What Changes in Organizations

(1)

PERTEMUAN 7

Readiness To Change

(2)

(3)

Scale of Change



First-order change:

◦

Incremental

◦

Maintains and develops the organization

– adjusting systems, processes,

structures, but not strategies and values

◦

E.g. continuous and smaller changes to

the structure of an organisation



Second-order change:

◦

Transformational

◦

Fundamentally changes the way an

organization functions

◦

E.g. downsizing

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

Types of Change:

-_Downsizing -_{Technological} -_Mergers

-_{Key Change}

(4)

Scale of Change



First-order change:

◦

Taking of individual initiatives

◦

Development of local routines



Second-order change:

◦

Move from entrepreneurial to

professional management structure

◦

Revitalization of already-established

company

◦

Visionary change in the business

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

-_{Key Change}

Challenges

(5)

Beyond 1

st

& 2

nd

Order Change



Mid-range changes

◦

Overcomes inertia but is not

revolutionary

◦

Avoids the alarming implications of

large scale change



Punctuated equilibrium

◦

Long periods of stability followed by

short bursts of change and instability



Robust transformation

◦

Considers environmental conditions

as being temporary and requiring

robust responses including the

enactment of new capabilities.

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

-_{Key Change}

(6)

Types of Change

DOWNSIZING



Approaches to downsizing:

◦

Retrenchment

◦

Downscaling

◦

Downscoping



Does not necessarily lead to

increased productivity



Can be an excessively costly

exercise

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

-_{Key Change}

Challenges

(7)

Types of Change

TECHNOLOGICAL CHANGE



There are a variety of new

technologies being used, for

example:

◦

Customer relationship management

(CRM) systems

◦

Enterprise resource planning (ERP)

◦

Wireless technology

◦

Business process reengineering

(BPR)

◦

Six Sigma

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

-_{Key Change}

(8)

Types of Change

MERGERS AND ACQUISITIONS



Enable organizational growth at

an accelerated rate



Types of mergers and

acquisitions:

◦

Excessive capacity

◦

Neighbouring market expansion

◦

New product or market investment

◦

Research and development

◦

Leveraging to create industries

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change

-_{Key Change}

Challenges

(9)

Key Change Challenges

Downsizing New Technologies Mergers & Acquisitions Employee retention. Goal synthesis. Cost savings. Avoiding “hard

landings”.

Choice of technology Cultural adjustment.

Minimizing political behavior and loss of teamwork.

Identifying political

barriers. Balancing change and continuity.

Survivor syndrome The IT team. Due diligence. Communication Communication Employee retention Due diligence Time frame. Contingency planning. Cultural adjustment. Contingency planning Power structure.

Choice of restructuring technique

Communication

This table outlines the key change challenges for the three

types of change. These issues need to be addressed when

managing change:

Scale of Change:

-₁st_order

-₂nd_order

Between 1st_&

2nd_Order

Change Types of Change: -_Downsizing -_{Technological} -_Mergers

-_{Key Change}

(10)

Diagnosis for Change

(11)

Advantages of Diagnostic Tools



Help understand what to change, how and why.



Simplify a complex situation.



Identify priorities for attention.



Highlight various organizational properties (e.g.

strategy and structure) and their

interconnectedness.



Provide a common “language” with which to

discuss organizational characteristics.



Provide a guide to the sequence of actions to

take in a change situation.



Help us be more efficient and rational as we

attempt to understand and change an

organization.

Advantages of diagnostic tools

Diagnostic Models:

-_Organization -_Components

(12)

Diagnostic Models: Organization

Advantages of diagnostic tools

Readiness for Change

•

Six-box organizational model:

–

The key focus here is on six variables – purpose,

structure, rewards, helpful mechanisms, relationship and

leadership. This model is useful to maintain awareness

of all areas for consideration even though one variable

may be identified as the main area for attention.

•

7-S framework:

–

The 7-S framework: this focuses on seven key

components that affect organizational effectiveness –

structure, systems, style, staff, skills, strategy and

superordinate goals. The interconnectedness of these

variables is vital to the success of change.

•

Star model:

–

An organization is effective when the five components of

organizational design – strategy, structure, processes

and later capability, reward systems and people

practices – are in alignment.

(13)

Advantages of diagnostic tools

Six-box

(14)

Advantages of diagnostic tools

7-S framework

(15)

Advantages of diagnostic tools

(16)

Diagnostic Models: Organization



Congruence model:

◦ The organization is broken down into four components – task, individuals, formal organizational arrangements and informal organisation. This is influenced by the context where the strategy is formulated and the output is then the performance of the organization.



Burke-Litwin model:

◦ This model identifies the transformational – external environment, mission and strategy, leadership and organizational culture - and transactional sources of change.



Four frame model:

◦ This offers four frames for the managers to

conceptualize how the organization operates. These frames are structural, human resource, political and symbolic frames.



Diagnosis by image:

◦ This technique allows organizational members to use images to describe the organizations and this can be used as a basis for discussion.

(17)

Diagnostic Models: Organization

Congruence model

Advantages

of diagnostic tools

(18)

(19)

Burke-Litwin

model

Advantages of diagnostic tools

Diagnostic Models: Organization

(20)

Diagnostic Models: Components



PESTEL Framework

◦ This analyses the external environment in terms of six factors – political, economic, social, technological,

environmental and legal. 

Scenario analysis

◦ Creates stories of possible future scenarios that are considered to be vital to the future of the organization. 

Gap analysis

◦ This is a tool used for reviewing the organization’s

position based on where they are and where they want to get to.



Elements of strategy

◦ These are five elements of strategy that are considered mutually reinforcing – arenas, vehicles, differentiators, staging and lowest costs through scale advantage. Any misalignment of these signifies the need for change. 

Strategic inventory

◦ This aims to identify the strategic assumptions of managers and determine their consistency with the business environment. This determines whether the strategy should be a focal point for change.

(21)

Diagnostic Models: Components



Newsflash exercise:

◦ This is an exercise that encourages managers to be very specific and succinct about change and clearer about the intended outcomes.



Cultural web:

◦ This provides a way of mapping the organizational culture through seven elements – paradigm, rituals and routines, stories, symbols, control systems, power structures and organizational structure. 

Structural dilemmas:

◦ Six possible structural dilemmas that can be

encountered during change are diagnosed so areas that have been “traded-off” during the change

process can be identified



The Boundaryless Organization:

◦ Success is arguably achieved only if four types of organizational boundaries are diagnosed and

reduced. These are vertical, horizontal, external and geographical boundaries.

Advantages of diagnostic tools

(22)

Readiness for Change



Assessing the organization's readiness to

change can be a mediating variable

between change management strategies

and the outcomes of desired strategies.



A perchance audit of the readiness of an

organization for change can provide an

indication of the likely outcome of a

change initiative at a particular point in

time. Some ways of doing this include:

◦

Questionnaires

◦

Stakeholder analysis: This focuses on the

position of stakeholders in the change process

and allows the manager to be better informed of

how to confront potential issues.

◦

Force-field analysis: This identifies factors that

are driving forces for change as well as

restraining forces.