Instructors Manual to Accompany

Organizational Behavior 5/e

emerging knowledge and practice for the real world

by Steven L. McShane and Mary Ann von Glinow

Chapter 15 Organizational Change

Prepared by: Steven L. McShane, University of Western Australia

ThisInstructorsManual1ileispartoftheInstructorsResourceCDROMforOrganizationalBehavior: EmergingKnowledgeandPracticefortheRealWorld,5thedition. 10digitISBN:0073364347 13digitISBN:9780073364346 PublishedbyMcGrawHill/Irwin,abusinessunitofTheMcGrawHillCompanies,Inc.,1221AvenueoftheAmericas,New York,NY,10020.Copyright2010,2008,2005,2003,2000byTheMcGrawHillCompanies,Inc.Allrightsreserved.No partofthispublicationmaybereproducedordistributedinanyformorbyanymeans,orstoredinadatabaseorretrieval system,withoutthepriorwrittenconsentofTheMcGrawHillCompanies,Inc.,including,butnotlimitedto,inanynetwork orotherelectronicstorageortransmission,orbroadcastfordistancelearning. Someancillaries,includingelectronicandprintcomponents,maynotbeavailabletocustomersoutsidetheUnitedStates.

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Chapter 15: Organizational Change

15

Organizational Change
LEARNING OBJECTIVES
Afterreadingthischapter,studentsshouldbeableto: 1. DescribetheelementsofLewinsforce1ieldanalysismodel. 2. Outlinesixreasonswhypeopleresistorganizationalchange. 3. Discusssixstrategiesforminimizingresistancetochange. 4. Outlinetheconditionsforeffectivelydiffusingchangefromapilotproject. 5. Describetheactionresearchapproachtoorganizationalchange. 6. OutlinetheFourDmodelofappreciativeinquiryandexplainhowthisapproachdiffers fromactionresearch. 7. Explainhowparallellearningstructuresassistthechangeprocess. 8. Discussthreeethicalissuesinorganizationalchange.

CHAPTER GLOSSARY
actionresearchaproblemfocusedchangeprocess thatcombinesactionorientation(changingattitudes andbehavior)andresearchorientation(testingtheory throughdatacollectionandanalysis). appreciativeinquiryanorganizationalchangestrategy thatdirectsthegroupsattentionawayfromitsown problemsandfocusesparticipantsonthegroups potentialandpositiveelements. force1ieldanalysisKurtLewinsmodelofsystemwide changethathelpschangeagentsdiagnosetheforces thatdriveandrestrainproposedorganizationalchange futuresearchsystemwidegroupsessions,usually lastingafewdays,inwhichparticipantsidentifytrends andidentifywaystoadapttothosechanges parallellearningstructurehighlyparticipative arrangements,composedofpeoplefrommostlevelsof theorganizationwhofollowtheactionresearchmodel toproducemeaningfulorganizationalchange. refreezingthelatterpartofthechangeprocessin whichsystemsandconditionsareintroducedthat reinforceandmaintainthedesiredbehaviors. unfreezingthe1irstpartofthechangeprocess wherebythechangeagentproducesdisequilibrium betweenthedrivingandrestrainingforces.

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Chapter 15: Organizational Change

CHAPTER SYNOPSIS
Lewinsforce1ieldanalysismodelstatesthatallsystemshavedrivingandrestrainingforces.Changeoccursthroughthe processofunfreezing,changing,andrefreezing.Unfreezingproducesdisequilibriumbetweenthedrivingand restrainingforces.Refreezingrealignstheorganizationssystemsandstructureswiththedesiredbehaviors. Restrainingforcesaremanifestedasemployeeresistancetochange.Resistancetochangeshouldbeviewedasa resource,notaninherentobstacletochange.Themainreasonswhypeopleresistchangearedirectcosts,savingface, fearoftheunknown,breakingroutines,incongruentteamdynamics,andincongruentorganizationalsystems. Resistancetochangemaybeminimizedbykeepingemployeesinformedaboutwhattoexpectfromthechangeeffort (communicating);teachingemployeesvaluableskillsforthedesiredfuture(learning);involvingtheminthechange process;helpingemployeescopewiththestressofchange;negotiatingtradeoffswiththosewhowillclearlylosefrom thechangeeffort;andusingcoercion(sparinglyandasalastresort). Organizationalchangealsorequiresdrivingforces.Thismeansthatemployeesneedtohaveanurgencyforchangeby becomingawareoftheenvironmentalconditionsthatdemandchangeintheorganization.Thechangeprocessalso requiresrefreezingthenewbehaviorsbyrealigningorganizationalsystemsandteamdynamicswiththedesired changes.Everysuccessfulchangealsorequireschangeagentswithaclear,wellarticulatedvisionofthedesiredfuture state.Thechangeprocessalsooftenappliesadiffusionprocessinwhichchangebeginsasapilotprojectandeventually spreadstootherareasoftheorganization. Actionresearchisahighlyparticipative,opensystemsapproachtochangemanagementthatcombinesanaction orientation(changingattitudesandbehavior)withresearchorientation(testingtheory).Itisadatabased,problem orientedprocessthatdiagnosestheneedforchange,introducestheintervention,andthenevaluatesandstabilizesthe desiredchanges. Appreciativeinquiryembracesthepositiveorganizationalbehaviorphilosophybyfocusingparticipantsonthepositive andpossible.Ittriestobreakoutoftheproblemsolvingmentalitythatdominatesorganizationalchangethroughthe actionresearchmodel.Thefourstagesofappreciativeinquiryincludediscovery,dreaming,designing,anddelivering. Largegroupinterventions,suchasfuturesearchconferences,arehighlyparticipativeeventsthattypicallytrytogetthe entiresystemintotheroom.Afourthorganizationalchangeapproach,calledparallellearningstructures,relieson socialstructuresdevelopedalongsidetheformalhierarchywiththepurposeofincreasingtheorganization'slearning. Theyarehighlyparticipativearrangements,composedofpeoplefrommostlevelsoftheorganizationwhofollowthe actionresearchmodeltoproducemeaningfulorganizationalchange. Onesigni1icantconcernisthatorganizationalchangetheoriesdevelopedwithaWesternculturalorientationpotentially con1lictwithculturalvaluesinsomeothercountries.Also,organizationalchangepracticescanraiseoneormoreethical concerns,includingincreasingmanagementspoweroveremployees,threateningindividualprivacyrights, underminingindividualselfesteem,andmakingclientsdependentonthechangeconsultant.

POWERPOINT SLIDES
OrganizationalBehaviorFifthEditionincludesacompletesetofMicrosoftPowerPoint1ilesforeachchapter.(Please contactyourMcGrawHill/Irwinrepresentativeto1indouthowinstructorscanreceivethese1iles.)Inthelecture outlinethatfollows,athumbnailillustrationofeachPowerPointslideforthischapterisplacedbesidethe correspondinglecturematerial.Theslidenumberhelpsyoutoseeyourlocationintheslideshowsequenceandtoskip slidesthatyoudontwanttoshowtotheclass.(Tojumpaheadorbacktoaparticularslide,justtypetheslidenumber andhittheEnterorReturnkey.)

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Chapter 15: Organizational Change

LECTURE OUTLINE (WITH POWERPOINT SLIDES)

Organizational Change

Organizational Change Slide 1

Umpqua Banks Organizational Change Umpqua Bank has become the largest regional community bank in the Pacific Northwest by applying effective organizational change practices

Suncor Embraces Continuous Change Slide 2

Lewins Force Field Analysis Model Highly respected model of change developed by social psychologist Kurt Lewin
Lewins Force Field Analysis Model Slide 3

Consists of driving and restraining forces in the change process Driving forces
Push organizations toward a new state of affairs Includes external forces -- e.g., competitors, technologies may be developed from leader -- divine discontent -- urge employees to strive for higher standards or new innovations

Restraining forces
resistance to change -- employee behaviors that block the change process try to maintain the status quo

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Chapter 15: Organizational Change

Force Field Analysis Model Effective change occurs by unfreezing the current situation, moving to a desired condition, and then refreezing the system
Force Field Analysis Model Slide 4

Unfreezing
producing disequilibrium between the driving and restraining forces

Stability
when driving and restraining forces are roughly in equilibrium

Refreezing
introducing organizational systems and structures aligned with the desired behaviors support and reinforce the new role patterns

Not Hoppy About Change Mina Ishiwatari (front) wanted to improve Hoppy drinks brand image, but most staff didnt want to change. I tried to take a new marketing approach to change the image of Hoppy . . . but no one would listen to me. She improved Hoppys popularity with limited support or budget. Most employees who opposed Ishiwataris changes have since left the company. Restraining Forces (Resistance to change) Many forms -- complaints, absenteeism, passive noncompliance etc.
Restraining Forces (Resistance to Change) Slide 6

Not Hoppy About Change Slide 5

Subtle resistance is much more common than overt resistance -more difficult to address because not as obvious Need to view resistance as a resource, not impediment to change 1. resistance incidents are symptoms of deeper problems in the change process
signal need for better change mgt practices occurs when employees worry about the consequences of change, or about the process of change itself

2. A form of constructive conflict -- may produce better change decisions 3. Resistance is a form of voice -- may improve procedural justice and motivate people to act towards change

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Chapter 15: Organizational Change

Why People Resist Change Related to motivation, ability, and role perceptions
Why People Resist Change Slide 7

Motivation -- perceive negative consequences of change Ability -- lack of skills/knowledge to change Role perceptions -- not clear what change is required

1. Direct costs
Losing something of value due to change FBIs new intelligence mandate would reduce status in law enforcement

2. Saving face
Accepting change acknowledges own imperfection, past wrongdoing New FBI mandate acknowledges value of CIA work (source of past turf wars)

3. Fear of the unknown

Risk of personal loss Concern about being unable to adjust

Why People Resist Change (cont) 4. Breaking routines

Why People Resist Change (cont) Slide 8

Organizational unlearning is part of change process But past practices/habits are valued by employees due to comfort, low cognitive effort

5. Incongruent organizational systems

Systems/structures reinforce status quo FBI career, reward, power, communication systems supported law enforcement, not intelligence

6. Incongruent team dynamics

Norms contrary to desired change

Unfreezing, Changing, and Refreezing Shouldnt increase driving forces alone

increase restraining forces to counterbalance driving forces

Preferred strategy is to destabilize status quo by:

1. increasing/exposing driving forces (create urgency for change) 2. decreasing the restraining forces -- minimize resistance

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Chapter 15: Organizational Change

Creating an Urgency for Change Inform employees about driving forces -- competitors, changing consumer trends, etc
Creating an Urgency for Change Slide 9

Most difficult when organization is doing well Customer-driven change

Dissatisfied customers have real consequences for the firm Human element energizes employees

Sometimes need to create urgency to change without external drivers

e.g., when company is successful Requires persuasive influence -- employees visualize future competitive threats and environmental shifts Use positive vision of future rather than threats as driver Problem: Creating illusory drivers for change produces cynicism to change

Minimizing Resistance to Change: Communication Highest priority and first strategy for change Improves urgency to change
Minimizing Resistance to Change: Communication Slide 10

Reduces uncertainty (fear of unknown) Problems -- time consuming and costly Minimizing Resistance to Change: Learning Provides new knowledge and skills Includes coaching and other forms of learning

Minimizing Resistance to Change: Learning Slide 11

Helps break old routines and adopt new roles Problems -- potentially time consuming and costly Minimizing Resistance to Change: Involvement Employees participate in change process Almost essential part of change process these days

Minimizing Resistance to Change: Involvement Slide 12

Employees feel personally responsible for success of change Minimizes saving face and reducing fear of unknown

Problems -- time-consuming, potential conflict

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Chapter 15: Organizational Change

Minimizing Resistance to Change: Stress Change process potentially threatens self-esteem and creates uncertainty about the future
Minimizing Resistance to Change: Stress Slide 13

Communication, learning, and involvement reduce stress to some degree, but may require other strategies to minimize stress Potential benefits
More motivation to change Less fear of unknown Fewer direct costs

Problems -- time-consuming, expensive, doesnt help everyone Minimizing Resistance to Change: Negotiation Influence support for change by negotiating benefits or resources in exchange for compliance with request (e.g. supporting change)
Minimizing Resistance to Change: Negotiation Slide 14

May be necessary when people clearly lose something and wont otherwise support change Reduces resistance due to perceived direct costs Problems
Expensive Gains compliance, not commitment

Minimizing Resistance to Change: Coercion Necessary when all other strategies fail Assertive influence tactics
Minimizing Resistance to Change: Coercion Slide 15

e.g. monitoring behaviors to ensure compliance, confronting, threats of sanctions etc.

Radical form of organizational unlearning -- dismissals Problems

Reduces trust May create more subtle resistance More politics to protect job security

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Chapter 15: Organizational Change

Refreezing the Desired Conditions When you are leading for growth, you know you are going to disrupt comfortable routines and ask for new behavior, new priorities, new skills Even when we want to change, and do change, we tend to relax and the rubber band snaps us back into our comfort zones. Ray Davis, CEO, Umpqua Bank Refreezing the Desired Conditions Realigning organizational systems and team dynamics with the desired changes
Refreezing the Desired Conditions Slide 17

Refreezing the Desired Conditions Slide 16

Alter rewards to reinforce new behaviors Change career paths Revise information systems

Change Agents Change agent -- anyone who possesses enough knowledge and power to guide and facilitate the change effort
Change Agents Slide 18

Change agents apply transformational leadership

Help develop a vision Communicate the vision Act consistently with the vision Build commitment to the vision

Strategic Vision & Change Need a vision of the desired future state Identifies critical success factors for change
Strategic Vision & Change Slide 19

Minimizes employee fear of the unknown Clarifies role perceptions

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Chapter 15: Organizational Change

Diffusion of Change Successful change initiatives usually begin as pilot projects

Pilot projects offer greater flexibility, less risk
Diffusion of Change Slide 20

Effective diffusion of pilot project success considers MARS model 1. Motivation

Pilot project is successful Reward and support diffusion of pilot project elsewhere

2. Ability
Train employees with skills/knowledge necessary to adopt pilot project Role modeling from people in pilot project

3. Role perceptions
Help employees translate pilot project practices to their specific work environment

4. Situational factors
Provide resources to implement pilot project elsewhere

Action Research Approach Action orientation and research orientation

Action to achieve the goal of change Research testing application of concepts

Action Research Approach Slide 21

Action research principles

1. Open systems perspective 2. Highly participative process 3. Data-driven, problem-oriented process

Action Research Process 1. Form client-consultant relationship

Client readiness -- clients motivation, open to meaningful change, possess abilities to complete change process
Action Research Process Slide 22

2. Diagnose the need for change

Organizational diagnosis -- gathering and analyzing data about an ongoing system Includes employee involvement -- agree on change methods, determine objectives of successful change

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Chapter 15: Organizational Change

3. Introduce intervention
Applies one or more actions -- e.g. managing conflict, team building, changing corporate culture Incremental change vs. quantum change -- small steps or massive overhaul -- advantages and perils for either approach

4. Evaluate and stabilize change

Comparing change outcomes against standards established earlier in action research process Problems -- (a) outcomes arent apparent for a long time, (b) difficult to separate effects of external changes Refreeze conditions to stabilize change

BBC Takes the Appreciative Journey To become a more creative organization, the British Broadcasting Company sponsored an appreciative inquiry process of employee consultation, called Just Imagine. It gave me a powerful mandate for change, said BBCs chief executive at the time. Appreciative Inquiry Approach Frames change around positive and possible future, rather than traditional problem-focus
Appreciative Inquiry Approach Slide 24

BBC Takes the Appreciative Journey Slide 23

Builds change process around strengths, not weaknesses Form of behavioral modeling -- finding and replicating examples of positive events Positive focus minimizes defensiveness, conflict

Application of positive OB -- success and well-being grounded in positive rather than negative aspects of life

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Chapter 15: Organizational Change

Four-D Model of Appreciative Inquiry 1. Discovery

discovering positive elements of the observed organization (may involve interviewing, documenting positive events and elements)
Four-D Model of Appreciative Inquiry Slide 25

2. Dreaming
considering what might be possible in an ideal organization safer revealing aspirations about an ideal than their own situation

3. Designing
participants listen to each others' models and assumptions, and eventually form a collective model for thinking within the team

4. Delivering
participants establish specific objectives and direction for their own organization based on their model of what should be

Evaluating Appreciative Inquiry Several successful change stories from this approach, but not always successful
Requires positive rather than problem-oriented mindset Not yet clear what other conditions are best for appreciative inquiry (i.e. contingencies not yet known)

Large Group Interventions Future search, open space, and other interventions that involve the whole system
Large Group Interventions Slide 26

Large group sessions May last a few days High involvement with minimal structure

Limitations of large group interventions

Limited opportunity to contribute Risk that a few people will dominate Focus on common ground may hide differences Generates high expectations about ideal future

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Chapter 15: Organizational Change

Parallel Learning Structure Approach Highly participative social structures Members representative across the formal hierarchy
Parallel Learning Structure Approach Slide 27

Sufficiently free from firms constraints Develop solutions for organizational change which are then applied back into the larger organization Parallel Learning Structures

Parallel Learning Structures Slide 28

Cross-Cultural and Ethical Concerns Cross-Cultural Concerns

Cross-Cultural and Ethical Concerns Slide 29

Linear and open conflict assumptions different from values in some cultures

Ethical Concerns
Privacy rights of individuals Management power Individuals self-esteem

Organizations are About People Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory. Andrew Carnegie (1835-1919) Organizational Change

Organizations are About People Slide 30

Organizational Change Slide 31

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Chapter 15: Organizational Change

Discussion of Activity 15.3: Strategic Change Incidents

Discussion of Activity 15.3: Strategic Change Incidents Slide 32

Scenario #1: Greener Telco Scenario #1 refers to Bell Canadas Zero Waste program, which successfully changed wasteful employee behaviors by altering the causes of those behaviors.
Scenario #1: Greener Telco Slide 33

Bell Canadas Change Strategy Relied on the MARS model to alter behavior:
Motivation -- employee involvement, respected steering committee Ability -- taught paper reduction, email, food disposal Role perceptions -- communicated importance of reducing waste Situation -- Created barriers to wasteful behavior, e.g.. removed garbage bins

Bell Canadas Change Strategy Slide 34

Scenario #2: Go Forward Airline Scenario #2 refers to Continental Airlines Go Forward change strategy, which catapulted the company from worst to first within a couple of years.
Scenario #2: Go Forward Airline Slide 35

Continental Airlines Change Strategy

Communicate, communicate, communicate Introduced 15 performance measures Established stretch goals (repainting planes in 6 months) Replaced 50 of 61 executives Rewarded new goals (on-time arrival, stock price) Customers as drivers of change

Continental Airlines Change Strategy Slide 36

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Chapter 15: Organizational Change

SOLUTIONS TO CRITICAL THINKING QUESTIONS

1. Chancesarethattheschoolyouareattendingiscurrentlyundergoingsomesortofchangetoadaptmore closelywithitsenvironment.Discusstheexternalforcesthataredrivingthesechanges.Whatinternal driversforchangealsoexist? Therearemanypossiblechangesthatyourcollegeiscurrentlyexperiencing.Someofthemorecommonchanges mightbe:(a)shiftfromquartertosemesterschedule;(b)introductionofonlinelearning;(c)changinglibrary hours;(d)newcoursesanddisciplines;(e)reassignmentofphysicalspaceduetonewconstructionorclosureof oldbuildings. Therearejustasmanypossibleexternalforcesforchangetoconsider,including:(a)increasedcompetitionfor students;(b)emergingtechnologies;(c)costpressures(restrictedbudgets);(d)changingstudentexpectations (e.g.newcoursecontent,more1lexiblelearning);(e)collegeratings. Internalforcesforchangemainlycomefromsuchthingsasleadership,physicalstructures(e.g.agingbuildings), andstudentandfacultycoalitions. Itisimportanttodistinguishthechangesfromtheforcesforchange.Forexample,theintroductionofonline learningmighthaveresultedfrombothnewtechnologiesandincreasedcompetitionforstudents. 2. UseLewinsforceAieldanalysistodescribethedynamicsoforganizationalchangeatUmpquaBank(see openingvignettetothischapter). Theopeningvignettetothischapteridenti1iesthechangingmarketplaceasthemainexternalforceforchange. UmpquaBankwouldnotlastlongunlessitdifferentiateditself.ItisalsoclearthatCEORayDaviswasapowerful forceforchange,particularlyhisvisionandenthusiasmforthatvision. Theopeningvignetterefersbrie1lytosomeinstancesofresistancetochange,suchasgettingthewrongpeopleoff thebus.Thespeci1iccausesofthatresistancearenotstated,butDavisreferstobreakingroutineswhenhetalks abouttherubberbandeffect.StudentsmightspeculateotherreasonswhyUmpquaBankemployeesmightresist change.Forexample: Directcosts.Someemployeesmightlosetheirpowerandstatusinthenewbankformat. SavingFace.EmployeesresponsibleforcorporatestrategyandmarketingmightfeelslightedbyhavingtheCEO suggestasuperioridea. FearoftheUnknown.Thissourceofresistancewouldlikelyhavebeenquiteapparent.Thevignettedescribes howthechangesweremuchmoreradicalthanatypicalbank,soemployeeswouldnothavemuchclarityaboutthe future. BreakingRoutines.Theradicalnatureofthechangesprobablycausedsomeresistance,becauseemployeeshadto learnnewpractices,andadoptnewvaluesinorderforthecompanytomovetowardanadaptiveculture. IncongruentSystems.Althoughnotstatedinthecase,Umpquabankmighthavehadarewardsystem,corporate culture,informationsystemetcthatworkedagainsttheproposedchanges. IncongruentTeamdynamics.Aswiththeabove,thisfactorisnotapparentasasourceofresistanceinthecase.

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Chapter 15: Organizational Change

3. Employeeresistanceisasymptom,notaproblem,inthechangeprocess.Whataresomeofthereal problemsthatmayunderlieemployeeresistance? Thetextbookoutlinessixmainreasonswhyemployeesresistchange.Thefollowingreasonsexplainthereal problemsthatemployeesexperienceandareconcernedaboutwithchangeprocesses. Directcosts.Resistancemaybeasymptomthatunderliesemployeejobsecurityconcernsorfearsthechangemay affecttheircareerdevelopmentpotential. Savingface.Whenchangeinvolvesimplementingadecisionthatwasnotrecommendedbyanindividual,the individualmaytrytoprovethatthedecisionwaswrongorthatthepersonencouragingchangeisincompetent. Fearoftheunknown.Peopleresistchangebecausetheyareworriedtheywillnotbeabletoadoptthenew behaviorsrequired. Breakingroutines.Peopledonotwanttogiveuptheircomfortzonesanddailyroutinesthatprovide predictability. Incongruentorganizationalsystems.Organizationalsystemsmayactuallybediscouragingemployeesfrom adoptingnewways.Forexample,theorganizationsreward,selection,trainingandothercontrolsystemsmaybe causingemployeestomaintainthestatusquo. Incongruentteamdynamics.Teamnormsmaycon1lictwiththedesiredchangeandconsequentlyreinforce conformitytothestatusquo. 4. Seniormanagementofalargemultinationalcorporationisplanningtorestructuretheorganization. Currently,theorganizationisdecentralizedaroundgeographicalareassothattheexecutiveresponsible foreachareahasconsiderableautonomyovermanufacturingandsales.Thenewstructurewilltransfer powertotheexecutivesresponsiblefordifferentproductgroups;theexecutivesresponsibleforeach geographicareawillnolongerberesponsibleformanufacturingintheirareabutwillretaincontrolover salesactivities.Describetwotypesofresistanceseniormanagementmightencounterfromthis organizationalchange. Theanswertothisquestionshouldincludedirectcostsasonetypeofresistancetochangeamongthegeographic executives.Theywilllosestatus,power,andresponsibilityfromthechangeeffort. Theothertypeofresistancetochangemightbeincongruentorganizationalsystems,incongruentteamdynamics, orbreakingroutines.Unlessthecompanyhastakenspeci1icstepstoalterorganizationalsystems,thesesystems mightstillsupportthedecentralizedorganizationalstructure.Forexample,communicationpatternsandphysical structuresmightstillbecon1iguredaroundthegeographicratherthanproductstructure. Regardingteamdynamics,departmentalnormsmightsupportthegeographicexecutive.Forexample,employees mighthavedevelopedawetheyattitudetowardproductleadersinheadquarters.Althoughtherestructuring placedregionalproductgroupsunderproductexecutives,theseantagonisticnormsmaycontinue. Finally,somestudentsmightarguethatresistancewilloccurbecauseemployeeswillbebreakingroutines.For instance,geographicexecutivesandtheiremployeesmayhaveformedhabitsregardingrelationsbetweensalesand productionunits.Nowthatproductionunitsarenolongerundertheexecutivescontrol,thesehabitsmustbe alteredandperhapssalespracticeschangedto1itthenewreportingstructure.

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Chapter 15: Organizational Change

5. Discusstheroleofrewardsystemsinorganizationalchange.SpeciAically,identifywhererewardsystems relatetoLewinsforceAieldmodelandwheretheyunderminetheorganizationalchangeprocess. Studentsshouldrecognizethatrewardsystemscanbeeitherasourceofresistancetochangeorasystemthat reinforcesthedesiredchange(i.e.refreezesthesystem).Asasourceofresistance,rewardswouldbean incongruentorganizationalsystem,suchaswhererewardsreinforceef1iciencybuttheorganizationistryingto changetowardacustomerfocus.Asamechanismforrefreezing,rewardsareintroducedorchangesotheyare compatiblewiththedesiredbehaviors. 6. WebCircuitsisaMalaysianbasedcustommanufacturerforhightechnologycompanies.Senior managementwantstointroduceleanmanagementpracticestoreduceproductioncostsandremain competitive.Aconsultanthasrecommendedthatthecompanystartwithapilotprojectinonedepartment and,whensuccessful,diffusethesepracticestootherareasoftheorganization.Discusstheadvantagesof thisrecommendationandidentifythreeways(otherthanthepilotproject'ssuccess)tomakediffusionof thechangeeffortmoresuccessful. Apilotprojectisusuallyaneffectivechangemanagementstrategy.Itismore1lexibleandlessriskythancentralized organizationwideprograms. Thereareseveralwaystomakediffusionofthechangeeffortmoresuccessful.Severalstrategiesaredescribedin thetextbookaroundthefourelementsoftheMARSmodel.Hereisasummaryoftheserecommendations: Motivation:Ensurethatemployeesseethatthepilotprojectissuccessfulandthatpeopleinthepilotproject receiverecognitionandrewardsforchangingtheirpreviousworkpractices.Supervisorsneedtoactivelysupport andreinforcethedesiredbehaviors.Theyalsoneedtoremovesourcesofresistancethatactascountermotivators todiffusionofchange. Ability:employeesmusthavetheabilitytherequiredskillsandknowledgetoadoptthepracticesintroducedin thepilotproject.Also,peopleadoptideasmorereadilywhentheyhaveanopportunitytointeractandlearnfrom otherswhohavealreadyappliedthenewpractices. RolePerceptions:Employeesneedtounderstandhowthepracticesinapilotprojectapplytothemeventhoughin acompletelydifferentfunctionalarea.Thisrequiresguidancethatisneithertospeci1ic,becauseitmightnotseem relevanttootherareasoftheorganization,nortooabstract. SituationalFactors:Employeesrequiresupportivesituationalfactors,includingtheresourcesandtimenecessary toadoptthepracticesdemonstratedinthepilotproject. 7. SupposethatyouarevicepresidentofbranchservicesattheBankofEastLansing.Younoticethatseveral brancheshaveconsistentlylowcustomerserviceratingseventhoughtherearenoapparentdifferencesin resourcesorstaffcharacteristics.Describeanappreciativeinquiryprocessinoneofthesebranchesthat mighthelptoovercometheseproblems. Appreciativeinquiryreframesrelationshipsaroundthepositiveandthepossible.Thebankbranchesshouldlookat anotherbranchthathasbeensuccessful.Thisincreasesopendialoguebyredirectingattentionawayfrominternal problems. Therearefourmainstagestoappreciativeinquiry.Theprocessbeginswiththediscoverystage,wherebythe participantsidentifythepositiveelementsoftheobservedorganization.Astheydiscusstheir1indings,participants shiftintothedreamingstagebyconsideringwhatmightbepossibleinanidealorganization. Thethirdstageofappreciativeinquiryisknownasdesigning,inwhichparticipantslistenwithsel1lessreceptivity toeachothersmodelsandassumptions,andeventuallyformacollectivemodelforthinkingwithintheteam. Throughoutthisstage,teammembersshiftthefocusbacktotheirownorganizationandeventuallyenterthe deliveringstage.Thisisthephaseinwhichparticipantsbegindiscussingtheirownorganizationagain.They establishspeci1icobjectivesanddirectionfortheirownorganizationbasedontheirmodelofwhatshouldbe.
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Chapter 15: Organizational Change

8. Thischaptersuggeststhatsomeorganizationalchangeactivitiesfaceethicalconcerns.Yetseveral consultantsactivelyusetheseprocessesbecausetheybelievetheybeneAittheorganizationanddoless damagetoemployeesthanitseemsonthesurface.Forexample,someactivitiestrytoopenupthe employeeshiddenarea(reviewtheJohariWindowdiscussioninChapter3)sothatthereisbettermutual understandingwithcoworkers.Discussthisargument,andidentifywhereyouthinkorganizational changeinterventionsshouldlimitthisprocess. Thetextbookidenti1iesthreeethicalproblemswithorganizationalchange.Studentsareaskedtoconsiderreasons whyeachofthesepracticesisacceptableratherthanunethical.Theideahereisthatsituationsarerarelypurely goodorbad.Thereareusuallytwosidestotheargument. IndividualPrivacyRights.Actionresearchcollectsinformationfromemployees,someofwhichtheymaynot wanttodivulge.Someinterventionsmaythreatenindividualprivacyrightsbecauseemployeesareaskedto publiclydisclosetheirpersonalbeliefsandexperiences.Thecounterpointhereischangeisbothapersonaland interpersonaljourney.Changeagentsneedtounderstandindividualattitudestowardthechange,notjustthe structuralneedforchange.Inusingchangetechniquesthatinvolveindividualdisclosure,organizationsneedto ensurethatemployeesmaintaincontrolovertheirlevelofdisclosureandarenotundulypressuredtorevealmore personalinformationthattheyarecomfortablewith. ManagementPower.Manychangeinterventionscreateuncertaintyandreestablishmanagementspositionin directingtheorganization.Studentsmightcounterwiththenotionthatmostchangesrequiretheuseand strengthening(atleasttemporarily)ofmanagementpowertobringaboutmeaningfulchange.Asnotedinthe textbook,nearlytwothirdsofcompaniesrelyonsomecoerciontobringaboutchange.However,organizationscan dealwiththisconcernbyensuringthatcoercionisonlyusedasalastresortandbyensuringthatconsiderationand careisusedatalltimesindealingwiththeorganizationsmostimportantresourcespeople. IndividualSelfEsteem.Somechangeactivitiesmayunderminetheindividualsselfesteem.Theunfreezing processrequiresparticipantstodiscon1irmtheirexistingbeliefs,sometimesincludingtheirowncompetenceat certaintasksorinterpersonalrelations.Somespeci1icchangepracticesinvolvedirectexposuretopersonalcritique bycoworkersaswellaspublicdisclosureofone'spersonallimitationsandfaults.Studentsmightsuggestin supportofthispracticethatanychangerequiresgivingupsomeselfesteem.Itinvolvesrecognizingpast imperfections,whichmotivatespeopletochangeforthefuture.Employeesmayrequiresupportand/orresources tosustainhighlevelsofselfef1icacy.

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Chapter 15: Organizational Change

CASE STUDY 15-1: TRANSACT INSURANCE CORPORATION

Case Synopsis
TransActInsuranceCorporation(TIC)providesautomobileinsurancethroughouttheSoutheasternUnitedStates.Jim LeonwashiredasvicepresidentofClaimsandimmediatelybeganaseriesofchanges.Hedecidedtomakemoraleand supervisoryleadershiphistoppriority.OneofLeonsmostpronouncedsymbolsofchangewasthe"Claims ManagementCredo"outliningthephilosophythateveryclaimsmanagerwouldfollow.Afterthecredowasapproved byclaimsmanagers,Leonannouncedplanstofollowupwithanannualsurveytoevaluateeachclaimsmanager's performance.Oneyearlater,asurveyofclaimscenteremployeeswasheld.ClaimsmanagersdidntbelievethatLeon wouldreallyconductthesurvey.Thesurveyhadahighresponserate,withmostmanagersreceivingmoderateorpoor ratingsonthetencredoitems.Thesurveyresults,includingeverycommentmadebyemployeesatthatclaimscenter, wereshowntoemployees.Claimscentermanagerswereshocked.Discussionmeetingswithemployeeswereattended bytheregionaldirectortocontroloravoidconfrontations.Soonafterthesemeetings,someclaimsmanagersquitor askedfortransfersintononmanagementjobs. Epilogue.Shortlyafterthe1irstsurvey,thenewsletterwassuspended.Jimhadmanymoremeetingswithhismanagers anddirectors.Jimeventuallyconcludedthattoomanyofhismanagersweretechnicalexpertsininsuranceandlacked thepeopleskillsnecessaryformanagement.Toresolvethisproblem,managerswereaskedtocompeteforrevised positionswithagreateremphasisonmanagementabilityratherthantechnicalprowess.Afewnewmanagerswere broughtinbutmostofthesuccessfulcandidateswereselectedfromtheexistingrosterofmanagers.Employeesurveys stoppedafterfouryears.Jimleftandwentintosemiretirement.

Suggested Answers to Case Questions

1. Whatsymptom(s)existinthiscasetosuggestthatsomethinghasgonewrong? ThereareseveralsymptomssuggestingthatJimLeonschangeprocessisnotgoingwell.First,employeesand managersalikearedissatis1iedwiththeprocess,althoughfordifferentreasons.someofthedebrie1ingsessions revealedlevelsofunhealthycon1lict.Afewmanagershavequittheirjobsoraskedfortransfers.Earlier,managers quietlyresistedthechangesbynottakingtheprocessseriously(i.e.theyignoredituntilthenextroundofevents). 2. Whataretherootcausesthathaveledtothesesymptoms? JimLeonwasunsuccessfulwiththischangeprocess.Althoughhissmallchangesdescribedatthebeginningofthe caseseemtohaveworked,thesurveyprocesscreatedsuchresistanceandreactionfrommanagersthatchange probablybecamemoredif1icultafterwards.Bylookingattheactionresearchmodel,wecanseethatatleastthe 1irsttwostageswerenotconductedsuf1icientlywell. Themaincausescanbeidenti1iedfromevidenceof(a)thelackofurgencytochangeamongmanagers,(b)various sourcesofresistancetochange,and(c)lackofdiagnosisforthechangeintervention. Lackofurgency.JimLeondidnotdiagnosethereadinessforchangeofhisclaimsmanagersandemployees.The claimsmanagersdidnotbelievethatthesurveywouldbeconducted,theydoubtedtheimportanceoftheClaims Managementcredo,andtheydidnotsupporttheopensurveyfeedbackprocess.Consequently,Leondidnot provideenoughevidenceandargumenttomotivatetheclaimsmanagerstoembraceoratleastpreparethemselves forthechangeprocess. SourcesofResistance.Theclaimsmanagersengagedinpassiveresistancetothechange.Studentsshouldbeable toidentifylikelyreasonsforthisresistance.Theinterventionmightrequirechangingmanagerialpractices,which relatestobreakingroutines,fearoftheunknown,andpossiblydirectcosts(wheremanagerslosepower,resources, orstatus).Managerialnormsofbehaviormightalsobepresentthatinterferewiththedesiredchanges.Wedont haveinformationaboutsystemsorstructures,buttheymightalsoactasbarriers.Studentsmightnotethelackof
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Chapter 15: Organizational Change

involvementofmanagersinthechangeprocess.Althoughtheyidenti1iedthesurveyperformancefactors,thislist wasreallyrestrictedtothepointthatLeonwasmoreincontrolofthefactorstobeconsidered. DiagnoseNeedforChange.Theemployeesurveyisanintervention,becauseitwasintendedtobeanongoing systeminmanagementdevelopmentatTransAct.However,theinitialsurveywasalsoadiagnostictooltohelpLeon andclaimsmanagersidentifyareasthatneedimprovement.Althoughstudentsmaydebatetheappropriatenessof asurveyfordatacollection,themainproblemisthatthedatawerenotfedbacktoclaimsmanagersinawaythat minimizesperceptualdefense.Thisisimportant,becauseitaffectsthewillingnessofparticipantstocontinuewith theintervention.Forexample,thesurveydatawerebothanevaluationtoolandaorganizationalchange assessmenttool.Moreover,theprocesswasdelayedforoneyear,somanagersmayhavelostanyinertiatoward changethatoccurredwhenthecredowasformedayearearlier.Anotherconcernisthatsomeofthesurveyitems mayrelatetofactorsoverwhichtheclaimsmanagershavenocontrol.Employeeshadlowmoraleandoverwork beforeLeontookoverasVPofclaims.Severalyearsofpentupfrustrationwereventedinthesurvey,andclaims managerswerenotcompletelyresponsibleforthosefeelings. Thereareargumentsinfavorofusingtheemployeesurveyprocess,suchasthatthisiscostef1icientforalarge groupofpeople.However,thesurveydesignandfeedbackshouldbechangedtoimprovetheirrelevanceand acceptabilitytoeveryoneinvolved.Theclaimsmanagersshouldbeputinabetterstateofreadinesstoparticipate inthesurveydesignprocess.Thequestionsshouldbeclearlyandobjectivelyrelatedtotheclaimsmanagersjobs. Thesurveyfeedbackshouldbemorecon1idential,perhapswithfeedbacksessionsbasedonlyonoverallstatistical resultsacrosstheclaimsdivision(i.e.,notwithinthesmallclaimscentersandnotwithindividualcomments). 3. Whatactionsshouldthecompanytaketocorrecttheseproblems? Thecompanyshouldbeginthechangeprocessagain.Thiswouldbeginbyidentifyingonwhatneedstochange (morecustomerfocus?costef1iciency?employeeengagement?).Next,thechangeprocessrequiresstronger mechanismstocreateanurgencytochange,suchasmoredirectevidenceofcompanyproblems,ofincreased competition,orofagreaterpotentialeffectiveness.Third,employeeandmanagementinvolvementintheprocess needstoberealratherthanhighlyrestricted.Thus,inlinewithactionresearch,thepreferredinterventionand indicatorsofitseffectivenessshouldrelyoninputfromthesestakeholders,notjustJimLeonortheCEO.Thelatter mayhaveultimatedecisioncontrol,butinvolvementiscriticalforbuyin.TheCEOandLeonmightalsoconsidera pilotprojectifthechangeisdif1icultandrisky.However,sincetheunitisintegrated,apilotprojectmaybedif1icult. Finally,thechoiceofinterventionneedstobecarefullychosensuchthatitisalignedwiththechangeobjectives. Thismayinvolvetraining,changingrewardsandinformationsystems,orothersystemsalterations. StudentsshouldalsodiscussJimLeonasachangeagent.Speci1ically,thereisreasontobelievethatLeonhaslost trust,respect,andcredibilitytoleadthechangeprocess.Thisdoesnotnecessarilymeanthatheneedstobe replacedasheadofclaims.Rather,anexternalconsultantwhoworkswithmanagementandemployeesmaybe requiredtoengageinthenextattempttochange.

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Chapter 15: Organizational Change

CASE STUDY 15-2: INSIDE INTEL

Case Synopsis
Foryears,IntelthrivedonabusinessmodelthatcofounderAndyGroveperfectedandreinforcedunderhisleadership andtheleadershipofhissuccessor,CraigBarrett.ButIntelslatestCEO,PaulOtellinihasdifferentplans.Ratherthan continuingtobuildfasterchipsjustforPCcomputers,Otelliniseesbiggeropportunitiesinnewplatforms.Otellinialso wantstoraisethepro1ileofmarketing,ratherthanletengineersdeterminewhatproductsaredeveloped.Eventhe famousIntellogo(withalowerede)isbeingditchedforamorecontemporarydesign.ThisBusinessWeekcasestudy reviewsthechangesthatPaulOtelliniisintroducingatIntelandexplainshowheisbuildingmomentumtowardthese changes.Thearticlealsodescribeshowemployeesarerespondingtothesechanges.

Suggested Answers to Case Questions

1. WhatchangemanagementstrategieshasPaulOtelliniusedtohelpintroducethevariouschangesatIntel? Otellinihasengagedinafewpracticesforchange.Onestrategywastoreorganizeemployeesintoproductareas. ThishadtheeffectofdissipatingthecreosoteeffectofthePCchipdevelopmentoperations,nowallowingvarious initiativestodevelop.Similarly,hehasstructuredproductdevelopmentaroundcrossfunctionalteamsratherthan allowingengineerstoworkinisolation. Anotherstrategyistohireavarietyofpeoplewithdifferentbackgrounds.Theirexperienceandvalueswill ultimatelyreshapethecompanysvaluesandculture.Relatedtothisstrategyistheactionofhiringstarpeople, suchasaformermarketingguruatSamsung.Anotherstrategyistoalterpositionpower(probablythrough restructuringandbudgets)suchthatsomeengineeringgroupsnolongerwieldthemostpower.Changehasalso beeinstitutedthroughsymbolicactions,suchasslowlyphasingoutthePentiumbrandandalteringIntelslogo.

2. Discussevidencethatsomeemployeesareresistingthesechanges?What,ifanything,canOtellinidoto minimizethisresistance? Themainevidenceofresistanceisthefrustrationthatemployeessaytheyareexperiencing.Toidentifywhat actionsOtellinishouldtake,studentsshouldexaminethevariouswaystoreduceresistancetochange,particularly communication,training,andinvolvement.

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Chapter 15: Organizational Change

TEAM EXERCISE 15-3: STRATEGIC CHANGE INCIDENTS

Purpose
Thisexerciseisdesignedtohelpstudentstoidentifystrategiestofacilitateorganizationalchangeinvarioussituations.

Instructions
Step1:Theinstructorwillplacestudentsintoteams,andeachteamwillbeassignedoneofthescenariospresentedin thisexercise. Step2:Eachteamwilldiagnoseitsassignedscenariotodeterminethemostappropriatesetofchangemanagement practices.Whereappropriate,thesepracticesshould(a)createanurgencytochange,(b)minimizeresistanceto change,and(c)refreezethesituationtosupportthechangeinitiative.Eachofthesescenariosisbasedonrealevents thatoccurredintheUnitedStatesandelsewhere. Step3:Eachteamwillpresentanddefenditschangemanagementstrategy.Classdiscussionregardingthe appropriatenessandfeasibilityofeachstrategywilloccurafterallteamsassignedthesamescenariohavepresented. Theinstructorwillthendescribewhattheorganizationsactuallydidinthesesituations.

Comments for Instructors

IhaveusedthisexerciseseveraltimesinMBAclassesandexecutivedevelopmentprograms,withconsistentlygood results.Theactivityshouldalsoworkwellwithundergraduateuniversityandcollegeclassesbecauseitis straightforwardandappliesconceptsfromthetextbook. TheactivityismademoreinterestingbythefactthatthesescenariosinvolveREALCOMPANIES,sotheinstructorcan advisestudentsthattheirstrategieswillbecomparedwithwhatthecompaniesactuallydid.ThePowerPoint1ilefor thischapterincludesasummaryofthesescenarios,includingtheactionstakenbythetworealorganizations.(These PowerPointslidesappearaftertheslidesforthechaptercontent.)

Scenario 1: Greener Telco

TheBoardofDirectorsatalargetelephonecompanywantitsexecutivestomaketheorganizationmore environmentallyfriendlybyencouragingemployeestoreducewasteintheworkplace.Therearealsoexpectationsby governmentandotherstakeholdersforthecompanytotakethisactionandbepubliclysuccessful.Consequently,the managingdirectorwantstosigni1icantlyreducetheuseofpaper,refuse,andotherwastethroughoutthecompanys manywidespreadof1ices.Unfortunately,asurveyindicatesthatemployeesdonotvalueenvironmentalobjectivesand donotknowhowtoreduce,reuse,recycle.AsVPAdministration,youhavebeenaskedtodevelopastrategythat mightbringaboutmeaningfulbehavioralchangetowardtheseenvironmentalgoals.Whatwouldyoudo? WhatActuallyHappened:ThisincidentdescribestheZeroWasteprogramseveralyearsagoatBellCanada.Bell Canadaisthelargesttelephonecompanyinthatcountry.Althoughtheinterventionoccurred15yearsago,itisa timelessincidentfordiscussionbecauseitappliestobehaviorchangethatmightoccurinanyorganizationandwould involveemployeesatalllevels.BellCanadainvokedchangebyapplyingseveralstrategiestominimizeresistanceto change.HerearethestepsthetelephonecompanytooktobringaboutZerowaste: Communication:Employeesattendedinformationsessionsandsawbannersatthefrontentranceaboutthebeginning ofZeroWaste.Ataskforceofemployeerepresentativeskepteveryoneinformedaboutdevelopmentsleadingupto the1irstdayofzerowaste. Training.Employeeswereshownhowtoreducepaperwastebyusingbothsidesofpaper,usingscrappaperasmemo pads,reusingof1iceenvelopes,andrelyingmoreonemailandvoicemailthanwrittenmemos.Inthecafeteria,they learnedtoseparateleftoverfoodanddeposititintotheappropriatecompostbin.Thecompanyalsoinstalledaspecial telephonehotlinetoanswerquestionsaboutrecycling.BellCanadaemployeesalsoreceivedfeedbackabouttheir
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Chapter 15: Organizational Change

progresstowardthewastereductiongoal.Thetaskforceweighedthegarbagetwiceeachweekandpubliclydisplayed theseresultsoncharts.Thegarbagewasoccasionallyauditedforincorrectbehaviors,suchasthrowingapplecoresin thepaperrecyclingbin.Offendingemployeeswerepolitelyencouragedtousethecompostbininstead. Employeeinvolvement.BellCanadadeliberatelyselectedthemorepopularemployeesineachdepartmenttoserveona specialtaskforcetodeveloptheZeroWasteprogram.Theseemployeesquicklybecamechampionsastheytook ownershipoftheprogram.Theywerealsoconduitsofinformationandenthusiasmbacktothedepartmentswhere theyworked. Coercion.TheZeroWasteprogramcreatedbarrierstowastefulbehavior.Papertowelswerereplacedwithelectrichand dryersinthewashrooms.Styrofoamcupswerereplacedwithreusablemugsateachemployeesdesk.Metalgarbage cansateachworkstationwerereplacedwithplasticrecyclingbins.Employeeswereleftwithtinyreusablebagsto carrynonrecyclablestospeciallymarkedbinslocatedelsewhereinthebuilding. Alongwiththesestrategies,BellCanadabegantheprogramasapilotprojectinoneofitslargestbuildings.Thatpilot projectreducedwasteby98percentfromnearly1,000poundsofwasteeachdaytolessthan25poundsofwaste eachday.Thecompanysubsequentlyappliedsimilarchangemanagementprinciplestoimproveenergyconservation. SomestudentsmightcorrectlysuggestthatthechangeprocessisessentiallyapplyingtheMARSmodeltoalter individualbehavior.BellCanadamotivatedemployees,changedtheirroleperceptions,andimprovedtheirability throughtrainingtoreducewaste.Perhapsmostimportant,BellCanadachangedtheenvironmentsothatsituational factorsmadeitmoredif1iculttoengageinwastefulbehavior. References:J.Mills,BellSetsExamplewithZeroWasteProgram,MontrealGazette,(February14,1993),p.C3;C. Mahood,BellZerosinonWaste,Globe&Mail,(May4,1992),pp.B1,B2;BellCanada,InsideGuide,(January1993), pp.4648;D.Hogarth,FirmsReapGreenHarvest,FinancialPost,(June1517,1991),p.18.

Scenario 2: Go Forward Airline

Amajorairlinehadexperiencedadecadeofroughturbulence,includingtwoboutsofbankruptcyprotection,10 managingdirectors,andmoralesolowthatemployeeshadrippedoffcompanylogosfromtheiruniformsoutof embarrassment.Servicewasterribleandtheairplanesrarelyarrivedorlefttheterminalontime.Thiswascostingthe airlinesigni1icantamountsofmoneyinpassengerlayovers.Managerswereparalyzedbyanxietyandmanyhadbeen withthe1irmsolongthattheydidntknowhowtosetstrategicgoalsthatworked.One1ifthofall1lightswerelosing moneyandthecompanyoverallwasnear1inancialcollapse(justthreemonthstodefaultingonpayrollobligations).The newlyhiredCEOandyoumustgetemployeestoquicklyimproveoperationalef1iciencyandcustomerservice.What actionswouldyoutaketobringaboutthesechangesintime? WhatActuallyHappened:Scenario#2describesthetroublesthatContinentalAirlinesexperiencedduringthe1980s andearly1990s.Theairlinewastheresultsofsevenmergedairlinesandhadbeenmanagedbadlyovertheprevious decade.ContinentalwentintobankruptcytwiceandwasalmostoutofcashwhenGordonBethuneandGreg Brennemanwerehiredaschairmanandpresident,respectively.Thecompanywascontinuallylosingmoneyandits continuouscostcuttingonlymademattersworsebydestroyingcustomerserviceandemployeeloyalty.Continental executivesGordonBethuneandGregBrennemanappliedthefollowingchangemanagementstrategy: Communication.BethuneandBrennemanconstantlycommunicatedtheirGoForwardstrategicplantosavethe airline.GoForwardcoveredfourcornerstones:market,1inancial,product,andpeople.BethuneandBrennemanalso workedalongsidebaggagestaffandotheremployees,discussingtheirgoforwardplanwhileperformingthefrontline work.Thecompanyalsopostednewsofthechangeprocessonbulletinboards,inweeklyvoicemailsfromBethune,and inmonthlyopenhousemeetingswithemployees. Training.TherewerenoapparenttrainingprogramstochangeContinentalairlines.BethuneandBrennemanargued thatemployeesalreadyknewtheirjobs,butlackedtheopportunityandstrategytoputtheirskillsandknowledgeto use.However,Continentalintroducednewgoals(suchasontimedepartures)andusedDepartmentofTransportation monthlymeasuresasfeedbackonhowwellthecompanyperformedontheseperformancemetrics. EmployeeInvolvement.BethuneandBrennemancollectedtheThouShaltnotmanualtheguidebookonwhat employeesarenotallowedtodoandpubliclyburnedthemintheparkinglot.ThenBethuneandBrennemantold employeestomakecustomerservicehappen.

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Chapter 15: Organizational Change

Coercion.Fiftyoneofthe60executiveswerereplacedwithinacoupleofmonths.BethuneandBrennemanstatedthatit isdif1icultforpeoplewhogetacompanyintoamesstogetthemout.Moreover,theexecutiveswhomadethese mistakesforsolongwouldnotbetrustedbyemployeestoleadthemintothefuture. Alongwiththesestrategies,Continentalintroducedrewardsthatalignedemployeeswiththecompanysnewstrategic goals.Ratherthanreducecosts,Continentalwasgoingtoimproveservice.Thus,employeeswereeachpaid$65for eachmonththatContinentalplacedinthetop1iveairlinesforontimeservice,accordingtotheDepartmentof Transportation.Inchangemanagement,rewardsrelatetointroducingsystemsandstructurestorefreezethedesired conditions. BethuneandBrennemanalsobroughtaboutrapidchangebyhiringseniorexecutives(replacingthose1ired)with competenciesandvaluesthatweremorealignedwiththeGoForwardplan. References:G.Brenneman,RightAwayandAllatOnce:HowWeSavedContinental,HarvardBusinessReview, SeptemberOctober1998,pp.16279;T.Kennedy,Con1idencereturnswithContinental'sstrongcomeback, MinneapolisStarTribune,February1,1998,p.1A.

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Chapter 15: Organizational Change

SELF-ASSESSMENT 15-4: ARE YOU TOLERANT OF CHANGE?

NOTE: This self-assessment may be completed at the Online Learning Center.

Purpose
Thisexerciseisdesignedtohelpstudentsunderstandhowpeopledifferintheirtoleranceofchange.

Background
Somepeoplearenaturallylesscomfortablethanotherpeoplewiththecomplexityanduncertaintyofchange.Thisself assessmentprovidesanestimateofhowtolerantpeopleareofchange. Studentsareaskedtoreadeachofthestatementsandcircletheresponsethatbest1itstheirpersonalbelief.Theythen usethescoringkeytocalculatetheirresults.Thisselfassessmentiscompletedalonesothatstudentsratethemselves honestlywithoutconcernsofsocialcomparison.However,classdiscussionwillfocusonthemeaningoftoleranceof change,howthisscalemightbeappliedinorganizations,andthelimitationsofmeasuringtoleranceofchangeinwork settings.

Feedback for the Tolerance of Change Scale

Thismeasurementinstrumentisformallyknownasthetoleranceofambiguityscale.Althoughitwasdevelopedover 40yearsago,theinstrumentisstillusedtodayinresearch.Peoplewithahightoleranceofambiguityarecomfortable withuncertainty,suddenchange,andnewsituations.Thesearecharacteristicsofthehyperfastchangesoccurringin manyorganizationstoday.ThefollowinggraphcomparesyourscoreonthisscaletoresultsforasampleofMBA students.Scoresonthisscalerangefrom16to112.Ahigherscoreindicatesahighertoleranceofchange.

Score 81 to 112 63 to 80 16 to 62

Interpretation High tolerance of change Moderate tolerance of change Low tolerance of change

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