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Carnegie school theory of organizational change
- 1. MEKOWULU FAVOUR CHIMDIOGO KBS BA 52 THE CARNEGIE SCHOOL THEORY OF ORGANIZATIONAL CHANGE. INTRODUCTION It's difficult to discuss any beneficial organizational change without examining it in the context of change management. After all, change can be managed well or poorly, but unmanaged change quickly leads to chaos and an organization's downfall. What Is Organizational Change? Organizational change is both the process in which an organization changes its str ucture, strategies, operational methods, technologies, or organizational culture to affect change within the organization and the effects of these changes on the orga nization. Organizational change can be continuous or occur for distinct periods of time. Organizational change is the movement of an organization from one state of affairs to an other. Organizational change can take many forms. It may involve a change in a compan y’s structure, strategy, policies, procedures, technology, or culture. The change may be p lanned years in advance or may be forced upon an organization because of a shift in the environment. Organizational change can be radical and alter the way an organization operates, or it ma y be incremental and slowly change the way things are done. In any case, regardless of t he type, change involves letting go of the old ways in which work is done and adjusting t o the new ways. Therefore, fundamentally, it is a process that involves effective people management. Th is article presents an overview on the concept of organizational change and the related fa ctors.
- 2. Defining Change Management Change management is the process, tools and techniques to manage the people side of c hange to achieve the required business outcome. Change management incorporates the organizational tools that can be utilized to help ind ividuals make successful personal transitions resulting in the adoption and realization of change. Change affects... > Processes > Systems > Organization structure > Job roles While there are numerous approaches and tools that can be used to improve the organiza tion, all of them ultimately prescribe adjustments to one or more of the four parts of the organization listed above. Change typically results as a reaction to specific problems or opportunities the organization is facing based on internal or external stimuli. While the n otion of becoming “more competitive” or “closer to the customer” or “more efficient” ca n be the motivation to change, at some point these goals must be transformed into the sp ecific impacts on processes, systems, organization structures or job roles. This is the pro cess of defining the change.
- 3. One of the cornerstone models for understanding organizational change is social scientist Kurt Lewin’s three-stage model developed in 1951: Unfreeze-Change- Refreeze. Unfreeze Unfreeze represents the stage before the change occurs -- the point at which the status quo ends. Organizations determine the need for change and develop messaging that details why current ways will no longer work. Old customs and norms are replaced. As this happens, employees experience uncertainty about how changes will impact them. This uncertainty may lead to a fear of change that may, in turn, spur dissent. Change During the Change stage, organizations incorporate new behaviors, and employee uncertainty eases. Communication and training are essential to help employees understand their roles in making change happen. As organizations foster this understanding, people start to buy in to the new ways that will support the organization’s new vision. Employees are most likely to accept change if they understand how the changes will benefit them. However, some people -- particularly those who benefit from the status quo -- may be adversely impacted by change, and it will take time for others to recognize the benefits.
- 4. Refreeze Refreezing takes place after the change. This is the point when organizations establish the change as the standard. Those affected embrace the new ways of working. Moreover, reinforcement and measurement of behavior changes take place. Incentive systems are put into place to achieve desired behaviors. Performance appraisals, promotions. Why is Change Important in an Organization? Any business in today's fast-moving environment that is looking for the pace of change to slow is likely to be sorely disappointed. In fact, businesses should embrace change. Change is important for any organization because, without change, businesses would likely lose their competitive edge and fail to meet the needs of what most hope to be a growing base of loyal customers. In this fluid world, all organizations are affected by change. The extent to which an organization manages change often dictates whether that organization will thrive, or even survive.
- 5. The Carnegie perspective of Organizational change was created in the late 1950s and mid1960s. It concentrated on examining wellsprings of adjustment and change in an association. Change has been variously defined as making a material difference in something compared to an earlier state, transforming or converting something, or simply becoming different. All of these definitions can be applied to change as it occurs within organizations and businesses. Organizational change may mean changing technological infrastructures (e.g., moving from a mainframe environment to distributed computing), marketing strategies (targeting a new customer base), or management and decision-making practices. The most revered business professionals of the United States have been those who were best able to exploit changes in business and the economy. For example, in the late nineteenth century, Andrew Carnegie greatly expanded his empire by purchasing the very businesses he depended on for his steel business, making his company one of the first successful examples of vertical integration. The Carnegie School Theory of Organizational Change It focused on studying sources of stabilization and change in an organization. The Carnegie School made three important contributions to organizational change. Failure-induced change: The theory of fear-induced change is rather simple. An organization will change its strategies, technology, culture, and other features of the organization in response to failure in an attempt to reach its goals. For example, if your company's old computer systems are wreaking havoc on your company's productivity, you may upgrade the systems to reach productivity goals. Routinization of organizational activity: According to the Carnegie School, standard procedures, programs, and routines provide stability to an organization. Organizational change occurs when these standards are changed. Standard routines and processes can also help with organizational change according to the Dynamic Capabilities Approach to Management. Under
- 6. this approach, processes and routines are used to help an organization facilitate and adapt to change. A classic example is a company's research and development department, which aids the company in keeping up in a competitive market. Model of organizational learning: The Carnegie School also proposed a model for a learning organization. You should first note that learning is a different concept from change. You can learn without changing and change without learning; however, change, including fear-induced change, can influence learning. Learning can also increase the chance of effective organizational change. According to the model, organizational learning requires four components: knowledge acquisition, information distribution, knowledge interpretation, and organizational memory. The Carnegie school theory was developed in mid-1950 and aimed to exemplify the drivers of stability and change in an organization. The theory states that organizations engage in change when they face failure in their current business procedures. If the current nature of the business model, technical feasibility, human resource policies and organization culture do not lead the company towards their goals, then it leads to a failure induced need for change. The Carnegie school theory states that the source for stability in the organization are the routine procedures and programs in the business and when the standard practices do not help develop stability in the business, then the need for change arises. The major reason for the change is to tighten up organizational procedure to ensure more efficiency for the optimization of resources. People don't like change and attempts to implement change may be futile if not done with the proper change management techniques. Change management is a vital aspect of successful organizational change and refers to the methodology used to transition employees and organizational procedures to the new methods intended to bring about optimization of organization resources and profitability as well as a significant reduction of costs. In, essence, change management how management plans to reshape how the enterprise works to fit more realistic and achievable goals depending on the nature of the business and the environment. Concerning change management, it is important to understand
- 7. what change entails to have a clear picture of what to consider while designing a change plan. THE DALE CARNEGIE MODEL The Dale Carnegie Training Change Model can help leaders prepare for change, engage their employee through the change, and drive positive outcomes. This model allows leaders to take a structured approach to organizational change, while maintaining flexibility in implementation. Step 1: Establish a Motivation for Change Step 2: Analyze the Situation Step 3: Plan the Direction Step 4: Implement the Change
- 8. Step 5: Review the Direction Step 6: Adopt or Adjust STEP 1: MOTIVATION FOR CHANGE The Change Model begins at the point where the organization finds a motivation for change. Sometimes external issues drive the change, like reorganizations, management changes, relocations, changes in economic conditions, changes in customer needs or mergers/acquisitions. Other times internal forces drive change, such as technology innovations, expansion, and growth, or just the
- 9. desire for continuous improvement. STEP 2: ANALYZE THE SITUATION As the organization becomes progressively more motivated to change, leaders must undertake a thorough analysis of the risks and opportunities associated with the proposed change What are the potential gains in undertaking the change? • What are the costs? • What are the risks of making the change? • What are the risks of not making the change? STEP 3: PLAN THE DIRECTION Once the determination is made that opportunities outweigh the risks, a plan is developed for change implementation. Many organizational change initiates fail because of poor planning. In this step of the model, the foundation for execution is established. Key elements of the plan must include: • Planning for the impact of the change on individuals who will be most affected. • Planning for the impact of the change on the systems within the organization that will be most affected. • A step-by-step plan for integrating the change into the organization. • A review plan to measure the success of the proposed change.
- 10. STEP 4: IMPLEMENT THE CHANGE Depending on the type and scope of the change, implementation within the organization maybe gradual or abrupt. Changes such as layoffs or acquisitions often are implemented with little prior warning, while staffing, reorganizations, or technology changes may be phased in over a period of time. The team’s most critical role in this step of the change process is to maintain open, honest lines of communication with each other. • Define individual responsibilities. • Announce and launch the change. • Adhere to timetables. • Promote the anticipated benefits of the change. STEP 5: REVIEW THE DIRECTION Once change has been implemented, the outcomes of the new structure and system must be monitored. Change will not evolve exactly as planned, and every individual affected by the change will not react as anticipated. Our role as a leader is to observe and review benchmarks that will reveal whether the change is working as anticipated and is producing the desired results. • Establish benchmarks to measure results. • Communicate criteria for successful change outcomes. • Coordinate the gathering and measuring of change effects. • Inform key team members consistently during the review process.
- 11. STEP 6A: ADOPT When the change implementation has been reviewed and found to be succeeding as planned, the new concept, approach or process is adopted, and becomes part of the new organizational norm. The review process is not terminated, but it transitions to the ongoing monitoring of the changed systems and relationships within the organization. • How well is the change meeting planned outcomes? • How well have individuals adjusted to the new status quo? • What aspects of the change have not met expectations? • What is the leadership role in making those aspects more successful? STEP 6B: ADJUST If the review process concludes that the change is not working as planned, adjustments need to be made to the change implementation. Assuming that the change analysis and plan have been executed accurately, adjustments to the implementation of the organizational change should achieve the desired results. • Determine where the outcomes are falling short of the plan. • Engage key individuals in determining adjustments that need to be made. • Keep the lines of communication open with everyone involved. • Make adjustments to the review process as well as the change implementation. THE CARNEGIE SCHOOL OF ORGANIZATIONAL THEORY Decision making in a rational model (HA Simon)
- 12. Standard model – intentional, future-oriented, leading to optimal choices • Assumes accurate knowledge about all alternatives • Certainty = consequences of all alternatives are known • Uncertainty into risk =probability distribution of consequences of all alternatives can be estimated • Consistent ordering of preferences when comparing alternatives and their consequences = utility function maximizes preferred choice • Decision rules to select among alternatives and their consequences LIMITS OF AMBIGUITY : UNCERTAINTY AND AMBIGUITY Organisations and members may intend to be rational, but often act on bounded rationality • Incomplete / incorrect information without awareness about alternatives • Information overload and limits to human cognitive capacities • Rarely a well defined preference function to compare alternatives and their consequences • Preference discovered through action (not action guided by extent preferences) • Coordinate inconsistent and conflicting goals through trial and error AMBIGUITY IN ORGANIZATIONAL • AMBIGUITY OF INTENTION : organizations often have ill defined and inconsistent goals and preferences . • AMBIGUITY OF UNDERSTANDING : difficult for organizations to interpret what happens in their environment and to recognize the causal relation between organizational consequences and actions. • AMBIGUITY OF HISTORY : path dependence of organization is important, but the past is not easily interpreted. • AMBIGUITY OF ORGANIZATION : members of organizations come and go, their participation in decision making is uncertain and changing. CONSEQUENCES FOR ORGANIZATIONAL CHOICES BOUNDED / LIMITED RATIONALITY :
- 13. • Individuals are intended rational ( decision makers try to be rational) but are constrained by limited cognitive capabilities and incomplete information. • Search for a solution that is “Good enough “ Decisions in organization often just happen MAJOR QUESTION : How do organisations manage to achieve their goals as a collectively when they are composed of individual decision makers who face bounded rationality, an uncertain organizational environment, and a limited capacity to process information and perform tasks?. Organizational decision-making and - The School BIBLIOGRAPHY https://www.hospitalitynet.org/opinion/4083875.html https://www.cairn.info/revue-management-2018-4-page-1278.htm