MGT504 - Organization Theory and Design - Lecture Handout 32

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As the world becomes increasingly complex, the need for change within organization and the need for leaders who can successfully manage change continues to grow, coping with rapid change is one of the greatest challenges facing today’s organizations. Organizations need to continuously change and adapt in response to a turbulent environment. They need leaders who clearly recognize the need for change and make it happen, who can develop and communicate a vision for what the organizations can be and provide the motivation and guidance to take it there. Leaders who an effect the kind of continuous adaptation needed in today’s world recognize that change is painful for employees , and they learn to put themselves in their employee’s shoes and develop partnerships that make successful change possible.

Successful change can happen only when employees are willing to devote the time and energy needed to reach new goals as well as endure possible stress and hardship, Having a clearly communicated vision that embodies flexibility and openness to new ideas, methods, and styles sets the stag for a change – oriented organization and helps employees cope with the chaos and tension associated with change. Leaders also build organization wide commitment by taking employees through three stages of the change commitment process. In the first stage, preparation, employees hear about the change through memos, meetings, speeches, or personal contact and become aware that the change will directly affect their work. In the second stage, leaders should help employees develop an understanding of the full impact of the change and the positive, the decisions to implement is made. In the third stage, the true commitment process begins. The installation step, a trial process for the change, gives leaders an opportunity to discuss problems and employee concerns and build commitment to action. In the full stage, institutionalization, employees view the change not as something new but as a normal and integral part of organizational operations.

The pressures on organizations to change will likely increase over the next few decades and leaders must develop the personal qualities, skills, and methods needed to help their companies remain competitive. Indeed, some management experts argue that to survive the upheaval of the early twenty –first century, managers must turns their organizations into change leaders by using the present to actually create the future -- breaking industry rules, creating new market space, and routinely abandoning outmoded products, services, and processes to free up resources to build the future.


Visionary leadership is crucial for change; however, leaders should expect to encounter resistance as they attempt to take the organization through the three stages of the change commitment process. It is natural for people to resist change, and many barriers to change exist at the individual and organizational level.

  1. Excessive focus on costs. Management may possess the mind – set that costs are all – important and may fail to appreciate the importance of a change that is not focused on costs – for example, a change to increase employee motivation or customer satisfaction.
  2. Failure to perceive benefits. Any significant change will produce both positive and negative reactions. Education may be needed to help managers and employees perceive more positive than negative aspects of the change. In addition, if the organization’s reward system discourages risk – taking, a change process may falter because employee thinks that risk of making the changer is too high.
  3. Lack of coordination and cooperation. Organizational fragmentation and conflict often result from the lack of coordination for change implementation, Moreover, in the case of new technology; the old and new systems must be compatible.
  4. Uncertainty avoidance. At the individual level, many employees fear the uncertainty associated with change. Constant communication is needed so that employees know what is going on and understand how it impacts their
  5. Fear of loss, Managers and employees may fear the loss of power and status or even their jobs. In these cases, implementation should be careful and incremental, and all employees should be involved as closely as possible in the change process.

Implementation can typically be designed to overcome many of the organizational and individual barriers to change.


Top leaders articulate the vision and set the tone, but managers and employees throughout the organization are involved in the process of change. There are a number of techniques that can be used to successfully implement change.

  1. Identify a true need for change. A careful diagnosis of the existing situation is necessary to determine the extent of the problem or opportunity, if the people affected by the change do not agree with a problem; the change process should not proceed without further analysis and communication among all employees. As mentioned early sometimes a sense of urgency is needed to unfreeze people and make them willing to invest the time and energy to adopt new techniques or procedures. For example, ALLTEL, an information services and telecommunications company , faced both productivity and customer service problems as the company coped with rapid growth in the
    mid 1990s but mangers found it difficult to convince employees of the need for change. When ALLTEL Technology Center’s errors began to mount and the Center almost lost its largest client, GTE, managers used the
    incident to help establish a sense of urgency. Management and employees began meeting in small groups to talk
    about the need for change and how they could revise their work to improve the organization.
  2. Find an idea that fits the need, finding the right ideas often involves search procedures – taking with other mangers, assigning a task force to investigate the problem, sending out a request to suppliers, or asking creative people within the organization to develop a solution. The creation of a new idea requires organic conditions. This is a good opportunity to encourage employee participation, because they need the freedom to think about and explore new options. ALLTEL set up a program called Team Focus to gather input from all employees. In twenty groups meeting over a period of two weeks, managers gathered 2,800 suggestions, which they then narrowed down to 170 critical action items that specifically addressed problems that were affecting employee morale and performance.
  3. Get top management support, successful change requires the support of top management; top managers should
    articulate clear innovation goals. For a single large change, such as a structural reorganization, the president and vice presidents must give their blessing and support, for smaller changes, the support of influential manager in relevant departments is required. The lack of top management support is one of the most frequent causes of implementation failure.
  4. Design the change for incremental implantation. Sometimes large changes cannot be implanted all at once or employees may feel overwhelmed and resist the change, Recall how Dan Caulfield tried to force employees to shift to a paperless office system overnight but found that he needed to scale back and introduce the new system in more gradual manners. Likewise, when a large bank in South Carolina. Installed a complete new $ 6 million system to computerize processing, it was stunned that the system didn’t work very well. The prospect for success of such a large change is improved if the change can be broken into subparts and each part adopted sequentially. Then designers can make adjustment to improve the innovation, and hesitant users who see success can throw support behind the rest of the change program.
  5. Develop plans to overcome resistance to change. Many good ideas are never used because managers failed to anticipate or prepare for resistance to change by consumers, employees, or other managers. No matter how impressive the performance characteristic of an innovation, its implementation will conflict with some interests and
    jeopardizes some alliances in the organization. To increase the chance of successful implantation, management must acknowledge the conflict, threats, and potential losses perceived by employees. Several strategies can be used by managers to overcome the resistance problem;
    • Alignment with needs and goals of users. The best strategy for overcoming resistance is to make sure
      change meets a real need. Employees in R&D often come up with great ideas that solve nonexistent problems. This happens because initiators fail to consult with the people who use a change. Resistance can be frustrating for managers, but moderate resistance to change is good for an organization. Resistance provides a barrier to frivolous changes or to change for the sake of change. The process of overcoming resistance to change normally requires that the change be good for its users.
    • Communication and training. Communications informs users about need for change and about the consequences of a proposed change, preventing false rumors, misunderstanding, and resentment. In one study of change efforts, the most commonly citied reason for failure was that employees learned of the change from outsiders. Top managers concentrated on communicating with the public and with shareholders, but failed to communicate with the people who would be most intimately involved and most affected by the changes – their own employees. Open communication often gives management an opportunity to explain what steps will be taken to ensure that the change will have no adverse consequences for employees. Training is also needed to help employees understand and cope with their role in the change process.
    • Participation and involvement, Early and extensive participation in a change should be part of implementation. Participation given those involved a sense of control over the change activity. They understand it better, and they become committed to successful implementation. One recent study of the implementation and adoption of computer technology at two companies showed a much smoother implementation, process at the company that introduced the new technology using a participatory approach. The team – building and large group intervention activities described earlier can be effective ways to involve employees in a change process.
    • Forcing and Coercion. As a last resort, mangers may overcome resistance by threatening employees with
      loss of jobs or promotion or by firing or transferring them. In other words, management power is used to
      overwhelm resistance. In most cases, this approach is not advisable because it leaves people angry at change mangers, and the change may be sabotaged. However, this technique may be needed when speed is essential, such as when the organization faces a crisis. It may also be required for needed administrative changes that flow from the top down, such as downsizing the work force.
  6. Create change teams. Separate Creative Department, new venture groups, or an ad hoc team or task force are ways to focus energy on both creation and implementation. As separate department has the freedom to create a new technology that fits a genuine need. A task force can be created to see that implementation is completed. The
    task force can be responsible for communication, involvement of users, training, and other activities needed for
  7. Foster idea champions. One of the most effective weapons in the battle for change is the ideas champion. The most effective champion is a volunteer champion who is deeply committed to a new idea. The idea champion sees
    that all technical activities are correct and complete. An additional champion, such as manager sponsor, may also be needed to persuade people about implementation, even using coercion if necessary. For example, John Cunningham was the idea champion at Chesebrough- Ponds who developed the polishing pen through which nail polish is applied. Management supporters at Chesebrough –Ponds then solved the implementation problems of
    manufacturing, packaging, and marketing. Both technical and management champions may break the rules and push ahead even when others are non-believing, but the enthusiasm pays off.


The change used to adapt to the environment can be evaluated according to scope – that is, the extent to which changes are incremental or radical for the organization. Incremental change represent as series of continual progressions that maintain the organization’s general equilibrium and often affect only one organizational part. Radical change, by contrast, breaks the frame of reference for the organization, often transforming the entire organization, frame of reference for the organization, often transforming the entire organization. For example, an incremental change is the implementation of sales team in the marketing department, whereas a radical change is shifting the entire organization from a vertical to a horizontal structure, with all employees who work on specific core processes brought together in teams rather than being separated into functional departments such as marketing, finance, production, and so forth. For the most part, incremental change occurs through the established structure and management processes, and it may include technology improvement – such as the introduction of computer integrated manufacturing – or product improvement, --- such as Procter & Gamble’s addition to Tide detergent of cleaning agents that protect colors and fabrics. Radical change involves the creation of new structure and management processes. The technology is likely to be breakthrough, and new products thereby rated will establish new markets.

As we have just discussed, there is a growing emphasis on the need for radical change because of today’s turbulent, unpredictable environment. Indeed, some experts argue that firms must be constantly changing their structures and management processes in response to changing their structures and management processes in response to changing demands, the health – care industry, for example, continues to face tremendous upheaval, and companies likely will have to implement radical change to survive. One example of radical change was the revolution at Motorola that achieved an astounding six sigma quality (only 3.4. mistakes per million parts produced). This level of quality, previously considered impossible, became the new norm. An example of radical change in s Service Company comes from the traditionally slow – moving insurance industry.

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