiated and coordinated by a manager within the organization.Types of Change AgentsManagers.Non managers: change specialists from human resource departments Outside consultants: change implementation experts/ provide advice and assistance.

CHANGE MANAGEMENT

Challenges of ChangeManagers face three challenges in practical:1.First increased competition for an organizational resources.

2. Second these organizations have to compete in a world that is constantly changing due to globalization, technological changes and unanticipated events.

3. Third it is increasingly difficult to predict what will happen in an organization environment i.e. both external uncertainties and internal uncertainties.

-The only certainty in a changing world is that you cannot escape change.- In a competitive business environment, the ability to manage change effectively can translate into increased market share, revenue and profits.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

CHANGE MANAGEMENT * CONTRIBUTIONS OF KURT LEWINLewins description of the change process as a break in the organizations equilibrium stateUnfreezing the status quoChanging to a new stateRefreezing to make the change permanentAn individual called Kurt Lewin first articulated the science of change in human efforts.His seminal work is the foundation for our model of change management.Lewins illustrated in any individual, group or organization there are two competing forces in operation.1. Force of stability that aim to maintain the human systems in status quo.2. Force of change that push the system towards change.In human system these forces are evenly balanced known as quasi stationary equilibrium by maintaining the system in status quo.

CHANGE MANAGEMENT

CONTRIBUTIONS OF KURT LEWIN (Contd).- For change to happen either the forces of change needs to be strengthened or forces of stability needs to be weakened.

- The step of weakening the forces of stability is referred to as unfreezing in his change model.

- After the system is unfrozen, the existing forces of change will ensure that the system moves towards a new state and change itself can be implemented.

-In order for a change to take hold, the new system needs to be refrozen so that it can be sustained overtime.

-Once the system has moved into a new state it is refrozen in that state by the adoption of new structures and cultures.

CHANGE MANGEMENT*

CHANGE MANGEMENT

CONTRIBUTIONS OF KURT LEWIN (Contd)- According to Lewins Change model, forces of stability and change are both within the organizations.

-Seeds of change are present in every organizations. -The primary task of change management is to discover these forces of change and create a suitable condition for these forces to push the organization towards a new state.

- Assumption underlying our change management is that solutions to an organizations problem cannot be found outside the organization.

- An organization posses the potential and capability to solve its own problem. CHANGE MANAGEMENT*

CHANGE MANAGEMENT

CHANGE MANAGEMENT*MANAGING CHANGE: Types of Change-Initiating change involves identifying what organizational areas might need to be changed and putting the change process in motion.- Managers option fall into three categories to change: 1. Structure 2.Technology and 3. People.StructuralChanging the organizations structure or its structural components.TechnologicalAdopting new equipment or operating methods that displace old skills and require new ones.AutomationReplacing certain tasks done by people with machines.WorkforceChanging attitudes, expectations, perceptions, and behaviors of the workforce.

CHANGE MANAGEMENT

ORGANIZATIONAL ROUTINES AND MENTAL MODELS-Organizational routines is the second assumption in our change management model, which states that organizational change involves changing routines in an organization.

-These rules, codes or routines they are embedded in peoples head as mindsets or mental models.

-These mindsets or mental models are made up of assumptions, values and beliefs.

-Organizational routines are like formulae or code to guide behavior in specific situations.

-Since routines create and sustain stability in an organization, change management is largely about changing peoples mindsets.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

CHANGING MENTAL MODELS OR MINDSETS-As routines drive organizations towards stability and are embedded in mental models or mindsets that people carry, then change involves altering these mental models.-Following Lewin, we only want to change those mental models or routines that sustain or maintain organization in the status quo.- Reducing the existing forces of stability and the existing force of change will move the organization forward.-Changing an individual mental models involve including the individual to give up some of his or her beliefs, assumptions and values.-Edgar Schein (MIT) in United States building on Kurt Lewin ideas, he argues that change in individuals involves two opposing forces.- These are learning anxiety and survival anxiety.-Learning Anxiety: the prospects of learning something new itself produces anxiety. Learning anxiety causes resistance to change. It is a force against change in an organization so it is a force of stability.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

-Survival Anxiety: the feeling unless we learn something new we are going to be out of business or fail to achieve some important goals.-It is a force of change and survival anxiety has to be greater than learning anxiety.-Following Lewin, Schein argues that reducing learning anxiety rather than increasing survival anxiety can more effectively bring about change.-This involves a climate of Psychological safety so that individuals feel comfortable in changing their mental models and ways of thinking.-Schein warns against coercive persuasion, which occurs when individuals are forced to change.-So our model of change management is premised on the assumption of free choice.- It is proposed that change is most effective when it is based on free choice and it is brought about without coercing individuals.-Change management requires engagement and connections with those whose mental models needs to be changed.- Dialogue and conversation constitutes a medium of change.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

THE CHANGE MANAGEMENT MODEL- Managing change involves managing four complex tasks.- Each of these complex tasks needs to be completed effectively in order to achieve a successful outcome.- Failure in any one of these four tasks will lead to a failure in the overall change.- These four tasks are:(1) Appreciating change(2) Mobilizing support(3) Executing change(4) Building change capability

- The figure shows the model.-Leadership lies at the core of change management.-Each of the four complex tasks require a specific type of leadership.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

FIGURE:THE CHANGE MANAGEMENT MODELCHANGE MANAGEMENT*APPRECIATINGMOBILIZING CHANGESUPPORT

BUILDING EXECUTINGCHANGE CHANGECAPABILITY

LEADERSHIP

CHANGE MANAGEMENT

APPRECIATING CHANGE-Appreciating change involves understanding the forces of stability and change in an organization.-Two ways in which an organization can change.-One is unplanned change (changes due to new ideas, conflict between individuals, departments or teams, political and power struggle inside the organization).-Second is planned change and change management is mostly about planned change.-The appreciation phase makes us aware of:

(1)The need for change(2) Consequences of changing and not changing(3) Options for undertaking change in the organization.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

APPRECIATING CHANGEThe need for Change: - Experiential learning model by Herbert Simon, Richard Cyert and James March explains why individuals and organizations change has two aspects.- Organizations are purposive, goal oriented systems, which represents organizations expectations about its performance.- Performance exceeds expectations they are successful or vice versa.- Perception of failure leads to change.- This model proposes organizational change is triggered by performance falling below expectations level.- Change is initiated by disconfirmation.Content of Change:- For all organizations in competitive and dynamic environment there are four content levers of change.-Technology, Quality, Costs, Marketing four areas that are targeted for change.

CHANGE MANAGEMENT*

CHANGE MANAGEMENT

APPRECIATING CHANGE-The critical task of appreciating change is intended to make key people in the organization mentally ready for change in light of analysis of operating environment.-A common mistake most managers make in assuming that just because they are ready for change, everyone else in the organization is ready.-This is a flawed assumption.-Rest of the employee in organizations dont see the way managers see a big picture.-Convince others about the need for change.-This is the next critical task of change management.

CHANGE MANAGEMENT*

CHANGE MANAGEMENT

MOBILISING SUPPORT-Why is support necessary?-Two ways of planned change in organizations.-One way is to impose change (non participative process).-Second way participative approach (convincing process).-It does not impose change but expose people to the possibility of change.-In change management model engagement, involvement and participation are essential to bring about meaningful change.-Three categories of people play a role in change process:1.Change strategists decide that organization needs change and set a direction for change effort, they design the change process like top management.2. Change implementers those implement the change by creating new structures, rules, procedures and processes like middle management.3. Change Recipients people whose jobs change as a result of changes launched in the organization usually lower levels in the organization.

CHANGE MANAGEMENT*

CHANGE MANAGEMENT

MOBILISING SUPPORT-Getting consent for change: -People need to be convinced about change.-It requires persistence and patience and willingness to engage with people opposed to your ideas and opinions.-Politics of change:-Change refers to a political process because it involves influencing and negotiating with people in order to bring about change in their mental models.-Executing change:-This involves creating and putting in place new structures, processes or procedures.-It involves creating coordinating mechanisms such as cross functional teams for improvements and innovations.-Most change management efforts fail at the implementation phase because of problems like it takes more time then originally allocated.-Lack of coordination, competitors activities, crisis, capabilities and skills of

CHANGE MANAGEMENT*

CHANGE MANAGEMENT

EXECUTING CHANGE-employees falls short of requirements.-Change execution always require more resources than what has been allocated by an organization like people, time and money.-Types of Change:-Change type depends on four crucial decisions made by key managers:1.Deciding the goal and purpose of change. What do we want to achieve?2.Deciding the scope of change. Do we want change throughout organization or in a few selected units?3.Deciding the intensity of change. Do we change few things or do we change many things?4.Deciding the timeframe for change. How quickly and slowly do we want to execute change? -Styles of Change:1.Deciding whether the change execution should be directive or participative.2.Deciding whether the changes should focus on structures or processes.CHANGE MANAGEMENT *

CHANGE MANAGEMENT

EXECUTING CHANGE-Directive changes are typically top down changes where as participative changes may be initiated at the top but will involve extensive consultations with people in the organizations.-Structures refers to organizational components where as process refers to norms and culture of the organization.-Changing structure is relatively easier.-Programmatic Change:-Variety of change programs have emerged each promising effective and successful change.-Referred to as change packages a ready made approach that can be customized for each organization. -These packages are less risky to use as a change approach that has proven itself in other organizational setting.-It is not true to say that as change approach has worked in another organization it will also work in your organization.-Organizational change is very context dependent.CHANGE MANAGEMENT *

CHANGE MANAGEMENT

EXECUTING CHANGE-Research indicates that organizational change success does not depend on package, techniques and tools employed.-Critical success factors include: clearly focused strategy, quality of operational execution, performance of employee and flexible structures.-Challenge is to manage people response to change.-Employees are seen as resisting to change because of hostility, negativity and lack of enthusiasm for change.-People undergo psychological transitions because they have to let go of their old mental models.- This transition takes time and manager has to deal with these emotions with sensitivity and tacts.CHANGE MANAGEMENT *

CHANGE MANAGEMENT

BUILDING CHANGE CAPABILITY-Organizations require a frame braking change by:1.new definition of companys mission and core values.2.an alteration of the distribution of power.3.a modification in structure, systems and procedures.4.a change in the way people work together in organizations.5.new executives brought in from outside the organization in key managerial position.-Organizations must have the in build capacity for adapting to change.-How can managers create such capability?-Knowledge creation and diffusion is one way of creating such capabilities in organizations.-These are correctly embedded, the knowledge that they create in their systems, structures, habits and processes.-Finally capability can be build by attending to a number of areas; such as building system for identifying improvement opportunities, rewarding knowledge sharing, building greater discretion and flexibility, creating CHANGE MANAGEMENT*

CHANGE MANAGEMENT

BUILDING CHANGE CAPABILITY-Culture of free and frank conversation, risk taking and keeping to be the best.-Three elements contributing to capability are self efficacy, focus and energy.-Self efficacy: refers to the confidence an individual has in his or her ability to achieve challenging goals/ belief that one has capability to master difficult tasks.-A high level of self efficacy makes it easier for an individual to learn new things because he or she experiences less learning anxiety compared to another individual with lower level of self efficacy.-Critical role of change managers and leaders is to devise ways of enhancing the self efficacy of people in organizations.-Focus implies that individuals and groups have the clear understanding of the goals to attain and specific steps to be taken for this purpose.-Learning is valuable only when focused and well defined agenda.-Energy signifies that actors are determined to do what is required to achieve the goals; their actions are fuelled by intense personal commitment.CHANGE MANAGEMENT*

CHANGE MANAGEMENT

LEADERSHIP OF CHANGE-Research has shown that many change programs fail because they lack commitment and support from top management.-Effective change management requires credible and visible leadership in all phases.-Organizational change requires different leadership roles for four different tasks.-These leadership roles are:1.Cognitive Tuner2.People Catalyser3.System Architect4.Efficacy Builder 1.Cognitive Tuner: The task of appreciating change requires the leader to understand the mental models inside the organization and forces of change impacting on the organization.- The leader must tune into both the prevailing mindsets inside the organization and the forces of change in the environment. CHANGE MANAGEMENT*

CHANGE MANAGEMENT

-It is largely a process of reflection, analysis and thinking and occurs through a medium of dialogue and conversation.-Leader must be skilled in initiating dialogue in the organization to both understand people mindset and make people aware of their mindsets.-The very act of cognitive tuning is it initiates change in an organization.2. People Catalyser: The role of a leader is to act as a catalyst to speed up the process of letting go of old mental models and adoption of newer ones.-In an organizational settings this involves mobilizing support and resources, building networks and relentlessly communicating the message of change.-It involves helping people to cognitively redefine their mental models, need to influence and persuade others, frame the change to permit the people to let go off their old mental models and build support through negotiation.3. System Architect: Executing change involves creating the right structures and processes in an organization.-It is establishing effective coordination mechanisms such as cross functional teams.- Change leader play a important role in executing change because they can

CHANGE MANAGEMENT*

CHANGE MANAGEMENT

-Facilitate change by the kind of architecture that they put in place for the change process.-Success of change efforts depends on the important role of leader in designing, building and sustaining a social architecture that can facilitate others to change.4. Efficacy Builder: -The essence of capability building is making people believe in their own ability to face challenges and master new tasks.-Change leaders play a central role in creating and sustaining a positive climate that enhances peoples self efficacy in an organization.-They perform this role by enhancing the expectation of people inside the organization to face challenging tasks.-Effective change leaders make change happen by engendering a feeling of optimism and hope in the organization.-This fosters a positive belief in people that they can face the challenges of change and overcome them.-This helps people view change as an opportunity rather than a threat.

CHANGE MANAGMENT *

CHANGE MANAGMENT

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Managing Resistance to ChangeWhy People Resist Change?The ambiguity and uncertainty that change introducesThe comfort of old habitsA concern over personal loss of status, money, authority, friendships, and personal convenienceThe perception that change is incompatible with the goals and interest of the organization

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Issues in Managing Change (contd)Changing Organizational CulturesCultures are naturally resistant to changeConditions that facilitate cultural change:The occurrence of a dramatic crisisLeadership changing handsA young, flexible, and small organizationA weak organizational culture

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Issues in Managing ChangeHandling Employee Stress due to ChangeStressThe physical and psychological tension an individual feels when confronted with extraordinary demands, constraints, or opportunities and their associated importance and uncertainties.Functional StressStress that has a positive effect on performance.How Potential Stress Becomes Actual StressThere is uncertainty over the outcomeWhen the outcome is important

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Issues in Managing ChangeReducing StressEngage in proper employee selectionMatch employees KSAs to jobs TDRsUse realistic job interviews for reduce ambiguityImprove organizational communicationsDevelop a performance planning programUse job redesignProvide a counseling programOffer time planning management assistanceSponsor wellness programs

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Issues in Managing ChangeMaking Change Happen SuccessfullyEmbrace changebecome a change-capable organization.Create a simple, compelling message explaining why change is necessary.Communicate constantly and honestly.Foster as much employee participation as possibleget all employees committedEncourage employees to be flexibleRemove those who resist and cannot be changed.

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Stimulating InnovationCreativityThe ability to combine ideas in a unique way or to make an unusual association.InnovationTurning the outcomes of the creative process into useful products, services, or work methods

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Creating the Right Environment for InnovationStructural VariablesAdopt an organic structureMake available plentiful resourcesEngage in frequent interunit communicationMinimize extreme time pressures on creative activitiesProvide explicit support for creativity

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Creating the Right Environment for Innovation (contd)Cultural VariablesAccept ambiguityTolerate the impracticalHave low external controlsTolerate risk takingTolerate conflictFocus on ends rather than meansDevelop an open-system focusProvide positive feedback

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Copyright 2005 Prentice Hall, Inc. All rights reserved. 13*Creating the Right Environment for Innovation (contd)Human Resource VariablesActively promote training and development to keep employees skills currentOffer high job security to encourage risk takingEncourage individual to be champions of change

Copyright 2005 Prentice Hall, Inc. All rights reserved.