Class, when I grade discussion or any written assignments I use th.docx
1. Class, when I grade discussion or any written assignments I use
the 80/20 rule. This means that 80% of any discussion post or
written assignment must be your original work, not quoted
material from another source. Another way to say this is that no
more than 20% of any discussion post or written assignment can
be quoted material. I want to hear what you know, not what
someone else knows. So, skip the cut and paste and write your
own responses and papers.
Class, when I grade discussion or any written assignments I use
the 80/20 rule. This means that 80% of any discussion post or
written assignment must be your original work, not quoted
material from another source. Another way to say this is that no
more than 20% of any discussion post or written assignment can
be quoted material. I want to hear what you know, not what
someone else knows. So, skip the cut and paste and write your
own responses and papers.
1 Organizational Change Management: An Introduction
Didem Hizar/Hemera/Thinkstock
Learning Objectives
After reading this chapter, you should be able to do the
following:
1. Explain planned organizational change and analyze Kotter’s
eight-step change process.
2. Compare and contrast the fields of organizational
development and change management.
3. Pretest Questions
1. True/False: Planned organizational change is a process that
shields an organization
from external legal and technological changes.
2. True/False: The fields of organizational development (OD)
and change management
are similar in that both are based in the discipline of operations
management.
3. True/False: Change is the result of opposing forces that move
with and against an
organization’s status quo.
4. True/False: As a force for change, competitive advantage
means advancing within an
industry while maintaining some degree of organizational
stability.
5. True/False: Tactical models of organizational change seek to
address short-term
issues and opportunities.
6. True/False: The stakeholder approach to change suggests that
an organization can-
not be socially responsible and seek profitability at the same
time.
The Chinese international commerce company Alibaba was
founded in 1999 by Jack Ma, a
visionary businessman with a knack for change in his DNA. He
launched Alibaba.com—an
e-commerce platform that focused on small export firms—from
his Hangzhou apartment. It has
5. exploitation)” (p. 78).
A quick examination of Alibaba’s brief history demonstrates
how the company has used self-
tuning concepts to adjust to—and even create—customer
demand. The company moves quickly
to diversify its product offerings and markets by creating spin-
off companies. This practice
characterizes Alibaba’s successful change and evolution—at
least to date. For example, in 2003
Alibaba launched Taobao Marketplace to test China’s consumer
demand. It then rapidly created
yet another spin-off, Aliwangwang, in 2004 that enabled instant
messaging on the Taobao
website. Enlarging the company’s business model, Alipay was
also started in 2004, creating an
infrastructure that experimented with and strengthened
consumer confidence in online business
transactions. It worked. In 2008 Taobao was renamed TMall,
which included a business-to-
customer platform and e-commerce ecosystem.
In 2009 Alibaba Cloud Computing was started to keep up with
bleeding edge storage and
retrieval technology. AliExpress was launched in 2010, which
moved the company into a
global position and provided it with an online international
consumer website. In 2011 TMall
and eTao (a shopping comparison website) became independent
platforms in order to enable
Alibaba to explore the future of customer demand and e-
commerce in China. Cainiao, China
Smart Logistics, was then launched in 2013, further enlarging
the company’s scope from
e-commerce to emphasizing infrastructure. In 2014 Ant
Financial Services Group was formed,
7. Introduction
Introduction: Importance of Organizational Change
The prevalence of organizational change management is
growing exponentially. Three
decades ago, most university curricula did not include courses
on change management. Now
such courses are commonplace (Worren, Ruddle, & Moore,
1999; see also Project Manage-
ment Institute, 2015). A McKinsey & Company study of
189,000 employees from 81 diverse
organizations found that championing desired change was one
of the most important leader-
ship behaviors (as cited in McKeown, 2015). The growing
popularity and need for organiza-
tional change management is due in large part to the rapid and
pervasive amount of change
we regularly face.
The world has changed dramatically over the past 30 years, as
have how we think, what we
think, and how we communicate. Globalization and technology
have made the world far more
interconnected, so what affects one business sector or one part
of the world invariably affects
everyone. Economic uncertainty in Europe and Asia affects
exports in the United States. An oil
spill in the Gulf of Mexico affects the restaurant industry in
every corner of the country, from
Boston to Seattle. Decades ago, events could be isolated; today
change is everywhere and can
occur at any time. To be effective in such a marketplace, it is
essential to manage change. Lead-
ing and managing organizational change has become a core
competency for business profes-
sionals. Companies not only need to manage change to survive,
8. but to create a competitive
advantage.
Rival Internet companies Google and Facebook are good
examples of the importance of using
change to gain a competitive advantage. Although Facebook is
the leading social network-
ing website and has overtaken websites like Friendster and
Myspace, larger competitors like
Google, Microsoft, and Apple are not waiting for their territory
to be encroached on—they
are therefore continually moving forward with technological
breakthroughs. In the words of
David Rowan, editor of Wired magazine, Facebook and Google
are “in the ultimate battle for
control of the Internet” (Rowan, 2010). He asserts that Google
hires the world’s smartest soft-
ware engineers, and this, along with
algorithm-based computing power,
has helped them dominate the desk-
top-Internet era for a decade. On the
other side, he suggests that Facebook
strives to know all of what society is
thinking, doing, and purchasing, and
this helps it play a critical role in all of
its members’ big and small life deci-
sions (Rowan, 2010; see also Nagarkar,
2015).
As Facebook’s scope and reach con-
tinues to grow, Google’s executives are
taking note and ensuring they follow
suit. Both companies are extending
into markets that no one ever antici-
pated. As this trend unfolds, more
companies will no doubt implement
10. which include being unable to gain access to needed capital and
effectively innovate and
market; failing to adequately control growth; demonstrating
poor accounting and operational
inefficiencies; not enabling employees to work smarter (using
technology); and failing to
address regulations (U.S. Small Business Administration, 2015;
see also All Business, 2015).
Not all changes are dramatic, or even involve the entire
organization. Some divisions, busi-
ness units, departments, teams, and individuals may require
varying amounts of change to
increase effectiveness and obtain desired results. As we discuss
in a later section, experts
in change management offer particular knowledge in diagnosing
and addressing issues.
Although we focus on large-scale change here, we also
acknowledge and discuss different
types, scales, and scopes of organizational change, grounded in
models and skills with which
to plan and implement these strategies.
In large and small organizations, significant changes are
typically not easy or linear to imple-
ment. Larger changes tend to become overly complicated,
especially if an organization lacks a
realistic plan. Because organizational change involves people
and their emotions, resistance
is natural. Who wants to change jobs and routines they know? A
survey of 3,199 executives
worldwide found that only 1 in 3 transformational
organizational change programs succeeds.
Other experts estimate that between 50% and 70% of major
organizational change efforts fail
(All Business, 2015; Salim, 2015).
11. Organizational change efforts could avoid failure if leadership
followed different strategic and
tactical plans and implementation steps. Leadership is
particularly crucial to executing an
effective change program. Effective change projects call for
leaders and managers who are
emotionally intelligent and mindful. Such leaders need to be
flexible, creative, and good com-
municators who work well with people. Also, companies must
not only know what types of
change to watch for, but how to implement effective strategies
to survive and thrive. This
chapter will provide a broad overview of types of changes, the
forces that induce change,
and organizational frameworks for dealing with change. We
begin with two of the most well-
known frameworks for planned organizational change.
1.1 Kotter’s Eight-Step Approach
Broadly speaking, planned organizational change is a process
that moves companies from a
present state to a desired future state with the goal of enhancing
their effectiveness. Ultimately,
the goal of planned organizational change is to improve an
organization’s capabilities, thus
enhancing its value to stakeholders and stockholders (Beer,
1980). Organizational leaders,
managers, and employees who do not—or cannot—use change
to their strategic and opera-
tional advantage may see change as threatening and may resist
efforts to alter a problematic
situation. Those leaders and professionals who work with
change specialists are more likely to
view change as a competitive advantage if change is
conscientiously planned and implemented.
13. success, survival, or failure
(Lohr, 2015). This goes against conventional wisdom, which
assumes that planning processes
start with a vision or goal. However, Kotter believes that
individuals are not motivated with-
out an initial sense of urgency. Creating one involves examining
markets and competitive
realities and identifying and discussing crises, potential crises,
or major opportunities. Small
companies and start-ups usually have a greater sense of urgency
to change than do large
organizations, because their very existence is at stake.
Kotter (2007) has found that more than 50% of companies fail
during this first phase because
executives (a) either underestimate the difficulty of moving
people out of their comfort zones
or overestimate their own ability to create a sense of urgency;
(b) lack patience—or as some
say, “Enough with the preliminaries, let’s get on with it”; or (c)
become paralyzed by the pos-
sible drawbacks, which can include defensiveness among
employees, lack of morale among
senior employees, or an overarching fear that things will spin
out of control, business will
suffer, stocks will sink, and they will be blamed for these and
other mistakes. Kotter states
the urgency rate is high enough when 75% of a company’s
management actually believe that
“business as usual” is no longer acceptable.
Step 2. Form a Powerful Guiding Coalition
According to Kotter (2007), the second stage of planning
change is to form a powerful guiding
coalition. This is accomplished by assembling a group with
15. and communicated later in the
process, based on this step. The process of creating a sensible,
realistic statement and strate-
gies can take 3 to 12 months. Large-scale change efforts that
fail either have several plans and
programs but no vision or a vision that is overly complicated
and “blurry.”
Step 4. Communicate the Vision
Kotter (2008) states that the coalition must actively
communicate the vision, which involves
using every vehicle possible to ensure that employees
understand the new vision and strategies
for achieving it. Communication also involves teaching new
behaviors, which the guiding coali-
tion should model and exemplify. Vision should be simple,
crisp, and concise: A vision that can-
not be communicated to someone in 5 minutes will usually not
work. Effectively communicating
the vision can make or break the buy-in from employees, who
may be required to make signifi-
cant sacrifices if the change is to succeed. Kotter notes that
employees will not make sacrifices if
they do not believe the change is possible. Therefore, credible
communication must win so-
called hearts and minds if employees are to accept the changes.
Moreover, a successful vision
typically includes a plan for growth and certain assurances,
such as if employees are laid off,
they will be treated justly.
The guiding coalition should use
words and actions to communicate the
vision. Leaders and coalition members
must “walk the talk” rather than sim-
17. the better. It is therefore important to remove obstacles that
hinder change. Organizational
structures, compensation and performance criteria, or outdated
technologies may have to be
removed or altered. Obstacles can also be individuals, such as
department heads or managers
who do not believe in the change and/or refuse to adjust their
attitudes, behaviors, and prac-
tices. However, whether someone accepts or resists the change,
everyone should be treated
equally and in a manner that reflects the new vision (Kotter,
2007).
Step 6. Plan for and Create Short-Term Wins
Next, Kotter (2008) advises planning for and creating short-
term wins, which involves estab-
lishing visible and tangible performance improvements. Once
these improvements are evi-
dent, it is important to recognize and reward the employees that
facilitated them. Change
efforts are unsuccessful when executives do not systematically
plan for or create short-term
wins. Since large-scale transformations take time, employees
need to see results around 12 to
24 months into the change; otherwise, resistance may set in.
Step 7. Consolidate Improvements and Produce More Change
After planning and celebrating short-term wins, Kotter (2008)
says change leaders must con-
solidate improvements and produce still more change. They can
do this by using the credibility
they have accrued from their expertise and experience to change
systems, structures, and
policies that do not fit together or with the new vision. They
18. can also hire, promote, and train
employees who can implement the vision and reinvigorate the
process. It is important to note
that Kotter warns about declaring victory too soon into a major
change initiative and empha-
sizes that real change takes time. As he says:
In one of the most successful transformations that I have ever
seen, we quanti-
fied the amount of change that occurred each year over a seven-
year period.…
The peak came in year five, fully 36 months after the first set of
visible wins.
(Kotter, 2008)
Step 8. Institutionalize New Approaches in the Culture
Finally, it is important to anchor and institutionalize new
approaches in the culture. This means
making the change accepted and established in the
organization’s culture. Organizations
accomplish this by increasing their performance through
customer- and productivity-related
behaviors. It is also important to articulate and reinforce
productive and empowering rela-
tionships between the new behaviors and organizational
successes so that employees do not
misinterpret the effects of the change. This is the first step
toward institutionalizing the new
approach in the company’s culture. The second step is to
cultivate the means to ensure leader-
ship development and succession so that future leaders
understand and embody the changes.
Therefore, according to Kotter (2008), succession planning (that
is, setting the next chief
20. Cook has effectively transitioned into
his role as CEO, sustaining the innova-
tions Jobs created and moving on to
newer ones. Anchoring and institu-
tionalizing effective transformational
changes from one CEO or management
team to another is not easy, but effec-
tive succession planning allows compa-
nies to continue approaches that have
worked in the past and plan new ones to
meet future environmental challenges.
Let’s now turn our attention to how
planned organizational change is
developed, by whom, and how an
understanding of two types of change
specialists can help organizations negotiate and manage changes
that occur both internally
and externally.
Check Your Understanding
1. The first step in Kotter’s eight-step model is to establish a
sense of urgency. How do you think
companies like Apple, Amazon, and Google can create a sense
of urgency when they are already
leaders in their industries?
2. Kotter believes it is necessary to create short-term wins when
establishing change. Why do you
think this is important?
1.2 Organizational Development and
Change Management
22. Organizational Development
The field of organizational development (OD) is “the practice of
changing people and orga-
nizations for positive growth” (OD Portal.com, n.d., para. 1).
OD is the planned, organization-
wide improvement of business processes to increase a
company’s effectiveness and overall
health. The planned changes are managed by executive
leadership and based on behavioral
science knowledge.
OD was the first professional field in
management/organizational behavior and development
to establish social science–based strategies and tools to
diagnose, plan, and help business
leaders implement organizational improvement changes. OD as
a specialized area has been
described as a “data-based process supported by survey
feedback, a sociotechnical approach
that is centered on job tasks and characteristics, and an
interpersonal process approach led
by group dynamics” (Waclawski & Church, 2002; see also
Burke & Noumair, 2015, p. 16). This
field differs from those such as accounting, law, or politics,
because it overlaps with other
fields such as organizational behavior, change management, and
consulting processes. Other
disciplines have a focused sense of purpose, whereas OD is
always evolving and does not yet
have basic boundaries or parameters, despite discussion and
debate from OD practitioners
regarding the nature of the field (Church, Hurley, & Burke,
1992; Friedlander, 1976; Greiner,
1980; Weisbord, 1982; Waclawski & Church, 2002).
23. Pioneers and those active in OD pride themselves on the
inclusivity and diversity of their pro-
fession’s values and methods. Organizational development
specialists, many of whom are
academics and organizational behavior professionals, are a
major source of organizational
change expertise, both theoretical and applied.
OD differs from change management in several ways. OD is
based on humanistic, egalitar-
ian, and process-oriented values; in short, it is grounded more
in the “people side” of things.
Change management, on the other hand, is based on the content-
based disciplines of busi-
ness, finance, strategic, and operations management. Both fields
have expanded to include
parts of each, while still maintaining certain subject matter
expertise. Leaders and consul-
tants from both fields are important and complementary to
planning organizational change.
We use the term specialists for both OD and change
management experts. This term encom-
passes consultants, practitioners, and others with expertise in
these areas.
Specialists use organizational development methods that focus
mainly on people and the
human dimensions of organizations, such as culture, climate,
leadership, and communication.
These methods involve team building, survey feedback, quality
of work life, restructuring work
and positions, and job satisfaction (French & Bell, 1978). As
the field of OD has evolved, it has
incorporated change planning and interventions that also focus
on structural, work process,
25. to effectively implement these goals. During her work with this
division, she may discover
that the goals do not connect well with the company’s overall
strategy. When reporting her
findings to the hiring manager, she shares this discovery and
perhaps extends the contract to
address larger related issues in the organization.
OD specialists rely on a variety of theories, concepts, and
practical applications that are dis-
cussed in more detail in the following chapters. For example,
specialists use systems theory.
This is the idea that organizations are a system comprising
interdependent subsystems that
have individual components that include people, technology,
work, and culture, all of which
operate together to respond to external environmental changes
such as competitors, custom-
ers, or government regulations (Katz & Kahn, 1978).
OD specialists also conceptualize organizational systems using
contingency theory, which
views organizational dimensions (strategy, structure, people,
work, rewards) as parts of a
whole that “fit” together. Issues emerge when one of these
dimensions is out of sync with
the others. When all subsystems function together and fit into
the external environment, the
organization has a higher probability of fulfilling its goals
(Burke & Bradford, 2005).
OD specialists use a wide array of skills and tools in their
change work, including intraper-
sonal (self-management and emotional intelligence) skills;
interpersonal skills; one-on-one
coaching and mentoring; group facilitating; interviewing and
26. surveying; collecting, analyz-
ing, and diagnosing data and information; problem solving;
assessing; program planning; and
implementing. Specialists need to look at an organizational
problem in a number of differ-
ent ways to accurately diagnose what is wrong and to implement
the most effective strategy.
Major approaches that OD specialists may take include:
• A long-term change approach that focuses on lasting effects
through cultural norms;
these changes include interventions that alter attitudes,
behaviors, processes,
knowledge, and structures.
• A top-down approach that seeks to gain top management
commitment and involve-
ment in order to have the authority and legitimacy to
significantly effect intended
changes. Although change begins at the top, it is implemented
throughout the
organization.
• A collaborative approach that involves professionals who are
affected by the changes
and support them.
• An analytical approach that examines data, diagnoses
problems, and motivates
change to resolve issues. Accurate diagnostic skills are a core
competency of OD
change agents.
• A facilitation approach that uses skilled dialogue and
discussion, listening, and
feedback when helping professionals identify the organization’s
28. There are several notable trends in the field of OD. One
involves ensuring that process inter-
ventions in organizational change are “transparent, possess
integrity, treat people with dignity,
and serve diverse stakeholders,” and have a primary goal of
“help[ing] organizations create
such processes; whether they subsequently lead to performance
outcomes is of secondary
import” (Cummings & Worley, 2009, p. 694). Another
pragmatic trend calls for increased pro-
fessionalization and the need to provide relevant expertise to
organizations (Church, 2001).
Management consulting in general, and change consulting
specifically, is an unregulated indus-
try, which means almost anyone can claim to be an expert in
these fields. Certification and
degrees or concentrations in these fields should be a minimum
requirement for practitioners.
Finally, trends in the “context of Organizational Development”
(Cummings & Worley, 2010,
p. 697) indicate that the field is becoming more focused on
“driving effectiveness in a broader
range of organizations.” It is also helping both technical and
managerial innovation, support-
ing cultural diversity, and is more centered on ecological
sustainability. As global, regional,
national, and local economies, industries, and organizations
change and evolve, so too will
some change management and OD skills and practices. In many
ways we are all involved
in organizational change—as drivers and recipients. Hopefully,
the readers of this text will
become more informed and knowledgeable about change
processes as a result.
30. employees communicate, relate, strategize, sell, and solve
problems) and general systems-
oriented interventions (how strategy, culture, structure,
accounting, and HR systems work
together to meet goals), change management specialists address
issues and areas such as:
• competitive business strategy;
• strategic firm (HR benefits, budgeting, profit sharing)
planning;
• information technology (IT) and engineering solutions design
and development;
• IT infrastructure support;
• business process engineering and reengineering;
• marketing planning;
• financial analysis, inventory control and analysis, work-flow
analysis, and design
solutions; and
• project management methods.
Part of a change management specialist’s role is to align a
business’s objectives and practices
with the new or desired strategy, structure, and system. To do
this effectively, change special-
ists must focus on both the content and process; for example,
they must be concerned with
how organizational leaders commu-
nicate business strategy to IT teams,
although this may not be their primary
expertise. Change management con-
sultants usually specialize in particular
content areas such as strategy, manu-
facturing and operations, marketing,
and IT, whereas OD consultants deal
31. with identifying and solving broader
organizational integration issues—for
example, structuring organizational
units for effectiveness, coaching and
advising leaders on communication
and relational skills, working with
teams to improve their project man-
agement processes, and other organi-
zational behavior topics.
One expert in the field noted that technical experts such as
manufacturing engineers focus on
how to standardize and regulate tasks, so these can be
consistently repeated. Such is the role
of a change management specialist. In contrast, OD specialists
find that these regulations and
procedures suppress creativity and cause dissatisfaction in an
organization (Worren et al.,
1999).
In larger organizations it is common to find change management
teams from different con-
sulting companies that are composed of people with
complementary skills. For example,
members may come from entirely different segments of a
business, such as IT, marketing,
engineering, and organizational design.
michaeljung/iStock/Thinkstock
Change management specialists often work in teams
and must coordinate many facets of an organization
to effectively execute a change plan.
wei82650_01_c01_001-056.indd 13 12/15/15 9:34 AM
33. other, one set of forces must be
increased, decreased, or both. This model is based on the law of
physics that holds that an
object at rest will remain so unless the forces exerted on the
object (to move it) are greater
than the forces working against it (to keep it at rest). Therefore,
behavioral change will occur
if (a) the forces for change are strengthened, (b) the forces
against change are weakened, or
(c) a combination of the two is applied.
Lewin’s method is also used to diagnose and develop strategies
to alter the dynamics of
change at any stage of a change process. It is an excellent
method for engaging employees and
managers in identifying hidden assumptions, issues, and
perceived opportunities related to a
desired end state to be achieved, a plan to be implemented, or
an initiative to be tested.
The following steps can be used to identify the forces for and
against a particular situation,
problem, or opportunity:
1. Describe the opportunity, problem, or issue.
2. Identify the desired end state.
3. List the potential benefits derived from having achieved the
end state.
4. Identify the driving forces, strategies, and tactics for change
toward the end state.
5. Identify the resisting forces against change toward the end
state.
6. Identify tactics that can be used to weaken the forces against
change.
7. List tactics to strengthen the forces for change to reach the
desired end state.
34. 8. Develop an action plan.
Figure 1.1 uses an initiative to implement a new software
program to illustrate Lewin’s force-
field analysis. In this situation, a consultant collaborates with
an organization’s leadership
team to interview and survey a work group whose support is
needed to implement the soft-
ware. Their opinions of the change are indicated in this figure.
Those who supported the
change indicated that the new software would provide added
capability, while those who
opposed it countered with their fear and hesitancy of the
change.
Forces for
change
Equilibrium
Forces resisting
change
• Added capability
• Perform work
more quickly
• Maintain
technological edge
• Network everyone
on same system
• Fear of change
36. Forces for
change
Equilibrium
Forces resisting
change
• Added capability
• Perform work
more quickly
• Maintain
technological edge
• Network everyone
on same system
• Fear of change
• Resistance to new
training
• Old habits
• No benefits of
change identified
Organizational
initiative:
Implement a
new software
37. program
organization wide
+ −
Section 1.3 Lewin’s Force-Field Analysis and Resistance to
Change
Check Your Understanding
1. List five of the major skills or tools that OD specialists must
use in their change work and
explain why they are important.
2. Describe the major differences between OD and change
management specialists. Provide an
example of when each type of specialist is needed.
1.3 Lewin’s Force-Field Analysis and Resistance to Change
The term resistance to change was first introduced by Kurt
Lewin in his field theory and work
on group dynamics (Lewin, 1947; Gravenhorst, 2003). Lewin’s
force-field analysis is such a
widely used method that its use has become commonplace.
When used systematically, the
method can help individuals, groups, and organizations
understand and overcome resistance
to specific changes.
Force-Field Analysis
Lewin views change as the result of opposing forces that move
with and against the status
quo at any given time. Change comes to a standstill when the
opposing forces are of equal
38. strength. To move the state of change in one direction or the
other, one set of forces must be
increased, decreased, or both. This model is based on the law of
physics that holds that an
object at rest will remain so unless the forces exerted on the
object (to move it) are greater
than the forces working against it (to keep it at rest). Therefore,
behavioral change will occur
if (a) the forces for change are strengthened, (b) the forces
against change are weakened, or
(c) a combination of the two is applied.
Lewin’s method is also used to diagnose and develop strategies
to alter the dynamics of
change at any stage of a change process. It is an excellent
method for engaging employees and
managers in identifying hidden assumptions, issues, and
perceived opportunities related to a
desired end state to be achieved, a plan to be implemented, or
an initiative to be tested.
The following steps can be used to identify the forces for and
against a particular situation,
problem, or opportunity:
1. Describe the opportunity, problem, or issue.
2. Identify the desired end state.
3. List the potential benefits derived from having achieved the
end state.
4. Identify the driving forces, strategies, and tactics for change
toward the end state.
5. Identify the resisting forces against change toward the end
state.
6. Identify tactics that can be used to weaken the forces against
change.
7. List tactics to strengthen the forces for change to reach the
39. desired end state.
8. Develop an action plan.
Figure 1.1 uses an initiative to implement a new software
program to illustrate Lewin’s force-
field analysis. In this situation, a consultant collaborates with
an organization’s leadership
team to interview and survey a work group whose support is
needed to implement the soft-
ware. Their opinions of the change are indicated in this figure.
Those who supported the
change indicated that the new software would provide added
capability, while those who
opposed it countered with their fear and hesitancy of the
change.
Forces for
change
Equilibrium
Forces resisting
change
• Added capability
• Perform work
more quickly
• Maintain
technological edge
• Network everyone
on same system
• Fear of change
40. • Resistance to new
training
• Old habits
• No benefits of
change identified
Organizational
initiative:
Implement a
new software
program
organization wide
+ −
Figure 1.1: Force-field analysis
This chart shows the ways in which forces for change and its
resistance meet in the middle at
equilibrium.
Source: Lewin, K. (1997). Field theory and learning. In D.
Cartwright (Ed.), Field theory in social science: Selected
theoretical papers
(pp. 212–230). Washington, DC: American Psychological
Association.
After analyzing the number and strength of supporters and
resisters, the consultant and orga-
nizational HR professional might conclude that support for
change outweighs the resistance.
41. Also, evidence from interviewing and surveying the work group
may also indicate that the
consultant needs to educate individuals who doubt the new
software’s additional capability
and technological advantages. Doing so may encourage those
who were initial dissenters to
embrace the change and carry it out.
The Three Stages of Change: Unfreezing, Moving/Changing,
Refreezing in the Force Field
Lewin’s force-field analysis also argues that there are three
stages of change: unfreezing,
moving/changing, and refreezing.
The unfreezing stage focuses on creating an emotional need for
change by increasing the
motivation to change. Individuals are encouraged to abandon
old behaviors and attitudes
and become open to accepting new ones. Managers can
participate in this stage by reducing
barriers to change, creating incentives to change, and
introducing rewards for new behaviors.
Individuals begin to unfreeze old behaviors and attitudes when
they can see and experience
their uselessness.
For example, imagine that directors of an organization have
been required to use a new finan-
cial reporting system that tracks their expenses. Most do so and
immediately see its benefits,
which include helping them make more objective decisions
about activities and resources.
However, those who refuse to use the new system start to fall
further behind in their work.
43. attitudes. Enabling employees to practice new behaviors with
appropriate rewards helps
stabilize changes during this phase. Managers must ensure that
the culture, structure, and
reward system support the new behaviors.
The managers meet frequently with the directors and others in
the company who have been
positively affected by the new system. They discuss its issues
and benefits. The managers also
introduce bonuses and other perks to the directors and
employees who have increased their
productivity by using the system. An overall feeling of
accomplishment and pride takes hold,
and the company’s culture is revitalized.
Managing Change
Confronting Resistance
Rather than reduce a large number of staff members, a financial
services company chose
cost-cutting measures to weather the financial crisis. These
included consolidating its office
space, renting out one of its floors, and overhauling employee
health insurance options. The
traditional health maintenance organization was still available,
but at a much higher price,
which offset the company’s rising cost of providing the benefit.
A new high-deductible plan
was also put into place. Open enrollment usually took place
every year in November, and
e-mails were sent out to employees notifying them of the
changes at the end of September.
Employees complained that as part of the high-deductible plan,
45. could include special industry events, an unforeseen opportunity
for company growth, indus-
try trends, or any myriad of pressures from inside or outside the
company. Detecting signs of
external change is important, since failure to do so could cause
an organization to miss oppor-
tunities or fail to see impending threats. Planned change begins
with learning to interpret and
respond to trends that are triggered in external environments.
Macro-level external sources of change are depicted in Figure
1.2. These include government
and political, economic, technological, sociocultural, and
natural- and human-related forces.
When planning a change, this broader level of analysis is
completed before identifying more
specific operational dimensions of change—that is, the
particular industry and the niche of
the organization in that industry.
From a change perspective, these environmental forces can have
many effects on an organiza-
tion’s internal systems—that is, its leaders and employees, its
strategy and operating systems
(IT, HR, and so on), and even its very culture. See Figure 1.3
for a depiction of the external
influences on an organization’s internal systems.
To understand how organizational leaders and change
specialists analyze environments,
try this exercise. Think of an organization in which you work or
have worked, or one
you’ve learned about from the media. Then, answer these
questions as you read this
section.
47. • Willingness to move
• Ethics
Technological Forces
• Information technology/the
Internet
• New production processes
• Computerization of processes
• How technology is sold and
serviced
Economic Forces
• Globalization
• Competitors/suppliers
• Currency exchange rates
• Employment and wage rates
• Government economic policies
• Lending policies of financial
institutions
Government &
Political Forces
• Government legislation
• International law
• Wars
• Local regulations
• Taxation
• Trade unions activities
Organization
Natural Disasters &
Human-Induced Forces
• Weather
• Extreme storms (hurricanes,
tsunamis, volcanoes,
49. The five macro-level, external forces of change are economic,
technological, sociocultural, natural and
human-induced, and government and political. These forces
produce potential opportunities or critical
issues for an organization.
Source: Senior, B., & Fleming, J. (2006a). The leadership of
change. In B. Senior & J. Fleming (Eds.), Organizational change
(3rd ed.). Essex,
UK: Prentice Hall, Figure 1.3, p. 17.
Sociocultural Forces
• Demographic trends
• Lifestyle changes
• Availability skills
• Attitudes toward work
• Gender issues
• Willingness to move
• Ethics
Technological Forces
• Information technology/the
Internet
• New production processes
• Computerization of processes
• How technology is sold and
serviced
Economic Forces
• Globalization
• Competitors/suppliers
• Currency exchange rates
• Employment and wage rates
• Government economic policies
• Lending policies of financial
institutions
50. Government &
Political Forces
• Government legislation
• International law
• Wars
• Local regulations
• Taxation
• Trade unions activities
Organization
Natural Disasters &
Human-Induced Forces
• Weather
• Extreme storms (hurricanes,
tsunamis, volcanoes,
earthquakes)
• Pollution
• Health, food, stress
Figure 1.3: Environmental influence on internal organization
The external forces of change influence an organization’s
formal and informal subsystems.
Source: Senior, B., & Fleming, J. (2006a). The leadership of
change. In B. Senior & J. Fleming (Eds.), Organizational change
(3rd ed.). Essex,
UK: Prentice Hall, Figure 1.4, p. 32.
Political–Legal
Forces
Sociocultural
Forces
52. see Figure 1.3).
2. Can you think of a particular way the organization changed
(Figure 1.2) or
must change to compete as a result of any of the environmental
influences in
Figure 1.3?
3. Do you buy or avoid buying any products because of how the
company that makes
them does business? If so, what product, what company, and
what do you admire or
dislike about the way it does business?
Your answers to these questions indicate changes that
organizations need to make or plan for
in order to meet new market and customer demands.
External Forces of Change
Let’s look more closely at Figure 1.2 to see how external forces
and influences can create
threats and opportunities for organizations.
Technology Forces
Technology is a primary driver of innovation and change.
Organizations use information
technologies in their strategies and operations to gain speed,
scale, scope, and reach with
customers and stakeholders around the world. IT has enabled
the creation of new industries,
business models, professions, products, and services.
Take, for example, Google, Facebook, YouTube, and Amazon,
to name just some of the promi-
nent companies that have dramatically shifted customer-to-
53. customer as well as business-to-
customer relationships. Websites like Google have practically
replaced the Yellow Pages and
traditional map-printing companies like Rand McNally.
Facebook created not only networks
of friends but also those of clustered, self-promotional buyers.
YouTube became an enter-
tainment, educational, and journalistic resource center. Amazon
took consumers from sifting
through bookshelves in bookstores to online web pages—and
then to Kindle.
These companies, along with PayPal, have changed the practices
surrounding payment for
services and products, marketing, advertising, sales, and
delivery. These firms and their many
uses of technology have helped shift power to customers, since
they can now select from a
wider and more differentiated set of websites and digital stores.
Technology not only drives changes within companies but has
the ability to change industries
worldwide. An example of the influence of technology on global
health care comes from Zhu
Ling, a Chinese student who became strangely ill in 1994. Her
friend posted a description of
the student’s medical condition on the Internet. After reading
about her symptoms, doctors
in the West diagnosed her with thallium poisoning and saved
her life. Having the ability to
receive diagnoses using technology is beneficial, since China
had 1 general medical practitio-
ner for every 10,000 individuals in 2013.
wei82650_01_c01_001-056.indd 19 12/15/15 9:34 AM
55. to grassroots social movements—to
achieve their goals via social net-
working technologies.
Social media is also well used in are-
nas outside politics. In a 2014 report
on social media marketing, 92% of
marketers surveyed agreed that social
media is important for their business,
up from 86% in 2013. Sixty-eight per-
cent of marketers plan to increase
their use of blogging, which was the
top investment area for marketers in 2014. Fifty-four percent of
marketers use Google+, and
Facebook (54%) and LinkedIn (17%) were considered the two
most important social net-
works (Stelzner, 2014).
Organizations, regardless of their size, are becoming more
effective, efficient, connected,
and “globalized” because of the Internet and related
technologies. Real-time production that
serves customized demand is the norm (Intuit, 2010). Many
large firms with global supply
chains are now networked to their suppliers, customers, and
vendors through extranets and
integrated internally through intranets, which are information
networks that operate much
like the Internet but are restricted to an organization’s
employees. Extranets are intranets
that also allow people outside of the business to access an
organization’s system. According
to Information Week, most IT managers expect a positive return
on investment on these types
of network infrastructure (“Intranets and Extranets,” 2011).
Innovation in this field will lead
57. (Owyang, 2013). Although there are
regulatory and competitive issues among rivals in this growing
and changing industry, these
firms are changing the ways business is done and adding to
economies in the process.
As we discussed earlier, the world has become flatter, and what
affects one region has direct
and immediate consequences everywhere else. Previously, a
troubled economy in a particu-
lar country could be isolated to that region, but now it can
quickly drag down economies
the world over. This was evident during the Great Recession of
2008–2009. No country was
spared in the fallout from the housing market crash in the
United States. Likewise, uncertainty
in the European Union (EU) from 2011 to the present has
created economic instability in Asia
and the United States. Economies and the governments that
manage them are interconnected
as in no other time in human history. Monitoring governmental
decisions and economic con-
ditions around the world has become a critical necessity for
businesses of any size.
A variety of economic conditions predicted through 2020 are
expected to impact both organi-
zations and consumers, including an increase in consumer
spending in developing countries,
depleted savings in the United States, and continuing debt and
deficits throughout the West-
ern world that will restrain spending rates. However, global
economic growth is predicted, with
more than a billion new middle-class consumers who will
increase spending. The information
technologies discussed in the previous section will grow in
58. demand. Both large and small compa-
nies will need new businesses and business models that can
meet the demands of the new mid-
dle-class consumers (Etsy, 2013, 2014; Intuit, 2010) and, at the
same time, meet the demands of
diminishing economies.
Environmental Forces
Environmental issues present another factor that drives change.
Chronic smog and air pol-
lution in cities throughout the world are major health hazards
that must be addressed.
Climate change and sustainability considerations (“green”
initiatives) also present chal-
lenges for organizations, but managing these forces is no longer
a choice; it is becom-
ing a competitive requirement, especially as companies try to
dig their way out of the
Great Recession or to compete in the new so-called purpose
economies, in which consum-
ers are interested in companies that “bring value to their lives
and to society at large”
(Fields, 2014).
Consider Havas Media’s Meaningful Brands Index, a ranking of
consumer-conscious compa-
nies. The index measures various areas of customer well-being
and ranks brands accordingly.
The Meaningful Brands 2015 top global performers were
Samsung, Google, Nestlé, Bimbo,
and Sony. A Havas Media survey of 134,000 participants in 23
countries showed that they
would not care if 70% of brands disappeared because they are
“ultimately meaningless”
(Fields, 2014).
60. (Ceres, n.d.). In 2013 Hasbro
(2014) obtained 85% of its paperboard packaging from recycled
materials; the company
ranked second in Corporate Responsibility Magazine’s 100 Best
Corporate Citizens 2015 list
(http://www.thecro.com/files/100BestList2015.pdf ) (Hasbro,
2015; Watson, n.d.).
Corporations and organizations will be pressured to plan,
budget, and implement green logic
into their business strategies, production, and manufacturing.
They will need to factor con-
cern for the environment, sustainable energy use, and
responsible waste disposal into all
their strategies using the three Rs: reduce, reuse, and recycle.
As technology allows for more
ways to meet these environmental concerns, companies will be
well served to remain on the
innovative forefront by seeking cost-effective ways to
implement such technologies. Manag-
ing change in this regard will help companies become more
efficient and appeal to a growing
consumer base.
Some industries and companies do not practice sustainable clean
air and water strategies
in their operations. Supporters of environmental sustainability
contend that industries and
firms that use coal particularly contribute to pollution (Johnson,
2011). It can be expensive
to convert to clean energies and sustainable business practices,
and pollution and other
unhealthy consequences can result when governments do not
offer industries and companies
incentives to change.
62. However, one thing is certain: Companies will have to manage
change on this front better
than ever before. Health care expansion will present business
growth opportunities, but it
will also present potential dangers. Change management will be
critical in determining these
outcomes.
Government and Political Forces
Organizations and companies will also continue to cope with
and respond to external politi-
cal and governmental changes. Such uncertainty stems from
regime changes, wars, terrorism,
and global economic instability. Political unrest can have the
same effect as economic unrest.
A Harvard report on competitiveness illustrates business
leaders’ opinions of actions they
would like to see the government take to cope with uncertainty,
including controlling fed-
eral spending, reforming the tax code, and streamlining
regulations. Divisive politics that do
not address the root causes of lack of competitiveness prevent
productive change (Denning,
2013).
In this volatile era, the U.S. government waivers between a
lowered and less-than-acceptable
credit rating from the Standard & Poor’s credit rating agency.
This signals a need to continue
to decrease unemployment and increase job creation—
particularly in critical sectors such
as engineering, manufacturing, and technology; decrease the
national debt; rebuild infra-
structures; restructure the education system; and balance
regulation with innovation in the
financial, banking, and investment industries. At the same time,
63. EU countries must absorb the
soaring debts of several member countries like Greece and Italy.
Corporate leaders must think
innovatively to move their economies forward; this will involve
investing in new industries
and creating new jobs.
Generating positive change in such unstable political and
economic times is not easy. Accord-
ing to the Global Competitiveness Report 2014–2015 (Schwab,
2014–2015), the United
States ranked third in competitiveness, behind Switzerland
(first) and Singapore, and was
followed by Finland, Germany, Japan, Hong Kong, Netherlands,
Sweden, the United Kingdom,
and Norway. The United States rose to third from its fifth-place
ranking in 2013, while Japan
climbed from ninth place to sixth. Increasing global
competitiveness will require innova-
tive and bold organizational strategies and structures to meet
external opportunities and
demands. Transformational change is needed, which is
discussed in a later section.
Sociocultural Forces
Brainpower and talent are the keys to reigniting corporate and
economic growth and pro-
viding opportunities for a new generation of students. At the
same time, companies must
provide meaningful and challenging work to employees who
value learning, ethics, and flex-
ible working conditions. Work/life and work/family issues are
also major sources of work-
force and workplace change. The increasing number of women
(single with children and
married with children) in the U.S. workforce has pressured
65. India’s presence as a high-volume, low-cost labor manufacturer,
Western countries are being
pressured to find even more ways to innovative and compete.
China is now the second largest
economy. The Asian Tigers (Hong Kong, Singapore, South
Korea, and Taiwan) have emerged
as advanced economies that serve as financial centers and IT
innovators. This change, along
with new technology, has enabled low-cost international
competitors to drive down business
costs and thus force companies to streamline structures and
change strategies and business
practices.
The firm PricewaterhouseCoopers estimates that China will
overtake the United States
as the largest economy in purchasing power parity (PPP) terms
by 2017 and in market
exchange rate terms by 2027 (Hawksworth & Danny, 2015). It
has been estimated that by
2050, India will become the third global economic giant and
Brazil will rise to fourth. Russia
may become the largest European economy in PPP by 2020 and
in market exchange rates by
2035 (Simha, 2014).
Although there are many negative aspects of globalization, there
are many positive aspects
too. As discussed earlier, international economies are more
interrelated than ever before.
International investments and movements in the U.S. stock
markets affect American pension
funds, corporate earnings, and market forecasts. Industry
regulation and deregulation (espe-
cially in telecommunications, banking, financial services, and
67. International Business Machines Corporation (IBM),
Mitsubishi, and GE have strategically
responded to external changes with innovative organizational
structures, including net-
works, strategic alliances, and virtual corporations.
Solution
s and pathways to navigat-
ing change will definitely involve different information and
communication technologies
(Grajek, 2015).
Businesses understand that they must change in order to survive
and succeed in today’s envi-
ronment and are thus working to become more streamlined,
ecologically sustainable, and
responsive to external demands. They are striving to be more
proactive and taking the initia-
tive in managing change (Cummings & Worley, 2015).
It is important to point out that not all organizations will or
should respond to external
environmental change, and not in the same way. The external
environment is not always
a completely objective phenomenon. The ways in which the
68. environment is perceived and
responded to depend on individual interpretations—in this case,
the interpretations of orga-
nizational leaders and managers. How leaders and managers
perceive pressures and forces
in their environments affects whether and how they develop
change strategies to respond
(Smircich & Stubbart, 1985).
Type 1 and 2 Errors
Boyd, Dess, and Rasheed (1993) identified two types of errors
that leaders and managers
can make in perceiving and acting on change. A type 1 error
occurs when the environment
is stable, but leaders and managers perceive it as turbulent and
take unnecessary actions in
response. A type 2 error happens when leaders and managers
perceive the environment as
stable when in actuality it is turbulent, and they fail to take
necessary actions, thus threaten-
ing the survival of their organizations.
An example of a type 1 error occurred in 2003 when President
George W. Bush and his cabinet,
with congressional approval, hastily declared war on Iraq based
69. on the belief that its regime
possessed weapons of mass destruction and intended to use
them against its neighbors and the
United States. This was shortly following the terrorist attacks of
September 11, 2011, a time of
high anxiety and upheaval. After years of war it was ultimately
found that Iraq had no weapons
of mass destruction; the costs from this misperception were and
continue to be substantial.
An example of a type 2 error occurred when U.S. auto
manufacturers perceived the environ-
ment in the 1980s as stable and failed to design and
manufacture four-cylinder fuel-efficient
cars, as opposed to the Japanese, who later won and maintained
a sizable market share in the
U.S. auto industry as a result of their first-move advantage with
quality cars. The lesson is that
trends and forces in the external environment must not only be
monitored but also carefully
scrutinized in conjunction with governments and companies.
Individuals can also learn from
type 1 and 2 errors when perceiving and planning a change.
wei82650_01_c01_001-056.indd 25 12/15/15 9:34 AM
71. Competitive advantage: flexible and responsive to
changing markets
Predictability and uncertainty reduction: stability
enables, rather than impedes change
Control: less hierarchy and more power through
management performance targets
Organizational social capital: trust among employ-
ees is created as an asset
Impatient capital markets: short-term investments
favored over long-term ones
Sustained advantage: created through stable inter-
actions over time
Cost containment: Human resources seen as a cost,
not an asset
Transaction costs: stability creates rational invest-
ment in employee development
Environment adaptability: stability impedes adapt-
72. ability; flexibility adapts to change
Institutionalism: power structures self-perpetuate,
solidify relationships and practice
Source: Leana & Barry, 2000; Palmer, Dunford, & Akin, 2009.
Whether organizations need to change, and to what extent,
involves the need to balance per-
ception and decisions with wisdom and experience. As Figure
1.1 shows, performing a force-
field analysis is one way that leaders, managers, and individuals
can address if and to what
extent it is helpful to move forward with a change to part or all
of an organization. Table 1.1
shows the forces at play that can help decision makers weigh
the benefits and costs of a change.
Note in Table 1.1 that competitive advantage as a force for
change is counterbalanced by the
need to achieve predictability and reduce uncertainty.
Competitive advantage requires organi-
zational flexibility and responsiveness, but effective
organizations also require stability and cer-
tainty to thrive. Although control as a force for change means
73. less hierarchy and more emphasis
on performance targets, organizational social capital requires
employers to develop and nourish
coworker trust, which is an invisible force for stability.
Impatient capital markets that demand
immediate, short-term investment are indeed a force for change,
but organizations also need to
have sustained advantage that is gained over time through stable
organizational relationships
and interactions. Finally, organizations that wish to become
competitive must adapt to multiple
environments, but at the same time, organizations need to rely
and draw on institutionalized
best practices of what worked well in the past, including sound
relationships.
In summary, macro external forces affect organizations’
operational and internal environ-
ments. Trends, events, and crises that occur in the global,
technological, economic, govern-
mental, political, and demographic/social environments
influence organizations. These
influences are felt by organizations through changing markets,
laws and regulations, finances,
natural disasters, and so on. Leaders and managers must create
75. which environments are exerting changes on organizations and,
as this course progresses,
to suggest different types of changes and change strategies that
organizations can use to
respond to environmental opportunities and threats. In the next
section, we present specific
types of organizational change that are used, depending on
relevant criteria.
Check Your Understanding
1. Find an example of a company that changed due to one of the
external forces discussed in this
section. What was the force, and how did the company change?
2. Explain why forces for stability and forces for change are
essential to organizational
functioning.
1.5 Types of Organizational Change
Not all changes are the same. The nature of change and change
frameworks presented here
illustrate these differences. Some frameworks overlap and are
complementary, whereas oth-
ers have dissimilar change philosophies and approaches.
76. However, all illustrate the multiple
perspectives change specialists can use to understand change
and gain insight into the types
of interventions and strategies for effectively responding to it.
At the most general level, Ackerman and Anderson (2010)
identified three types of change:
developmental, transitional, and transformational.
Developmental change involves improving what already exists.
For example, an organization
may improve on a previously established process, such as an HR
policy regarding employee
leave time or a marketing department’s procedure for sharing
expertise on certain projects.
The change does not have to be large or complex. Consequently,
little stress is created with
this type of small-scale change.
Transitional change involves achieving a known desired state
that is different from the
existing one. Examples of this more intrusive, larger change
include organizational mergers
or replacing an established process with a new one, such as
installing a new technology sys-
78. unique risks. The following mod-
els expand on these three fundamental change types.
Dunphy and Stace’s Four Levels of Change
After determining whether the desired change is developmental,
transitional, or transforma-
tional, it is helpful to refer to Dunphy and Stace’s (1993) four
levels of change.
Level 1—fine tuning. This involves an ongoing process of
matching and fitting an organiza-
tion’s strategy, structure, people, and processes with the
environment. This type of change
occurs more at a divisional and departmental level, although for
some firms like Alibaba,
the enterprise is involved. It includes such activities as refining
policies, methods, and pro-
cedures; developing personnel; fostering group and individual
morale; and commitment to
the organization’s mission and departments. Fine tuning has
traditionally required minimal
effort and resources.
Level 2—incremental adjustments. These are predictable
79. changes within the organization
that evolve slowly and systematically at a constant rate over
time to fit the external environ-
ment. No radical changes are needed, but modifications are
made, such as shifting emphasis
among products, expanding a sales territory, and modifying a
mission statement to employ-
ees. Incremental adjustments and fine tuning are comparable to
developmental change. As
Ashkenas (2015) observes, change management refers to
implementing predetermined ini-
tiatives that may or may not affect the entire organization; focus
is placed on making a well-
defined change to a process or procedure.
Ashkenas (2015) provides an example that illustrates how a
large technology company
integrated specialized engineers into regional sales teams,
which involved changes in roles,
client assignments, compensation, goals, and teamwork.
Hundreds of people were affected,
but well-known change management principles and tools were
used, including (a) making
a case for the business change, (b) building a coalition of
leaders, (c) showing early results,
80. (d) involving stakeholders, and (e) executing by plan and with
discipline. The new sales
approach was effectively implemented and showed improved
results.
Level 3—modular transformation. Organizational change is
radical in modular transforma-
tion, but it is focused on subparts rather than on the entire
organization. Examples of this
level of change include restructuring departments or divisions,
changing key executives’ and
managers’ responsibilities, and introducing a new business
process. This type of change is
related to transitional change.
Level 4—corporate transformation. Like transformational
change, corporate trans-
formation involves a radical shift in the business strategy and
changes to the company’s
vision, mission, culture, and systems—the company may
essentially be reinvented. The
plan and projected outcomes are more unpredictable, and there
is experimentation and
risk. New executives and key management positions are often
recruited from the outside.
82. company operating according to a seemingly confused strategy,
she moved forward with her
predecessor’s plan to divide HP into two companies: an
enterprise-computing technologies
company and a consumer products company, which sells
products such as personal comput-
ers and printers (Chenmay, 2015). The journey is not over, and
though industry analysts have
mixed reviews, Whitman remains in charge for now.
Managing Change
Organizational and Managerial Response to Change
Suppose you oversee marketing and communications for a
consumer bank. The business
environment in the banking industry has undergone remarkable
changes in recent years,
given the merging and acquisition of companies, the effect of
the economic recession on
consumers, and the reputational impacts of corporate
misconduct by banking executives,
which in some cases has required extensive publicity campaigns
and rebranding. In addition,
the proposal of many national banks to charge fees on accounts
83. is challenging customer
attitudes about your bank.
In a reactive decision, you and top leadership have decided to
implement a new website with
rapid-response online customer service functions. The goals are
to strengthen competitive
advantage, increase customer loyalty, and respond to growing
consumer demands for
adequate attention to customer needs.
Technology frequently drives the need for organizational
change, and IT is an integral part
of change management within companies. Not only is the
proposed change IT based, but
technology can also be used to manage the change internally. In
addition, the change will
not only involve the IT department, but should be integrated
with many other departments
so that everyone embraces the goals of the plan and the firm
overall—a mark of an effective
organization.
Discussion Questions
85. End Result
Revolution Reconstruction
Evolution AdaptationIncremental
Big Bang
Section 1.5 Types of Organizational Change
Balogun and Hope-Hailey’s Change Model
Balogun and Hope-Hailey’s (2004) model includes four types of
change that combine into four
strategies. Figure 1.4 illustrates these different types, which are
organized along two axes:
“nature of change” on the vertical axis and “end result” on the
horizontal axis. The two clas-
sifications of change under nature of change are incremental
and big bang (a sudden change
that occurs all at once). Such change can be significant in size,
scope, and impact, depending
on the situation. The two classifications of change under the end
result perspective include
86. transformation and realignment. Transformational change, as
discussed earlier, has a sig-
nificant impact on organizations, including their culture,
people, and systems. Realignment
types of change involve adjustment but do not generally entail a
fundamental reassessment
of the central assumptions and beliefs in an organization’s
culture. Still, a major restructuring
can have a large impact on an organization (Balogun, 2001).
The four strategies for estimating the nature of a change and the
desired end result are as
follows:
1. Evolution: when the change is incremental but the end result
is transformation.
This strategy suggests proceeding in a progressive way by
analyzing the internal and
external environments while implementing the change. An
example would be imple-
menting a new software system in a division over a 2-year
period.
2. Adaptation: when the change is incremental and the end
result is realignment. This
