Organizational change in transition period

1. 1 Surma Tower, Sylhet An Assignment on “Organizational change in transition period” Course title: Organization Development Course code: HRM-601 Submitted to: Md. Abdul Muhith Chowdhury Senior Lecturer Department of Business Administration Leading University, Sylhet Prepared by: Head Hunter’s ID Name 1611017014 Mahmudul Hasan 1611017021 Masum Hussain Semester: 5th Batch: 38th MBA Program Major: Human Resource Management Department of Business Administration Leading University, Sylhet Date of Submission: 8 December, 2016

2. 2 Executive Summary As the Greek philosopher Heraclitus (525 – 475BC) pointed out: change alone is unchanging. Nowhere is this truer than in corporate North America. Globalization; quantum leaps in technology; mergers and acquisitions; shifting markets and client demands; and, significant changes in the workforce make changing to survive a strategic imperative. All organizations need to have a greater reach, be in more places, be aware of regional and cultural differences, and integrate coherent strategies for different markets and communities. (Kanter, 1999) Failure to change, to change rapidly enough, or to make the right changes, has turned corporate giants into subsidiaries, seemingly overnight. With change having been a constant for over 2500 years, why are businesses still so bad at managing it? Why do so many change initiatives wither and die leaving only confusion and mangled processes in their wake? This paper explores some of the reasons corporate change programs fail and offers some ideas as to how organizations institutionalize change to become a constantly evolving success story. Once the awakening phase has been successfully completed, management must then face the challenge of transition. Experience shows that having launched a change initiative, management often loses interest and turns to other projects. It acts as if, having taken the principal decisions and accepted the work plan; it is enough to delegate the follow-up to lower levels in the organization for the “magic” to work. While this approach is appropriate for everyday operations, it has unfortunately proved inadequate for managing change and often detrimental to achieving its objectives. Indeed, the staff of the organization will often interpret this type of behaviour as a change in priority on the part of management and, in turn, will tend to lose interest. However, once the decisions have been taken, the most difficult part remains to be carried out – implementing the change. The transition period brings with it very specific challenges for which specific measures need to be foreseen, otherwise problems will soon arise and the desired change may be jeopardized. To illustrate the nature of these challenges, let us take the example of the Police Department of Geneva, Switzerland, which, in 2002 and 2003, needed to replace all computer applications throughout its information technology system at a cost of several million Swiss francs, affecting more than 1 200 of its 1 500-strong staff.

3. 3 Contents Subjects pages 1. Introduction 5 2. Defining Organizational change 6 3. Defining Transition 6 4. Criticals behind organizational change & Transitions 7 a. Competition 7 b. Technology & Innovation 7 c. Desire for Growth 7 d. Need to Improve Processes 7 e. Government Regulations 7 5. Challenges behind change & transitions 8 6. The Change Process: Phases of Change 9 7. Planned & Unplanned Changes 10 8. Stages of change & transition model 11 9. Employee readiness during transition 12 10.Employee Resilience 12 11.Leadership requirements during change & transition 13 12. Quantum and Incremental Change & Transition can take place 14 13.Findings 14 14.Conclusion 15 15.References 16

4. 4 Acknowledgement At first, we are grateful to Almighty Allah for creating us in such a beautiful country like Bangladesh and also for controlling our life. For the mercy of Him, we have got such courage to start this assignment on “Organizational change in t“Organizational change in t“Organizational change in t“Organizational change in transition period”ransition period”ransition period”ransition period” After that we would like to give thanks to our honorable Dean and Head of the Department Prof.Prof.Prof.Prof. Md. Nazrul IslamMd. Nazrul IslamMd. Nazrul IslamMd. Nazrul Islam for giving us the opportunity to study in this subject. We would like to express our thanks to the librarian of Leading University for all his help that we have received. Our respected parents who gave us mental support and inspiration for our assignment, there is a special thanks for them. We also would like to give a lot of thanks to our honorable course teacher, Md. Abdul Muhith Chowdhury for giving us a wonderful opportunity to make such an interesting and valuable assignment and giving us a clear concept about the assignment. At last but not the least, without the help of our friends and classmates it was quite impossible to prepare such kind of assignment. They gave us some necessary information about this topic which was unknown to us. So, we would like to give thanks to all of them.

5. 5 Introduction It could be said that one of the most challenging aspects of modern society is the understanding and management of change. Over the past three decades, global change trends such as technological advances and globalization have influenced the ways modern societies operate. In addition to these global trends, regional trends are also shaping the behavior of states and societies. For example, in Europe tremendous changes have resulted from the fall of communism1 in 1989 and due to developments, especially regarding expansion, in the European Union. The subsequent requirements for unity across Europe are also leading to states having to engage in change whether they like it or not, which raises the subject of drivers of change, and of the idea of forced as opposed to ‘natural’ change. In modern society, the formal organization became the tool of social action. Hence societal change is interrelated to organizational change as well. Students of organizational theory and management build models including numerous factors that may either influence or help understand organizational change. These models are mainly focused on the everyday concerns of individuals and organizations operating in relatively stable social, political and economic systems. To these models, history has added one more factor: the sudden transition from one political, social and economic regime to another. Sometimes, however, these sudden transitions are the result of, or are followed by armed conflicts, so that the radical nature of transitions is further exacerbated. In such societies, usually characterized by the collapse of their social, political and economic systems, the system of meaning that individuals and organizations use to make sense of their lives has often also been destroyed. Whereas past research has shown that individuals can either adapt quickly to new situations or remain entrenched in the past order, an organization’s reaction to change is likely to be more complex. Organizations will be subjected to the imposition of outside rules, but will also rely on the many other factors such as: how different individuals within those organizations interpret and implement the changes, how these individuals interact, what are the ethos of the organization, and so on. This very complex interplay of factors means that predicting how an organization will respond to change is very difficult, if not impossible.

6. 6 Defining Organizational change: Organizational change is both the process in which an organization changes its structure, strategies, operational methods, technologies, or organizational culture to affect change within the organization and the effects of these changes on the organization. Organizational change can be continuous or occur for distinct periods of time. The study of organizational change is interdisciplinary in nature and draws from the fields of psychology, sociology, political science, economics, and management. You will not find a grand, unified theory of organizational change. Instead, you will find distinct theories that have not really been integrated to date. In this lesson, we'll focus on the Carnegie School of thought on organizational change. The Carnegie School Theory of Organizational Change The Carnegie view of organizational change was developed in the late 1950s and early 1960s. 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. Reutilization 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 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. Defining Transition: Transition is the psychological process through which people come to terms with a new situation, and adjust and adapt. While transition is a normal, natural and necessary human process, some people deny and avoid it. Their solution is to simply think positive and not waste time expressing negative emotions. However, when people don’t have a safe and productive way to express and process their feelings, they tend to internalize them. Their emotions re-appear in the form of denial, anger, fear, frustration, cynicism, and skepticism. The net result is overt and/or covert resistance that is counter-productive. The resistance slows down or stops the needed change. (Business Dictionary.com, Bridges of transition- William Bridges)

7. 7 Criticals behind organizational change & Transitions: As societies continue to evolve and changing demand creates the need for new products and services, businesses often are forced to make changes to stay competitive. The businesses that continue to survive and even thrive are usually the ones that most readily adapt to change. A variety of factors can cause a business to reevaluate its methods of operation. Competition: The entrance of a new competitor into a market can cause a business to change its marketing strategy. For example, a small electronics store that was the only game in town might have to change its image in the marketplace when a large chain store opens nearby. While the smaller store might not be able to compete in price, it can use advertising to position itself as the friendly, service-oriented local alternative. Technology & Innovation: Innovations in technology can force a business to change just to keep up. Employees who have never used computers need to be trained to operate the new computer system. A business also can benefit by implementing a technological change. According to the Hotel Online website, the airlines' introduction of email ticketing has resulted in increased efficiency and better customer service while meeting little customer resistance. Desire for Growth: Businesses that want to attain growth might need to change their method of operations. For example, the Subway sandwich chain started as a small business under a different name in 1965 and struggled through its first several years. The company began to flourish after it changed its name to Subway in 1974 and began to sell franchises. According to the Entrepreneur website, there were 22,525 Subway franchise units in the United States as of 2009. Need to Improve Processes: A business might need to implement new production processes to become more efficient and eliminate waste. In 2003, Cigna Healthcare implemented a leaner production process known as Six Sigma to improve service and reduce operating costs. In 2006, the company was recognized by the J.D. Power independent rating organization for its high level of service and quality. Government Regulations: Changes in government regulations can have an impact on how a company does business. Newly mandated safety procedures can force a factory to change its production process to create a safer work environment. Businesses that make or distribute consumer goods such as food products might have to add more quality control measures to ensure consumer safety. The 2009 Food and Drug Administration Food Code included provisions such as banning the option to serve rare hamburger that is ordered by request off a children's menu and increased requirements for food allergen awareness by food workers. (Jullien Vrezen’s Phd Paper Oxford, Leading change & Transition Community Guide)

8. 8 Challenges behind change & transitions: 1. People will resist change. Some of the strongest resistance will occur from what people ask for. Why? “Uninformed Optimism is always followed by “Informed Pessimism” and humans will choose the comfort of familiarity over the anxiety that comes with the unknown. 2. We live in an era of perpetual change/unrest. We have more unrest today than 20 years ago. In fact we have only just crossed the threshold of perpetual unrest. We need to expect more change. Today represents the least amount of ambiguity we will face. So, we need to stop assuming we are one project away from things settling down. 3. We’ve run out of the resources required to deal with change. Absorbing change requires physical, emotional, and intellectual energy. On any given day human being can only absorb so much change before capacity reaches overload and they are pushed into “future shock”. The dysfunctional symptoms of “future shock” occur when the demands for adaptation to change exceed the current adaptation capacity. What is change related dysfunction? - Any action or feeling that diverts resources away from meeting productivity and quality standards. 4. We incorrectly focus an inordinate amount of energy into trying to make people feel comfortable during a major change. Reality is they won’t – dramatic change is uncomfortable. The leader’s role in change is not to make people feel happy about the change: it’s helping them succeed despite their discomfort. It is not necessary for people to like what has happened to them – it is necessary that they make adjustments that will help them succeed in the new environment. 5. We focus on getting the change “installed” (e.g. # people trained, $ spent, # computers on desks) and miss “realizing” the return on investment expected from the change (i.e. the fundamental purpose for the change, the outcomes that were promised). What is behind this gap? The human side of change. It is the humans in the landscape that achieve the results not the change “containers” we buy or build. People need to be readied to absorb the disruption and adapt to the change. The Change Process: Phases of Change There are many change models available seeking to clarify and define the process of change at a human behaviour level. The Change Curve, below, offers a clear, concise picture which has successfully helped many of my clients begin to understand and deal with change. It also provides an easy, clear language they can use to discuss change in a non-threatening, process- based manner. This helps take personalities and personal biases out of the picture and reinforces that all the stages of change are normal. This model lets one frame change. It can be used to illustrate that people react differently to change based on: Personal change tolerance; The number of changes going on simultaneously in a person’s life; How critical the person perceives each change to be; and, How much change has happened over the past twelve to twenty-four months.

9. 9 This model is also effective in opening discussion on how one can help one’s peer’s move through the phases, thus ensuring a successful change for the entire group. Getting the group to take responsibility for moving all the members through the change, respecting each person’s change parameters, and understanding that no one really wants to be left behind. Phases of change & transition: 1) Change begins & change adopted 2) Denial 3) Resistance 4) Transition point 5) Exploration 6) Commitment (Scott & Jaffe, Managing Organizational Change taken from Gingerella, 1993 ) As Gingerella (1993) points out, initial feelings of danger result from potential loss of control, competence, direction, and territory. Once these issues are addressed people can move into the opportunity phase and begin to see the potential for greater freedom, power, recognition, increased participation and reward. (Scott & Jaffe, Managing Organizational Change taken from Gingerella, 1993, Managing transition & change tool kit) If we explain the phases the first one, denial typical thoughts include: • If I just ignore this it will go away • This must be a mistake • This must be going on in another department, my department is working well. During denial, employees want to believe that the change is still optional, probably a mistake, that it will go away and life will get back to normal. Communication and getting employees involved in the change will move them quickly out of denial. It is important to reinforce that the change is required for business survival, explain what factors are causing the change, focus on a clear goal, and institute robust two-way communication to deal with issues and move people out of the denial phase. By the time people enter the resistance phase they are becoming angry and it is anger based on fear. Typical thoughts include: • How could they do this to me • I’ll show them. They can’t make this work without me. • I’m just not going to do it

10. 10 During this phase, if it is not managed well, sabotage of the process or even the plant can occur. Employees who do not move out of this phase remain angry and non-productive. They have a negative impact on those around them and often need to be removed from the organization. Resistance is a normal phase that everyone passes through, it may take a minute or months. If resistance is not dealt with, the organizational change will fail. During resistance “Managers are faced with increasing absenteeism, failing production, and decreasing quality. The employees begin to coalesce into protective reinforcement groups, or worse, they surrender to their fears and become organizational dropouts.” (Gingerella, 1993) In a healthy change initiative participants will move through resistance, reach a transitional point and begin to identify personal opportunities to flourish based on the change. First, employees become willing to explore the change and look for ways they can contribute. This is a very fragile period. Communication and personal reinforcement must be maintained and managed. Employees must be rewarded for even small increments of involvement. During exploration comfort zones are being rebuilt and existing skills are being applied to new and challenging tasks, relationships and processes. Any failure to support the employee during exploration will result in an immediate and final retreat into resistance or indifference. Planned & Unplanned Changes: Across the vast knowledge base of information about change management, the large majority of available resources available provide detailed information and frameworks about how to manage and lead planned change. Planned change may include scenarios such as implementing a new strategic plan, restructuring an organization to facilitate collaboration across program areas, or launching a new reporting method. While leading planned change is not without challenges, there are many well-established systematic approaches that practitioners can draw on to assist with this type of change. However, there are also situations in which practitioners are confronted with unplanned or unexpected change. While planned change typically has an expected result of leading to some type of improvement, unplanned change can be chaotic and lead to unknown results, or can even lead to an unexpected success. Whether change is planned or unplanned, it is typically something that happens to people, whether they agree with it or not. As illustrated in Figure 1 below, regardless of the change scenario, there is a transition period that people go through before moving into either the expected improvement or new situation.1,2 While change sometimes happens quickly, transition usually occurs more slowly. To work through and possibly capitalize on the impact of change, practitioners must not only manage change but provide the leadership to transition through change

11. 11 Stages of change & transition model: Stage 1 Change: Ending, Losing, and Letting Go When first presented with change, people move into Stage 1. This stage is often marked with emotional upheaval and resistance, because people have to let go or give up something that they are comfortable with or that is routine. Some may get stuck in this stage for some time, and may even exhibit active resistance throughout the change process if their feelings about the situation are not acknowledged. (Modified version Lewin’s Change & transition, Organizational change- Fleet Street journal’s) Stage 1 Transition Strategies: Listen and Communicate Even if people are initially resistant to change in Stage 1, it is important to understand their emotions and allow them time to let go. Listen intently, communicate openly, and assure people that they will have the support they need to work in the new situation. Given that people often fear what they do not understand, educate them about the positive aspects of the change and communicate how their knowledge and skills are going to be an essential part of it. Stage 2 Change: The Neutral Zone, people most affected by the change are often confused and uncertain during this phase. In fact, in Stage 2, they may experience a higher workload as they work to get used to new systems and new ways of working. This phase is the bridge between the old and the new, which will result in mixed emotions. While this can be an extremely trying time, it can also be a time of great creativity, innovation, and renewal. Stage 2 Transition Strategies: Support and Guide Providing support and guidance through Stage 2 is essential. Because of the higher workload and possible new processes, people may feel unproductive during this time and feel as though progress is not being made. To move through this stage, it is important to provide solid direction, frequent Stage 1: Ending, Losing, and Letting go Stage 2: The Neutral Zone

12. 12 Stage 3: The New Beginning Feedback and short-term goals for a few quick wins. It may also be important to reprioritize some work or provide extra assistance to staff to help manage the increased workload. Stage 3 Change: The New Beginning Stage 3, the last of the transition stages, is one of acceptance and new energy. People have started to embrace the change initiative because they have begun to build skills to work in a new way and they are starting to see some wins from their efforts. Most importantly, at this stage, people experience a new commitment to the group or role. Stage 3 Transition Strategies: Celebrate and Commit Being able to sustain the renewed commitment during this phase is essential. Take time to celebrate the change that everyone has gone through and reward groups for their hard work. It is also important to remember that not everyone will reach this stage at the same time and that there is the possibility that people will slip back in stages if you do not continue to embrace the change and provide support. While the transition model is outlined relative to managing internal transition, the concepts and strategies of each stage can also be applied to the work that practitioners do in leading and managing change with external partners. Employee readiness during transition: A successful journey through exploration will lead employees to commitment and change adoption and integration into the organization. Commitment comes through transition. As Bridges and Mitchell (2000) point out, change is external; transition is the internal psychological reorientation employee’s experience which allows the change to work. While these phases appear to be linear they are actually iterative with slight movement into and out of each phase as people put a tentative foot forward, retreat slightly, and make a larger foray. How the organization communicates, rewards, and supports the iterations will determine whether change is successful. Engineering Successful Change Continuous and overlapping change has become a way of life in the corporate environment. (Conner, 2001) In the 1980’s change theories recommended unfreezing, changing, and then refreezing the organization. The refreezing part of this equation is no longer possible. There is no new status quo just continuous evolution and change in response to competition and markets. This speed of change has introduced a new desirable employee characteristic: resilience or the ability to manage one’s energies, support the change, and emerge stronger than before the change. Employee Resilience: Resilience is the ability to move through a change and come out stronger than before with enough personal energy in reserve to still get the job done. Part of building employee resilience is helping them learn how to say goodbye to the old way of doing things, the way of doing things which, in the past, made them successful. Next, acknowledge the neutral zone, the period of time during which people are focusing their energies on coping with the

13. 13 uncertainties and confusion. Then help employees move forward. There is a natural tendency to hang back and see how others handle the new beginning. (Bridges and Mitchell, 2000) Foster resilience by providing safe environments for risk taking, rewarding large and small successes, and informing everyone but only pulling on the energies of those required for that portion of the change. Save some employee energy for later – you will need it! (2008-05 Tiplic Report, Managing change & transition by William Bridge) Leadership requirements during change & transition: Change Leadership: Leadership is the other key component of successful change. As Kanter (1999) points out “the most important things a leader can bring to a changing organization are passion, conviction, and confidence in others.” Successful change leaders focus on the change and solely on the change. It must the centre of all thoughts and actions and the driving force behind business decisions. Change is messy, chaotic, and turbulent. It is not a neat process – the plan will not go smoothly. Change leaders must be willing to: Listen to the corporate environment by developing a network of contacts that will keep them honestly and completely informed. These ties in with building coalitions, groups of key supporters and influencers with the same drive and vision as the leader. Use this network to understand why some employees are not embracing the change and take steps to help those employees. Search for agreements between the leader and the opposition and use these agreements to lure the opposition into the fold. Challenge the prevailing corporate wisdom must be considered from new angles. However, only disrupt what needs to be changed. Retain the best of what is already being done, if it fits with the new vision. change being implemented, what will the final state look and feel like, how can we get there, and what does each individual need to do to help the corporation get there. Be open and honest. Do not pretend that the negative aspects of the change do not exist. Give ownership for the change to the people who are ultimately responsible for its success. Involve those who need to be involved. Clearly define the roles they will play in the change, their goals, and how success will be recognized (how will we know when we get there). Make sure to track, support, reward, and challenge their ideas. Remember that they took some time to come to grips with the change and that they probably took less time that most others in the organization will need. Understand that others will need time to change. Recognize their own limitations and the effect these could have on the changing organization. Realize that in most cases the change will: Take longer than anticipated come up against unforeseen problems Regularly become uncoordinated and ineffective and need an adjustment Fall short of forecasts

14. 14 Lose momentum Quantum and Incremental Change & Transition can take place: Few would argue that systemic analysis will result in a more business focused communicable end-state vision. Much discussion is generated as to whether that systemic vision must be implemented simultaneously throughout the entire organization. There was a time, or so I have been told, when leaders could order a change and sit back and wait while the change was implemented throughout the organization. If that time did indeed exist it is a time long gone. Organizations are far too large and far too complex with a mirage of variables which cannot be controlled from the centre. Today, “quantum change occurs incrementally -- as a result of “high leverage” decisions and actions that push the organization in new directions and reverberate and cumulate in their effects.” (Morgan and Zohar, 1996) Gareth Morgan’s 15% Solution theory states that most people have about 15 percent control over their work situations. If individuals target doable, high leverage, actions in their locus of control, and if these actions are in the direction of the required corporate change, then incremental change spreads throughout the organization based on realistic changes owned by the people who can make the change succeed. Dramatic change fizzles out while incremental change embeds itself in the fabric of the continuously improving organization. Breakthrough ideas and pivotal changes can generate large effects; critical mass is achieved through incremental change building momentum and fostering innovative actions around a shared vision. (William bridge, Jefferson’s guide of transition in organization, Kurt Lewins change steps) Findings: 1) Change’s re inevitable for organizations survival & sustainment. 2) With change process people restrain issues that are common. 3) Change is first process, transitions takes long duration & close to people feelings & actions during changes. 4) Change can be fruit of well designed plan or forged by uncertainty. 5) Leadership plays important roles in maintaining change & transition. 6) To make change successful alignment of employees with it is must. 7) Change & transitions will be easy when it unfolds fruits for multilateral parties.

15. 15 Conclusion: “Change unfolds. It can be nudged and shaped, but never fully programmed and controlled.” (Morgan and Zohar, 1996). As such the phrase change management is an oxymoron. One cannot manage change but one can work to institutionalize resilience and continuous change in an organization. Rather than periodically mobilizing enormous corporate energies to implement a change program, change should be a matter of the daily work of each person in the organization. By constantly scanning the economic horizon and communicating trends and opportunities, leaders can provide line personnel with the information they need to inspire employees to continuously, and incrementally, shift and shape the organization in productive and profitable directions. Organizational flexibility is increased making it possible to react quickly and more effectively should a large scale, quantum change be required. Leaders need to identify the business imperative, communicate the vision, establish the parameters, and create a supportive environment which fosters incremental change toward the goal. Front line supervisors need to communicate and clarify the goal consistently and constantly in terms that employees can operationalize. It is to these front line managers that the task of helping employees move from denial to commitment falls. Employees need to identify opportunities, within their sphere of influence, to move the organization towards the goal and to build flexibility into processes to allow for on-going change. If the organization fails so do the employees. Working together these human components of the corporation can build a healthy and profitable enterprise able to adjust and reposition as technology, globalization, mergers and acquisitions, shifting markets, and customer requirements continuously change.

16. 16 Other References: 1) Denis, J.L., Langley, A. and Cazale, L. 1996. Leadership and Strategic Change under Ambiguity. Organization Studies. 2) Erakovic, Lj. And Powell, M. 2006. Pathways of Change: Organizations in Transition. Public Administration. 3) Katz, D., and Kahn, R.L. 1978. The Social Psychology of Organizations. New York: John Wiley & Sons. 4) Mintzberg, H. 1979. The Structuring of Organizations. Englewood Clifs, N.J.: Prentice Hall. 5) Newman, K.L. 2000. Organizational Transformation during Institutional Upheaval. The Academy of Management Revie. 6) Rogers, E.L. and Whetten, D.A. (and associates). 1982. Inter-organizational Coordination: Theory, Research and Implementation. Ames: Iowa State University Press.