Week12 rainey chapter_13

Understanding and Managing Public Organizations

Chapter 13Managing Organizational

Change and Development

Overview• Organizations undergo constant change. This

chapter addresses the challenge that organizational change and development present for managers. It provides

• An overview of the literature on the topic

• A discussion of change in the context of public sector environments

• Examples of successful change efforts

The Stages of Organizational Life

• Some changes are purposefully brought about, but other changes occur naturally as organizations pass through phases of development.

• Research on organizational life cycles has paid attention to naturally evolving change processes.

Downs (1967)—The Three Stages of Organizational Life

• Early stage: struggle for autonomy. • “Zealots” and “advocates” dominate young bureaus and

struggle to build political support for their legitimacy and resource requests.

• Middle stage of rapid expansion and innovation• Survival is assured; members focus on expansion and

innovation.• Deceleration stage

• Downs called this the rigidity cycle for bureaus.• Bureaus grow older and larger; administrators concentrate

on elaborating rules and ensuring accountability. • “Zealots” and “advocates” either depart for more active

programs or settle into the role of “conservers.”

• Yet Downs oversimplified the process. Large, old organizations change markedly.

Quinn and Cameron’s (1983)Four-Stages Framework for OD

1. Entrepreneurial Stage

• Members concentrate on marshaling resources and establishing the organization as a viable entity. An entrepreneurial head plays a strong leading role, pressing for innovation and new opportunities, emphasizing open systems model.

2. Collectivity Stage

• Members develop high cohesion and commitment. They operate in a flexible, team-based mode, emphasizing a human relations model as well as an open systems model.

Quinn and Cameron’s (1983)Four-Stages Framework for OD

3. Formalization and Control Stage

• Members confront the problems of extensive control developed during the third stage; the rational control mode predominates. The importance of open system and human relations criteria lessen.

4. Elaboration Stage

• This stage involves movement toward a more elaborate structure to allow more decentralization but also corresponding coordination processes.

Organizational Decline and Death

• Organizations may decline at various rates and in various patterns for a number of reasons. Three main reasons are

1. Vulnerability and loss of legitimacy

2. Environmental entropy

3. Responses to decline

Organization Decline and Death

• Vulnerability and Loss of Legitimacy–Organizations can be vulnerable to losing resources or support and, similarly, to losing legitimacy.

• Environmental Entropy–An organization’s environment can deteriorate in its capac-ity to support the organization.

• Responses to Decline–There are several patterns for response (Whetten, 1988).

The Ultimate Decline: Organizational Death

• Vulnerability and Loss of Legitimacy– Organizations can be vulnerable to losing resources or

support, which can also be associated with the loss of legitimacy (for example, public funds to support an organization are no longer available).

• Environmental Entropy– An organization’s environment can deteriorate in its

capacity to support an organization (for example, when the social need for an organization wanes).


• Many responses to decline• Organizations aggressively resisting or accepting

• Negative, resistant disposition toward change

• Receptive and adaptive

• Cutback management (pressures for reduced government taxing and spending)


Cutback management (pressures for reduced government taxing and spending)– Levine (1980a) suggested two groups of tactics: ones to resist

decline and ones to smooth decline.

– Rubin (1985) found that the Reagan administration cutbacks damaged management and reduced productivity in some agencies. Yet, her analysis implies that agencies do change and they do not necessarily resist change as some theories suggest.

– Starbuck and Nystrom (1981) reanalyzed Kaufman’s data and found that government agencies and industrial corporations have very similar death and survival rates.

• These results show that public agencies do change a great deal, including undergoing the ultimate change of passing out of existence.

Organizational Decline and Cutback Management: Tactics for Responding to Decline and Funding Cuts

Tactics to Resist Decline Tactics to Smooth Decline

External Political (problem depletion)

1. Diversify programs, clients, and constituents2. Improve legislative liaison3. Educate the public about the agency’s

mission4. Mobilize dependent clients5. Become “captured” by a powerful interest

group or legislator6. Threaten to cut vital or popular programs7. Cut a visible and widespread service a little to

demonstrate client dependence

1. Make peace with competing agencies2. Cut low-prestige programs3. Cut programs to politically weak clients4. Sell and lend expertise to other agencies5. Share problems with other agencies

External Economic or Technical (environmental entropy)

1. Find a wider and richer revenue base (for example, metropolitan reorganization)

2. Develop incentives to prevent disinvestment3. Seek foundation support4. Lure new public and private sector investment5. Adopt user charges for services when possible

1. Improve targeting on problems2. Plan with preservative objectives3. Cut losses by distinguishing between capital

investments and sunk costs4. Yield concessions to taxpayers and employers

to retain them

Internal Political (political vulnerability)

1. Issue symbolic responses, such as forming study commissions and task forces

2. “Circle the wagons”—develop a siege mentality to retain esprit de corps

3. Strengthen expertise

1. Change leadership at each stage in the decline process

2. Reorganize at each stage3. Cut programs run by weak subunits4. Shift programs to another agency5. Get temporary exemptions from personnel and

budgetary regulations that limit discretion

Internal Economic or Technical (organizational atrophy)

1. Increase hierarchical control2. Improve productivity3. Experiment with less costly service-delivery

systems4. Automate5. Stockpile and ration resources

1. Renegotiate long-term contracts to regain flexibility

2. Install rational choice techniques such as zero-based budgeting and evaluation research

3. Mortgage the future by deferring maintenance and downscaling personnel quality

4. Ask employees to make voluntary sacrifices such as taking early retirements and deferring raises

5. Improve forecasting capacity to anticipate future cuts

6. Reassign surplus facilities to other users7. Sell surplus property, lease back when needed8. Exploit the exploitable

Source: Levine, 1980b. Reproduced by permission of Chatham House Publishers, Inc.

Innovation and Organizations

• Innovation is an organizational survival response.

• Innovative managers tend to have certain characteristics. Linden (1990) notes seven:1. Strategic action 2. Holding on and letting go3. Creating a felt need for change 4. Starting with concrete change5. Using structural changes6. Dealing with risk 7. Using political skills

Attributes of Innovations That Affect Their Implementation

1. Cost—initial and continuing; financial and social 2. Returns on investment3. Efficiency—improvements in efficiency offered by innovation4. Risk and uncertainty5. Communicability—clarity of the innovation and its results6. Compatibility—similarity to existing product or process7. Complexity8. Scientific status9. Perceived relative advantage—whether potential advantages can be demonstrated or made

visible10. Point of origin—from inside or outside the organization; from what person, unit, or institution 11. Terminality—whether the innovation has a specific endpoint12. Reversibility and divisibility—whether the innovation can be reversed or divided into steps or

components so that the organization can return to the status quo if necessary 13. Commitment—the degree of behavioral and attitudinal commitment required for success 14. Interpersonal relations—how the innovation influences personal relations15. Public- versus private-good attributes—whether the innovation provides public benefits or

restricts benefits to a smaller set of individuals16. Gatekeepers—how the innovation is related to various influential persons or groups that can

block or initiate the innovation17. Adaptability—whether users can modify and refine the innovation18. Successive innovations—prospects for leading to additional innovations

Source: Adapted from Zaltman, Duncan, and Holbek, 1973.

Large-Scale Planned Change

• Organizations can initiate purposeful planned change. • Resistance to change: Many authors have argued that

traditional bureaucratic forms of organization inhibit change.

• The rule-oriented characteristics and the normal human tendency to resist change bring about resistance.


• Good reasons to resist change:• Some new ideas are simply bad and the people with the most

experience realize it.

• Many elected officials and political appointees initiate reforms but show a disinclination to become deeply involved in implementing them.

• Mandates can be ambiguous and their tenure short. This can deprive the change process of essential support and leadership.

• Dilemma about organizational change in government: Successful change requires sustained support from higher levels, participative planning, and flexible implementation. Much literature suggests their scarcity in the public sector.


• There are at least four types of change (Daft, 2013). • Technology changes • Administrative changes • Changes in products and services • Human resource changes

• Frequently, these changes intertwine.

• Tichy (1983) argued that strategic change should coordinate different dimensions of changes to affect large-scale transformations.


• Three types of change that can occur in individual responses to an organization (Golembiewski, 1986)1. Alpha change is a shift in assessment from one level

to another, for example, job satisfaction.

2. Beta change is a shift in the respondent’s metric, so that there is a change in distance between scale anchors from state A to state B.

3. Gamma change involves a general change in state, so that it is no longer comparable from one state to the next.

Phases of an Action Research Model for Organizational Development

1. Performance gap: Key executives perceive problems. 2. Executives confer with an organizational consultant. 3. Diagnosis: The consultant begins a process of diagnosis and data gathering. 4. Feedback: The consultant communicates the results to key clients and client

groups. 5. Joint action planning: The consultant works with client groups in planning the

objectives and procedures (such as team building) for the OD program. 6. Further data gathering: The consultant continues to monitor perceptions and

attitudes.7. Further feedback: In team-building sessions or other settings, the organizational

members address the problems identified in the diagnostic work. 8. The client groups discuss and work on the data from the diagnosis and earlier

sessions. New attitudes emerge. 9. Action planning: The groups set objectives for further development and develop

plans for getting there.10. Action: The plans are carried out, and new behaviors develop. 11. Further data gathering. 12. Further feedback.13. Further action planning. 14. Continuation and consultant departure: The cycle of diagnosis, feedback,

planning, and action continues until the appropriate point for the departure of the consultant.

Source: Burke, 1994; French and Bell, 1999.

Organizational Development • The aim of OD is to improve the functioning of organizations,

especially along human relations and social dimensions, by applying social scientific theory and techniques.

• OD focuses on improving communication, problem solving, conflict airing and resolution, decision making, and trust and openness.

• OD has firm roots in the human relations orientation and in the groups dynamics movement.

• OD practitioners tend to value personal growth for people in organizations.

• OD interventions include a variety of techniques including surveys, team-building techniques, process consultation, T-groups, encounter groups, or sensitivity sessions.

Organizational Development

• The complexity of organizations and their problems make it hard for OD consultants to establish and prove clear success.

• Critics sometimes attack OD for this lack of substantive theory and theory-based research.

• Tichy (1983) argued that OD concentrates on only human resources issues when large-scale strategic changes require coordinating these issues with strategies for improving the organization’s technical and political dimensions.

OD in the Public Sector• Application of OD may present more challenges in public

sector (Golembiewski, 1969). • Complex interests and reward structures, multiple political actors

within and outside organizations, and diffuse authority

• But OD writers say it can succeed—it’s challenging but manageable. • Golembiewski (1985) reported evidence that OD projects in the

public sector enjoy a relatively impressive success rate.

• Despite some controversies, these results imply that planned change initiatives appear to succeed about as often in public organizations as they do in private organizations.

Successful Revitalization in Public Agencies

• Greiner (1967) analyzed eighteen major change attempts and drew conclusions about the patterns of successful change, emphasizing the following conditions and steps:

– Widely perceived pressure for improvement – A new change agent from outside– The deep and sustaining involvement of top executives – A general diagnosis initiated by the change agent – Participation from many units and levels in diagnosis

process – Solution development by the participants and small-scale

experiment – Use of successes for reinforcing results

• Greiner emphasizes the key role of power sharing in successful patterns of change.


• Kotter (1995) suggested eight steps for successful organizational transformations:

1. Establishing a sense of emergency 2. Forming a powerful guiding coalition 3. Creating a vision 4. Communicating the vision 5. Empowering others to act on the vision 6. Creating short-term wins 7. Consolidating improvements and producing further

change 8. Institutionalizing the new approach


• Kotter’s observation (1995) differed from Greiner’s in important ways.

• Kotter referred to “vision” and emphasized the role of “a guiding coalition” in contrast to Greiner’s focus on a change leader who comes from the outside.

• Huber and Glick (1993) also emphasized the essential role of “shared values” and leadership teams rather than individual leaders.

Similarities of Greiner and Kotter• Both commonly emphasize

• Widespread belief in the need for change • Clear, sustained leadership, including support from top

leadership

• Broad participation in diagnosing problems and planning the change

• Flexible, incremental implementation, involving experimentation, feedback, adaptation

• Building on prior success to institutionalize change


• Poister (1988a) provided a compilation of revitalization case studies. • All emphasize developing a shared vision and mission, strategic

planning, and developing the organization’s leadership and culture.

• All involve redistributions of power toward more active involvement of the agency’s members.

• Effective revitalization campaigns also require the agency managers to develop and maintain effective political support, to provide resources and a mandate for the changes.

• Success requires both skillful employment of generic principles of organizational change and skill in dealing with the political context and administrative features of public organizations.

Two Contrasting Cases

• The “O Area” reforms in the State Department

• Modularization of claims processing in the Social Security Administration

The U.S. State Department’s Unsuccessful Attempt to Decentralize• Warwick (1975) argued that failure is due to the

political and institutional context of government and the internal cultures of public agencies that impede change. Further, effective change in public agencies must

– Include efforts to build broad-based consensus about the need of change within the agency and to gain support from external controllers and allies

– Build a coordinating body to monitor and sustain the change despite the turnover among top executives

Case of Social Security Administration

• In a contrast to Warwick study, Rainey and Rainey (1986) discussed the success of the Social Security Administration in the modularization of claims processing.

• Under the right circumstances, applying sound principles of change, skilled public managers and employees can carry out major changes very effectively.

Patterns of Successful Organizational ChangePhase I: Pressure and Arousal 1. There is significant external and internal pressure for change. There is a widespread perception of

performance gaps and of a need for change, placing pressure on top management.

Phase II: Intervention and Reorientation2. A new person enters as change leader. The person has a record as a successful change agent and

enters as a leader of the organization or as a consultant working with the leader. 3. The new person leads a reexamination of past practices and current problems. The newcomer uses his

or her objective, external perspective to encourage examination of old views and rationalizations and attention to “real” problems.

4. Top management becomes heavily involved in the reexamination. The head of the organization and his or her immediate subordinates assume a direct, heavily involved role in the reexamination.

Phase III: Diagnosis and Recognition5. The change leader engages multiple levels in diagnosis. The change leader involves multiple levels and

units in collaborative, fact-finding, problem-solving discussions to identify and diagnose current problems. The diagnosis involves significant power sharing.

Phase IV: Invention and Commitment6. The change leader stimulates a widespread search for creative solutions, involving many levels.

Phase V: Experimentation and Search7. Solutions are developed, tested, and proven on a small scale. Problems are worked out and solved.

Experimentation is encouraged.

Phase VI: Reinforcement and Acceptance8. Successes are reinforced and disseminated and breed further success. People are rewarded. Successes

become accepted and institutionalized.

Source: Adapted from Greiner, 1967.

Steps for Successful Organizational Transformation1. Establish a sense of urgency.

• Examine market and competitive realities. • Identify crises and opportunities.

2. Form a powerful guiding coalition. • Assemble a group with enough power to lead the change effort. • Encourage the group to work as a team.

3. Create a vision. • Create a vision to help direct the change effort. • Develop strategies for achieving that vision.

4. Communicate the vision. • Use all available means to communicate the new vision and strategy. • Have the guiding coalition teach the necessary new behaviors by example.

5. Empower others to act on the vision. • Remove obstacles to change. • Change systems of structures that present obstacles.

6. Create short-term wins. • Plan for visible performance improvements. • Create those improvements.• Recognize and reward employees involved in those improvements.

7. Consolidate improvements and produce further change. • Use increased credibility to change systems, structures, and policies to pursue the

vision. • Hire and develop employees who can implement the vision.

8. Institutionalize the new approach. • Articulate the connection between the new behaviors and organizational success. • Ensure leadership development and succession.

Source: Adapted from Kotter, 1995.

Conditions for a Successful Change in a Federal Agency

1. A durable power center, committed to successful change• Strong, stable leadership by career civil servants• An internal change agent (career agency executive) with sufficient authority and

resources • Active, creative bureau staff

2. Appropriate timing for collective support• A political “window of opportunity”• Political overseers (congressional committee heads) who are supportive but not

interventionist • Political sophistication of agency leaders and staff—effective management of

relations with Congress and oversight agencies (OPM, GSA)• Strategies that blend sincere employee involvement with decisive exercise of

authority 3. A comprehensive, clear, realistic, alternative process

• A long-term change strategy, using group processes to develop new structures• A major structural reform, focused on measurable outputs, that decentralizes

operational responsibility • Reasonable clarity about the nature and objectives of the new structure and

process

Source: Rainey and Rainey, 1986.

Week12 rainey chapter_13

Education

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