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Documente Profesional
Documente Cultură
Objectives
After going through this unit, you will be able to understand
meaning and relevance ofchange in organisation,
nature of change,
a factors which affect change.
Structure
1 .I Introduction
1.2 Developing the Cliange Mindset
1.3 Some Key Change Themes
1.4 Categories of Business Change
1.5 Triggers for Change
1.6 Creating the Future
1.7 Summary
1.8 Self-Assessment Questions
1.9 Further Readings
1 . INTRODUCTION
It is often said that change is tlie only reality, rest is subject to change. Traditionally
and universally it is believed that people resistchangedueto its displacing effect
overtime. However, people move towards its acceptance through negotiations over the
'price' of change.
History has time and again proven that the process of change is inevitable in the
progress of mankind. The ability of the human race to innovate has brought about
radical transfw~nationof society. All the countries ofthe world are undergoing some
kind of change which is especially true in the context of organisations. At times like
this, more than ever, it is essential that the organisations appreciate the human
resource management skills required to successfully handle the transformation of
industry throi~glione of its most critical periods. Hence, the purpose of this unit is to
create an understallding ofthe dynamics involved in the change process in the
organisational context and help to clalrify the notions involved, in it.
Who is a Manager?
You are a manager. What does this mean? The word derives from the ancient French
word for handling horses and a later one for handling the affairs of the kitchen. Synics
might replace horse by donkey, but all would see the analogy of keeping an &-
Risking Yourself
Every tirrre you make a decision you risk yourself. You chop off one branch of a tree
in favour of another. That is the meaning of the word 'decide', from the Latin
decidere, meaning to cut off. It is a risky business, because you cannot easily stick
baclc the branch you have chopped off.
Mobilisilmg Resources
Nothing I~appenswithout resources; there are never enough of them and they won't
always rr:adily provide the advantage that you seek. So there are people, materials,
money, markets, ideas, components, space and time and many other resources all
requiring to be mobilized before you can produce and sell what you have to offer. The
word 'm'obilize' has a very active ring about it, and management is about activity.
Mobilising Relationships
Mobilising resources would only take you so far unless you got the relationship right,
especially those of people. People meant workfdrce, suppliers, customers,
shareholders, govenment, community - all the stakeholders. They had to be given a
serlse of shaiing ownership for what was going on - and managers are the prime
influences of &is process. They are people-linkers.
TCI
add 'Value
We could have said profit, and often this is what we mean. But we can be in the
voluntary of the public sector where the community has to be served, effectively and
econom~ically,but where it has been decided by the govenment or people or both that
the activity must be run outside the normal market mechanism of shareholders and
stock markets.
To the Enterprise
Not 'organization' or 'firm' or 'business' or 'company'. All these would be perfectly
appropriate, but we wanted a word that would have a forceful, thrusting, innovative,
creative, exciting flavour, and enterprise seems to capture that approach.
Your Power as a Manager Understanding Change
So, as a manager, you are almost abound to participate in the processes of change in
tlir enterprise for which you work. But how? In your company you may feel that you
liave little change to infli~encethe process of change. All the decisions are taken at the
very top and what the chief executive says is final. So the change decisions are handed
down and yo11have to get on with handling and implementing them.
But surely you will still liave an effect on liow the company or enterprise performs in
the ilrlplenienting of change. Everyone in any enterprise is involved in change in some
way or other. and its success or failure depends on everyone. The ideal company may
well consult a large 11~111lber
of its e~nployeesabout decisions concerning change-
what to change, how to cliange and when to change. It does, its employees will have a
sense of ownersliip in the changes and are more likely to co-operate in their
implenientation. Of course there are, in even the most participative of companies,
situations where there is no time to consult everybody or where secrecy is ofthe
essence. SLICII as in some merger or acquisition decisions. And some companies are
just autocratic anyway.
But whatever the situation, at all levels every manager has some contribution to make
to tlie process of change, and to make that contribution requires a certain attitude of
milid - a certain mindset. To identify this mindset, and to assist its growth in the
readers and indeed in the enterprise for which they work.
Principles
I and concepts I
Figure 1: Learning Cycle, based on the ideas o f David Kolb Experimental Learning
He is the formulator of the well-known Kolb Learning Cycle. To sum it up, he says
that learning is all about having experiences (in line with Meaad, with life as a series
of experiences which makes us what we are). He goes on to say that then next stage of
the c!/cle or spiral (see Figure 1) is that we reflect upon the experience that we have
just had. Thirdly, we draw out some concepts and some principles from this reflection.
Finally, we test out the new concepts in new situation so that they become part ofthe
ongo ~ngexperience.
David Kolb does not use the words 'process', interaction or 'change', but this is what Understanding Change
he is thinking about. It is noteworthy that lie uses the word 'learning', and if you think
about it, all these ideas come together and form a framework within which we can
tlii~ikabout change and even learn to love it and welcome it. Learning is itself a
process of cliange. Something is added to our perception and prepared us for the next
impression, c\;liich will cliange our understanding yet more, however minutely. What
David Kolb is talking about is tlie normal scientific approach, where observations
made are the normal scientific approach, where observations are made and reflected
upon to yield theories from which hypotheses are derived and tested out in action,
creating new events and experiences.
Cl~angis Learning
The Kolb contribution is a significant one because it practically equates change and
learning. When you learn, you change. When you cliange, you learn. A book on
change is therefore also a book about learning.
Reg Revans of Action Learning frame would make a distinction with two little
syrnbols L>C and C>L. If learning is represented by L and change represented by C
then tlie first sy~ilbolmeans you are ahead in the game-your are learning faster than
tliirigs change. The second can spell disaster, because things are changing faster than
you are learning, so that you are behind in the race.
Nevertheless Revans is in harmony with Kolb in that his contribution of Action
Learning is based on the concept that people learn more from reflection, discussion
and working together on real live issues than from being lectured at. They learn from
each other and the learning is relevant, and even when the classroom is being used for
input, it is important to provide plenty of scope for learning in this way.
A Positive Approach
These perceptions of what is to be human can help us to take a positive approach to
change and make it work to our advantage and to that of our enterprise. You are
only really alive when you are changing. It is the essence of personal growth, it is the
basis of relationships with other people, and without it there is no learning and no
progress.
Yet even when we acknowledge all this, we are prone to resist change. We fear it; we
avoid it and we sign for tlie status quo.
......... the task of industry is continuously, year on year, to make more and better
things, using less of the world's resources. Management in particular is not about the
presentation of the status quo; it is about maintaining the highest rate of change that
the organization and the people within it can stand.' (Sir John Harvey Jones).
Cusiomers want thz pi, ductor service where they want it. They don't just want it
wiiat: t l i t bupplier thinks ~t:s convenient to hold it. They want it at anyplace. Already
there are plenty of examples of this. We all carry around pocket calculators where
once we would have had to go to the office to use a desk one. Month bymonth the
nu~mberof people who carry the phone around with them is growing, and they no
longer have to go to where the phone is. They practically wear it. Portable computers
of the lap variety enable business people to do their spreadsheets on the plane; home
entertainment systems are now designed for self-assembly, so that you no longer have
to wait for the technician but within an hour of purchase you are enjoying the fruits of
your investment, having taken it home in two or three boxes in the car. The customers,
in effect, does part of what would previously have been done at the factory, as well as
providing the transport. The manufacturing chain ofthe goods and services ends in the
hands of the consumer in their own physical space.
T'he abl~lityto proivde the product in any place is facilitated by the advance in
electronics, whereby a million electronic components can be placed on a quarter of an
inch square of smelted sand. The information carried by electrical impulses
demolishes space as well as time so as enables the customers to enjoy both benefits.
No doubt all these innovations brought a lot of unwelcome change to those who
plreferred the status qu, but those with the future mindset prevailed.
These concepts of any time and any place also enter into the whole way a corporation
organizes itself. It is becoming less significant where you work. The number of home-
workel-sis on the increase, with ultimate benefit to transport problems as the people
~ l o r kaway on their computers. They still need human association and this is provided
by the network. It is the ultimate in decentralization, which as after all about place. As
people work in networks, less dependent on space, so headquarters building are less
inhabited and organizational hierarchies flattened. Middle managers find a new place
between the producers and the customers, instead of between the senior managers and
the supervisors.
No matter Understanding Change
L Mass Customisation
--- Finally, Stan Davis gives us the paradoxical ideas of 'mass customisation'. This
expressed the ideas of providing the customer with precisely what he or she requires,
such as a garment to suit a bulky or a slender fiame - something that is non-standard,
yet can be produced goods of standard size, weight or other requirement. The
I-
technology now perinits the non-standard to be produced on the standard line. Just a
change of the computerized instructions and the trick is performed.
Gone the long wait while something is made to measure. The same technique can be
used to provide cultural variations required in various parts of the world without
setting up a special production line. Mass economy provides the benefit of scale; mass
custo~nization allows for tlie differentiation and individualization of requirements.
I
The contribution of Stan Davis to our thought is variable. He enables us to group the
changes whicli have had the biggest impact on business, industry and society under
types of technological development. Not so long ago you can imagine how some well-
established business would have resisted such changes, no doubt thought of them as
an unrealistic piece of futurology. Let us stick to what we know we are good at and so
on.
I
The four concepts and the examples given illustrate what we have been saying about
the need to approach the present from the standpoint of the future. That's how all
these developments have occurred -so much so that we find it difficult to realize the
amount of resistance they initially caused. Many of these developmentsare at a
Concept of relatively early stage, so there is much more to follow. It is essential that managers
Managing Change who are going to have to cope with such changes see them as a part of their functions
to etlucate their workforces to understand the nature of the changes we can expect, of
the world in which we live and the future we can create.
Against the background of some personal experience of change, and to help you place
your own change experiences into categories from which something can be learnt for
the future, we now attempt to list some of the areas in which change arises and to
bring some classification to bear.
However you classify cliange, the various heading you come up with the interrealted.
We would suggest tliat the main headings under which you could probably place
business change experiences are:
Markets changes
Technological cl~anges
Organizational changes
Concept o f Market Changes
Managing Change
The market changes, custo~nerswant more or less of goods or services,
competitors have begun to get ahead in the race, government decisions have freed you
or ccnstrai~ledyou, world events have changed the nature of people's expectations,
price mechanisms nationally or internationally have got out of kilter, new teclinology
has superseded what your organization was good at, political changes in other
countries open up opportunities or closely entry, and raw material shortages have
arisen or their prices have shot up. All these create specific changes in your business,
whatever it is.
Technolog,icalChanges
-I-he c11angl:s in the market place given rise to specific happennings in the company. If
the signs are negative, tliere will be new urgency in the search for new products or the
creat~onof new expectations from old ones. There will be the introduction of new
teclinology, if it can be found, in order to re-establish price advantage, quality pre-
eminence or diversification into new products. There will be the decision to explore
areas of the globe where you are not previously represented.
Organizational Changes
These responses to the market place will affect tlie organization. At worst there will be
retrenchment, reduction in the number of elnployees, and reduction in the number of
levels of miinagement. The technologv itself might require new styles of organization,
new slkills and the upgrading of old ones. The number of operating sites may be
reduced. People may find tliemselves performing totally new functions, which theymay
like 01- perhaps won't like, at least to start with. The only way to stay in business may
be a merger or to be the subject of atakeover, friendly or hostile. With such ownership
changq other market, technological and organizational changes may follow. In some
industrial it is an endless cycle.
Unde~stantlingthe Relationship
If every manager and every member of the workforce could have some understanding
ofthese relationships in the formula for change, then tliere would be some change that
acceptance would be easier. The above three paragraphs sound simple enough, but
when you feel threatened by what is happening, you don't think rationally. Feeling
takes over. It is all seen as some kind of conspiracy by employers, managers or
governme~itsto look after themselves. No doubt there can be elements of truth in this,
but there is an inevitability about change: market expectations are not static, new
tecllnology is constantly being developed, and organizational responses are inevitable
to these sequences. It is a simple matter of business evolution. Less secrecy and more
openness, ebrenat some risk, plus a major educational effort to get everyone in the
company to expect change, and indeed to create it within their own spheres, would
smootl-\enthl: path of positive change.
Systemization
Integration
In the pioneeing phase a few entrepreneurial people get together to develop a new
product or service. ~ ! ; are
e ~bound to each other by mutual loyalty and the excitement
of discovery and innovation. There is little formality, fast growth and the early
appearance of results.
Then it gets a bit too big for this approach: guidelines and checklists are needed, but
priorities are unclear, and confusion arises where the imaginative decisions oftlie
earlier days continue to be made on the spur of the moment. So system has to be
introduced: standards are consistency being to matter, organization charts and job
descriptions come into the reckoning, and specialists are appointed. A bureaucracy
has to be created.
I n due course this second phase brings to wear its value out. The organization
becomes remote from the customers, there is too much paperwork and too many
meetings, risk is discouraged, empire-building happens, and people play things by the
book. So change has to be introduced again. The organization may be decentralized,
with autonomous cost or profit centers and a closer link with customers and suppliers.
Sonie systeni remains, but team-working is developed and people are empowered so
that decisions are made at the lowest possible level.
Larry Greiner has a siniilar picture of five phases and five crises which induce change:
Phuse Crisis
1. Growth through creativity of leadership
2. Growth through direction of autonomy
3. Growth tlirough delegation of control
4. Growth throi~ghco-ordination of red tape
5. Growth through collaboration of?
In each case the crises springs out of the accentuation of the previous phase.
- Phase 1 -everyone's doing their their own thing and so leadership is needed.
Phase 2 -.when direct ion is too pronounced, people cry out for freedom and
autonomy. The when they get it (Phase 3), eventually it gets out of hand and controls .
are required, which in the course of Phase 4 turn to red tape. The fifth crisis is a
renewed call for strong leadership.
One corporate entity may have divisions, functions or subsidiaries simultaneously at
1 any or all ofthese phases. One ski I I is to match people's stages of life to the company
phase: entrepreneurial people for Phase 1: methodical, systematic people for Phase 4,
people-careers for Phase 5. Some might say this order represents of sequence - the
young adventurer, the steady applier of experience, the mature recognition that it's all
about people in the end.
Harry Woo4ward and Steeve Buckholz in Aftershock (1987).
1. Formative - leader manager; inventing; learning risk-taking
2. Norniative - systems, procedures, measures, guidelines, formality
3. Integrative - innovation, collaboration, new growth, freedom on the job
creativity
Where does your colnpany or organization lie on these life cycle continually? Or what
parts of your organization lie where? It wi I1 help adaptation to change to know where
you stand, and understanding 'the global scene' and having a 'future mindset' will
help you to find out where you aie and whither you are headed.
Concept of
Managing Change - TIUGGERS FOR CHANGE
1.5 -
Char~geare expressed through three main areas: the market itself, the technology to
meel market demand competitively, the organization of resources and the enterprise to
achieve success. We also consider the tendency of companies to follow a pattern of
similar liflc cycles. The stage in the life cycle could affect the nature ofthe changes
which mig;ht be expected.
The Ashridge Change Data Base
We ]low want to fill out the p i c t ~ ~by
r e examples of specific changes in business and
industry drawn from the Ashridge Management Research Group's change Data Base'.
This data base was created from an examination of published and unpublished
infol-mationabout some 200 conlpanies in the UK, Continental Europe and the United
Statt:s of America. A detailed analysis was published in Triggers for Change (Whille,
198B), originally commissioned by Ashridge Management Development Services Ltd.
and also used on the Ashridge Management College programme, 'Making Change
Work'.
There were public and private organizations in fields ranging through engineering;
leisure; ell:ctronic; computers; heavy equipment; shipbuilding; financial services; food,
drinlc and tobacco; transport; airlines; energy; travel; local government; central
government; retailing; oil; glass; automobiles; construction and building materials;
chenlicals; pharmaceuticals; textiles; clothing; police; and architects.
The organizations tended to be at the larger end because the information was more
readily available, though this is not to denigrate the significance of the smaller
businesses, which employ a large proportion ofthe populaltion in the countries under
review.
Table 1 is concerned with the causes of change - what triggered action. Table 2
prestents a broad classification of the type of change which responded to these triggers.
These two categories of analysis are not mutually exclusive. Thus the arrival of a new
chief executive officer (CEO) may be both a response to triggers and a trigger for
further change.
Sim rlarly. a technological opportunity may trigger changes in work practices, and
these in turn will trigger need for training or new methods of reward. Change is
interconnmected and never-ending. Ifyou change one part of the system, there will be a
knock-on effect, and it is very important to be aware of this. Otherwise a primary
change w 111give rise to unexpected secondary ones which may invalidate the hoped-
for benefits.
Table 1: Triggers of change
D. TECHNOLOGY
Technology
E. ENTREPRENEURIAL CREATIVE
Innovation
Entrepreneurship
F. ECONOMICS
Costing cutting 6
Staff reductions 9
Productivity 7
Ir Note: Tliere is frequently more than one type for change in any one organization.
Crises Change
Taking tlie results of tlie Asliridge Research as a whole, we see that change was often
triggered by tlie need to meet danger or to avoid impending disaster. So about a
oftile triggers for change which emerged inthe research related to change
initiated 'in order to cope with drops in profits, sluggishness of growth or downright
i.
I financial losses.
It is not surprising that clia~igewill often stem from a threat to financial results. After
all, financial disaster means that in the end there will be no company. If there is
,--openness in tlie company, the workforce can at least understand changes of this
nature. However, a ~~ormally secretive company will create suspicion if it suddenly
becomes ope11because of crisis. Workers feel it's an excuse to bulldoze changes to
'line the shareholder pockets'. Tliis suggests that openness is essential in a company
where change is way of life. Of course, too much openness may also depress sliare
values.
I Proactive Change
A quarter of tlie companies in Table 1 report proactive changes. The trigger was
someone's perceptioli of the shape ofthings to come, an opportunity or a threat.
Action was being suggested while there was time. The perception was practice and the
response was proactive. Corrective action was being taken before a market decline or
before technolog:l became obsolete. Positive action was being taken to seize
competitive advantage before someone else did.
Concept of Chief Executive Officer (CEO) and Change
Managing Change
In about 16 percent of the reports analysed, the advent of a new CEO was identified
as associ:~tedwith substantial change (see table 1). Although sometimes a new CEO
might sicnply succeed one who had retired in a normal way, most often the new CEOs
were brought in for the very purpose of handling difficulty. Tlie advent of CEO and
the changes introduced go together as part of the package to deal with crises, so that
many of the actions taken by CEOs appear in Table 2 as types of change, illustrating
furlher the indissolubility oftriggers and types of change. Strong leadersliip from the
top certainly is fundamental, and it is apporpriate that this major responsibility of
women or man at the top should be acknowledged. However, it must never be
forgotten that the top person can only achieve success with the support of the rest of
the employees, managerial and otlierwise. Part ofthe skill ofthe CEO is to mobilize
thi:; support.
Nevertheless we found that our source material often read as if the top person was
solely responsible for the changes undertaken. Obviously we need some balance here.
Often some steps had already been taken on which the CEO has been able to build an
in any event.
Significant corporate change cannot be achieved by one man alone, and even the
acltive sl~pportof all the managers in a company is no more than the first crucial step.
It lnean!;touching the hearts and minds of everybody working in an organization,
because it is in thote hearts that tlie organization actually exists. It does not exist in
balance sheets, hilding or computers.'
Leader:; are not found only at the top. There are many leaders in middle management
and on he shop floor, witl~outwhom those at the top could not achieve their results. If
tlirir pr~:occupations ,.G ..metimes with relatively small matters, their success remind
IS Lne little things tn,a often make a big difference.
US, tilul 11
l'liere are many examples of CEOs who provided this inspiration and communicated
well with all their staff. They were able to project a vision, a sense of direction and an
energy to get result, Jan Carlzon of SAS and Sir John Harvey-Jones of ICI, from both
oiFwhom we have quoted, come to mind. Sir Colin Marshall ofBritish Airways (BA)
and Iar~Hannah of Thistle Hotels attended all the seminars run from staff of all
le:vels. Sandy Sigoloff, of the American firm Wickes, and Lee Lacocca of Chrysler
slimuli~tedpeople even when giving them bad news. Marshall at BA showed his
commitment to serving the customer by going so far as to clean out some of the toilets,
in a blaze of publicity, as a signal to everyone.
ngissio~nStatements
Top managers have used the development of 'mission statements' as significant
contributions to the promotion of proactive change, often involving groups of
Il~ianagers and other employees in the work. Mission statements give the why that
inspires every how. The main concept that of institutionalizing change by reweaving
tlie firm's social fabric. Of course, these are high-sounding phrases and may be teated
with cynicism by some. However, they do focus attention, and when worked out in a
practical why and turned into action-plans that affect the bottom line, such slogans,
signals, and mission statements can help to create a culture of change.
Jan Carlzon of SAS, is well-known for the way in which he fired the whole airline
with the idea of daily 'moment of truth' as employees at any level came face to face
with c.ustomerswho were the real raison d'etre for the company's existence. A simple
j~liase- moment of truth - helped change to penetrate the whole organization. A leader
.was able to encapsulate of whole philosophy in a phrase which became a catchword
,3n evt~rybody'slips, inspiri~lgthem moment by moment. Words so used are not to be
belittled: as with Churchill's in the Second World war, they are tools for winning
battles i n their own right -the battle for hearts and minds mobilized against inertia Understanding Change
and self-doubt. Manager at any level who have imagination and way with words can
employ them with their own teams you don't have to wait for the top man. You can
even bave a fun competition for such aslogan for your own work group.
Other examples of expressing new missions are foud in the Prudential Corporation
(U.K.), to change its self-imagine from one of staid~iessto drive. Rank-Zerox
identified its niision as everything to do withoffice documents'. Dayton Hudson, the
American department store, defined its mission as to be 'the purchasing agent for our
custo~ners'-simple to understand by mobilizing attention on the quality of suppliers'
provision. Tlie emphasis on custolners is here on findings and getting what they want.
One can well imagine the practical day to day changes involved in such a
reorientation.,
Roger Smith reshaped General Motors by 'demonstrating to fellow Americans in
industry that timidity is not the answer'. Retrenchment is no solution. At GM we say,
"go for it. And we have. Tlie vision is paying off'.
Personal Styles
Top people do not confor111to one pattern. Some are charismatic, some even
flamboyant. Most of those we have just mentioned tended that way, but there are
others like Mac Booth of Polariod, Sir Peter Walters of BP and Roger Smith of
General Motors who employed their quieter style to shift gear in whole organizations.
Sometimes, too, CEOs wer changed, not because they were not effective leaders, but
because oftlie need to match strengths to situations. Thus, Robb Wilmot in ICL
provided strategic vision, whereas his succesor Peter Bonfielf was adapt at
implementation.
Another point to be noted is tliat effective CEOs do not have to be 'nice guys'. They
have to be resolute and tough. Some managers do this in an affable manner. Others
\nay appear almost brutal. Whatever the personal styles, unpalatable decisions have to
be reached and top people need the resilience to make them and take unpopularity an
opposition in their stride.
Organizational Change
Most CEOs seeking to improve results do something about the organizational
structure and culture of their enterprise. Thus it is not surprising that in Table 2
organizational structure and cultural issues together head the types of change recorded
in the asliridge data. Organization is a matter of structuring the way in which
resources are brought and kept together in order to achieve objectives. These
resources incl i~depeople, places, money, materials, machines and so on, for a number
of these may actually be needed in any particular type ofchange.
Nevertheless the emphasis in organization restructuring and culture modification is not
on tlie resources tliemselve, e.g. not on people as individuals, but on tlie way in whi;ch
they are interlined and mobilized, where the resources are positioned, how co-
ordination is ensured and pattern of share beliefs and values created to give cohesion
and provide tlie basis of behaviour in the enterprise (see definition of management).
We would expect niost changes to have some implications for the ways in which
*resourcesand relationships are organized. Whether corrective action is being taken or
opportunities are being seized, the organization' change will make a difference to the
immediacy of reaching and speed of decision-making, information-sharing,
con1mun ications and pol icy-implementation.
The CEO of Jacobs-Suchard declared tliat organizational stability was the biggest
barrier to renewal, tlie German Bank TUBmoved from its former aristocratic
Concept of approacl~,and Alvin Toffler showed AT&T in America the need to be ruthless in
Managing Change reviewing its basic premises if it was to avoid becoming part of a museum of 1
i
co1:poral:e dinosaurs. The culture change brought about by reorganizing are the most I
dii'ficult handle, and the ones that take longest. They have to overcome the inhibitions
of a whole corporate life history, and they are likely to meet emotional resistance.
I
Organizational restructuring has.contributed most to effective change where it has
been something more than redrawing organization charts. Sir peter Walters took BP 1
1
from a llierarchical structure to what he called 'a solar system of operating units
circling; round the central sunv,with headquarters as the centre of dynamic system
rather than the top of a rigid pyramid. Line managers were made responsible for
achieving financial targets implicit in change. A matrix structure was introduced to i
enable manager were made responsible for achieving financial targets implicit in 1
change. A matrix structure was introduced to enable managers of subsidiaries to look I
after the general interests, as well as those which give local advantage. !
L~ecen~:ralization of detailed responsibility to operating units, with main board
retaining only the broadest direction crops up repeatedly as the route to successful
change. Layers of hierarchy reduced, a move from commodity to value added
products, acquisitions, and international expansions are exemplified in many
companies such as ICI; JC Bamford Excavators (JCB). ASE (where even before its
rnerger with BBC Brown Boveri restructuring had eliminated 4000 jobs, but paved the
way for the subsequent creating of 6000 new jobs). Electrolux described at one stage
by CEO Anders Scharp as hundreds of independent villages', through latterly more a
matter of interderzndent networks, but either way, places where people and through
I hem the company cap y e w . Jacobs-Suchard (whose frequent changes at the top
1:ncourage managers to maintain a business overview, because they never know when
tile1 l , y ~ ~ i ffunct~ons
i, :.:w phznge, yet the requirement remains to contribute to total
corpcrate effectiveness); and SAS (where managers of profit centers were expected to
act in an entrepreneurial manner).
Em01ional resistance to change emerged in a number of the stories in the Ashridge
data base. It was no easy job to mobilize Swatch to adopt Japanese methods of
making inexpensive watches. Fagor, the Spanish Co-operative, must have found it
emotionally hard to 'go corporate'. Organizational change has to take into account the
something beyond reason alone embedded in culture and tradition.
Nevertheless the restructuring of organizations will have to be essentially rational -
and it will move in different directions, depending on need. This is particularly true of
the i:ssue'centralise versus decentralise'. JCB Excavators did both for differnt parts of
the organizations.
Malily organizations engaged in major organizational and cultural change found it
useful to bring in reputable outside consultants. It helped in thinking the problems
through; a fresh and impartial mind can shed new light on a situation.
Moreover, the views of outsider can carry weight as they have no axe to grind and
acceptance of difficult decisions may be achieved through their good offices. Ofthe
178 companies in the Ashridge data base, some forty mentioned the use of
consultants, and there were, no doubt, many others who use them but made no
rner~tionedfact.
a
The market, quality and change
Hig;h in table 2 listing the types of change recorded in the data base, stands the move
to a market-led approach. This is a commercial as well as a cultural issue. It also links
with the developing of new products to meet market demand, with emphasis on quality
anti service, with internationalization, and with the alternatives of diversification on
the one hand and going back to the core business on the other. Understanding Change
We have the ICI Agricultural Division creating a link between marketing and every
departnient, SAS spending lavislily on marketing when the financial situation was
grim, and tlie banks and iilsurance companies which expanded into financial services
setting up marketing activity as the key to success. As part of the market-led
pliilosopliy a new e~nphasison quality, feeding on the work of Deming, of Juran and
of Crosby, is a key change element in many companies.
Quality which become the key factor in the changes which put Jaguar back on the
map. Tlie Britisli Airways change programme was all about customer service
becoming the consuming concern of every employee. It was about wuality of service
to win markets. SAS had already found success in this approach. Tlie French credit
and leasing finn, UFB-Locabail, develped a change programme which permeated the
organization with quality circles. Continent, the French Hypermarket chain, did the
same.
One gets some idea of the sincerity of a company's awareness of the value of its
people by tlie attitude it takes to their training and development, even in times of
austerity. Tlie wise company will be like the farmer who, in times of near famine, still
has to sow scarce seed if there is to be a harvest next year.
There are Inany exa~nplesof the empowering role of communication, participation and
personal and collective development (often under-described as training) in pursuing
change through people. Particularly ~ioticeablein this regard is the use of seminars1
workshops all the way 'down' and organization to cascade the vision from the top and
Concept of integrate it with visions at all levels from people often nearer to the place which made
Managing Change thirigs happen on a daily basis.
British A.irways brought in 'Tirne Manager International' to involve all employees in
their customer car programme - 'Putting People First'. Courage, the brewers, held .
cor~sultativeworkshops throughout the period of building a new brewery, to hammer
out the problem of how to use new technology without robbing work of its interest and
skill. The brewery staff still exercise the skill that determines the quality of the beer.
Technology
Technology is ~iaturallyenough a significant part of the change scenario. It is used to
cut people costs; to speed up manufacturing and assemby processes; to capture
information that makes out of money, by having it in the right place in order to hold in
the best currency of the moment; and to facilitate the meetings ofcustomer needs,
anywhere, at any time, in the form it is wanted and with the minimum of physical
material and the maximum of accompanying service. Technological change has a
knock-on effect, so that change in this field in respose to need becomes the trigger of
further change. It pervades the data base even though it has fewer specific mentions
that one would have expected.
Imagination
Many of other types inTable 2 are implicit in those we have been reviewing. The
instilling of an entrepreneurial approach is frequently part of both orgaliizational and
people-oriented changes. Rank-Zerox develops networks or workers on contract to the
company. In addition, people-related clianges oftenlead to imaginative changes in
working hours and practices. Blue Cirlce Industries, the cement-based UK
conglomerate, has removed overtime from its vocabulary by an annual hours policy;
people benefit from getting work done in the fewest hours consistent with quality and
with enhanced productivity.
Man.aging,the Beforemath
You see a future event. It is real and you are certain that you and your organization
can bring it about. When that future arrives, it will have arrived because these steps
have been taken. You look at what you have to do to get there from a more positive
point of view. You treat the anticipated future as already in the past. This does away
with if we get there. Instead you are there and looking back at how you got there. It is
psycholog;icallysound approach.
Thus picture a special board meeting where the CEO has made it clear that this is a
mt:etinp unlike the usual one's because everyone is going to be invited to let their hair
down as a way of taking the first steps to creating a new future. The chief executive
aslks them all to write on their notepads the date. Though it is really 10 December
1990 he asks them to write down 10 December 1996. He then begins: 'It is December
19196.PJe have just secured the biggest order for pijongs over known .... There are
letsions to be learnt from this. Let's just recap how we got here. You remember how in
1990 we invented the concept of p.ijongs and got everyong talking about them as a
result of our mysterious advertisement campaign. We didn't tell peqple what they
were. 111fact at the time we didn't t o w ourselves.
1
After a little more in that style he asks others to recap the contributions they made to
d1:ciding what pijongs should be and for everyong to pitch in with a retrospective
rehearsal of the arguments for and against, and the alternatives which were proposed.
Understanding Change
He lias alreadywar~iedthem to come prepared to talk about their proposals for new
products, and he lias told them to be ready for a new approach. At first they are
embarrassed at the idea of starting in the future, but after a while they begin to see the
value, and the flow of ideas expands. Creative imaginations is kindled and anything
becomes possible. Tlie present no longer constricts.
It is rather likethe quotation J.F. Kennedy made from George Bernard Shaw, who in
turn took it from Aescliylus: 'Some people see things as they are and ask why? I
dream dreams that never were and ask why not?
The much used words 'visio~i'and 'missio11"are relevant here. Tlie following brief
extracts fro111top managers with a future mindset illustrate the idea:
'While it is foolish to throw away the past, it is the future that we can affect. The
ability to create and manage for future in the way that we wish is what differentiates
the good manager from tlie bad .... The engine of change is dissatisfaction with the
present and the brakes of change are fear of the unknown and fear of the future.... It
has to be possible to dream and speak the unthinkable, for the only things tliat we do
know is tliat we sllall not know what tomorrow's world will be like. It will have
changed more than even the most outrageous thinking is likely to encompasses.' (John
Harvey-Jones, Making it Happen, 1988).
'It is up to tlie top executive to become a true leader, devoted to creating an
environment in which employees can accept and execute their responsibilities with
confidence and finesse. He must communicate with his employees, imparting the
company's vision and listening to what they need to make that vision a reality. To
succeed he can no longer be an isolated and autocratic decision maker. Instead, he
niust be a visionary, a strategist, and informer, a teacher and an inspirer'. (Jan
Carlzon, Moments of Truth, 1987).
'Wl~ata conipany needs is a "director of vision", whatever he or she is called .... A
"director of vision" helps to shape the future .... prevents corporate myopia and adds
a "conceptual quality" to a board bothered about day to day worries. A "director of
vision" can provide an element of magic. Companies shouldn't be afraid of that. He or
she helps tlie conipany to aim for the products of the future: ones that meet future
customer aspirations'.
A prime task of the top leadership of an organization is to give the grand vision of the
future. People at all levels can then break down this vision to arrive at their piece of
the big picture. Indeed we need 'directors of vision' at all levels of an organization.
Tlie more widely leadership and strategic thinking are disseminated throughout an
enterprise, the more interacted will its activity be.
As Davis puts it, the leaders of the future must lead 'from a place in time which
assunles you are already there and that is determined even though it hasn't happened
yet'. The fornier boss of ITT, Harold Geneen, expressed it as follows: 'You read a
book from beginning to end. You run a business the opposite way. Your start with the
end, and then do everything you mut to reach it.
Of course, you ma! say that this is all right for the board, but less senior managers
might find this approacli less relevant to their functions. How could middle and junior
managers, supervisors and people on the shop floor or out in the field apply it? The
future mindset applies at all levels and will introduce someone practical ways of
establishing it, of helping everyone to be a change agent.
As Buck Rogers, formerly Corporate Marketing Vice President of IBM, puts it: 'The
people I enjoy working with most are those who believe that we can have an impact
on the world around us' (Getting the Best, 1987).
-
In this unit the nature and meaning ofchange and how different environmental factors
affect change have been discussed.
Structure
2. I Introduction
2.2 Focus on the Individual
2.3 Focus pn the Role
2.4 Focus on Teams
2.5 Focus on the Organisation
2.6 Types of Change
. t / ~ ; u T 1 " " ~ ~ l d Management
Key Constituents of Turnaround
2.7.2 Process Models of Turnaround Management
2.7.3 Types of Turnaround
2.7.4 Turnaround Performance
2.8 Planned Change
2.9 Work Redesign as aTechnique of Planned Organisation Change
2.9.1 Alternative Usesof Work Redesign
2.9.2 DesigningNew Organisational Units
2.10 Change: The Challenge of Transformation
-- FOCUS ON-"THE
2.2 -..~-
INDIVIDUAL
Arc~ .Ii n to~ this mod,.. :-angc-.the individual is the prime force in organisational
clung,. ll~dlv~dual s can ~ r o r r ~ cor
t eresist change. If individuals get motivated, change
is easy How do individ!~alsget motivated? We shall consider three explanations in
this regard: individuals c h a ~ g when
e they learn new and more desirable ways of
doing things; they change w hen they get non-threateningfeedback; they change
when their motives change.
Change as a Learning Process: The adoption-diffusion model of change, so popular
in agriculture, is based on the theory of change being the process of learning. Learning
t.akesplace when one is dissatisfied with the present state, wants a change. sees the
new alternatives somewhere, debates in one's mind about the pay off of the new
alternative, checks with others one trusts, tries the new alternative, assesses its
advantages over the old ways, and finally adopts it. Two main elements of this model
are: Change is regarded as a sequential process, and the rate of change varies from
one individual or a group to another.
'There are 8 stages in the process of change in an individual: initiation, motivation,
diugnosis, information collt?ction,action proposal, deliberation, implementation,
,md s fabilisation.
Individuals do not respond to change at the same time. Those who accept change have
been classified into five groups: innovators (about 2.5%), early adopters (about
13.5?/0),early majority to adopt change (about 34%), late majority (about 34%) and
laggards (about 16%).
A large number of studies have been made, and extension practices have been
developed to help people go through the sequential process faster, and to help "late
majairty" and "laggards" in learning to quicken their pace ofchange. One popular
method to help is "demonstration" of the new alternative, by taking people to a place
Change through Feedback: Another model ofchange is based on the assumption that
i~idividualschange if they get feedback on their behaviour, and also have a theoretical
framework which sliows that tlie current behaviour is dysfunctional. The feedback
need to be objective and non-threatening. A good example ofthis model is the work
done in schools on clianging teachers style, using Flander's theory of teacher's
classroom interaction behaviour. The teachers learn how to score objectively a
teacher's beliaviour while teaching the students. The scoring method is objective and
teacher's behaviour is scored every third second during the period of teaching. Scoring
reliability of 98% (agreement between two scores) has to be established before scoring
a teaclier's behaviour on "direct influence"(behaviour which restricts initiative and
freedom of the student, like lecturing,criticising, reprimanding,ordering, asking
questio~iswith one known answer) and "indirect influence"(behaviour which
encourages students' initiative and autonomy, like student talk, encouraging feelings,
asking questions with ~nultiplealternative answers). Then i/d (indirect divided by
direct) i~lfli~encebehaviour is worked out and feedback given to the teacher concerned.
The teacliers learn the theory and research results showing that direct influence
behavioi~rresults in dependency, lack of initiative, low activity level, lower
interpersonal trust, and low adjustment of students, while indirect influence behaviour
results in tlie opposite effect. Such feedback alone leads to change in teacher's styles
and change of the scl~oolclimate. (References to the results of work done with this
model are given in "Further Readings").
Motivation Change Model: The well-known work of David McClelland on
changing larger systems by changing basic motives of individuals is quite well-known,
and lias been widely used in India in tlie development of entrepreneurship. The basic
explanatio~iis that individuals engage in certain activities because of their dominant
motive or psychological need. A person with affiliation motive (the need to establish
and enjoy close personal relations) will socialise more and enjoy meeting and being
with people. Similarly, a person with achievement motive (the need to excel and to do
something unique) will be engaged in competitive activities, and is likely to spend
more time in work (business, selling, competitive games etc.). Ifwe can change the
maill motive of a person, for example, from affiliation to motivation, the patterns of
activities can be changed from "club-like" behaviour to work related excellence.
Successful attempts have been made to change motivation patterns of individuals, and
produce large change. (Reference to the work is made in the Readings at the end of
this unit.) McCIeIIund has suggested theJolIowing 12 propositions for designing
intervention to help the adults acquire motives which they desire to know.
Proposition 1. The more an individual believes in advance that he can, will, or should
develop a motive, the more likely he is to succeed in the educational attempts designed
to develop that motive.
Proposition 2. The more an individual perceives that developing a motive is
consistelit with tlie demands of reality (and reason), the more likely is the success of
educational attempts designed to develop that motive.
Proposition 3. The more tl~oroughlyan individual develops and clearly conceptualises
the associative network defining tlie motive, the more likely he is to develop the
motive.
Proposition 4. The more an individual can link the newly developed nebwrk to
related actions, the more likely is to occur and endure in thought and action.
Proposition 5. The more an individual can link the newly conceptualised
association-action complex (or motive) to events in his everyday life, the more likely
the motive is to infli~encehis thoughts and actions in situations outside the training
experience.
Proposition 6. The more an individual can perceive and experience the newly
conceptuafised motive as an improvement in the self-image, the more the motive likely
is it to influence his future thoughts and actions.
Proposition 7. The more an individual can perceive and experience the newly
conc.eptue~lisedmotive as an improvement on prevailing cultural values, the more the
motive likely is it to influence his future thoughis and actions.
Prolposition 8. The more an individual commits himself to achieving concrete goals in
life related to the newly-formed motive, the more likely the motive is to influence his
future thoughts and actions.
Proposition 9. The more an individual keeps a record of his progress toward
achi,evinggoals to which he committed, the more the newly-formed motive is likely to
infliuence his future thoughts and actions.
Prolposition 10. Changes in motives are more likely to occur in an interpersonal
atmosp11r:re in which the individual feels warmly but honestly supported and respected
by others as a person capable to guiding and directing his own future behaviour.
Proposition 11. Changes in motives are more likely to occur, ifthe setting dramatises
the importance of self-study and lifts it out ofthe routine ofeveryday life.
Proposiition 12. Changes in motives are more likely to occur and persist if the new
motive is a sign of membership in a new reference group.
--
2.3 IrOCUS ON THE ROLE- - -
Proccss Consultation
Procesq cc)nsultationis one specific approach. Process consultation is the help given to
a clit:nt group in understanding and developing methodology of working in general,
and ~~nderstanding and managing the effects of work methodology on involvement,
alierration, collaboration, conflict, consensus and such other group processes which
effect decision-making and the members' commitment to the decisions made.
Schcin stiggests three main characteristics of process consultation: joint diagnosis of
the ~r(>ce!;s
with the client, helping the client in learning the diagnostic skills, and the
active inbolvement of the client in searching a solution.
A consull.ant helps a client group by giving feedback on their ways of working in
examining the data, and in planning improvement in the processes of working and
decision-making. The process consultant helps the client group move from dependence
to interdependence and independence in diagnosis and action planning. As the term
suggests, consultation is on process of working and not on the client.
Work Redesigning
Work redesigning focuses on distribution of power of decision-making in work-related
matters 1.0 the group which is responsible for results. It is a radical model,
emphasising integration of intellectual (managerial-supervisory) and physical work
(produc1:ion). Work redesigning is done by training members of a team in multiple
ski Ils, and giving complete aufonomy to the team to plan, supervise and produce
productj or services. The role of the supervisors then changes; they plan boundary
management (getting resources needed by the team, solving their external problems)
and educational roles (helping the team when needed on new information, training
etc.).
Work redesigning emphasises the use of responsible autonomy, adaptability, variety,
and participation. It uses the socio-technical systems and open systems approaches,
suggesting that technical systems need to be integrated wit the social systems, and
sf~ouldbe open feedback and change. Self-regulation is greatly emphasised.
Nitish De, who pioneered work redesigning in India in different settings (industry, post
office, LIC, income tax office, consulting organisations, bank)proposedsevenphases
of, work redesigning, based on experience in India.
1 ) Hostility: Despite preliminary explorations, discussions and clarifications sought
and ofiered, there is a feeling amongst employees, irrespective of their positions and
roles, that the experiment is a motivated one, conditioned by the management's desire
to gain and the researcher's desire to conduct the research in order to publish. lnternal
consultants are seen as motivated by career considerations. Depending on the
dynatl-ticsof situation in most Indian organisation, this phase has been operating
covertly. Overt expression of hostility has often come from isolated individuals.
;!) Reluctance: Though some degree of curiosity develops amongst the members,
there is no visible symbol of commitment. However, a few persons involved in the
experiment feel that something is possible and that some changes for the better can be
effected. Positive leaders among the experimental groups do play an important role in
lihis a; well as in the earlier phase.
3) Guarded commitment and indifference: A substantial number show interest in Types of Change
what is happening, seeking data, taking initiative in group discussion, and offering
suggestions, while the majority still remain indifferent. Indifference is more passive
compared to the two earlier stages.
4) Intergroup dynamics: Something of a Hawthorne effect is produced in terms of
attention received. On the one hand, an in-group feeling gets created at the
experimental site and, on the other, a feeling ofjealousy and some amount of hostility
is often expressed by way ofjokes and caustic comrnents by the other groups.
5) Positive Interest: On one hand, in-group feeling brings some degree of stability to
the experimental group and, on the other, some internal dynamics goes on in terms of
power struggle regarding the experimental scheme. At times it is aggravated by caste
and regional considerations, factional in-fighting between sub-groups with negative
and positive attitudes and others who are in between. The positive groups, however,
acquire more visibility because they now take more active interest and gradually take
the control functions in the autonornous groups.
6) Isolation of negative elements: The majority are already committed to the
experi~nenthaving experienced some positive gains on some of the key criteria such as
variety ofjob, ~i~ea~ii~igfi~lness,
social support, challenge, autonomy, and evolving
norms for the group. The isolates are the negative elements who, depending on how
they majority treat them, either indicate withdrawal of a passive kind or personal
hostility. By and large, however, the group settles down to work out the operational
details of the scheme.
7) Networking: An experimental group takes initiative in looking outwards and seeks
to compare notes and experiences with other similar groups. This phase becomes a
potential force for the diffi~sionprocess.
DonczldB~:beault: Several writers have tried to study the sequence of steps through
which a turnaround proceeds. The study by Donald Bibeault, turnaround practitioner
and :;chol;~r,of 8 1 US turnarounds led him to identify five stages of turnaround.
According to him, generally the first crucial stage of step is that of the moment of
truth and of a change at the top, followed by an evaluation, an emergency, and a
stab~lizationof the situation, and lastly, a return to normal growth. The moment of
truth dawns when people in power (generally the board) decide that something needs
to be done, the existing top management may not be able to do it, and therefore a new
heln~sma~i is needed. Change of management may not, however, occur if the cause of
decline is identified as clearly extenal. And even ifthe trouble is internal, the CEO
may not be replaced if he or she has strong ownership stake in the company - some
othr:r top executives may be replaced, usually the top operating offices. The new
leacler is likely to be an outsider ifthe problems are really tough and largely internal,
for an outsider, untainted by failure, is likely to be more objective and have greater
credibility than an insider who has been part of a team that wrecked the organization.
An outsi~dercan also be a more ruthless hatched man for the owners.
In the evaluation stage the focus is on the liability of the company and outli~iingof a
turnaround plan with priorities. This usually follows, at least in the US, some suave
chast thumping the scapegoating by the new chief to show that he or she means
businessland that the actions are rational in the circumstances. Evaluation work is
essential when the new chief is an outsider. It is also good for credibility. But it needs
to be fairly is an outsider. It is also good for credibility. But it needs to be failrly
quick-time is of the essence. The evaluation consists ofthe identification of short-term
and long-term, severe and marginal problems. Some crucial judgements need to be
made: Which business segments ofthe company are viable and which are not? Do any
of the ccjmpany's products have or can have, with suitable action a competitive
advantage in the market place that can yield profit? Some good brainstorming can
yijeld several good solutions, and in the initial period ofthe turnaround the realistic
target it; to solve 80 per cent of the relatively easily solvable problems rather than get
bogged down with 20 per cent more intractable problems. An action plan is preferable
to fire-'fighting actions, and an important part ofthe action plan may be to staunch the
negative cash flow. As important as the action plan is its effective communication -
upwards to the board for approval, possibly also to other stakeholders like lenders,
and downloads to the management team. A presentation to the management team
hopefully resulting in a consensus is desirable.
The next is the fire alarms stage of emergency, and stringent cash controls are
imposed to dowse the flames. This may be accompanied by postponement of long-
term expenditure, downsizing, and borrowing. Divestiture of loosing business may
5sllow.
lifter losses are sharply out comes the stabilization or settling down phase, which
means seeking an acceptable rate of return. Profitability takes priority over cash flow,
fbcus shifts to improving operations (and this means a lot of analysis), and to strategic
refocusing. The emphasis shifts to core businesses, that is, business the company
Icnowr; well, and to making them more profitable, and the best managers may be
assigned the task. Also, management systems get renovated, especially control
systems.
Finally, in tlie 'reposturing' stage, the company initiates aplanned exit from
~~nprofitable or fi~turelessbusiness and entry into high-potential businesses. This often
means divestitures balanced by acquisitions, possibly diversification. The emphasis is
on growth and development rather than retrenchment, and stronger financial
eval~~ation system. Is the turnaround now complete? Yes, says Bibeault, provided that
besides generating profits, the company has rebuilt its position in the market place,
made the right strategic moves, and motivated its staffto complete tlie turnaround
cycle.
Bibeault's stage model of turnaround was not derived from data on the 81 turnarounds
he studied. It is, therefore, a plausible prescriptive model. It sounds reasonable until
one starts questioning its premises. What if, in a society, most privately owned
enterprises, even large ones, are owner managed, as is the case with economies in
whicli business groups own, control, and manage the enterprises in their stable
(a fairly typical siti~ationin many Asian countries)? What then happens vis-a-vis
cliange in 'top management' if an enterprise declines? If in a society there are legal or
social liurdles to downsizing or to divestiture or to acquiring businesses freely, what
happens to tlie stages of emergency, stabilization, and reposturing? It is not as if
turnarounds do riot happen in these societies. But the mechanics may be rather
different, and so may tlie stages.
change in tlie decline phase, and also lower change in several efficiency and Types of Change
profitability ratios compared to the non-turnaround firms, the figures were completely
reversed in the turnaround phase. The wide range ofvariables of which turned around
firms were superior, compared with both their decline phases and also with the non-
turnaround phase. The wide range ofvariables for which turned around firms were
superior. compared with both their decline phases and also with the non-turnaround
group, suggests that the turned around firms employed a multi-pronged strategy for
turnaround that involved higher rates of modernization, better use of equipment,
greater sales productivity, better cost control, better use of working capital, and better
on sales.
Prudip Khundwallu did a comparative study of five relatively successful Indian
turnarounds and five relatively unsucessful turnarounds broadly from the same
industries. The firms were medium sized. To analyze the cases he used 10 categories
of turnaround action. There were six categories of action in which the number of
actions in which tlie number of actions take by the successes far outnumbered the
nuniber of action taken by the relative failures. These were: initial control (21 actions
versus three), quick pay-off projects and actions (30 versus 1 9 , quick cost reduction
(25 versus I 1 ), revenue generation (27 versus nine), organizational mobilization
(20 versus nine), and internal coordination (nine versus zero). Three categories did not
differentiate significantly between the relative successes and the relative
failures,namely ~hangesin top management (all 10 firms had such changes), initial
credibility building actions, and negotiation of outside support and pressure
neutralization. Neither group tried the asset liquidation route in a big way. Successful
turnaround seemed to result from a new management seizing control over the finances
and operations of tlie firm, hustling in numerous ways, some large, many small, to cut
costs, boost revenues, and improve operations (quality, productivity, cleanliness, etc.)
mobilizing the managers as well as the staff for turnaround through communications,
briefings, brainstorming meetings, and task forces, and ensuring originated reponses
throi~glicom~nitteesand periodic reviews. In short, success came from a highly pro-
active, opportunistic and participatory management of turnaround.
I n his study of 42 turnarounds from different countries, Khandwalla drew out two
sub-samples. One was of 18 fast turnarounds and the other of 20 slower turnarounds.
When tlieir early, middle and final phase actions were compared, some important
differences were noted. In the initial phase, fast turnarounds tended to engage far more
in formal diagnostic activities than slower turnarounds. They also tried harder at
getting tlie si~pportof various stakeholders. And they were more vigorous in taking
market related a~idmanagement control enhancing actions. Thus, fast trackers got
going on a number of fronts while the slow trackers tarried.
In the middle phase, fast turnarounds were much more likely to use incentives and
motivation than slower tu'rnarounds. They were also likely to use participative
management, an emphasis on core values, and other modes of creating organizational
cohesion for turnaround, as well as attempt more vigorously to increase efficiency,
quality, and productivity(other than through modernization and automation). In the
middle phase, too, the fast trackers acted on many more fronts than slow trackers.
Fast trackers tended to pay much greater initial attention to diagnosing the
organization's proble~nsand mobilizing the internal and external stakeholders for
turnaround than slow trackers, and were much more likely to seize control and push
for larger sales early in the game. They also tended to push harder and earlier for
operational excellence than the slow trackers, and that, too, without slackening the
effort at coliselisus building for turnaround. It is possible that attacking many fronts
vigorously led to a faster turnaround.
An interesting point in this Khandwatia study was that while the non-surgical
turnarounds a group outperformed the surgical turnaround group both as to extent and 43
Concept o f speed of turnround, one surgical sub-type the surgical productivity/innovation
Ndnaging Change turnaround --outperformed one non-surgical sub-type, the non-surgical innovation
sub-type. T'nis suggests that mere presence or absence or surgery is not decisive,
though the general advantage may lie with turnarounds without mass layoffs. What
else goes with surgery or its absence - in other words, synergy - can make a large
diffensnce to performance.
What do we make of the scl~olarlyempirical work on turnarounds? As is well known,
pundits seldom agree on anything. and cumulation of knowledge in the human sciences
is impeded by different research approaches, samples, variables examined and their
operationalization, and interpretation of the findings. Turnaround pundits are no
renegades to their race. Nonetheless some inferences, at least at a tentative level, are
possible.
As somebady put it, the eye altering all. Turnarounds to yield rich fresh insights when
the perspective is altered. When economists and finance people look at turnarounds,
they see one face of turnarounds, say, of changes in various financial or cost ratios.
Wlhen strategic managment scholars can turnarounds, they see another face, say of
changes i n business focus, growth and competitive strategies and restructuring for
realigning the structure with a changed strategy. When organizational behaviour
specialisls examine turnarounds, they see still another face, ofchanges in leadership
style. in I-IRD, in how 'people problem' of motivation and conflict resolution are
tackled. .4nd so on. \9/1w! we a n conclude is that turnaround is an extraordinarily rich
medley of possible actions. Numerous sets of only partially overlapping variables can
be developed t- studv it.
.
However. study after stc -Ir so indicates that some turnaround actions have a lot
mc -,. clout than others ;.; I luenc~ng the form and effectiveness of turnarounds. Some
of t 4 - - a + I ful actiol~:, :,: to most turnarounds. They are almost necessary
dr- h - ~
coindrtlcns, and include management changes, especially at the top, and marketing,
cost pruning, better operational and financial control and productivity enhancing
actions. However, there maj be no unique way these basic or foundational actions are
undertaken; each management may deploy them in its own distinctive manner. Another
class of powerful actions seerns to be those that can be termed 'strategic'. Their
deploy~nentis optional, but if any is employed, it can catalyze a lot more turnaround
ac,tions.Expert diagnosis seeins to have this capacity, and also many 'people
management' actions like creating a support base of stakeholders to get them to pitch
in with help, extensive participation of lower levels in turnaround related decision
making, internal communications to rouse the staff and keep them informed, greater _
enlphasis on HRD and motivators, etc. Business strategy actions, too, can have large
catalytic capability, such as repositioning the organization's business, and revamping
ils growth and competitive strategies. Restructuring also may be strategic in its
ram iti1:ations.
TNhy tlo these 'strategic' turnaround actions catalyze many other actions? The reason
rnay be that they touch upon many, possibly all facets of organizational functioning.
'Fake expert diagnosis of sickness causes. It can uncover a broad band of causative
?actors that encompasses pract~callyall the facets of organizational functioning thus
initialing a broadband remedial actlon. Similarly, when turnarounders involve many
stake11olders in the turnaround, again a whole lot of concerns as well as suggestions
for in~provementare likely to arise, and acting upon them may have organization-wide
repercussions. This is obviously true of strategic change, for a change in strategic
intent needs to be implemented by a whole host of operational-wide repercussions.
This is obviously true of strategic change, for a change in strategic intent needs to be
,
impl~mentedby a whole host of operational level changes in marketing, finance,
personnel, and production areas. Restructuring, too, has many ramifications because it
can iilter substantially the power and authority structure in an organization species is
our creativity, our nearly inexhaustible capacity to improvise solutions.. In turnaround Types of Change
situations this implies the capacity to craft many different turnaround modes even in
very similar context. So long as tlie mindset of turnaround scholars is to look for just
one kind of tur~iaroundresponse to a context, we will continue to underestimate
turnaround creativity. After all, each successful (or unsuccessful) turnaround is an
experiment which can trigger many learning and changes in other turnarounds. Rather
than looking out for ~~nique context-turnaround modes for each contextual condition,
so that they can be compared and provide a choice to the bewildered turnaround
practitioner. This is a major task.
These choices and possibilities need to be compared with what the turnarounders think
turnaround is all about. Turnarounders tend to see their situations as hot seats, and
indeed they are. But scholars clarify the numerous sources of crisis and the
relationship oftliese sources with one another a d with consequential actions.
Turnarounderssee themselves as energizers par excellence who provide a gripping
vision of the future, who act as bridges to various stakeholders, who impose on the
lesser denizens of their organizations new work philosophies, who suffuse them with a
new purpose and energy, who set personal example, who ask tough questions to
shatter relatively under examined preconceptions, who take risks, who differentiate
between the organizational deadwood and what can be salvaged, who build teams,
who empower the lesser fry, who assuage the anxiety and insecurity of the flock, and
so on. This is often so, but these dramatic flourishes camouflage a huge amount of
vital backroom work. It is up to scholars to uncover this work of nitty gritty
implementation, local and lower-level initiative taking, n~cndingoftattered
management systems, tactics in tlie market place, redefinitionsof lower level roles and
relationsliips and so on. Without this work, turnaround flourishes by the CEO may
well resemble vigorous baton waving by the conductor in front of a drowsy orchestra.
And finally, turnaround and also what can be made to happen. It is the difference
between 'fix it, sell it, or shoot it' -the simplistic mantra of Allen Born of Amax -
and the fine-grained constituents of a decline - stemming strategy and recovery
strategy, or the different modes of surgical and non-surgical turnarounds, or
differences between 'strategic' and 'operating' turnaround strategic, and the
differences between the turnaround stages of arresting sickness, reorienting,
institutio~lalization,and growth. During turnarounds restructuring often takes the form .
of decentralization but with sharper accountability, divisionalization, and change in
incentives. This implies that a lot more managers get the freedom to take initiatives,
and these initiates again may mean organization-widechanges.
We noted earlier sonie controvery among American scholars whether 'retrenchment',
meaning Illass layoffs, diverstitures, and downscoping,'isa necessary condition for
turnaround. Evidence suggests otherwise. In Khandwalla's study of42 successful
turnarounds, just about half had not resorted to mass layoffs, and many also had not
divested or downscoped. Even in US studies, asset-cot surgery therefore is likely to be
at best a strategic variable, and a dubiously useful one at that. In Khandwalla's study,
1 significant retrench~nentwas negatively correlated with the rate of improvement in
firm profitability. Thus, firms that retrenche~dtened to be slower in turning around
than firms that did not. On the other hand, attempts to increase operational
effectiveness, expert diagnosis, attempts to rope in various stakeholders in the
turnarounds, improvement of management systems, and use of motivation aids tended
to speed up turnarounds. Thus, retrenchment may often be a negative strategic action,
more a hindrance to turnaround than help.
The studies also suggest that resorting to many, diverse actions rather than just a few
i makes turnarou~idsuccess more probable. That is to say, the turnround battle usually
needs to be fought on Inany fronts. The greater the recourse to 'strategic' turnaround
I actions, t'he more action are likely to be catalyzed, and therefore the more
--
2.8 P'LANNED CHANGE
The eficiencies of advance tech,nology,the economics of scale and the benefits of
increased inanagerial control have generated substantial increase in the productive
efficiency of organizations and :substantialeconomic benefits to the owners of
organizations and to the society as a whole. These economic benefits, it is argued,
have been responsible for a general increase in the affluence, education and personal
1eve:Isof aspirations. However, ,alongwith positive development, people have argued
that these,changes also have brought higher level of stress, lowerjob satisfaction and
sotr~etimesincrease in attrition rate. It is very important to create an understanding of
the process of change and lay a foiindation for gaining results which have least
possibiliiies of negative effects. Thus understanding planned change is of utmost
importance to the students of management.
"Ijirmly believe that any organization in order to survive and achieve success, must
hme a sound set of beliefs on which it premises all its policies and actions. Next, I
believe t,llat the most importantisingle factor in corporate success is faithful
adherence to those beliej.7. And, Jinally, I believe ifan organization is to change
everything about itself except those beliefs as it moves through corporate life".
(Thomas Watson, Jr.)
"fi10l.7say they learn by experience. Iprefer to learn from others experience".
1
I
,
trying to transform their organization so as to win in this new, hyperactive world. Types of Change
And, all to many of them busy because they are frantically searching for ways to
maintain the competitive health of tlieir organizations.
The primitive hunting party like every team and orga~iizationever since, faced two
immediate challenges:
1. How is it going to deal with a hostile environment of animals and rival hunting
parties so as to provide a superior source of food for itself and its dependents,
and ...
2. How was it.going to organize its members to do that, and then to share the
results in such a way they would be happy to continue the partnership?
The first challe~igedeals with competition in the world external to an organization,
and poses tlie problem of strategy. The second deals with organization, and poses the
proble~nof strategy. The secontideals with pefformance in its internal world, and ~
poses the proble~nof integration.Tlie hunting parties that thrived were those best able
to devise solutions to these two problems. Then, over time, as conditions changes, as
tlie most successfuI combinations of hunting parties and family groups grew in size
because of their very success, as new tools were invented and new more sophisticated
methods of li~~nting and fending of rival grouping were developed, those burgeoning
mini-civilizationsfaced a third challenge- how to cope with change. Evolution had
done its for them in tlie past, but evolution itself implied a huge advantage to a group
whose menlber were able to take advantage of or, even more advantageous, shape
change better than their rivals. So was added a third challenge to the list that all
organizations share:
3. How is it going to deal with changes in either or both of its external or internal
environments, and so cope with the need to change its methods of strategy andlor
its means of integration?
In reality every orga~iizationalso faces a fourth, common challenge, which we didn't
stop to notice because it was self-evident in the very name ofthese earliest simplest
exaniple- families and hunting parties. Why does an organization exist? What are its
purposes? What is it in business for all? And this we call the challenge mission.
So the four, fundamental challenges faced by all organizations are:
a Mission a Competition a Performance a Change
Now what about tlie leaders ofthose early, human organizations- first the hunting
parties, and tlien the tribes that naturally followed them into existence as the
advantages of combining them with their associated family grouping made such
'societies' the most successful? Where did they come from? How did they emerge?
Organizational leadership then is about finding the wisdom and courage to make the
choices that are entailed in answering tliese four, great questions:
1. Mission: what are we trying to accomplish?
2. Comeptition: how do we get a competitive edge?
3. Performance: how do we deliver the results?
4. Changes: how do we cope with change?
Grand strategy is simply tlie name that we give to the all encompassing discipline that
it entails. So grand strategy is an agenda for leadership, not a recipe for management.
It is an agenda with four components but only one aim; and that aim is to find and
keep vital the ultimate competitive advantage- a superior way of running the
organization that ensures mutually supporting solutions to all challenges, all of the
time so that everything is done and every operating decision is made in a pre-
Concept of much overuse and abused term is simply operational management driven by a
Managing Change deliberatellychosen, explicitly articulated and comprehensively institutionalized grand
strategy, as opposes to beirig a collection of response to the tactical exigencies of the
moment.
-7
Exhibit 1.
Giving Up on Redesigning .lobs: One Consultant's View
If you're a boss and grumbling eniployees cause you sleepless nights. forget it.
That's the advice of Harry tevinson, a Mallagemelit psycliologist. Reporting in a
recent issue of his Levi~isonLetter, Dr. Levinson says that most e~nployees
eventi~allyget sick of tlieirjobs and tliat tliere is really nothing anyone can do for
them.
"The quality of work life call be improved in small ways. Dr. Levinso~isays, "but
flexitime, worker participatio~iand ihnproved working conditions don't cliange the
basic nature of tlie work. Most work is repetitive, routinized and boring. No job can
be endlessly enriched".
One of the principal tasks of any good manager, Dr. Levinson advices, is to help
e~iiployees"accept the realit~esof tlieirjob li~nitation".He cites a study by Herbert
Greenberg. president of tlie Marketing Research Corporation, wliicli purporets to
show tlia180 per cent of a11 American workers in every job category have jobs for
....
wliicli they are i~nsuited
"They are", says Dr. Levinson, "simply stuck". "A good boss", he contends, "will
help si~cliemployees reconcile themselves to tlie fact tliat they are stuck". "But", lie
concludes. "boredom is a reason, not an excuse, a!id when dissatisfied e~nployees
eannot shape up, tliey must go".
Lest we be misunderstood, let us emphasize that we do not concur with what
Dr. Levinson seems to be saying - namely, that the cause is hopeless, that work
redesign should be abandoned as a point of leverage for personal and organizational
change. For one thing, sometimes organizational circumstances are such that it is
possible to use work redesign to initiate substantial changes in work systems.
What, then are the alternatives to using work redesign as an "organization
dekelopl-nent" technique? Three possibilities are re-viewed below.
INTEGRATION
Fig.1 Process o f Transformation
The first step up the strategy axis is to define business concept, or Participation
Strategy. ?'his comprises a basic definition ofthe business and where in the industry
we will participate, i.e., where we're going to compete. The second step is to develop
an Operatiiig Strategy, or how we're going to compete, down to the level of detailed,
product/market, functional and geographic plans. These are not discrete, sequential
steps. since what we are practically capable of doing, or becoming able to do, and
wherc: thesze capabilities have value, are directly connected:However, we have to
start r;ome\vhere.So, in practice we undertake an interactive process, hypothesizing
first a desired participation strategy based on our aspirations and understanding
of the competition, technology ar~dmarket place. Next we attempt to develop an
operating strategy that can be demonstrated to the value-creating. Then, on the basis
of this learning, including early experience of product development and market
participation, we adjust both participation and operating strategies unti I we
have iifeasible whole.
Simil.arly,now looking at the Integration axis there are two steps to tlie desired, fully
integ~.atedorganization. First we must build a Top Team to exercise leadership and
personality the behaviour we are going to demand ofthe whole organizations.
This team rnay sirnply be comprised of the direct reports to the organization's leader.
More usually it is longer than that, including the key managers from the next level of
tlie organization. It is rare that it rlu~nbersless than twelve, and impractical that at
least its core much exceeds forty. The goal in composing it is to include the
critical mass of power wielders arid opinion leaders needed - first to ensure the
credibility ofthe team's pronouncements, and second to bring along the rest of
the organiz;ition.
The second step along the Integration axis is to expand tlie core team to cover the
whole orgai~iizationand everything that goes on within it, with particular
emphasis on all the aspects of the way people relate to each other and are
manal:ed. P s with strategy, in practice this must be an interactive process since the
ideas of the leadership need ultimately to be owned by everyone iftrue alignment
throughout the organization is to be achieved. Now we can fill in the lines
and define the nine boxes of what has come to be called the Transformation
Matrix (see Fig. 2).
Operating
Strategy
Participation
Strategy
Tlle first thing to recognize about this matrix is that every surviving organization was
at some time in the top right hand corner having achieved Strategic Integration - a
well aligned organization, with a fully detailed, operating strategy being implemented
to deliver f ~ ~ ldetailed,
ly operating strategy being implemented to deliver strategic
success. This is a very important insight for two reasons. The first is externally
focused. Every single one of our surviving competitors was once also in that top right
box. Moreover, if we are in trouble there is a good chance that one of the reasons is
that at least one ofthose competitors is still there! A healthy respect for one's
co~npetitorsis mandatory to maintaining competitive health.
The second is internally focused, and has two, rather paradoxical parts. It reminds
those of us who are in trouble that just because we've got problems it doesn't mean
we're failures. We did it right once, we ought to be able to do it again. But it also
requires us to recognize that the biggest barriers to getting it right again is the
institutionalized character ofthe way we got it right before. We are probably in
trouble because our success locked us into "the way we do things around here". And
when the assun~ptionson which we'd build that paradigm ceased to be valid, because
of shifts in the external and internal environment, we failed to change with them.
2.11 SUMMARY
In this unit types of changes are explained and a detailed description of how
turnaround management can be applied is given and finally process of transformation
has been explained.
-. . *,.
..
tiil.ttt?cha: ..ly;z has done pioneering work in organizational structuring, some
!;i,,is2,:i.lA.. d :vhich is ara;ldble in l\funaging Orgunizational Change edited by
\:-::-.:i:::i: '
CIuttopad!?yayand Ud,li Pareek (Oxford & IBH. 1982). Chapters arid 6.
.. . 'i'.ilicsh;.;?r~'s plone-:ring \horL, !:: MBC) is ilvailahle in h ~ :Vicmapir.g
s I,r3
~ , ~
., .,
.
, > ;,.:-.i,
1:. .;.:- {Tata McGraw-Hill. i 98f! >
UNIT 3 FACTORS CRITICAL TO CHANGE
Objectives
After studying this unit, you will be able to understand
a major factors which are responsible for change,
liow economic conditions play significant role in changing,
r
a liow tlie models of different theorists have changed over times.
Structure
v'
3.1 INTRODUCTION
Wliat are successfr~lorganizations? In the business world, they have three
characteristics:
e they are Inore profitable than their counterparts,
e they art. growing fasterthan their competitors, and
9 ihc\ as
,]I.:- i t:~orni/t.~! leader of at least some part of their industries.
'3:: I
- ~\~itext,
what are happy people? They too have three main
ldl
6111/.~' 1, ..3ppy people when we started working than there are today. So
-" What are the reasons? Are we worse managers than our parents?
I I 11anirc.d"Or people? Or both. The task somehow becomes more
i * ,-- . ~ t o , (01kept up.
Concept of Most. important of all, is there any reason to hope for a renaissance of management
Managing Change
that can create a better world? This is a question where the rule, and not the
exception, is successful organizations run by happy people; where the goals of
organisations inspsire passion and not problems, where leaders coach and counsel
rather than command and control; and where we know how to sustain these
character~~sticsin the face of intensive competition and wrenching change, so that
future generations do not have to repeat the pain and suffering being experienced
throuhgolutthe world or organizations today.
There are: reasons why we live in difficult times, that there is a disciplinegrand
strategy--to bring it about. Grand strategy is therefore about the transformation of
management itself. Its purpose is to find a superior way of managing the ultimate
conlpetitiveadvantage.
1. Corporate Objectives
(a) Corporate objectives that go beyond the conventional statements of quantified
goals like percent growth rate or return on investment or profitability%
(b) Objectives, encompass a stretegic vision ofthe future environment
(c) Identify its opportunities-in the marketplace with clarity, and capitalize on these
opportunitieseffectively and efficiently.
Concept o f 2. Culture and Values
Managing Change
(a) Kinds oFvalues and aspsirations that form the guiding force of the company.
(b) Values relating to high standards of performance and work ethics reinforced
aniong employees
(c) Rule bound and bureaucratic culture prevails or is it one, where formalization of
procedure is kept to the mininium people relating a spirit of enrepreneurship and
risktaking.
(d) Value of innovation and its incoporation by the managers.
(e) The degree of 'customer orientation' in the company and how the customer
orientation is reflected in the company's operations, structure and system
context.
Tlie underlying thought if that you have to develop fresh insights about these
organizational dimensions learn a great deal more about the organizational process
which reflects them and most importantly understand how they interact with each
other and the three hard Ss to influence shape and finally determine organizational
effectiveness.
It might be useful to point out some of the basic underlying assumptions which form
the base of tlie 7-S model. Tlie first and foremost, of course, is that it goes beyond
strategy, structure and systems and pinpoint four other identifiable organizational
elements. It could be argued that no clear cut lines can be drawn between them but
then the niodel still has the merit ofpresenting the reality that organizations are
complex forms and that segmenting the organizational process in specific components
and menting the organizational process in specific components and manageable parts
has distinct benefits in terms of managing and influencing the change in a positive
way. Secondly, the model identifies clearly that the elements are interconnected as
variables which determine organizationaleffectiveness.Lastly, and more importantly,
it tells us that you caniiot introduce change in one area for achieving progress unless,
you begin to pay systematic and conscious attention tothe others, and also their
interrelationship with the prime areas of organizational effort (i.e., achievement of
superordinate goal) for achieving better effectiveness.
( ~turcutreI
3Systems
I Concept of The new view of organiations, therefore, looks like the following:
!Managing Change
Perha~psthe most significant point of the diagram is that there is neither a starting
point nor is it a managerial totem pole (to be enshrined in future corporate folklore)
available to evaluate and pronour~cewhich factor is more important than the others. It
leave:; things open indicating perhaps that the area which is relatively more important
in a piirticular organization is determined by the context of the organization in terms
of its business, market, competition, technology, societal setting (which substantially
influences ihe social and political variables) and the regulatory environment.
Bhattachar:ya ( 1 989) comments that, it was evident that while some ofthe Indian
subsicliarie!; or associate companies ofthe multinationals abroad were outstanding in
terms ofthe: process and systems of management, one could hardly find anything in
relation to their operations which could be termed as 'core' or essentially Indian
managerial system, values or stylt:. It is true that the high performers among these
multicational corporations strongly identified themselves with the Indian social-
culturi~lenvironment and mouduled their core managerial values in Indian terms. The
process was'- to use a literary ana.logy- a matter of translation rather than an original
piece of writing. This is not in any way to detract from the excellent 'translations'
often with the case ofIndian actors with substantive Indian values. The fact remains,
however, that their prime values went rarely beyond the penumbra of the transnation
optical vision: Their managerial sophistication and excellence could often be related to
their conforming to the given managerial values and styles. They often had the
externai ima.geof Indian style but the implicit anxiety to conform to the parent
company's strategies, norms, valwes and styles was still very real. Perhaps this is
inevitable in a professional set-up where a certain amount of mental detachment,
which is conrelated to serving a company and the parent group in the most effective
profess:ionalmanager, overshadows the urge to look at the corporate operations as an
expression of one's Indian managerial identity. The result, therefore, has often been
that while th~zirpublished writings and private professions conformed to Indian values
and aspirations, the impression remained that the companies were Indian economic
enterprises subserving the broader goals of the parent companies. The scratching of
the outer veneer revealed that their managerial-professional identity rarely attained an
entrepr~cneuriallevel since it required not only participation in the risk but also
enrtepr1:neurial actions beyond one's prescribed job. This perception persisted even in
those cases where the legal and financial nexus between the parent company abroad
and associate: company here was absent oi if the company was substantially build up
from a0 initial non-Indian background and association-particularly in terms of
'product and technology association.
In the case of the public sector companies, while the identification with the social-
political environment was much stronger, the problem of entrepreneurial versus
managerial dascotomy remained, given the short tenures of appointment to top
management positions. The prospect of career advancement in other set-ups or in
governnier~tc~epartmentsalso contributed to such extra-institutional characterists,
often refecteld in detached professional or service values in almost impersonal terms.
The result often was that while sporindically personalities like V Krishnamurthy in
BHEL cr MK Mathulla in HMT came to build institutions they were often driven by
their own urges and aspirations for achievement rather than organizational drive
solely sternmlng from a strong desire to develop the enterprise they served
Factors Critical to Change
3.4 THE EMERGENCE OF HUMANISTIC PHILOSOPHY
IN MANAGEMENT OF CHANGE AND
ORGANIZATIONS
The Hawthorne studies ofthe late twenties and early thirties raised management's
awareness of the impact ofthe human element on organizational performance.
"Human relations" became important both as a field of academic study and as subject
matter in the training of managers. While the subject of human relations received
some attention, it was not until the late fifties that this became something more than an
addition to the managers' tool kit. A number of prominent social scientists developed
the theoretical foundations that made human relations a management philosophy and
approach. Their writings struck at the heart of the value orientations of managers and
at the asse~mptionsunderlying our organizational models. their analysis included not
only a criticism of current organizational and management practices but also
recommended an alternative set ofvalues which were more humanistic in nature. A
number of these writings are considered by some to be classics insofar as they
contributed in a major way to both the theory and the practice of management. While
there were many contributors, we will mention only a few ofthose whose work
provided a springboard for further exploration and experimentation in the field.
Abraham Maslow's theory of motivation became a platform from which
organizational analysis as well as worker motivation was studied. His concepts ofthe
"nids l~ierarchy"al,d'particularly his notions of self-actualization, became pbpu~ar
with managers who tried to incorporate them into their styles of managing and into
their approach to organization. Maslow's theory was understandable,could be easily
translated into organisational terms as a way to analyze and formulate approaches to
motivatio~~ and morale and had the additional advantage of lending itself to the
personalization of the work place. The most significant impact, however, came from
the notion of self-actualization. The idea that eacb individual strives to reach some
ideal point of achievement to fully realize his or her potential, seemed to strike many a
responsive chord. Some organizations tried to build a structure and a set of norms
which would permit the workplace to provide self-actualizingopportunities for people
organizations.
Building on Maslow's concepts of organizational models, Chris Argyris further
explored the relationship between the needs of individuals and the organizational
context within which the individuals work. Argyris argued against much of what was
then being attributed to the classical or bureaucratic model of organization and the
classical views of themanagement process. He showed that the notions on which the
organizational society was build had inherent contradictions that ran counter to the
natural development of human beings.
Further treatment came from Douglas McGregor, who in 1960 wrote The Human Side
ofEnterprise. McGregor, like Argyris, built on Maslow's theory of motivation. Very
briefly, McGregor proposed two sets of orientations, or values about management,
organization and the work place. On the one hand, he described a set of values, or
propositions,Theory X, that basically represented a negative, nontrusting,economic
view of people and organizations. McGregor's idea was that if one built an
organization and a management style or theory based upon this view, what was likely
to emerge was a highly bureaucratic organization having many rules and many
procedures. It would incorporate communication patterns which were essentially
downward (and unidirectional) and would encompass a'managment role which was
centered on control. On the other hand, McGregor proposed an alternative set of
propositions, or value, Theory Y, which took a positive, trusting, more complete view
of people and organizations. Managing under the Theory Y assumptions would
require the integration of individual needs and organizational goals. Under these
conditions, managers would not need to spend so much time on the control function. In
fact, the individuals in the organization would monitor and control their own
perfo:rmance- i.e., exert "self-control". The result would be increased consonance
between what individuals wanted from the job environment and what the organization
need 1:o provide for its own survival. It is easy to see the relationship between
McGI-egor'sorientation towards management and Maslow's description of
environmelnts in which individuals can "self-actualize".
Rensis Likart, building on some of these early notions, noted that the major building
blocks of successful organizational need not be individuals, but could in fact be social
organisms, such as the work group. From this perspecstive, the organization is viewed
as consisting of many social organism which are lined together by managers ("linking
pins") who play very special roles in the work groups of which they are members.
Likert's or lentation, like those of his contemporaries, was a view the organization as a
more humznistic social organism than as a bureaucracy designed to maximize the
technical elFficiencyof human beings.
Take11coll~:ctively,these humanistic views reflected a prescriptive (as opposed to
descriptive)orientation toward organization change and development.
--
FACILITATION OF PLANNED CHANGE
3.5 -
-
The fi~cilitationof planned organizational change as a process involving collaborative
relationshi1p.s between client systems and social sciences professionals may now be
said to have emerged as a recognized through still precarious activity in human
affairs. Thr: action research studies which provide its first models were undertaken
during the Second World War independently and against the background of distinct
traditions in the U.S. and Britain when conditions of crisis compelled rapid change.
Subst:quently, work of this kind has m-ade its appearance in most western and in one
or two eastern European couintries, and in developing countries as different as India
and hlexic13.After the immediate post-war years came a lull during which the different
norms of the academic and practical worlds were separately reasserted; but in
manifold Prays pressures towards;change continued to mount and from the late fifties
onwards collaborative activities have grown ir.frequency while increasing their
variely, their depth, their scope and their duration. Their persistence and elaboration
over 1 he past quarter of this century suggests that they represent a response, however
groping, to a widespread 'felt need' in the contemporary world. This need arises from
the cc.)ntinu~ouspresence in the social environment of a more rapid change-rate
sterhrning from an acceleration of technological innovation and scientific advance)
which has created higher orders of complexity and interdependence and higher level of
uncertainty than have previously characterized the human condition. These pose new
problems of adaptation for individualsand the organizations through which their
relations are regulated and on which they are dependent. New attitudes and values
must he found; old organizations require to new themselves; new organizational forms
and behaviours have to be brought into being and tested.
One way of attempting to incerase adaptive capability under these conditions is to
couple the resources of the social sciences with the competences already available in
orgar~izations.One way of effecting this coupling is through establishing a
collal~orative,action-research type relationship between social scientists outside and
independent of the organizationand those inside it who represent its various systems
and are directly concerned with its affairs. In such a relationship joint reponsibility is
accepted for brining about organizational change towards agreed ends identified
through a search process to which each party makes how own contribution, through
all decisions regarding the actual introduction of any change of whatever character
I.e~nai~is
strictly with members of the client system. Frequent evaluations must be Factors Critical to Change
made both of wliat is experienced and doue so that, on the one hand a process of social
learning can be released in the organization and, on the other hand, an increase in
knowledge be returned to the sclenti tic comniunity.
These last two aspects are of central importance for even if the available social
sciences resources werre the only constraint, the number of organizations able and
williiig to enter into through-going engagements of this type must be limited. Even if
not formally researched, every such engagement should be regarded as a research
undertaking in tlie fonnal sense, from which an attempt should be made to secure a
'multiplier effect'. This effect is beginningto be brought about in a number of ways.
For example, both tlie organizations and the social scientists concerned in such
progarammes are getting to know each other within and across national boundaries.
I
The overlapping inforrnal sets so composed liave the properties of a low register but
liiglier order system capable of influencing neighbouring sets to which their members
also belong. Tliere are now also inany more people inside organizations with varying
degrees of social science competence so that there often exists a third force, an internal
as well as an external, resource group, whose presence can accelerate the rate at
wliicli change can take place.
In tlie United States tlie mainstream of work concerned with changing organizations
derives from tlie field experi~ner~ts on various aspects of social change carried out by
Kurt Lewin ( 1 95 1 ) and liis associates during the last years of liis life. These led to a
field tlieory formulation of how to bring about social change which has affected areas
of world far wider tlian that witli whicli we are here concerned. It also led through the
unexpected effect of tlie members of an experimental workshop on community
relations to tlie discovery of the T-Groups, the innovation ofthe laboratory method of
training, tlie concept of tlie cultural island and the establishment of a new type of
social science institution - tlie National Training Laboratories (NTL) (Bradfor, Gibb
and Benne, 1964). This development was premised on the need to abstract the
individual from liis usual organizatiorial setting in order to learn experientially about
s~nallgroup processes and himself in relation to them - in the here and now'. In these
respects tlie ~netliodproved to have great power, but the effects on their organizations
of the abztract members when they returned were negligible; while the effect of
retur~iingon them were often to undo wliat had been gained. The original model ofthe
strangers' human relations trailling laboratory was not in itselfa method of effecting
organizational change. Its transformation into such a method tool another ten years to
discover.
I n Britain the counterpart ofthe Lewin change experiments was the development in
tlie war-time. Ar~iiyby a group, most of whom had been at the pre-war Tavistock
Clinic, of a form of operational field psycliiatry - a sort of psychological equivalent of
operational research (Rees, 1945). As the tasks undertaken became more complex
psychologists, sociologists and aritliropologists were added to the team.
lriterdiscipliriary collaboration was achieved in an action frame of reference, and a
cornmon set of understanding developed, based on a shared core value - commitment
to tlie social engange~nentof social science both as a strategy for advancing the base
offunda~ne~ital knowledge arid as a way of enabling the social sciences to contribute
to tlie important practical affairs of men. 'The value position was the same as Lewin's
-though the conceptual background was different - that of a psychoanalytically
oriented, i~iterdisciplinary,social psychiatry rather than of a social psychology based
on field theory.
The second pliase in the tlieme that now unfolds covers the decade which elapsed
between Lewin's death in 1974 and the fiision which took place between the training
centred laboratory ofNTL and the consulting studies of organizational change
demanded in increasing volume towards the need ofthe fifties by large-scale science-
based industries in the United States.
Concept of A second trend in work at the Tavistock entailed a shift in the unit of analysis from the
Managing Change social system to the social-technical system, which in turn required the replacement of
a closed b y an open system approach (Emery, 1959; Trist and Barnforth, 1951; Trist
et al., 1963). The studies in the Blritishcoal industry, which provided the first detailed
empirical zvidence ofthe superiority of certain forms of work organization over others
for the sanie technological tasks.,led to the concept of the joint optimization of the
technical and social systems as a goal of organizational change and raised the question
of the participation of the social scientists in the design process. An opportunity for
such partizipation arouse in collaborative work with the Sarabhai group of companies
in India (Rise, 1963). The opening phase of this project was concerned with the socio
technical reorganization of an automatic weaving shed where Rice became a member
of a (spontaneiouslyformed design team which included the workers as well as the
managrnent and himself.
i
themselves and possess their own distinctive needs which have to be satisfied. Once Factors Critical to Change
established, organizations tend to generate new ends which the nominal group goals
can be pursued.
Organizational structures are viewed as spontaneiously and homeostategically
maintained. Changes in organizational patterns are considered the results of
cumulative, unplanned, adaptive reponse to threats to the equilibrium ofthe system as
a whole. Responses to problems are thought of as taking the form of creatively
developed defence ineclianism and as being importantly shaped by shared values
which aredeeply internalized in the members. The empirical focus is thus directed to
the spontaneously emergent and normatively sanctioned structures in the organization.
The focus is not on deviations from rationality but, rather, on disruptions of
organizatio~ialequilibrium, and particularly on the mechanisms by which equilibrium i
homeostatically maintained. When deviation from planned purposes are considered,
tliey are viewed not so much as due to ignorance or error but as arising from
constraints imposed by the existent social structure. In given situations, the ignorance
of certain participatio~ismay not be considered injurious but functiagal to the
maintenance ofthe systein's equilibrium.
The natural-system model is typically based upon an underlying "organismic" model
wliich stresses tlie interdependence ofthe component parts. Planned changes are
therefore expected to have ramifying consequences for the whole organizational
system. When, as frequently happens, these consequences are unanticipated, they are
usually seen as divergent from and not as supportive of, the planner's intentions.
Natural-system theories tend to regard the organization as a whole as organically
"growing", witli a "natural history" of its own which is planfully modifiable only at
great peril, if at all. Long-range organizational development is then regarded as an
evolution, conforming to "natural laws" rather than to the planner's designs.
Orgar~izationalPatterns
The classic clrganization resembles the pyramid shape displayed in Exhibit 1. At the
top poiizt of the structure is the omnipotent manager and the workers. Within this
structure, both the chain of command stipulates that each person in the organization is
Top Managen
(Must Define and Allocate Tasks)
I Econo~llicMain
(Performance Due to Economic Motives)
Exhibit 1
to have only one superior or boss, for according to the classicist it is impossible for an Factors Critical to Change
organization to adapt itselfto the complexities ofdual command. Similarly, each
member is to have authority delegated to him which is equal to his responsibility. In
the cllan~lelsfor com~nunication,information is expected to flow downward in
accordance with the authority structure and upward only in relation to the result of
task performance.
Most ofthe classical modelists discussed this specializing in terms of assigning the
specific tasks to fi~nctionaldepartments....
Coordination. A highly specialized as this pyramid structure and the individuals
within it appear to be, the classical authors emphasis that the sum of the individual -
tasks would equal the overall organizational goal indicates their recognition ofthe
need for coordi~iationor integration. Primarily, the integration ofthe highly specialzed
efforts towards the singular and centrally determined corporate goal was expected to
be achieved because sub goals would add up to the superordinate goal. Any flaws in
this approach would be dealt with through the management hierarchy. In other words,
individuals in the organization's hierarchy with appropriate authority are expected to
delegate tasks in a manner which will turn out to be an integrated effort. Ifthis doesn't
work, they are expected to coordinate subordinate efforts.
The classicists primarily relied on this hierarchy pattern for achieving integration.
Conflict Resolution. For the most part, the classical authors ignored the topic of
conflict resolution. They believed that the structure they had designed alleviated the
possibility of conflict within the organization. The few classical autllors who did
recognize the need for tools to resolve intraorganizational conflict relied on the
philosophy that conflicting ideas or actions should be "pushed up the hierarchical
pyramid for a decision". It was the manager's responsibility to arbitrate disputes
between hostile subordinates.
The ;participativemodel
Whereas the classical model of organization is largely derived form an analysis of the-
early experience of practitioners, the participative model is derived from the work of
behavioura.1scientists. The participative model is one which many students tend to
think of as McGregor's "Theory Y".While the model's assumptions about individual
are closely akin to McGregor's thinking about people, the model has assumptions and
impli1:ation.s which are more far-reaching than Theory Y....
The ilndividual
According to the participative authors, the individuals in the organization is engaged
in a multidimensional process of development. Within this dynamic developmental
process, the individual is seen as moving through the process of maturity. As he
matures, this individual's needs, goals, and desires tend to move in a specific
direction. ?he individual seeks to be in a position of relative independence in which he
has sclme level of self-determination about his future. He begins to seek deeper, more
constant, and increasingly complex interest with which to be challenged. And he also
seeks a greater depth to his behav ioural interaction within the organization.
As tht: same time the individual is experiencing these personal changes, his process of
thinking about the organization and his position within the organization begin to
change. His time perspective begins to become more long-range in thinking about his
goals and growth in the organization. In the future, he is concerned about having an
equal or superordinate position with respect to his peers.
In other words, the maturity process described above is one in which the individual is
seeking self-actualization. The individual wants control over himself. He is developing
a sense of integrity and feeling of self-worth.
Exhibit 2
Linking Pins
Under the participative modelists assumptions, the linking pin a key fiture in the
organization. He provided a mean of transmitting information and influence
throughout the organization to achieve integration. Formalized group such adhoc
committees and staff groups ro meetings across two levels of the organizationsare
designed to augment interaction and the flow of communication and information
throughout the organization.
Organuational Change
The participative model oforganization views change as a total system condification
rather than an atomistic alteration. That is, if a manager wishes to create a change in
the participative organization, he cannot merely change one small piece of the
organization but he has to prepare the entire organization, since under the model's
linkage pin design the entire organization would be affected.
Consequently, according to the participative designers, change should start by altering
the most influential causal variables affecting what you want to change. Then, there
should be systematic plans prepared to modify all other affected parts of the
organizeition in carefully coordinated steps.
Conflict Management
The change method described above would involve each individual in the change
process. securing each person's commitment to the proposed change, and therefore
minimizing the potential for any conflict. In fact, under the model's assumptions, all
conflict is managed by the participation of the individuals in joint decision-making
period, ideas may be challenged. But once this group makes a defision, be it a four or
five or the collective "group" of an entire organization the participative theorists see
everyone as committed to the decision since they helped reach that determination. And
if confl ~ cdoes
t arise, the participative modelists believe that individuals who trust
each other and are seeking to cooperate with one another will be able to resolve this
conflict.
S~ourcreof Data
While the participative mode is closely linked to the thinking of later researchers like
IvLcGregor and Argyris, and to a greater extent on the work of Rensis Likert and his
colleag,uesat the Univesity of Michigan, the deepest roots of the participative model
are in the work of Kurt Lewin. While there are some differences in the various
re~earc~hers point ofview, they all find common ground in their universal applications
of modlel. This is, irrespective of time, size, location, or nature of business, they all
felt tha~tthe participative model is the way in which an organization should and can be
n~osteffectively designed.
The conclusion is based on the researchers' studies of organizations which have
shown that in the highest performing organization many ofthe kinds of behaviour
defined and described by the participative modelists are present.
filthor~ghit is impossible to review all the research on the participative model, Exhibit
71 is a flowchart of the general pattern of research findings.
Exhibit 3: An Introduction to Organisational Model's Factors Critical to Change
If a Manger Has:
Well-organized plan of operation
High performance goals
High technical competence
(manages of staff assistants)
And if the Manager Manages Via: I
Casi~alVariables Direct hierarchical pressure Principle of supportive
for results including the usual relationships group methods
contexts and other practices of of supervision, and other
principles of systems
I I
And if the Manager Manages Via:
I I
INVESTIGATION OF A CHANGE
Introduation
Thi:, exercise is intended to help you improve your grasp, insights and
understanding concerning the human process by which changes are made by
organizations.
Method
Think of specific change carried out in a particular organization you are familiar
with. It is ideal if you are familiar with first hand experience of the change. Try to
find a change which is recent enough to be fresh in your memory. The change need
not be earth shattering or organization-wide. A change affecting a single group is
quitr: sufficient for the purpose of the exercise.
Your task is (a) to think about the information you have on the change, especially
the human processes by which it was made, i.e., who did what with and/or to
whom, and when, in the course of the change; and (b) to analyze the information
thoroughl,y. Pay particular attention to:
(i) Cai~sesand perceptions; What were the causes of the change? Who/what
preciitated it? Who perceived what problem?
(ii) Problem solving and decision making process; in what way was the change
decided on and implemented'?Who decided on it? Who was involved, Howl
Wh,y?
(iii) Outcome: Did the attempted change work? Was the change accepted, resisted
or rejected by the people affected by it? How did they reactlbehave?
Prepare a careful systematic description of the change, for verbal presentation to
other people. in terms of causes, human processes and outcomes. You.should try to
explain why the change attained the level of success or failure it did.
--
l ~1945,
R e g i n ~ ~ iin g for about twenty-five years, we had a macro, business
environment which was essentially stable, where change was mostly predictable and
compet~tionwas moderate. There were, of course, business cycles, but the underlying
characteristics ofthe nature of the market, the major technologies and the primary
sources of competition did not change very much, or at least not in ways where there
wasn't ample notice of what was going on. The main industrial drivers of the economy
were automc>biles,electrical appliances, aircraft and aviation, chemicals, synthetic
fibres, pharmaceuticals, and radio and television.
The next twenty-five years were very different. Starting with the oil crises, the then the
other commodity shocks, resources, it~cludingmoney, became for the first time, at
least in American's history, scarce and expensive. Accompanying this we have
experienced a rising intensity of co~npetitionas transportation and communication
advances have broken down walls between countries, while deregulation did the same
for inddstries, new technologies began to make obsolete great tracts of manufacturing
assets, and the widespread, rapid availability of information and training in the latest
techniqlues equalized the capabilities of competitors.
I n the most recent period even business cycles appear to have had a different Factors Critical to Change
complexion, with the up parts being shorter and weaker, and the down parts longer
and more severe. This has led to all sorts of iconoclastic forecasts of economic doom,
and permanent changes in our economic fortunes in a lower-growth, lower-prosperity
future.
However, there is another view, a view which says that what we have experienced in
these two approximately twenty-five years periods, are the two parts of a long wave -
the first from the end oftlie Second World War until the early seventies, the
expansionary, or inflationary "A" phase; the second from the early seventies until
now, the recessionary, or deflationary "B" phase - driven by the latest in the burst of
technological innovation, and waves of population growth that have characterized the
economic history of the United States, and otlier western countries, for the last two
hundred years. In fact the pattern of economic growth since the beginning ofthe
nineteenth century with a lot of smoothing looks as in Fig.2.
4
4
L\' 3
A
v
t,
S
-7
A
I
I
Time
I 800 1850 1900 1950 3000
Figure 2 : Economic Growth Patterns in the United States, 1980-2000
There have been four long waves, each about fifty years in length. The first began just
before and end of the eighteenth century and last is just about at its end in the middle
of the last decade ofthe twentieth century. A chronology of these waves along with
their principle industries drivers is shown in Table 1.1.
Tabel 1.1 Mandel's chronology of long waver
Date
I. 'l'lie telephone. by Alesander Graham Bell 1876
2. Tlic talking machine. by Thomas A. Edison 1877
3. Tlic electric light. by Edison 1879
4. The gasoline automobile (although the first) 1889
5. The lrolley car, by Van Depoele and Sprague 1884-7
6. Pliolographic tilm and roll-holder by George Eastman and
Williams H. Walker (followed by transparent film in 1889). 1884
7. Thc linotype, by Mergenthaler 1885
8. The electric reduction turnace, by Cowles 1885
9. The recording adding machine. by Burroughs 1888
10. tligli frequency wireless. by Marconi 1896
1 1. 'fhe airplane. by Orville and Wilbur Wright 1903
The tirst challenge after such a cluster of breakthroughs in one ofrcchnical and
~nanufacturi~ig i~inovatiolito turn the new technologies into practical products and
processes. Then follows tlie entrepreneurial race to build the capacity of these just-
invented processes, needed to meet the demand for those just-invented products. Only
later, wlie~ltlie first rusli to create new supply to meet new demand is over, does the
real, new managerial cllallenge appear.
Tlie "B" phases beginning when tlie growth oftlie new industries has begun to slow,
have therefore been typified by advances in management technique, driven by the need
to manage tlie new tecllnologies and organizations thrown up by the preceding "A"
phases. I n periods where growth had slowed and competition increased, attention has
naturally turned to the cllallenge of managing the new enterprises more efficiently and
effectively to meet tlie new pressures on profitability. The last twenty years have been
just like previous "B" phases, characterized by a search for new management
tecll~liquesto lnanage tlie enterprises created by industries that drove the growth ofthe
post-Second World War economy. Here we look across the first three waves, at some
oftlie more significant things eacli oftliose previous "B" phases led us to invent in the
area of management, and thus, very broadly, at how the modern enterprise has evolved
over tlie period since tlie industrial revolution.
In the "B"phase of the first wave (1825-1 847) we had to learn how to manage the
very first, specialized enterprises of manufacturing, transportation, distribution and
financing. The corporate form itsetf came into being, and with it the beginning of the
separation of ownership and management. It was also in this period that the truly
revol~~tioriary"American system of manufacture"(the fabrication and assembly of
intercharigeable parts) was introduced. Invented in the small arms industry to lower
costs, driven by the price-based bidding for large contracts for the US Army, it rapidly
spread to other metal goods and then to the machinery to make them.
In tlie "B" phase of the second wave (1874-1 893), it could almost be said that
management itself was invented as tlie size oftlle typical industrial firm rose rapidly,
facilitated by the new, manufacturing technology and transportation infrastructure.
Beginning with the railroads the whole concept of formal organization, with its
attending element of functional specialization, coordinating, planning and control
processes. and layers of middle management, was developed to manage the first, really
Concept of The modelan corporation as we know it came into being in the third "B" phase (1913-
Managing Change 1939). It encompassed the delineation of centralized and decentralized roles, the
developml:nt of line and staff concepts of authority and, what has been described as
the greatest of all American inventions, training. This was the time when Alfred P.
Sloan, perhaps the leading organizational architect of this third "B" phase, was using
his administrative genius to turn General Motors into the largest industrial enterprise
of it:; time. The ideas ofthe product and production genius Henry Ford build the
automotive industry in its first, innovation-driven growth period. Sloan brought order
and )marketfocus to the gigantic new firms it created, and theory over took Ford in tt,
industry's second, consolidation dominated phase.
The profusion, confusion and disillusion of management techniques we have
seen in the last decade-and-a-half is not different in character to what was going
on in earlier " B phases. In the very first HawardBusiness Review, in October 1922,
nine year ; into the "B" phase of the third wave (and thereby corresponding
8
--
3.11 SUMMARY
We have been searching for new answers to new management challengzs. As in
previous cycles, this searching has had two quite different kinds of needs to meet, and
if tllere is a real complaint to be made about the way this search has been conducted, it
is not so much its sometimes misdirected enthusiasm but that we have not been very
good at lirst separating these two kinds of needs, and then seeking the right remedies
for each The first need is the problem of managing the giant corporations spawned by
the 1939-1974 expansionary era as they face the daunting challenge of adapting
themselves to a world where they are no longer the beneficiaries of sustained, rapid
growth. The second is the whole, different set ofchallenges arising from the
emergence is quite different kinds of companies in the new industries comprising the
economy's next drivers of growth. The survivors from the old economy (which,
remember, was driven in large degree by automobiles, electrical appliances, aircraft
anld avialtion, chemicals, synthetic fibres, pharmaceuticals, and radio and television)
will be those who find new ways of managing to suit the characteristics oftheir
mitturity in achanging world. The winners in the new economy will be those which
first develop appropriate forms of organization and accompanying management
techniques that fit the characteristicsofthe new technologies, and the rapidly evolving
environment they will have to deal with.
3 3 SELF-ASSESSMENT QUESTIONS
1) Dilscussthe important factors which are responsible for change.
2) D1:scribe the economic revolutions which have contributed in change.
3) Discuss different models and how they have changed their views over a period of
- - Factors Critical to Change
3.10 FURTHER READINGS -
\
"hattachary, S.K. (1 989) Achieving Managerial Excellence, MacMillan India Ltd.
t
Emery, F.E. (1 959)Characteristics of Socio-Technical Systems, Tavistock
1 Publication, No. 527.
I
Structure
Introduction
A Formal Definition of Organizational Culture
Organizational Culture and Organizational Change
The Need for Indigenous Management in Developing Countries
Characterization of Environments of Developed and Developing Countries
Thr: Emergence of Indigenization and the Change Process
Ind~igenizationand the Complexity of Management of Change
Strategic Behaviour of Strategic Developmental Organizations
Closing Cultural Gaps
Se If-Assessment Questions
Further Readings
4.1 INTRODUCTION
The culture of the factory is its customary and traditional way of thinking and of
doing things, which is shared to a greater or lesser degree by all its members, and
which new members must learn, and at least partially accept, in order to be accepted
into service in the firm.Culture in this sense covers a wide range of behaviour: the
mets~odsof production, job skills and technic1knowledge; attitudes towards discipline
and punishment, the customs and habits of managerial behavisur; the objectives ofthe
concern; its way of doing business; the methods of payment; the values placed on
different types of work; beliefs in democratic living and joint consultation; and the less
conscious conventions and taboos. Culture is second nature to those who have been
with the lirm for some time. Ignorance of culture maiks out the newcomers, while
maladjuyted members are recognized as those who reject or are otherwise unable to
use the c alture ofthe firm. In short, the making of relationships, is governed by the
extl:nt to which the individuals concerned have each absorbed the culture ofthe
organization so as to be able to operate within the same general code. The culture of
the factory consists ofthe means or techniques which lie at the disposal of the
individual for handling his relationships, and on which he depends for making his way
among, imd with, other members and groups.
Organisational Culture and
4.2 A FORMAL DEFINITION OF ORGANIZATIONAL Change: Cross Cultural
CULTUm Experiences
According to Schein (1985) the term "culture" should be resewed for the deeper level
of basic assunzptions and belie@ that are shared by members of an organization, that
operate unconsciously, and that define in a basic "taken-for-granted"fashion an
organization's view of itself and its environment. These assumptions and beliefs are
learned responses to a group's problems of survival in its external environment and its
. problems of internal integration. They come to be taken for granted because they
solve those problems repeatedly and reliably. This deeper level of assumptions is to be
7
distinguished from the "artifacts" and "values ' that are of manifestations or surface
levels of the culture but not the essence of the culture.
But this definition immediately brings us to a problem. What do we mean by the word
"group" or "organization", which, by implication, is the locale of a given culture?
Organizations are open systems in constant interaction with their many environments,
and they consist of lnany subgroups, occupational units, hierarchical layers, and
geographically dispersed segments. If we are to locate a given organization's culture,
where do we look, and how general a concept are we looking for?
Culture should be viewed as a property of an independently defined stable social unit.
That is, if one can demonstrate that a given set of people have shared a significant,
number of important experiences in the process of solving external and inernal
problems, one can assume that such common experiences have led them, over time, to
a shared view of the world around them and their place in it. There has to be enough
shared experience to have led to a shared view, and this shared view has to have
worked for long enough to have come to be taken for granted and to have dropped out
of awareness. Culture, in this sense. is a Iearnedproduct of group experience and is,
therefore, to be found only where there is a definable group with a significant history.
Whether or not a given organization has a single culture in addition to various
subcultures becomes an empirical question to be answered by locating stable groups
within that company and determining what their shared expreience has been, as well
as determining the shared experiences ofthe members ofthe total organization. One
may find that there are several cultures operating within the larger social unit called
the company or the organization: a managerial culture, various occupationally based
cultures in functional units, group cultures based on geographical proximity, worker
cultures based on shared hierarchical experiences, and so on. The organization as a
whole may be found to have an overall culture if that whole organisation has a
significant shared history, but we cannot assume the existence of such a culture ahead
of time.
This concept of culture is rooted more in theories of group dynamics and group
growth than in anthropological theories of how large cultures evolve. When we study
organizations, we do not have to decipher a completely strange language or set of
customs and mores. Rather, our problem is distinguished-within a broader host
culture-the unique features of a particular social unit in which we are interested.
This social unit often will have a history that can be deciphered, and the key actors in
the formation of that culture can often be studied, so that we are not limited, as the
anthropologist if often limited, by the lack of historical data.
By looking at evolving social units within a larger host culture, we also can take
advantage of learning theories and develop a dynamic concept of organizational
culture. Culture is learned, evolves with new experiences, and can be changed if one
understands the dynamics of the learning process. Jf one is concerned about managing
or changing culture, one must look to what we know about the learning and unlearning
of complex beliefs and assumptions that u~derliesocial behaviour.
Concept of The word "culture"can be applied to any size of social unit that has had the
Managing Change opportunity to learn and stabilize its view of itself and the environment around it-its
basic assumptions. At the broadest level, we have civilizations and refer to Western or
Eastern cultures; at the next level down, we have countries with sufficient ethnic
commonlity that we speak of American culture or Indian culture. But we recognize
immiediately that within a country we also have various ethnic groups to which we
attribute different cultures. Even more specific is the level of occupation, profession
or occup~rtionalcommunity. If such groups can be defined as stable unit with a shared
history of'experience, they will have developed their own cultures. Finally, we get to
the level of analysis that is the focus of this unit--organizations. Within organizations
we will find subunits that can be referred to as groups, and such groups may develop
group cultures.
To ~~ummarize, at any of these structural levels will mean by "culture", apattern of
basic ass.umtions-invented, discovered, or developed by a given group as it learns
to cope with its problems of external adaptation and internal integration-that has
woked wt!llenough to be considered valid and, therefoe, to be taught to new
members as the correct way to perceive, think and feel in relation to those problems.
Because !such assumptions have worked repeatedly, they are likely to be taken for
granted and to have dropped out of awareness. Note that the definition does not
include overt behaviour patterns. Behavioural regularitiescould be as much a
ref11:ction of the environment as of the culture and should, therefore, not be a prime
basi~sfor defning the culture. Or, to put it another way, when we observe behaviour
regularities, we do not know whether we are dealing with a cultural artifact or not.
The importance of understanding organizational culture and its contribution towards
malting change relevant and meaning, may lie in several issues. One needs to care very
deeply, first as an individual, second as a member of whatever kind of team one plays
on, and third as a world citizen struggling to make sense of the times one lives in.
First, there is a part of every job where the buck stops right there. And in that piece of
your job you need the insights of grand strategy. All of us face these four great
question:;. They are inherent certainly to every management position, and increasingly
to every other job in the decentralized, task-oriented, knowledge-workerworld that is
emergingas the century draws to a close. Without a clear, integrating, grand strategy
your actions are bound to be fragmented at best, and at odds with each other at worst.
In less competitive, more stable times maybe it didn't matter as much, but today it has
become ii condition for survival, let alone success.
Second, in the complex, interdependent system that is the modem organization we all
nee:d to tle aware of our organization's grand strategy, so that we can play our role and
help others play theirs. Even if we don't make the ultimate decisions, we certainly play
a piirt in getting them made for our immediate unit and increasingly, as various forms
of partic.ipativemanagement are more and more widely adopted, for the whole
organizations.
Finally, in every age man wants to believe that there is something special about this
particuleu time, that it is an important moment in history, and that there is an
opportunity to be part of some great event or movement which will leave its imprint
on the history of the human race. Something important, something special has been
going on in every age. Maybe that's true by definition - being man's response to, or
attempt ,atexploiting the change that never ceases in our world, in our ideas about it
anti in our capabilities for dealing with it. Maybe the real challenge is not so much to
try to figure out how to make our time special, but to find what's special about our
time, so that we can contribute to it, gain the most from it and above all learn to
manage it so that it doesn't manage us.
What's special about our age is, becoming pretty clear and, economically, there are organi~ationalCulture and
Change: Cross Cultural
,wo parts to it. First we are moving into a genuinely new economic era. This is a Experiences
discontinuous change that has taken place three times since the beginning of the
industrial revolution near the end ofthe eighteenth century. One more time change will
do so not because they go back to what they were doing before things began to go
wrong, but because they find superior, new answers to the four, great questions of
grand strategy suited to their new situation in a new world. The winners in the new
industries will be those who find superior answers to the same four questions, best
suited to the nature ofthe businesses spawned by the new technologies.
But most of us won't work for the relatively small number of glamour companies that
will become the icons ofthe new economy. What's more important for most of us,
than that there will be some spectacular winners that we will all wish we had joined or
bought stock in, is that every kind organization will have to be run in new ways in this
new economy if it is to survive, let alone be successful. These new ways of working,
of managing, and of leading will be very varied, far more so than in the previous era,
because one of the features of the new economy will be extraordinary diversity, as the
strategic value of focus in a huge global market provides the opportunity for myriad
specializations. The scale of the economy is now the scale of nature. The enormous
richness of species that evolution brought to nature, competition is now bringing to the
massive, global economy.
But there is also a dark side, for the historical lot of species has been extinction. The
evolutionary law that no two species can make their living in the same way in the
same environment now also comes into play with all its full force. The question is: are
we just going to await our revolutionary fate, hope that we have the skills that will be
valued and that the organizations that we are in have the capabilities to survive and
succeed? Or are we going to take control of our own destinies? The promise of grand
strategy is that it provides a way of understanding the task, and a set of tools for
tackling it that will enable those who dare to transform the way they manage, and by
so doing build their piece of one of the winning organizations ofthe new economy.
By common observation the industries that have driven the post-war economy are by
and large mature, and are being displaced as the engines of growth by a whole new
set, based on the emerging technologies of, for example, microelectronics, robotics,
biotech, material science, computer science and telecommunications.
Second, we are moving into a genuinely global economy coupled with a convergence
of attention by all the major economies on this new set of industries. This is going to
mean a gigantic clash between global, corporate entities as well as between them and
government, at the same time as there is more and more interdependence between
nations, and more and more of a common, global market-place.
Compounding these economic forces we are also facing major cuiltural clashes
between and within society after society, large and small. At the national economic
level, Western IndividualisticCapitalism faces its next huge challenge, after seeing off
socialism, with the rise of Communitarian Capitalism as it is practiced in the fastest-
growing countries in the world along the Pacific Rim. Will this next attempt to put the
group before the individual fare better than socialism? Or will those cultures become
more like the West's? This ancient struggle between man as an individual and man a
member of a group is also going on within nation after nation, whether it be the
multiple diversities of modem America1 versus the notion of an overriding, common
nationhood, the religious divisions in Northern Ireland, the ethnic hostilities in Bosnai,
or the tribal ones in Rwanda.
The claim of a few years ago that history had come to an end with the collapse of
Communism, and the apparent vindication of Western Democratic Capitalism has
proved very premature indeed China is the growing example. The competition between
. .. .-
Concept of different cultures, different to run economies and different modes of governance is still
Managing Change very much alive, and growing more, not less intensive as the world becomes a smaller
place.
The transformation that is taking place in the global economy means that all the
asulnptions of grand strategy are being thrown up in the air. It is truly time for 'back
to basics', but not in the sense of 'back to what we were doing' in easier times. That is
the one thing we know won't work! There will be new industries, new ways of
working, new ways of organizing enterprises and new ways of managing and, even
more important, leading the people who work in them.
I
The one-person business, The Family business, the small-group entrepreneur will
determine influence, power, style, due to its centralized ownership.
Size
As the enterprise grows and expands, tight ownership and control may dwindle and
other will start influencing style and culture.
High cost, high-tech, high touch, fast changing technologies like in telecommunica-
tions might require a more flexible culture than those technologies that are expensive
(machiner) where a more formal, well-structured culture will be required.
Lendersitin
-..---...r and Mission
~ ~ - ~ -
Individuals and their values will im~acton the culture of the oreanization.
". .
y Symbols )
Figure 1: The cultural web as instrument in analyzing the elements of the organization culture .,.t
- Stories: What people talk about, what matters, what is defined as success,
failure.
- Routines: What is the normal way of doing things, procedures, practices.
- Rituals: What does the organization highlight? Long service, quality, perfor- p.1"
I mance, and innovation.
- Symbols: Symbols like off~cesize, type of car.
$'
-
Higher levels of work
Organizational motivation and performance
effctiveness: with among organizational
respect to human members relative to
management' previously established standards
Organizational
Work
culture: - Shared norm, values, attitudes,
beliefs about work and
organization among managers
and employees
External
environmental
conditions: --+ - cultural
Table 4.2 Dimensions on which organizations in developed and developing countries differ
Sc~cio-culturalEnvironment
By separating developed and clevelopi~igcountries along cultural lines, one can say
that they represent two distinct cultural groups. To understand this, one must examine
what is meant by culture. Most management researchers subscribe to a view of culture
wtiicli sees it as a set of ideas shared by members of a group. A useful definition of
culture from this perspective is provided by the anthropologist Roger Keesing (1974).
He describes culture as being an individual's theory ofwhat his fellows know, believe,
and mean, his theory ofthe code being followed, the game being played. Culture is
therefore not an individual chiirtacteristic but rather denotes a set of common theories
of behaviour or mental programmes that are shared by a group of individuals.
Hofstedle carried out an empirical analysis that resulted in a concise framework of
di~nens~ons for differentiating national culures. Although the framework has some
lirnitations, it is most widely ~ ~ s by
e dresearchers and is recognized as a significant
landmark in cross-cultural research (Triandis 1982).
Hofstedie used a forty-country questionnaire survey of employees of one mulltinational
organization; 116,000 questionnaires were administered in two parts (1968 and 1972).
From these data, four dimensions were found to differentiate national cultures: power
distance, uncertainty avoidance, individualism (collectivism), and masculinity
(fi:mininity). These were described by Hofsteded (1980) as:
Power distance is 'the e,xtentto which a society accepts the fact that power in
inlstitutions and organizations is distributed unequally' (1980).
Uncertainty avoidance is the 'extent to which a society feels threatened by Organisations1 Culture and
uncertain and ambiguous situations by providing career stability, establishing Change: Cross Cultural
Experiences
more formal rules, not tolerating deviant ideas and behaviours, and believing in
absolute truths and the attainment of expertise' (1980).
Individualism 'implies a loosely knit social framwork in which people are
supposed to take care of themselves and their immediate families only, while
collectivism is characterized by a tight social framework in which people
distinguish between in-groups and out-groups; they expect their in-group.
Masculinity expresses 'the extent to which the dominant values in society are
"n~asc~~line" that is, assertiveness, the acquisition of money and things, and not
caring for others, the quality of life, or people' (1980).
The cultural dimensions manifest themselves in organizations in a number of ways.
For example, associated with high masculinity is a performance rather than a people
orientation. 'The existence of low uncertainty avoidance implies a willingness to take
risks and accept organizational change. An individualist believes that involvement
with organizations is calculative, whereas a collectivist believes involvement with
organizations has moral basis. If power distance is low, subordinates consider
superiors to be 'people like me' and vice versa.
A fifth dimension added by Kanungo and Jalgan (1980) is that of abstract versus
associative thinking, is also particularly useful in understandingcultural difference
between developed and developingcountries. This dimension can be summarized as
follows: ' I n associative cultures, people utilize associations among event that may not
have much logical basis, whereas in abstractive cultures, cause-effect relationshipsor
rational Judeo-Christian types of thinking are dominant'. Associative and abstractice
cultures, the context plays an important role in determining an individual's
perceptions, attributions, and behaviours. In contrast, in abstrative cultures these tend
to be influenced more by abstract rules and principles applied equally to every
situation. In addition, in associative culture communication tends to be more face to
face and is between people who share a large body of historical information from their
culture and society. In contrast, in abstractive cultures, communication through
technological mecha~lismssuch as the mass media as well as individual electronic
media such as telephone and electronic mail tend to be emphasized.
A culture also provides a guide for perception and attribution of others' behaviour.
Thus, whithin a cultural group, certain behaviours will generate a feeling and response
that is positive while others will generate anegative feeling and response.
An example which can illustrate these phenomena in an organizational context is the
behaviour of 'bypassing', i.e. a subordinate making direct contact with the superior of
his boss. In a situation of low power distance, this behaviour would be more likely to
occur and would not be viewed very negatively. In a situation of high power distance,
this behaviour would be unlikely to occur and, if it did, would be viewed very
negatively. Thus, in the latter situation, bypassisng behaviour would not only be
inhibited, but would in effect be punished, and thus be unlikely to recur.
--
48.7 INDEGENIZATION AND THE COMPLEXITY OF
MANAGEMENT OF CHANGE
Indigenization in mangement is a complex process. It is largely endogenous, utilizing
fix management some ofthe basic tenets of Buddhism, Confucianism, Taoism and
Hindu ism as also the 'models' set by experiences in the family and other social
i~~stitutionsstill powerful in many countries of Asia. But by and large, it is a process
in which there is positive valence towards one's own traditions and cultural heritage as
well towards the one that is 'foreign' and imported. It would be an over-simplification
to consider the two as opposite and inimical, as pitted against each other, and regard
the process of indigenization as representing a clash between tradion and modernity. In
essence, indigenization implies that what are useful and valuable in the two
systenns in the contemporary context are retained and integratged to generate a
synergic work culture that is not only congruent with socio-cultural realities but
also fi~nctionaland effective. It is an 'assimilative synthesis' ofthe two systems. As
illustrated by the case of Korean corporate culture. It results from interaction between
specific characteristics of organization (size, technology, human and material capital
ilnd organizational climate), task environment (consumers, government and labour
market) and social environment (societal factors such as education and cultural
ciimensions). It does not in any way imply that the 'foreign' has to be rejected per se
because the influence has come from outside, or that indigenous practices are goed Organisational Culture and
and are to be revived and reatined simply because they are 'local' and rooted in the Change: Cross Cultural
Experiences
culture. In short, work organization and management practices are aligned with
cultural values as well as with the needs and demands of modern technology (Sinha
and Kao, 1988).
In the context of the globalization of economy and business enterprises and the
ceaseless onslaught of television and other mass media catering to Western values and
lifestyles, a question that is automatically raised is whether, in years to come, the
process of indigenization shall continue to have relevance or significance. The
revolution brought about in international travel and communication by the marvels of
science and technology has fostered intercultural contact at the global level on a scale
undreamt of a few years ago. The world has shrunk and transformed itself into the
proverbial 'global village'.
With the globalization of business and the jet-age oftravel, individuals fiequently
move between cultures, and intermingle across national boundaries.People possessing
divergent systems of values rub shoulders and work together. This is likely to foster
the emergence of a common pattern of attitudes and behaviour in management and
organizatio~~s all over the world. Further, people with diverse cultural backgrounds
now work and closely interact in the same organization and share common
organizational goals. They tend to acquire values and behaviour patterns that
constitute the 'culture' of the organization. As a result, individual cultural proclivities
are likely to be whittled down and rounded off. That being the case, individual
behaviour is expected to conform progressively to universally prevalent norms and
6ehaviour patterns.
The fact of the matter, however, is that neither organizational socialization nor the
intermingling of people of diverse cultures brings about complete uniformity'of
attitudes, values and behaviour dispositions. Similarities may appear in some
superficial features, like dress, diction, manners and fashion. The experience of
countries that have followed the 'melting pot' policy has shown that the basic cultural
features of most ethnic groups tend to persist. What may be called the 'social traits' of
groups, learned through generations of collective experience and having functional
significance i n their respective eco-cultural contexts, continue to linger. The process of
indigenization thus remains important. Therefore, to function effectively in settings
where people have divergent perceptions, expectations and norms of superior-
subordinate relationships, it is not only useful but also essential to be adequately
sesitive to the various cultural influences and their impact on employees' behaviour
both as individuals and collectively,and to the indigenous transformations that take
place in the functioning of organizations.
Exposure to electronic mass media and the consumerism they foster are serious
matters. The influence of the media is so powerful and widespread that the possibility
of 'homogenization' erasing to a very large extent the richness and uniqueness of
different cultural groups cannot be brushed aside. The question that is pertinent is
whether, if such cultural homogenization becomes a reality, indigenization of
management--or, for that matter, indigenization as such-will continue to have
relevance.The point can be debated endlessly. It would suffice here to point out that
even in countries which boast of rich and ancient cultural heritage and continuity,
many uniformities called 'modernity' are apparent. Western management practices are
increasingly being adopted. In the Chinese-speakingworld, the influence and
importance of the family network in business is no longer what it used to be.
Confucian values and familism in the functiong of the work organizations are not as
strong as they were two or three decades ago. Need for autonomy participation in
decision-making and many other values typical of work organizations in the West are
gradually becoming features of organizational functioning in many Asian countries.
Concept of Every clilture has its inherent strength and vitality not easily swept away by external
Managing Change influences. Monotonic cultural homogenization is certainly a possibility, but is not
likely to turn into a reality given the strength and resilience of each culture. While
globalization may result in drastic reduction of diversities and emergence of
sin?ilariltiesat the surface level, the core elements of cultures would prevail and
influence the behaviour of individuals and work organizations, often in very subtle
forms. Despite globalization and the forces of homogenization, cultural proclivities
would remain, and differences in the hopes, beliefs, perceptions and expectations
regardir~gthe behaviour of superiors and subordinates shall persist and continue to
inl1uenc.ethe functioning of organizations. It is noteworthy that even European
countries which belong to 'Wt:stern' culture, and to that extent are exposed to very
sirnilar homogenizing influences, display very distinct 'intercultural7 differences in the
fie Id of management. In countries like France and Italy managers tend to emphasize
the importance of power motivation within the organization more than their
counterparts in the United Kingdom, the Netherlands and Germany. Again, managers
in France and Italy are seen as 'experts' who are expected to have answers to any
pr~~bleni, while those from the Netherlands and the United States are regarded as
'participative' problem-solvers. What is encouraged in one culture as 'participative
m,inagement' is seen in another as managerial incompetence. These countries belong
to Western culture and share Western values. Yet they display interesting basic
differences. Even in the context of globalization, awareness of the operation of
cultural factors and insight into indigenization in organizational behaviour are going
to remain effective tools for managers. The culture-technology interface will remain a
significant feature of work organizations as long as complete homogenization does not
ccme allout-and this is quite unlikely. A look at the processes involved reveals that
management and organizatiorls are culture-specificand at the same time have
tendencies towards universally valid characteristics.
--
4.8 STRATEGIC BEHAVIOUR OF STRATEGIC
--IDEVELOPMENTAL ORGANIZATIONS
Western strategic management has revolved mostly round diversification and vertical
inregration and competitive product, niche, and cost-advantage strategies. While
appropleiateto corporate organizations, these strategic options are far less relevant to
Third World strategic developmental organizations. Other strategic elements,
discussed below, seem to be far more Irelevant to the latter.
Doma in Compliance
Slrategic developmental organizations in the Third World tend to pursue national
pi iorities such as a greater output of essential goods and services, import substitution
arld greater national self-reliance, greater equity, etc. Since they are expected to play a
pace-setter role, obtaining the:compliance of the domain served to national priorities
becomes an important goal of'strategic developmental organizations. The Indian
P lannirig Commission for example develops national as well as sectoral growth targets
and monitors their achievement by the various ministries, governmental agencies, state
governments, etc. Since target setting is in part a gaming exercise, one commonplace
strategy pursued by apex organizations appears to be to pitch high tartgets in the hope
that actual achievemen1 may Sc close to the secret real targets. Another strategy
appear; to be tu reward the good performers through speedier sanctions and more
riunifizent allocation of resoi~rcesfor their projects. Often domain compliance is
sought through the participation of representatives of the domain, such as by
spc~msoringconferences of sub-strategic organizations to evolve criteria for evaluating
the latter's performance, co-opting prominent beneficiary organizations onto the
100
governing boards of strategic developmental organizations, etc. Deputing Organisationel Culture and
Change: Cross Cultural
representatives of tlie strategic organization onto the governing boards of sub-strategic Experiences
organizations, developing a cadre of professional managers for the sector through a
central training institute set up by the strategic organiszation, organizing periodic
performance reviews of sub-strategicorganizations by desk off~cersof the strategic
organization. etc. are other means of control commonly used by strategic
developmental organizations. In India, these options are known to be employed by the
government monitors of public enterprises (Khandwalla 1986). The domain
compliance alternatives may be usefully contrasted with the price leadership,
collusion, etc. ineatis employed by dominant corporations for securing compliance of
rivals (Sclierer 1980).
Learning strategy
Strategic developmental organizations often operate in relatively unfamiliar terrains.
They therefore face a real danger of initiating long-term projects or actions that are ill-
conceived in hindsight. Because of the power over domain ofthese organizations
(especially tlie power of the apex and apearhead ones), these ill-conceived actions may
result in vast waste of resources or suffering. The Indian public sector abounds in
stories of expensive projects that turned out to be duds (Khandwalla 1986).
Unfamiliarity with teclinology and the needs ofthe clientele can aggravate flawed
initial choices. Studies of successful Third World public programmes and public
sector enterprises (Khandwalla 1986) indicate that they tend to pursue vigorous
learning strategies, e.g. starting small and growing fast only after mastering
tech~iologicaland marketing intricacies; starting with only one goal and only later
adding other goals; starting with one product and diversifying only later; starting with
a pilot project and otily later scaling up; entering in a small way the post difficult
market segment and then going in a big way into the easier markets; phasing
expansions, etc. Another learning strategy commonly followed is to team up with one
or more enterprises or institutions in tlie developed countries for technology transfer.
Thus, in the 1950s HMT, an Indian public enterprise, teamed up with Oerlikon of
Switzerla~idto transfer machine tool technology to India; BHEL, another public
enterprise, later teamed with Siemens; and two Indian management institutes secured
management technology from Harvard and Massachusetts Institute of Technology.
Innovation diffusion
Given tlie responsibility for the growth and development of the domain, the strategic
organization is particularly concerned that an innovation or an improved practice is
diffused throughout tlie domain served as quickly as possible. This is in sharp contrast
with tlie corporate practice of protecting an innovation by defensive patenting or other
means (Scherer 1980). The strategic organization tries to diffuse innovation by
publicizing it, by deputing teams to organizations served to try and institutionalize it
in them, by training change agents working in these institutions; by codifying 'good'
management practices in a sector in tlie form of guidelines (BPE and BHEL 1976),
etc.
Seeking Autonomy
Many strategic developmental orgaiiizatio~isseek respite from bureaucratic pressures
and political pressilres in order to pursue tlieir missions more forcefully. Their
bureaucratic and political masters also seem to have begun to realize that operating
autonomy to pursue public policy objectives is essential for mission accomplishment.
Thus, a nulnber of strategic options have begun to emerge for increasing their
autonolily witliout decreasing their accountability for mission accomplishment. A
Concept of
under which the govenment and the strategic developmental organizations sign a
Managing Change fonrtal document setting forth their respective obligations towards one another. A third
idea is to bring the culture of the well-managed strategic developmental organization
into the governmental bureaucracy, by seconding its chief executive to a monitoring
role In the government (Khandwalla 1986). Several Indian public enterprises have
learnt to increase their autonomy by building up their credibility with government
monitors. 'Theyseek this by involving government monitors in their problems, by
keeping themqegulrly posted on their actions, by networking with important officials
and politicians within the government structure, and by showing good performance
vis-a-vis strategic goals of the government (Khandwalla 1986). Some have sought to
decrease their financial dependence on the government resorting to national and even
capital markets for funding agencies.
NOTES
UNIT 5 EMERGING ORGANIZATIONAL
FORMS AND STRUCTURES
5.1 Introduction
5.2 2 1 st Century Organizational 'Trends
5.3 Organizational Design
5.4 Organization Structure
5.5 Different Types of Organizational Structures
5.6 Amoeba-shaped Organization
5.7 Vertical~Tal
l Organizations
5.8 Horizontal/FlatOrganisation
5.9 Inverted Pyramid
5.1 0 Orcliestra
5.1 1 Clilster Organization
5.1 2 Virtual Organization
5.13 Matrix Organization
5.14 Functional Organization Structure
5.15 Product Organization Structure
5.16 Self-AssessmentQuestions
5.17 Further Readings
5.1 INTRODUCTION
Organizatio~is are economic and social entities in which a number of persons perform
multifarious tasks in order to attain common goals. ~r~an'izationsare effective
instruments which help individuals in accomplishing their personal objectives which
cannot be achieved by them alone. According to Argyris, organizationsare usually
formed to satisfy objectives that can best be met collectively.
Globalization
I ncreasiligly globalized sales, manufacturing, research, management.
Movement from direct exports to having sales offices in different countries
spread across the globe.
Increasingly globalized labor market.
Forms of Organisationnl Due to:
Change
wduced cost and improved quality of international transportation and
* communication.
<*
search for unsaturated markets.
exploit regional cost and expertise differences.
Diversity
Wcrkforce getting more heterogeneous sexually, racially, culturally, individually,
etc.
Source of both innovation and conflict/communicationproblems.
Need to cope with different styles of interaction, presentation, dress, physical
appearance.
Due to:
changing demographics.
globalization of the labour market.
Organizational systems and processes and people that can respond differently to
difirent situations
Fewer detailed rules and procedures
Greater autonomy, encouragement for initiative
Cus tomizable employment relationships: telecommuting,job sharing, pay for
skills
Lifetime employability, not lifetime employment
Due to:
differentiated customer needs- filling them exactly is source of competi
tive advantage
increasing diversity in workplace
increased pace of change in technology and markets
Flat
Fewer levels of management,
Workers empowered to make decisions
Fewer differences in responsibility(not in pay) across levels
Due to:
need for speed, which makes it helpful to empower employees to make
decisions, which means fewer managers are needed
changes in information technology mean less need for the communication
and control functions of middle managers
globalization means intensified competition, which increases the need to cut
costs
Netvvorkimg
Direct communication across unit & firm boundaries, ignoring chain of
comrnand
Cros!s-unitteam structures
a Outsourcing & downsizing ~ m k r ~ i h~ rg g a ~ f u t i o n a l
Forms and Structures
a Strategic alliances with competitors and others
a Now have firms that are your competitors, customers and collaborators all at the
sanie time
a Close coordination among firms (e.g., JIT systems) and information sharing
(open computer systems)
a Across the board contact with customers, not just official boundary spanners
a Decentral ization
Due to:
a new information technologies, especially groupware, client-server,
distributed computing
a fast changing customer needs and competitor offerings
a more complicated products require better integration of manufacturing,
design, and marketing functions.
Here is a diagram linking up all the concepts above.
The dashed arrows with blue heads mean, "creates the need for", while the solid
arrows with black heads mean "causes" or "enables".
Because of al l tlie above stated trends there is a strong need to design and redesign the
organizations again and again from time to time in order to keep up the efficiency and
effectiveness.
,
I
Work Specialization: This is also called division of labour. The degree to which
tasks in the organization are sub-divided into separate jobs.
Departmentalization: The basis by which jobs are grouped together.
Chain of Command: The unbroken line of authority that extends from the top of the
organization to the lowest echelon and clarifies who reports to whom.
Span of Control: The number of subordinates a manager can efficiently and
effectively direct.
Centralization and Decentralization: Centralization refers to the degree to which
decision rnaking is concentrated at a single point in the organization. Decentralization
---
is the degree to which decision discretion is pushed down to lower level employees.
Formalization: The degree to whizjobs within the organization are standardized.
--
5.5 D [FFERENT TYPES OF ORGANIZATIONAL
STRUCTURES
Spaghetti Organization
It is a forrn of boundary-less organization. General Electrical Chairman Jackwelch
coined thr: term boundary-less organization. The boundary-lessorganization seeks to
eliminate the chain ofcommand having limitless span ofcontrol and replace
departments with empowered teams. The main objective of a boundary-less
organizatl~onis to eliminate vertical and horizontal boundaries within the company and
breakdown external barriers between the company and its customers and suppliers.
By removing vertical boundaries, management flattens the hierarchy. Status and rank "
are rninirr~ized.This way the organization looks more like a silo than a pyramid.
These boundaries can be eliminated by creating cross-hierarchical teams, participative
decision-making practices and the use of 360-degree performance appraisals.
Horizontal boundaries can be reduced by replacing the functional departments with Emerging qrgmhtional
cross-functional teams and by organizing activities around process. These boundaries Forms and Structures
can also be cut through job rotation of people into different functional areas. This
turns specialist into generalists.
The external barriers can be removed with the help of globalization, strategic
alliances, customer-organizationlinkages and telecommuting.
The one common technological thread that makes the boundary-less organization
possible is a networked computer. They allow people to communicate across intra
organizational and inter organizational boundaries.
Advantages
1) I n the absence of vertical and horizontal boundaries communication is fast in the
organization and also decision making.
2) This kind of organization structure promotes participative decision making which
motivates the employees and develops there analytical and creative abilities.
3) This structure provides for job rotation, which leads to the development of the
employees in all the functional areas.
4) The reach of the organization spreads, as there are no external boundaries.
Disadvantages
1) I n the absence of vertical and horizontal boundaries the relationship between
superior and subordinates is not clearly established.
2) Tlle authority and responsibility are not clearly delegated as a result of which,
there may be confusion regarding"Who is responsible for what" in the
organization.
Advantages
19 Flexibilty in its operations.
2) The freedom to take decisions in the organization motivates the employees.
Disadvantages
I) As there is no middle level management the flow of communication from first
line employees to the top management may be affected.
1
2) More number of operating units may drive the organization into confusion due to
lack of cooperation and coordination.
i
Forms of Organisational
--
Change --V:ERTICAL / TALL ORGANIZATIONS
,5.7
Ve~.tical/tall
organizations refer to increase in the length af the organizatian chain af
connmand. The hierarchical chain of command represents the company's authority-
accountabilityrelationship between superiors and subordinates. Authority and
responsibility flows from the top to the bottom through all the levels ofhierarchy. 1
Presided
Advantages
1) 111this structure the most important people called customers are given the first
preference. This way it becomes very easy to understand their preferences and
plan the strategies of the organization accordingly.
2) Front line employees are given more responsibility and authority in the
organization than the top management because they are closest to the customers.
3) Delcentralization of authority and responsibility place a very important role in
prompt and timely decisions.
4) The inverted pyramid structure motivates the employees as they are placed in a
berter position than the top management.
Disadvantages Emerging Orprnizntional
Forms and Structures
1) This kind of structure may be dangerous because the role of top management is
been shifted to supporting one from that of commanding one which ultimately
leads to direction-less organization.
2) In this structure there is absence of clear authority and responsibility levels and
as a result of which people become confused and the business veers out of
control.
3) Frontline supervisor cannot make strategies regarding organizations even though
they have proper understanding of the customer's because they are not equipped
to do so.
5.10 ORCHESTRA
A firm styled as an orchestra could be an efficient management structure (Richardson,
1990). The conductor (CEOItop management) and the team (employees/managers)
operate to the same score, though each one operates a different instrument and at
different times. Everyone operates as a player in hislher own right and plays directly
to the CEO without an intermediary but with a high level of integrated effort
(synchrony). It is an organization of specialists of different kinds directing themselves
and doing different,kinds of work (the roles and responsibilities of each is clear in
relation to hislher own task and that of others).
It is more an information-based management system than an authority-based
bureaucratic command-control one. The objectives are clear and are translated into
particular actions. 111the context of a business organization, it involves defining the
goal (score) to be achieved and delineating performance expectations for the
enterprise. subsystem, and individual around organized feedback allowing for the
exercise of self-control (Drucker, 1988). Each one is clear as to what information he
needs to have topel-form better and of the informational dependencies within a role set
(i.e., wlio depends upon me for what information and on whom do 1depend in turn?).
Layers of bureaucracy are thus trimmed down.
The organization may be turned upside down, where information comes to employees
first and the top management does not give orders but only asks the right questions.
Advantages
1) There is a lot of cooperation and coordination between the employees and the
management.
2) The objectives are clearly defined.
3) The flow of information in the organization is perfect because it is more of
information - based management rather than the bureaucratic command - control.
Disadvantages
1) A perfect synchroi~ycannot be expected from the top management and the
employees always because there may be some hindrances in communication flow
as there is no middle leveI management.
2) The authority responsibility aspects are not clearly defined.
3) The control of whole organization by the top management alone without the help
of middle level management may not give good results.
--
Forms crf Organisational
Change --
5.11 CLUSTER ORGANIZATION
An organization may be restructured around certain clusters that are inter- locked or
networked representing a cluster organization. Each cluster consists rrf a group of
people drawn from different functional and staff areas working together cm a semi
permaiient ba~isto accocnplishcertain preset goals. A cluster handles its
adm~nistrativcfunctions, develops the required expertise, relates to customers, and is
accouiltable for its actions. Each individual within the! cluster has responsibility for
hi:$particular area of activity and also of the performance of the cluster as a whole.
Individ~lalclusters in an organization may differ in size consisting usually of 30 to 50
members to provide for a broad range of functional and staff expertise. Within itself a
cluster !nay have smaller teams of 5 or more individuals to facilitate its work.
A typical cluster organization would be: a number of interlocked circles with the CEO
at the center and the senior and middle level management in adjacent circles, while
others are grouped around in a number of independentclusters (each duster with a
spxific mission or purposv).
Atlvant ages
1) Well defined responsibilities.
2) This structure empowers the employee by fostering individual and team work.
Bbadvautages
I) Employees in this structure work on a semi permanent basis. The state of being
no1 ernpIoyed on a permanent basis by the organization may depmss the
employees and kill their initiative.
2) A c:luster, which manages all the activities associated witb accbmplishingtheir
corporate goals may become 'Vack of all, master of none".
3) There is lack of formal hierarchical structure, which may lead to direction-less of
the organization.
--
--
5,112 VIRTUAL ORGANIZATION
A iirm i:; said to be having a virtual organisational structure when it contracts out
alnlost all functions. The only function retained by the organization is the name and
the coorrjination among the parties. A virtual organization might not have even have a
permanent office.
Esl)eciallycommon in the fishion industry where you can have clothing labels that are
just that. Say the labd is "John Taylor". The label has a clear identity in thk public
eye, but when you try to track down the John Taylor company, you find there are no
Johin 'ra!dor designers, no John Taylor manufacturers. It's just 3 people in an office
subcontractingout all fbnctions.
It is a nettworkof firms held together by the product of the day. It is an open-ended
system of ideas and activities and firms.
- \
1) These structures enable f<)rdoing business with less capital, less human
resources and other inputs.
2) These structures provide flexibility of operation.
3) These structures develop ancillary industries.
I4
Disadvantages Emerging Organizational
Forms and Structures
I) Companies do not have strong foundations or strengths in their operations.
2) Orga~lizatimshave to heavily depend upon outsourcing.
1 3) Failwe in the network results in failure of the organization.
I
5.13 MATIUX ORGANIZATION
Matrix organization structure possesses a dual chain of command. Both functional
and project managers exercise authority over organizational activities in a matrix
structure. The strength of the matrix lies in his ability to facilitate coordination when
the organization has a multiplicity of complex and inter dependent activities. The
direct and frequent contact between different specialities in a matrix can make a better
cornmunicatiori and more flexibility. Information permeates the or~nizationand more
quickly reaches those people who need to take account of it.
Managing Director
--
General Manager
1
I I I
Manager Manager Manager Manager
-r Finance
aumptl Production Marketing RbD
PZsMlum
I P
I I I
Finance Production Marketiag R&D
Specialists Specialists Specialists Specialists
Ii Manager ,
I
I
Production
I Manager Specialists Specialists Specialists Specialists
Matrix also facilitates that efficient allocation ofspecialists. When individuals with .
highly specialized skills are lodged in one functional department or product group
thdr talents are monopolized and underutilized. The matrix achieves the advantages
of economies of scale by providing the organization with both the best resources and
an effective way of ensuring their efficient deployment.
Advantages
1) This structure has considerable flexibility. The personnel can be transferred
from one project to the other depending upon the need of the project.
2) The lower level functional employees are highly motivated and satisfied with
theirjob, as they are involved in decision making.
3) Promotes making trade-off decisions on the basis of, "what is the best for
organization as a whole".
4) Encourages cooperation, consensus building, conflict resolution and coordination
of related activities.
5) Makes efficient use of functional expertise.
Forms o f Organisational Disadvantages
Change
1) It is very complex to manage.
2) The authority is so much shared that it can result in misappropriated amounts of
time being spent on communications.
3) This structure violates unity of command.
4) Requires too much time for meetings and collaboration.
5) It is h~ardto move quickly and decisively without getting clearance from many
other people.
--
5.141-IWNCTIONAL ORGANIZATION STRUCTURE
-
In this structure each functional department consists of those jobs in which employees
perform similarjobs at different levels. The commonly used functions are: Marketing,
Finar~ceand accounting, Human Resources, Manufacturing, Research & Development
and Enginc:ering.
EL Chie!
Manag
I
T'
I--
Produeti011 Engineering
Control
Advantages
1) In-depth specialization and focussed concentration on performing functional
tasks can enhance operating efficiency and development of core competencies.
2) This type of structure promotes maximum utilization of up-to-date technical
skills imd enables the form to capitalize on specialization and efficiency.
3) This structure promotes common values and goals among employees ofthe department,
facilitatingcooperation and collaboration with the functionaldepartment.
4) Enhances operating efficiency where tasks are routine and repetitive.
Disadvanta~ges
1) l'he department members will see the activities from the narrow viewpoint of the
department rather than the total organization. This aspect results in absence of
inter-departmental coordinatio~land cooperation.
2) l'he narrow specialization kills the initiative of entrepreneurs and the zeal of
innovartivenessand creativeness.
3) 'I'his kind of structure promotes over specialization and narrow management
viewpoints.
4) ?'his k ~ndof structure is effective only in stable environment.
5) ?'his also results in absence of accountability.
Emerging Orgrniutlonsl
5.15 PRODUCT ORGANIZATION STRUCUTRE Forms and Structures
Advantages
1) This organization structure is appropriate to those forms which produce multiple
products.
2) Coordination among functional areas like product design, producing, marketing
is effective as all functions are formed in the same department.
3) Responsibility and accountabilityfor market share, sales, profitlloss is clearly
fixed.
Disadvantages
1) Each department will have production, marketing, human resource, finance
managers, secretarial and.supporting staff, computers and testing equipment. As
such specialized personal and equipment cannot be procured.
2) Inter departmental conflicts arise regarding sharing of common resources,
allocation of common and overhead expenses etc.,
Managing
Director
General Manager
Stucture
6.1 Introduction
6.2 History of Mergers
6.3 Concept
6.4 Types of Mergers
6.5 Reasons
6.6 Purpose of Merger and Acquisition
6.7 Role of Agencies
6.8 Legall Provisiol~s
6.9 Altel-nativesto Mergers and Acquisitions
6.10 Summary
6.1 1 Se!f A swsclnent Questivrlr
6.12 Further Readings
6.1-
- INTRODUCTION
Managing change is probably the single most important issue today for all those who
manage ol-ganizations.Technological changes and increasedglobal competition caused
by liberal ~zationand deregulation have placed greater demands on organizations to be
flexible, responsive and efficient. Around the world, organizations big and small face
the inevitiible prospect of change. Change takes many forms and it involves
simi~ltaneouslymanaging resources, processes and emotions, which makes change
complicaled and a challenging task. For a manager or an administrator with any
organizat on, grappling with and managing change is probably the single most
important issue. Management theory and practice has given change theories, models
and tools but intense competition forces organizations to grapple the change which is
cha~lging, faster than change itself. One of the successful ways of meeting such
contingencies is restructuring. The current restructuring modes all over the world
appear to be the phenomenon of mergers and acquisitions.
Evei-y merger or acquisition goes through a learning process of its own. Peter Drucker
(198 1 ), fclr instance, provides a set of "rules" of successful acquisition. If managed
properly mergers and acquisitions (M&A) can help the organization take a path of
growth and prosperity. This unit highlights the concept, history, types, reasons,
purpose, role of agencies, legal provisions and the alternatives for mergers and
acqi~isitions.
The field of M&A is undergoing rapid change, and it has reached new heights in the
1990s that eclipses the peaks set in the 1980s. This period witnessed the development
of the most unusual merger wave in the US economic history. Large scale mega I
mergers became common place. Hostile deals captured media headlines on regular Mergm and
Acqulsltlons
basis. This wave collapsed in the late 1980s,and many ofthe highly leveraged deals
of that period became fashionable in the early 1980s. However, just when it appeared
that tlie frantic pace of mergers have clearly ended, the trend got reversed and a new
period of M&A began in 1993. The history of the "merger wave" as it is termed,
could be seen in tlie history of the USA. These periods are characterized by cyclic
activity, that is, high levels of merger followed by periods of relatively few mergers.
Hisi:orically speaking most of these tenns originated either in the American or British
usage. Mergers, Takeovers, Antalgamationsand Management Buy Outs are typically
Brilish. While the corresponding American terms are Mergers, Acquisitions,
Cor~solidationsand Leveraged 13uyOuts respectively.Sometimes the broader terms
Reorganization, Reconstruction, Restructuring are also used.
On the surface, the distinction in meaning may not really matter, since the net result is
often the same -two companies (or more) that had separate ownership are now
opera tin^; under the same roof, usually to obtain some strategic or financial objective.
Yet the wrategic, financial, tax and the even cultural impact of the deal may be very
different. depending on which transaction is made.
A merger typically refers to two companies coming together (usually through the
excliangr: of shares) to become one. An acquisition typically has one company - the
buyer - who purchases the assets or shares of the seller, with the form of payment
being cash, the securities of the buyer, or other assets of value to the seller. In a stock
purchasc~transaction, the sellers shares are not necessarily combined with the
buqers existing company, but often kept separate as a new subsidiary or operating
division. In an assetpurcha.\e transaction, the assets conveyed by the seller to the
buyer become additional assets of the buyers company, with the hope and expectation
thal the balue ofthe assets purchased will exceed the prize paid over time, thereby
enhancing shareholder value as a result of the strategic of financial benefits of the Merhn and
Acquisitions
transaction.
The term takeover represents a transaction where cash changes hands in exchange for
shares. Though every such share transaction in itself is by consent, in so far as the
' existing controlling interest are concerned and whose control over the corporation is
being displaced, a takeover attempt may be with their consent or it could be hostile to
their interest. The former is rgferred to as consent takeover, and the later referred to as
hostile takeover.
Leveraged Bu-y outs, a term is typically American, whose British equivalent is
management buy out. The term is so used because of the high degree of leveraging
that goes into the acquisition. Leveraged buy out is taken to mean any takeover that is
effected with a high degree of borrowing.
LeverageclMergers is a term employed to describe a transaction that is highly
leveraged in acquisition. That is, the consideration is paid in a combination of cash
and securities.
Management Buy outs are conducted between existing managers of the corporation
and the dominant or controlling shareholders. Since the managers do not have the
where-with-all for heavy investments, their purchase is highly leveraged through
investment bankers, often at high rates of interest. The payment could either be in cash
or securities including the combination of various types of securities. Taken together
mergers, acquisitions, takeovers, amalgamations, management buy outs are all part of
the strategies for expansion and growth of corporations.
6.5 REASONS
The merger mania of the 1990s has certain themes and trends and emerged due to a
few key reasons. They are :
'
a) M&A are clearly more strategically motivated. Jobs are gained, not lost, as a
result of these deals. Experience shows that companies were built and not
destroyed. 111fact access to the contemporary intellectual capital appears to be
the primary motivated for the deal.
Forms of Organisationnl b) The Financing behind the deal is more sound and secure than ever before. Buyers
Change
use tlheir stocks as currency and sellers gladly accept this form of payment in lieu
of or in addition to cash. This forces both parties to work together on a post
closing basis to enhance shareholder value. Third party financing is additionally
available as never before with commercial and investment bankers competing to
finance these trans$&ions.
c) M&A are driven in many cases by the trends in a given industry such as rapidly
changing technology, fierce competition, changing consumer preferences, cost
effective products and services, shrinking resources etc.
d) Somc: deals are motivated by the need to transform corporate identity
following a crisis. A change in identity helps the company enhance its
reputation by M&A.
e) Many deals are fuelled by the need to spread the risk and cost of developing new
technologies, research, gaining access to new sources of energy etc.
f) The "global village" has forced many companies to explore M&A as a means to
develop an international presence and expanded market share. This market
peneirration strategy is often more cost effective than trying to build an overseas
operation from scratch.
g) Some recent M&A come about with the recognition that a complete product or
sewi'ce line may be necessary to remain competitive or to balance seasonal or
cyclical market trends. The retail, hospitality, entertainment industry etc have
been in response to consumer demand for "one stop shopping".
h) Many deals are driven by the premise that it is less expensive to buy brand
loyalty and customer relationship than it is to build them from scratch. In today's
economy, goodwill represents an asset that is very important but which is not
adequately reflected on the sellers Balance Sheet. Thus, these can be taken care
of in M&A.
i) Lastly, some buyers even look up on an acquisition as an alternative to starting a
new line of business, making those changes necessary to meet the buyers long
term objectives.
Thus these: are some of the reasons for mergers and acquisitions.
6.10
- -SUMMARY
The: wave of consolidations, mergers, acquisitions, corporate restructuring~have
reached 21 record height in both (developedand developing countries, thus generating
considerable interest amongst the lay persons as well as those involved in the activity.
The:field has got inter-twined in public image so much that all these terms have come
to be used interchangeably and used to manage change in the corporations.
6.1-
- 1 -
!SELF-ASSESSMENTQUESTIONS
1) Describe the reasons and the purpose of mergers and acquisitions.
2) Explain the role of %: ffererit agencies in the formation of mergers and
. ..ic;tions.
3) Explain the strategies which could be used other than mergers and acquisitions.
--
6.12 IFURTHER READINGS
Alle:n,Jul ius Corporate Takeovers: A Survey of Recent Developmen{s and Issues.
FVashington D.C: CRS, 1987
Brooks, John, The Takeover Game, NewYork: E.Dutton, 1987
Marren, Joseph Mergers anddcquisitions. Illionois: Dow Jones Irwin, 1985
Nelson, Ralph Merger Movenlents in American Industry: 1895 - 1956, New Jersy:
Princeton University Press, 1959
Caughan, Patrick A. Mergers, Acquisitions and Corporate Restructurings New York:
John Vliley, 1996
Venna, J.C., Corporate Mergers & Takeovers, New Delhi: Bharat Publishing House,
1993
a r Rajas Parchure Mergers and Takeovers in India, Pune: Times
Ashok K ~ ~ mand
R.esearch Foundation, 1990
Andrew J Sherman Mergers anddcquisitions New York: AMACOM, 1998
UNIT 7 TURN AROUND MANAGEMENT
I Objectives
Structure
7.1 Introduction
7.2 Concept
7.3 Kinds of Turnaround Situation
7.4 Steps Involved in Turnaround Management
7.5 Examples of Activities in major Turnaround Situations
1 7.6 Categories of Turnaround Management
7.7 Turnaround in Different Contexts
7.8 S u ~ n l n a j
7.9 Self-Assessment Questions
7. I0 Further Readings
7.1 INTRODUCTION
Manage~iientof cliange is and will continue to be a natural concern for most
organizatiolis in India. This is because the business environment in India is launched
into a process of irrevocable change in 1991 by the liberalization policy of the Indian
Government. This has exposed the Indian organizations to global competition,
teclinological change and increased customer demands. Consequently, the patterns of
organizational change over the last few years have thrown up issues of diverse nature.
One ofthe most important effects of these.changes has been the industrial sickness
and the resultant turnaround strategies of organizations. This chapter would highlight
the concept of turnaround management, the kinds ofturnaround situations, steps
involved in a turnaround, along with turnaround in a developed and a developing
context.
Industrial sickness is a phenomenon of the very process of industrialization in which,
well inanaged units grow, while poorly conceived, inefficient and marginal ones
disappear from the industrial scene. The era of industrialization was also a witness to
constant technological advancement over a period of time. However, industrial
sickness cannot be taken essentially as an inevitable consequence of technological
progress or product or process absoluteness but in most cases it is attributed to the
manage~nentfailure. An organization on its development path adopts business
strategies, which provide the basic direction for a host of supporting actions. They
are the basis of coordinated and sustained efforts directed towards achieving Iong-tern
business objectives. The accuracy of its forecasts, the competence of its
implementation efforts, the response of competitors, the cooperativenessof the
stakeholders and the receptivity of customers together combine to promote or restrain
the success of the strategy in the market.
Forms of Organisational Business Strategies fall into Three Categories:
Chanee
a) Internal growth strategies with five sub strategies - concentration, market
development, prod~ctdevelopment, innovation and joint venture to achieve
growth in the firms business.
b) Ext'ernalacquisition growth strategies - horizontal integration, vertical
integration and conglomerate diversification to attaip a cheaper way of
expanding than building a facility,
c) Disinvestment strategies comprisingturn around, retrenchment, liquidation, etc.
Most of the times, organizations have opted for a combination of these strategies
rather than the any isolated approaches. Moreover, these strategies are most
effective when they are employed together.
Modern organizations are concerned with turnaround strategies. Organizations
'Turnar2.round'when a firm becomes over extended in a given market, whkn its efforts
eco~iomioreversal because of competitive or other environmental pressures, when
cuaomer demand for the products or services declines, the firm may chose to
withdraw, some or all of its resources from business ventures or attempting for
turnarout~dsurvival - in such a situation the turnaround strategies come into the
picture. The concept of 'turnaround' assumes significance here.
7.2, CONCEPT
The co~iceptof turnaround is a recent phenomenon. When a weak company is
acquired it is rapidly subjected to turnaround management. Also when a sound and ~
prolitabla company has been purcliased, it is subjected to some form of turnaround
management, to realize the synergies so as to increase profits and shareholder value I
whish goes with a major acquisition. Peripheral non-core activities are often sold out
to concentrate on the organizations core business to enable the company to increase its
market sbare.
Cross border acquisitions, mergers and turnaround have become increasingly common
during the 1990s. Merger mania as it is often referred to, has always been an area of
attention to the corporate, media and the public alike, though in most situations most
of them failed to meet the pre-merger expectations (Arpi and Wejke 1999). Hostile
takeovers, which was an unacceptable phenomenon in the European market has
suddenly started to happen and given rise to scores of turnaround managers, who
strive for a combination of maximum speed, minimum mistakes and fast results. This
lias lead to the interest on International turnaround management.
The term 'turnaround' is also confused with the downsizing are restructuring
Altl:ougli, downsizing might be part of a turnaround plan, it does not, by itself,
constitute a turnaround. Even drastic downsizi~igcannot guarantee a sick company
survival and prosperity. The term turnaround management primarily refers to
companies or other organizations in distress. Such organizations are normally 'sick'
when measured on different criteria. They often display life-threateningsymptoms
and the urgent need for restoring them to health through a whole battery of
intel-ventions- both hard and soft. Arpi and Wejke defined turnaround management
as 'the systematic and rapid implementation of a range of measures to correct a
seriously unprofitable situation. It might include dealing with a financial disaster or
measures to avoid the highly likely occurrence of such a disaster'.
The typiczl turnaround situation is not characterized by the sudden impact of
completely uncontrollable outside force. The undesirable situation must have
developed from within over a number of years. Most of the time it is the result of a
complex web of unfortunate strategic decisions and mismanagement along with
inadequate response to the companies market position in competitive situation. Reneef Turnaround Management
Fellman stated 'only one sign all by itself does not mean major trouble. It is a set of
multiple problems that bring a company to the brink of disaster'.
Turnaround management includes an element of crisis management. In medical
parlance, the term 'crisis' often indicates that a turning point has been reached. A
Company needing turnaround management has usually reached a highly crucial and
decisive moment in its life, which could either be for better or for worse. The
turnaround manager is simply there to make sure that the turning point is for the
better, and not the beginning of an end. The turnaround mission does not conclude if a
bankruptcy has been avoided or because the most acute crisis is over. Turnaround also
worries about the long-term health prospects of the recently saved patient. This
means thabthe turnaround managers can critically review and also radicalljl revise the
organizations business mission statement. This makes sure that the goals and broad
directions contain therein represent a valid, and attainable blueprint for the future
company. The definition of turnaround management can thus be broadened to include
this long-term ambition as 'to also provide the troubled company with excellent
chances to survive and prosper in the longer term -although it will then most likely be
operating within the confines of a radkally redefined business mission'.
Turnaround activities are also triggered by acquisitions, mergers and privatization.
The activities most commonly initiatedof late are:
a) when a smaller company has been acquired
b) when two conipanies in the same industry are merged
c) when a state hold company just been privatized
In such situations, the tenn turnaround is not necessarily used. Such situations might
use terms like restructuring, downsizing, avoiding duplication of eforts, realizing
synergies, reducing over capacity, etc. Whatever are the terms used most of the
actions taken are those typically found in any turnaround case.
Turnaround management has also been looked at from the domestic and international
perspective. Normally, the cross border dimension is reflected in international
turnaround wliicli otherwise is referred to as domestic in nature. For example, Merita
Bank of Finland got merged with Nordbank of Sweden which is referred to as an
international turnaround situation where as in the Indian context the merger of Times
Bank with HDFC Bank is more in the nature of a domestic turnaround situation. The
mega mergers, for instance HP with Compaq also is rapidly increasing leading to
megaturnaround situations.
Turnaround has bee11popularly referred to as a recovery of declined performance,
decline being relative to tlie benchmark like GNP growth or industry growth or
previous performance ofthe organization (Khandwalla, 2001). Such definition of
turnaround is, however, troublesome as it does not fix the quantum of decline, period
of recovery, performance, etc. Thus turnaround was defined as 'recovery to
profitability from a loss situation'. Such precautions have ruled out fake or transient
turnaround but did not rule them out totally.
Structure
8.1 Introtluction
8.2 Reascws For The Process Change
8.3 The E'rocess To Manage The Change
8.4 Sumrnary
8.5 Self-~tsessmentQuestions
8.6 ~urther~ e a d i n ~ s
8.1
-7
INTRODUCTION
Unleashing a continuous improvement initiative of some kind has become the norm for
a large cross section of organizations throughout the world today. The aim is often to
reinvent the:mselvesas a cut above competitors, fine-tuned to customer needs and
adapt to changes in business conditions. A number of techniques and approaches can
be used to support to this process such as: SWOT analysis, right-sizing, Organisation
Analysis and Review (OAR), Total Quality Management, Six Sigma, Breakthrough
Manal;emeiit, Reengineering, Operational Excellence, etc. Nevertheless, at the heart of
each of these programs remains the ultimate object of achieving breAk through by
funda~nentaIly changing the way business is executed.
, Change is a process, which progress over a period of time. Whilst change itself
always carries with it improbability, the process of change should be managed by an
effective pli~n,unambiguousrules, processes, protocol and systems. Educational
researchers have defined the change process for both organizations and individuals as:
Change is not a single event; it takes time to plan for change, try new practices,
and incorporate new programs effectively.
Change can energize, act as a catalyst, and build a sense of community.
The process of change may not be embraced by all. Conflicts are a natural part
of the change process.
Change begins with the individual and will not be manifested in the organization
until ir~dividualsbelieve in the change and understand the reason which
prompted change.
I~ivolvementin the change process is individualistic and ultimately the responsi-
bility clf each person within the organization.
When individuals have clearly defined goals and expectations along with an
understandingthat the change can be effective, success and more acceptance of
the change process can occur.
Activity 1 Process Based Change
According to Professor Van den Broeck, Chairman of the Competence Centre People
and Orgsnisation: "Whenever an organisation embarks on a process of change, it first
needs to be sure of the direction it wants to take. After all, within the world of man-
agement thei-eare numerous systems to introduce order and standardisation-which
may be the right option in many cases-but one may decide to opt for greater staff
autonomy in order to achieve a higher degree of flexibility and diversity. To a large
extent, this choice will depend on the type of duties the members of staff are expected
to carry out."
Fullan ( 1993) lists eight "basic lessons" that can be learned about the process of
change and improvement: -
Lesson One: You can't mandate what matters (the more complex the change, the less
you can force it.)
Lesson'Two:Change is ajourney, not a blueprint (change is non-linear, loaded with
uncertainty and excitement and sometimes perverse.)
Lesson Three: Problems are our friends (problems are inevitable and you can't learn
without them.)
Lesson Four: Vision and strategic planning come later (premature visions and plan-
ning blind)
Lesson Five: Individualism and collectivism must have equal power (there are no one-
sided solutions to isolation and group think.)
b Lesson Six: Neither centralization nor decentralization works (both top-down and
bottom-up strategies are necessary.)
Lesson Seven: Connection with the wider environment is critical for success (the best
organizations learn externally as well as internally.)
Lesson Eight: Every person is a change agent (change is too important to leave to. the
experts, personal mind set and mastery is the ultimate protection) (pp. 21-22).
Al I these eight lessons are fit together. As Fullan (1993) notes later:
"There is a pattern underlying the eight lessons of dynamic change and it concerns
one's ability to work with polar opposites: simultaneously pushing for change while
al lowi~igself-learning to unfold; being prepared for a journey of uncertainty; seeing
problems as sources of creative resolution; having a vision, but not being blinded by
it; valuing the individual and the group; incorporatingcentralizing and decentralizing
forces; being internally cohesive, but externally oriented; and valuing, personal change
Forms of Organisational
--
Change --
8.2 IUCASONS FOR THE PROCESS CHANGE
I. Tlechnological Advancement
With the (emergenceof new technologies, basically CRM, e-business and Knowledge
Management, technology is now considered as a strategic tool, rather than an automa-
tion tool :is in the past. As newer technologies are developed and implemented, the
ski1Is and work habits required ofemployees change as well. This necessitates upgrad-
ing of the existing skill sets of employees, providing them advance training, improving
their communication skills, encouraging collaborative team work etc. Similarly,
technology has created more flexible, dynamic organisaton structure that facilitates
change and adaptation to changes in the organisation's environment The growing trend
for 'Total Quality Management initiatives for employees focus on collaborative
attempts lo improve organizational processes to ensure continual improvement in the
qua1ity of'the organisation's product process or service.
The advancement in the Information Technology requires organisations to:
Be able to develop an IT strategy that fully supports and enables the business
strategy to develop and grow.
Listen to business needs and translate them into technology requirements.
Make the common database available to all in customer service management
thereby joining market and business strategy with data provision.
Use easy access to a knowledge management approach and technology to turn
individual knowledge into company wide knowledge speedily and effectively.
Tecl~nologyhas also facilitated the relocation of work from the office to the home.
Telecomrnuting has, as a result, become more prevalent and estimated to grow at a
pace of 20% annually (Harvey, 2000). All these technological changes require the
people to change the fundamental way of their working, and also to constantly review
and evaluate HR practices to allow an organization to respond to changes taking place
in the environment.
11. Blusiness Process Reengineering (BPR)
Re-engineering has been a popular activity and another name for making major
organisation-wideimprovements. These are decisions by management based primarily
on cost refduction.It has become more than just business process improvement and
"
simplifica~tion.Breakthrough redesign and process improvement, not structure
reorganisiitionare the common objectives of reengineering
The classic definition of Business Process Reengineering (BPR) is given in Michael
Hammer's and John Champy's pioneering book, "Reengineering the Corporation-A
Manifesto for Business Revolution", 1992. They define BPR as, "The fundamental
rethinking and radical redesign of business processes to achieve dramatic improve-
ments in critical, contemporary measures of performance, such as cost, quality,
service and speed." From this definition it is clear that BPR is an ongoing, iterative
process itself requiring strong commitment and vision from senior management
During thte Forum organized at Warwick University on April 30th 1996, a number of
defining characteristics of BPR were proposed. The fowwing are ones about which
there was most agreement .
Regard organisations as open socio-technical systems that must constantly adapt
in an integrated way in order to improve customer service.
Adopt a process-oriented view of how the business operates
Pursue a radical business process redesign policy which starts with a 'clean
sheet' that seeks to recreate from the ground upwards how the business should be
36 run ideally.
Unlearn past habits of thinking and adopt new ways. Process B a d Change
Treat stability as dysfunctional, seeking improvements relentlessly and continu-
ously.
Set 'stretch targets' which seek to make major 'breakthroughs' in measurable
benefits in competitive performance, such as increased revenue, enhanced
quality, shorter cycle times and an improved cost base.
Move away froln centralised command and control processes to more devolved
managehent styles with more local empowerment and autonomy.
Encourage greater team working in which each member has multiple skills.
Pursue a radical business process redesign policy which starts with a 'clean
sheet' that seeks to recreate from the ground upwards how the business should be
run ideally.
There are usually two methodologies to reengineering activities: (i) Critical Redesign
Activities and (ii) High-level Reengineering Activities. Both the methodologies are
listed in the following tables.
Table 1: Key Reengineering Concepts
Topic Concept
-
Just In Time (JIT): JIT usage began in the US in the late 1980s. The first success
with JIT occurred in Japan i.e., in Toyota Company.
Purpose: JIT is an optimal material requirement planning system for a manufacturing
process in which there is little or no manufacturing material inventory on hand at the
manufacturing site and little or no incoming inspection.
Suggestion Schemes:
Pu~rpose:To generate ideas for improvement.
Process: The following are guidelinesfor successful running of suggestion schemes.
Set up a steering group to oversee the process.
Delegate as far down as practical the decision on whatever or not to implement
the suggestion.
Give awards to supervisors and managers whose employees generate most ideas.
In t'he early stages go for quantity of ideas rather than quaiity.
To generate ideas in manageable numbers try to set themes for ideas and change
the themes regularly.
Ensure that all ideas are acknowledged quickly and that the person generating the
idea is told whether it is to be implemented and if not, why not.
Look for reasons to say 'yes' rather than 'no'.
In the early stages be prepared for ideas to be about environmental aspects rather
than operational ones.
Sug;gestisnschemes provide a way of moving to continuous improvement via small
incl-emen~tal
changes.
I S 0 9000 Series
The: IS0 9000 Series were developed by International Organisation for
Standardisation (ISO), a spu~ialised international agency for standardisation com-
posed of the national standards of 91 countries in the year1987. It ensures consistent
quality for customers IS09000 certification indicates that a company performs above
a minimum level of quality and cornpetence.
42
7
Process: The requirements for IS09000 are depicted in the following Table. Process B a d Change
u
Requirements
u
Requirements
u
Requirements
u
Requirements
and fedback and fedback and fedback and fedback
Customer-Supplier Chain
Forms o f Organisational One: becomes a supplier when he supplies materials, information or services to
Change otht:rs inside the organisation 01' to external customers.
As customer things received from others are inputs.
As a supplier things that are supplied are outputs.
Customers and suppliers exchange information about their requirements and
provide one another with feedback on how to meet those requirements.
Activity 2
Your Manager often makes a statement that "TQM is all about statistical process
conitrol, not about people". How would you like to comment upon it ?.
IV. DOWNSIZING
As ar result of increased competitions, mergers acquisitions, divestiture, etc.
,downsizing. delayering, restructuring, and other dramatic changes in the workplace
are now "normal" business practices. Downsizing is the planned elimination of
positions and jobs. Rightsizing is a successful effort to achieve an appropriate size at
which the company performs most effectively.
Downsizing has a long term impact on the personal and emotional experience of
people who are caught up in the process. Some managers believe that those who are
not tlismi ssed feel relieved, even grateful that they survived to keep their jobs. This
might be true in some cases, where the cuts are few and widely felt to be justified.
However, in the large scale cutbacks that result in a decimated organization where
long: term working relationships are severed and people are expected to take on new
role.5,something quite different occurs. The survivors experience an emotional shock
that prevents them fiom suddenly changing direction. The familiar pattern is broken
and the nlornentum that comes fiom routine and repetition will take time to recover.
Not knowing what to do, people wait and see what happens. Even more than the loss
of familiarity and momentum is the sense of personal loss that many people feel at Process Based Change
seeing their friends leaving or their positions eliminated. It feels very much like a
death in the family and needs the compassion and time for mourning that we expect
whenever a loved one is lost.
There are actually 3 steps that need to be accomplished before the new organization is
back on its feet.
Ending: People need to understand and come to accept that the changes are real and
not reversible. The old organization ,the old ways of doing things are gone and won't
be restored.
Transitions: There is an in-between time when employees are letting go ofthe old and
getting familiar with the new. It is a time of uncertainty and often confusion, discom-
fort and high stress. People may even feel incompetent until they master new tools,
new skills and new roles.
New Beginnings:As people come to accept and master their new roles, the structure
of the organization begins to set and once again a routine and sense of "normalcy"
begin to become apparent. The old ways fade into memory and the new ways become
the expectation. People feel competent and confident again. Productivity increases As
people focus on the job at hand rather than dwelling on personal anxieties.
V. OUTSOURCING
Outsourcing has becoming an accepted way of functioning for organizations the world
over today. Outsourcing is not a normal buy or sell deal, but a case of building long-
: term relationships, where both the parties are convinced of mutual benefits. It is a
process of acquiring value from the outside vendor, who assumes responsibility for
!
one or more functions of a product or services. There are three large groups of
i outsourcers:
Domestic- Domestic outsourcers are based in the same country
International - These outsourcers are based in other countries.
e
Virtual- Virtual centers are centers comprised of agents who work from the comfort
of their homes. Generally, they are networked through technology and password-
protected intranet sites. The agents can work as independent contractors and thus, are
great for overflow or if you only need a small numbu of agents for outsourcing.
Here's a swift outline of some ofthe key differences among the three, compared to
maintaining an in-house contact center. Contact center outsourcing has gained popu-
larity over the last few years as companies search for new ways to added cut costs.
The outsourcing process has a significant impact on the people and their way of
working in the organization.
--
8.4
- SUMMARY
The challenge of implementing the change process is as immense as the challenge of
creating innovative business process solutions. As James Charnpy and NitinNohria
wrote in Fast Forward, "Change brings renewal...but change brings destruction as
well. To the extent it generates fear and cynicism, it not only halts progress, it takes us
backwarti." Implementing process change requires a powerful combination of "soft"
skills ancl "hard" skills: Soft skills include leadership, coalition building, internal sales
and com~nunication,conflict management; and Hard skills include strategic planning
project management, organizational alignment. Incorporation of both these hard and
sofi:skill 3 will help to win widespread support for process changes and metPIodologies
to axecute the solution effectively.
9.1 INTRODUCTION
Teams can churn out a positive alteration to any change effort being implemented in
an organisation. Therefore, the use ofteam activities to resolve quality and
performance crises has become more widespread in recent years .The popularity of the
team concept can be ascribed to several reasons. The foremost are: First, the growing
complexities of the business organisationsand virtual inability for any one individual
tornake good and right decisions in the rapidly changing business environment;
Second, developmental efforts are often focused on process flow, and cross-functional
teams can provide better and more needed information; Third, rnan&gersbelievethat if
they place people into on going work teams, they will be better motivated and more
constructive; Fourth, recent models for 'learning organisation' further entail that team
are natural ways to gain and share the new information vital to organisation growth
and flexibility (Senge, 1990). Finally, organisationseven see teams as a way of
assuring quality 'in process' by making teams responsible for internal quality control.
3.
Shared Responsibility: establishing an environment in which all team members
feel as responsible as the manager for the performance of the work unit.
Aligned on Purpose: having a sense of common purpose about why the team
exists and the function it serves.
Group Based Approaches
to Change
I 4.
5.
High Communication: creating a climate of trust a19d open, honest
communication.
Future Focussed: seeing change as an opportunity for growth.
6. Task Focussed: keeping meetings focused on results.
I Team Functions
Types of Team
Basically, four types of teams subsist, three of which are extensive used in today's
organisations. The teams vary on the two dimensions of fluidity of team membership,
and task complexity.
t
Type-I Team: It is the oldest and simplest type ofteam performing relatively simple
tasks. Such teams exist in organisations to deal with basic work problems. The quality
circles are an instance of such teams.
Type I1 Team: Such teams take in hand complex tasks and problems. The team
members not only solve problems, but also look for and implant their ideas. As
opposed to the membership of Type- I teams, these teams often comprise or are
exclusively made up of middle and top-level managers.
Type-I11Team: Such teams have a fluid membership although they do not typically
deal with highly complex problems. In addition to problem solving, one of their major
goals is to create and set the ground rules that would support the interaction of people
with diverse functional background. Cross-functionalteams are example of such
teams.
Type-IV Team: Such teams, popularly known as shamrocks, function in highly
complex organisations and deal with broad organisational issues. In addition to
problem solving, politics, and integration within existing structures, the goal of such
Forms of Organisational teams is primarily constructive thinking. Their focus is both internal and external.
Change
They operate at all levels of the organisation. - I
Many of the organisations have started with Type-I team through QCs and task I
Soilrce Nahavandi, Afsaneh and Aranda, Eileen .2002 . Academy of Management Executive, in
!vlello, Jeffrey, A. (Ed.). Strategic Human Resource Management, South-Westem, Thomson
],earning : U.S.A.
Q ualitJrCircle (QC)
Tlie cor~ceptof QC was originated in Japan and was originally known as Quality
Control Circles. QC is a small group of employees from the same work area
performing similar work who volunteer to meet regularly for one to one and half hour
each week on company time.
-
The pulpose of QC is to identify the causes of work related problems, quality
problenw and to propose solutions to the management artd on approval to take
cc~rrectiveactions. Improvement in the total performance leading to productivity and
enrichn~entof the quality of work life are the ultimate goals of QCs. QC activities
Cross-IFunctional Teams
C ross-functional teams bring together the knowledge and skills of people from various
work areas to identify and solve mutual problems. In other words, specialists from
different areas are brought together and put in the team, to achieve their goals.
Cross-lilnctional teanis are often most effective in situations that require adaptability,
speed and a focus on respondnng to customer needs. They may design and introduce
quality improve&ent programs and new technology, improve inputs or output, and link
separate functions to increase product or service innovations.
1 Self-Managed Work Teams (SMT) Group Based Approaches
to Change
Self-managed work teams (SMT) are defined as groups of workers who are given
administrativeoversight for their task domains. Administrative oversight involves
delegated activities such as planning, scheduling, monitoring, and staffing. These are
I
jobs normally performed by managers. Employees are given the autonomy to take
I
decisions related to the tasks performed by them. Each member learns all the jobs that
I
have to be performed by the team. In short, employees in these unique work groups
I act as their own supervisor. Self-managed teams are also referred to as semi
,
I
autonomous teams.
The impact of self - managed teams are enormous.
1 They generate great gains in productivity and quality.
Employees earn psychic rewards from team involvement.
Employees fundamentally change how work is organised and higher level
leadership is practiced.
1 By introducing self managed teams, the typical managerial hierarchy is often
eliminated thereby creating a flatter organisation.
Activity 1
,
Assessment of Team Empowerment
Instructions : Think of a team that you have been (or are) a member of in a work
setting. Respond to each statement below by indicating the degree to which you
agree or disagree with it in terms of the team identified. The scale is as follows.
5 4 3
Potency Items
1. The team had confidence in itself
2. The team believed that it could be very good at producing high-quality work.
3. The team expected to be seen by others as high performing
4. The team was confident that it could solve its own problems.
5. The team viewed no job as too tough.
Meaningfulness Items
6. The team cared about what it did.
7. The team brought that its work was valuable.
8. The team viewed its group goals as important.
9. Tlie team believed that its projects were significant.
1.0. The team considered its group tasks to be worthwhile.
Autonomy Items
11. The team could select different ways to do its work..
12. The team determined how things were done.
13. The team had a lot of choice what it did without being told by management
Forms of Organisational
Change P G h e team had significant influence in setting its goals
15. 'The team could rotate tasks and assignments among team members.
I Impact Items I
1 16. I
1 17.
The team assessed the extent to which it made progress on projects.
I
1 18.
The team had a positive impact on other employees.
I
1 19.
The team had a positive impact on customers
I
1 20.
The team accomplished its goals.
I
The team made a difference in the organization.
Total : Add points for items I through 20. This total is your perceived team
I
em povierment score. .
1
Scores may range from 20 to 100. Scores of 20 through 45 suggests low team
etnpovierment. Scores of 46 through 74 indicate moderate levels ofteam
empowerment. Scores of 75 through 100 reveal a state of significant to very high
team elnpowerment
Source: Adapted from Kirkman, B.I., and Rosen, B. Beyond self-management: Antecedents and
consequences of team empowerment. Academy ofManagement Journal. 1999,42,58-74; Guzzo,
R.A. Campbell, R.J., and Shea , G.P. Potency in groups. Articulating a construct. British Journal
of Social Psychology. 1993, 32, 87- 106 ; 'Thomas, K.W., and Tyman, W.G.Jr. Empowerment
Inventory. Tuxedo, N.Y:Xicom, 1993.
Interdependency Exercise
An interdependency exercise is a effective intervention ifteam members have
expressed a desire to improve collaboration among themselves and among their units.
This exercise is also useful for assisting people in getting better acquainted, in
surfacing problems that may be buried and not previously examined, and in providing
useful information about current challenges being faced in others areas of
responsibility.
The appreciationsand concerns exercise may be suitable if interview data indicate that
one of the deficiencies m the interactionsof member of a group is lack of expression
of appreciation,and that another deficiency is the avoidance of conforming concerns
and irritations.
Appreciative Inquiry
An intervention broader than that of the appreciation and concerns exercise is
appreciativeenquiry. This technique is developed by Frank Barrett and David
I Cooperrider, and refined by Gervase Bushe. It asserts that the fact of organizations is
1 not a problem to be solved, but " a miracle to be embraced". Appreciative inquiry
refers to both a search for knowledge and a theory of intentional collective action
which are designed to discover, understand, and encourage innovations in social-
organizational arrangements and processes.
Responsibility Charting
In work teams decisions are made, and chores are assigned to different team members.
Different members are responsible for different actions and decisions. In order to
clarify who is responsible for what action and decision, with what'kind of involvement
by others, a technique is used by Beckhard and Harris. This technique is known as
responsibilitycharting.
Visioning
This is an intervention technique in which various group members are asked to
describe their dream of what they want their organization to be like in future. Name of
Ronald Lippitt is associated with the development of this technique.
9.4 SUMMARY
Teams and various work groups are at the core of various OD activities . They are the
enlry points in most change management strategies. Ongoing concentration to team
effectiveness is sine qua non for successful change efforts and also to achieve total
org:anizationalimprovement.
--
9.5 :KEY WORDS -
--
Seiisitivity Training: An unstructured small group situation in which employees
realize their strengths and wealcnesses as well as that of others from interaction with
group members.
Process Consultation: A skilled third party (consultant) intervention to help
individuals.and groups to diagnoa: and understand process events.
Formal Group Diagnostic Mee1:ing: A group discussion involving everyone to critique
the performance of the group alnd.alsoto identify its strengths and problem areas.
Team: A.n association of a number of persons who work interdependently to achieve a
conlmon goal.
Quality Circle: It is a small group of employees from the same work area performing
similar urorkwho volunteer to meet regularly for one to one and half hour each week
on c.ompany time.
Role Analysis Technique: An intervention technique designed to elucidate role
expectations and obligatic>nsof team members with a view to augment the
effectiveness of the team.
1ntt:rdependency Exercises: A :I e:iei.cise to improve collaboratio~iamong team
mernbers .
Role Negotiation Technique: A techriiclue to improve the work relationships among
the leam members by enabling thern to make conditional offers to one another.
Appreciation and Concerns Exercise: An exercise to persuade each group member
to e:ipress his / her appreciatior~and concern for other members.
Apprecialtive Inquiry: A process of s j sternatically gathering data from team
members through interviews and discussions for discovering, understanding and
fostcring innovation in scicial orgartisational arrangements and process.
Reslponsibility Charting: A rech~niqui:for improving team functioning by clarifying
who is responsible for wtl;ir learn decisions and actions.
Visioning:: A process th~ough~ h i c the
! ~ group ltlembers portray their vision ofwhat
they wanr the organisation to be Iike in the future.
Self-Managed Team: A group *,fLvorkers who are giwn the autonomy to take
deci:jions related to the task to hc performed by them.
Cross-Functional Team: A team that drag members from several specialties to Group Bwd Approaches
identify and solve mutual problems. to Change
10.1 INTRODUCTION
Managers in most of the organizations are investing great amounts of time and energy
in planning and managing organizational change. These planned change efforts are
intended to respond to challenges arising from very turbulent and competitive
environments in which organizations of the present day exist. In addition,
organizations have also to meet with the demands of the customers and other stake
holders who are well aware of and well informed of the developments and quality
standards of products and services world-wide, thanks to the advancements in
Information technology and ever growing communication media. The policy makers
and the top management in organizationsare also constrained to meet with the
challenges of change for sustaining current markets if not to 'leap-frog' competition
and the latter requires mandating dramatic and innovative organizational changes.
While tlie need for change is felt by all organizations that alone does not make change
happen. Tlie success or failure of an orga~iizationalchange effort depends crucially on
understanding and realizing "why to change, how to change, who to change and when
to change". Unfortunately, most often organizations initiate change processes without
addressing these basic questions.
Diag~~osis
and Intervention
Askl~ngthese basic questions involve organizational diagnosis, which is to examine the
symptOm:j,and going beyond the symptoms to arrive at the root cause of
organizat~~onal problems. It also involves a critical examination of 'how effectively and
effic,ientlythe various systems operate and their interface and work-flow linkages'.
Diagnosis is a medical term. It is the act of identifying the nature of a problem,
espe:ciallyan illness. A doctor gives prescription only after a thorough understanding
of patient's problem, what in other words is "diagnosis" of a disease that the patient is
suffering from. Similarly, in the context of organizational change management,
orgelnizational diagnosis is fundamental in identifyingappropriate changes to be
implemerlted and for effective implementation ofthe designed change initiatives.
The orga~~izational diagnosis, therefore, is a scientific effort to understand: the entire
orgzunization,to acknowledge its strenghs and weaknesses, to examine how
competitive it is and needs to be, to identify gaps between its current performance and
desired performance as benchmarked against competitive standards ofthe industry,
and the ways and means of bridging the performance gaps. The diagnosis, hence,
would not only focus on systems and subsystems but also on organizational processes
such as goal setting, decision making, communication patterns and styles, intra and
inter-group relationships, work-flow patterns and so on (Beckhard, R. 1969).
Organizational diagnosis, basically, may be viewed as a knowledge gathering process
about tlie structure, systems, strategy, staff, style, skills and shared values of an
orga11izaI:ion.The instruments of diagnosis have their basis in certain conceptual
motiels allid methods drawn from behavioural sciences.
--
10.2 ]DIAGNOSIS-GENERAL CONSIDERATIONS
--
Most of the calculated management decisions are based on some sort of diagnosis.
Every manager, irrespective of his level, is in a continuous cycle of diagnosis-
decision-,action-evaluation,so long as his decisions and actions are not impulsive. His
abil ity to diagnose directly affects his performance. Top management often takes
decision:; forwarded by the managers at lower levels. The top managers have often to
'see', not with their eyes but with their ears. The ears listen to what the other
managers have diagnosed. The direct contact with organisational reality is minimum
at tlie lonlely heights of the organisational top. Yet, periodically, they are supposed to
know cle:arlywhat is happening within the organisation. Much data, helpful for
diagnosis, are screened off by managers at the lower echelons at their own discretion.
The upper level may thus be handicapped by less available information ad data. Their
level is tlie converging point of divergent views of the lower levels which make their
own diagnoses. How many managements reject or synthesise these views without
knowing the diagnostic bases from which their managers tend to operate?
So~ntimesthe management seeks help from external diagnosticians. Is this done in the
interest of objectivity? 1s it to crosscheck its own views? In a recent study of 85 chief
exe:cutives, by Bhattacharya, Cliattopadhyay and Sengupta, it was found that about
85 per cent of the chief executives agreed quite strongly that one ofthe reasons for
using external diagnosticians was to have objectivity. But when it came to comparing
tlie management's own views with those ofthe outsider, only about 75 per cent agreed
quite strongly with the proposition while 29 percent quite strongly disagreed. Putting
these tw,osets of data together, one may get an indication of the dilemma that prevails
in ihe situation. Neither can the internal diagnosis be accepted, nor can it be rejected.
One feels that the objectivity lies outside; one has to crosscheck the internal diagnoses.
Yet, how can one agree to crosscheck one's own internal diagnoses since they often
co~lstitutethe operating base? The dilemma seems to be "Do I not trust and depend on
my own instruments?"
The know ("gno") is the central concept in diagnosis. The urge to know, to sense what OrgnnizationnI
happens around an individual and integrate the experiences into a pattern, a syndrome, Diagnosis: bsues and
Concepts
and to arrive at a distinguishing meaning of these experiences constitutes a basic urge
of a variable, dynamic organism. This cognitive process of diagnosing is characterised
by a high degree of selectivity in sensing. With selectivity, screening takes place.
Differential preferencesad specialisationsemerge. Different schools ofthinking
develop. The specialisations which are limely to affect both internal managers and
external diagnosticians, provide rich depth and breadth in differentiation and
divergence. But the associated need for integration and convergence to a single point
of action-decision remains more often than not unattended. The role ofthe top
management is specifically to deal with this duality.
The success of a diagnosis depends greatly on the ways that practitioners handle the
intc:rpret.ativetask of defining the diagnosed problems, issues for study, methods of
study, analyzing results, and preparing recommendations.
While interpreting the gatliered data, the following set of questions remain pertinent
1. Interpreting the Initial Statement of the Problem. How does the client initially
define the problem, needs, and challenges faced by the organization or the unit
where change is planned? How does the client view the desired state ofthe
organization/unit?
2. Redefining the Problem. The problem is to be redefined to have workable OrganizationaI
solutions developed. What assumptions underlie the preferred state ofthe Diagnosis: Issues and
Concepts
organization need to be made explicit along with defining what constitutes
organizational effectiveness. What aspects of organizational life will be the focal
points of the diagnosis?
3. Understanding the Current State. How is the problem currently being dealt
with? How do members of the relevant groups define the problem and suggest
solving it? What organizational resources and strengths are necessary to solve
the problenl to improve the organizational effectiveness? Who are mostly
affected and in what ways among individuals, groups, and components of the
organization by the redefinition ofthe problem and the envisaged approach to
solve it?
4. Identifying the Forces for and against Change. What internal and external
groups and conditions create pressure for organizational change and what are the
sources of resistance to it? How ready and capable of changing are the people
and groups who are mostly affected by the problem and its possible solutions?
What are the comlnon interests or needs that could become a basis for working
together to solve the problem or resist it?
5. Developing Workable Solutions. Which behavioural patterns and
organizational arrangements, if any, can be most easily changed to solve
problems and improve effectiveness cost effective solutions) ? What interventions
are lnost likely to produce these desired outcomes?
10.10 METHODS
The methods used to gather and analyze data can also determine the success of a
diagnosis.
To provide valid resi~lts,practitioners should employ rigorous methods of enquiry and
analysis in keeping with practical constraints imposed by the nature ofthe assignment.
Rigorous methods (which need not necessarily be quantitative) should be consonant
with accepted standards of scientific inquiry. It is to ensure results that have a high
probability of being valid (Judd et al., 1991) and replicable by other trained
investigators. Non-rigorous approaches too can yield valid results to a certain degree,
but may not be independently evaluated or replicated. In assessing the validity of their
diagnoses, practitioners need to be especialty aware of the risk of false positives that
might lead them to recommend changes/actions that in the first place should not have
been recommended and could eventually be harmful to the client organization (Rossi
& Whyte, 1983).
To achieve reliability (i.e., reproducibility) practitioners can use structured data-
gathering and ~neasure~nent techniques, such as fixed-choice questionnairesor
observations using a standard coding scheme. Unfortunately, it is very hard to
structure techniques for assessing many complex but important phenomena such as
the degree to which managers accurately interpret environmental developments.
To produce valid and reliable results, investigatorsoften must sort out conflicting
opinions and perspectives about the organization to construct an independent
assessment. The quest for an independent viewpoint and scientific rigor should not,
however, prevent investigators from treating the plurality of interests and perspectives
within the client organization. The plurality may need to be treated as a significant
organizational feature in its own right (Hennestad, 1988; Ramirez & Bartunek, 1989).
Whatever techniques practitioners use in diagnosis, they should avoid methodological
overkill when they need only an estimate of the extent of a particular phenomenon
(Freeman & Rossi, 1984). For example, if the intent is to group individuals in to slots
Diagnosis of either 'satisfied' or 'dissatisfied' with regard to a procedure or solution, there is no
ant1 Intervention
need for-a finer discrimination as to the degree of satisfactioh or dissatisfaction that
one might want to do in an academic research.
Consultants need to consider the implications oftheir methods both for the consulting
process and the interpretive issues at hand, in addition to practical and
m~ethodologicalconsiderations. Thus a consultant might prefer to use non-rigorous
methods, such asdiscussion in workshop settings, which could bring out participants'
involvement and commitment to the diagnostic study and its findings. Or they might
prefer observationai methods to interviews, to minimize the many nitty-gritty
concerns that might arise during interviews.
The methods Chosen and the ways that data are presented need to fit the culture of the
client organization. In a high technology firm, fof example, people might regard
qualitai ive research as too impressionisticand unscientific. On the other hand,
members of a volunteer organization might view the use of standardized
questionnaires and quantitative analysis as too academic and impersonal.
1 . 11 SELF-ASSESSMENT QUESTIONS
1)1 Explain the different approaches to organisational diagnosis.
2)1 Describe the process of organisational diagnosis.
3) What are the different domains of organisational diagnosis? Explain.
-- -
Structure
1 1.1 Introduction
1 1.2 Open Systems Analysis: Assessing Effectiveness and Ineffectiveness
1 1.3 Key Features of the Model
1 1.4 The Model as a Diagnostic Guide
1 1.5 Weisbord's Six Box Model
1 1.6 Porras's Stream Analysis
1 1.7 Diagnosis of the Methods of Diagnosis
1 1.7.1 Diagnosing Organizational Subsystems
1 1.7.2 Organizational Process Identifying Remarks and Explanation Typical
Information Sought Common Methods of Diagnosis
I 1.8 Self-AssessmentQuestions
1 1.9 Further Readings
1 1 . INTRODUCTION
The whole range of organizational and managerial theories is potentially useful for
diagnosis. Each theoretical approach brings particular insights and by employing
divergent methods, managers or consultantscan effectively mirror the complexity of
organizational life and discover solutions. However, there are strong reasons to
conclude that no single model or method fully captures the complexity and
multifaceted nature of organizational reality (Morgan, 1986; Bolman & Deal, 1991).
In view of this, an attempt is made to present different models and methods of
organizational diagnosis.
.
.......... .......
Culture
f'
..zZ
;.- \ .........................-............................
.a"
f..
The main elements in the model and their key subcomponents are:
Input$;(or Resources): ~ e f etor Raw material, money, people (human resources),
equipment, information, knowledge, and legal authorizations that an organization
obtain:; from its environment and that contribute to the creation of its outputs.
O u t p ~ ~ tRefer
s : to Products, services, and ideas that arise out of organizational
actions. An organization transfers its main outputs back to the environment and uses
others internally.
Technology: Refers to Tools, machines, and techniques for transforming resources
ir.itooutputs.
I:nvir~onment:The task environment includes all the external factors and conditions
that are directly related to an organization's main operations and its technologies.
They include funding sources, suppliers, distributors, unions, customers, clients,
regulators, competitors, collaborative partners (e-g., in joint manufacturing ventures),
markets for products and resources, and the state of knowledge concerning the
organization's technologies.
The general Environment includes institutions and conditions having infrequent or
long-berm impacts on the organization and its task environment, including the
e:conoIny, the legal system, the state of scientific and technical knowledge, social
institutions such as the family, population distribution and composition, the political
cysteni, and the local or national culture within which the organization operates.
(Zoals and strategies: Goals are desired end-stateslfuture states sought by the
organl~zation as defined by its decision makers. (e.g., becoming the leading
construction firm in the country), while objectives are specific targets and indicators
of goa I attainment (e.g., 5% growth per year). Sfrategies are overall routes to goals,
including ways of dealing with the environment (e.g., strategy for expanding
operal.ions into shopping-mall construction business) and making use of the resources.
lDlunsspecify courses of action toward an end. Goals and strategies are the outcomes
of conflict and negotiation among powerful parties within and outside the organization
i ~ l the
d competitive environment. Goals and other desired future states can be
explicitly stated by decision-makers. Where they are not explicit, they could be
7
inferred from managers actions.
Behaviour and Processes: Prevailing patterns of behaviour, interactions, and Diagnostic ~tluthudulogy:
relations among individuals, intra-and inter-groups as seen in the extent of: Qualitative and Quantitative
- -
r Relationships
Cooperation among
interdependent role
players? Constructive
resolution of conflicts?
Are coordinating
technologies, like
planning, budgeting
Are rewards allocated
Structures
How do we
divide the
ENVIRONMENT
Figure 2: Weisbord's Six-Box Model
This model differs from others as it begins initially with identification of those
organizational outputs with which both the external customers and the internal
"producers"are dissatisfied. Identification of such outputs is followed by the
diagnosis ofthe sources of dissatisfaction inside the model. Internal producers are the
~ia~no'iis relevant set of key decision-makers in the focal organization.This model has parallels
and Intervention in ~Can~cron's (1984) model of organizational ineffectiveness, which also focuses on
dissatisihction u ith key organizational outcomes.
The six boxes shown in Figure 2 are postulated to contain the possible causes of
di~;satisFactionn ith organizatilonal products or services. Each box represents a cluster
of freq~~entlyoccurring organizational problems. The box labelled Helpful
Mechalrisms refers to internal procedures for coordination, control, communication,
ar~dinii)rmation management that are intended to help employees in their work roles.
The box labelled Relationships covers relations both within and among organizational
units, ~~lcludingconflict resoli~tionarrangements.
For each of these boxes, consultants are encouraged to diagnose gaps: (a) gaps
between what exists now and what ought to be; (b) gaps between what is actually
done and what employees and managers say that they do; (i.e. gaps between the
official and emergent aspects of organizational behaviour); and (c) gaps among
organi.zationa1units and layers-including gaps within and between boxes. Greater the
extent ofthese gaps, the more problematic the functioning ofthe organization is.
I'he leadership box in Figure 2 appears as a hub connecting the other five boxes.
lveisbord assumes that leaders and their concerns and choices regarding
clrganization's mission and strategy exert pivotal influence on organizational
effectiveness. Who are the leadcrs? Leaders are defined as key decision-makers ortop
managers. They are assigned responsibility for reducing diagnosed gaps and for
realigrling relations between the areas defined by the surrounding boxes. The
consultant's role in diagnosis is likened to that of an air traffic controller watching a
radar screen (i.e., the model shown in Figure 2)' which shows blips when gaps occur.
13zra on these blips d i p ovtdei to organizational leaders, who then decide what
:ict~ol~sshould be taken to reduce/minimize gaps.
'The central position ofthe leadership makes the six-box model very appropriate iftop
~nanagement'sleadership style or behaviour is diagnosed as primary to organization's
ills. However, where consultants question the validity ofthe model's assumptions
about the role and influence of top management alone determining organizational
effecr:iveness, they probably may not to use the model. Although there is some
empirical support for the model's assumptions about the impacts of leadership
(Gersick, 199 l), many scholars question these premises. Organizational ecologists
(e.g., Hannan & Freeman, 1983)' for instance, argue that managerial choices have
only slight impact on organizational outcomes and that it is very difficult for top
managers alone to plan and bring about changes that contribute to organizational
survival and enhance performance. Mintzberg (1 984), for example, argues that the
impact of leadership and the effectiveness of particular leadership styles depend on the
life cycle stage in which the organization exists.
The crux of the model lies in identifying gaps, but the major weakness of it lies in the
lack of a firm theoretical foundation concerning them. Weisbord did not provide clear
guidelines for determining whether a gap exists, which gaps exercise greater influence
over organizational effectiveness/ineffectiveness,and how consultants should cull and
intel:rate data on gaps. The model remains, therefore, deceptively simple (Burke,
1994).To apply it, consultants need to analyze and synthesize findings on a complex
array of different types of gaps.
An even more serious threat to the model's robustness is the lack of acle'ar-cut
appr-oachfor a syste~naticexplanation of intra-organizational causes of
dissatisfactionsfrom the statcd dissatisfactions regarding organization's products or
of organizational effectiveness. While the agreed-upon goals and objectives and Diagnostic Methodology:
smooth internal coordination among system components are important for Qualitative and Quantitative
organizatiorial effectiveness, tlie model downplays the significance of resource
acquisition and adaptation criteria, along wltli criteria favoured by powerful internal
and external stakeholders. Moreover, t!le model takes a more optimistic view ofthe
possibilities for attaining smooth internal coordination and consensus tlian most
current approaclies to organizational politics do.
A further limitation oftlie model is its failure to encourage users to examine several
poteritially crucial areas for diagnosis. These include an organization's economic
foundations and resource flows, its technology, and its culture. Tlie environment
remains unspecified in tlie model, arid linkages among the boxes and environmental
factors are underdeveloped.Given the importance ofthe ever turbulent and
competitive environments that most organizations face, and the interests ofthe
multiple stakeliolders in the environments, lack of serious attention to environment is
regarded as a severe handicap.
The four streams shown in Figure 3 are given special attention in diagnosis because
they can be changed through planned change interventions(Porras & Silver, 1991).
These streams, in turn, affect individual organizationalmembers, shape their job
behtiviourand consequently influenceorganizational outcomes. According tothis
logic, at any given point in time, the streams reflect previous interventions and also
form targets for future interventions.
The steering committee begins its diagnosis by sorting out current problems into the
four streams or sectors. After the sorting, they reach consensus on relations among the
problems identified in each sector. To do so, they discuss each problem and decide
whether it is a symptom or a basic problem. Some of the identified problems (and
symlptoms)may be reciprocally related, whereas others may be arranged in a causal
chain, with one problem leading to another. The diagnostic skills of the members lie in
the identification of core problems, which are at the root of a majority or all of the
organizational problems.
Figure 3 denotes symptoms by the letter S, problems by P, and core problems by CP.
A double-headedarrow symbolizes a reciprocal relation between symptoms and
protblems, whereas a single-headed arrow represents a unidirectional path of influence.
In Figure 3, the second core problem (CP2), which is located in the Social factors
sector, directly and indirectly leads to other problems and symptoms among social
factors, along with problems and symptoms in other sectors. This assists in identifying
the core problem underlying a number of symptoms, and addressing the core problem
thrcagh appropriate OD intervention(s) will produce effects throughoutthe
orgimization.
Construction of the stream diagnostic chart is rather a straightforward procedure. The Diagnostic Methodology:
steering committee identifies problems within the four streams and gathers data on Qualibfive
and Quantibtive
them; organizes problems into categories (i.e.. Ss. Ps, and CPs); identifies
interconnectionsamong symptoms and problems; and portrays these relations in a
chart like that shown in Figure 3. The findings can then be shared with others in the
organization and can serve as input into action planning and implementation. The
process of planning specific change activities, implementing planned changes, and
evaluating the results of these actions can all be undertaken within the analytical
framework just presented. The stream diagnostic chart helps leaders of planned
change activities to identify those change levers that seem most important aild relevant
to the focal organization. The diagnostic model and chart can also provide a
framework for analyzing the outcomes of planned change.
The merits and demerits of stream analysis: Any technique/model in social sciences
has its relative strengths and weaknesses. There cannot be a completely foolproof
model. Some of the strong advantages of the technique are, it:
Assists in assessirfg ineffectivenesswithin organizational structures and
processes.
Serves as a visual aid to diagnosis and feedback ofthe complex system relations
between symptoms, problems, and other organizational features.
Contributes to collaborative activity in which consultants and managers
construct the diagnostic chart and engage in diagnostic discussions.
Is theoretically integrated with other phases of consultation and planned change.
Can be used for both the intervention and evaluation phases of the consultation
pro-ject.
Is part of a theory of planned organizational change (Robertson, Roberts, &
Porras, 1993) and has received some support from studies designed to evaluate a
few of the theory's main tenets (Robertson et al., 1993).
Contains insights and practical features that consultants recommend for
organizational study
Despite its strengths, the model contains some limitations. Seemingly, there appears to
be a basic flaw in the theoretical rationale underlying the selection of the four streams -
or system components. In Stream Analysis, diagnosis starts by examining variables
that can be manipulated through planned change and may have been subject to past
interventions. These variables that are contained within the four streams are assumed
a priori to be the ones that can and should be changed to solve problems and to
enhance critical outcomes for the organization.This assumption prejudges the causes
ofeffectivenessand ineffectiveness. Furthermore, this assumption may lead to the
selection of change levers without taking into account oftheir feasibility and
appropriateness to the problems at hand and the organization. Contrarily, diagnosis
may begin with examining the critical ineffective outcomes, followed by analysis of
the underlyi~lgcauses of these outcomes, and decisions made subsequently.
Another serious weakness of the model is that it is limited to the four streams and
hence misses on other critical system features that could be equally or more
signifibant. For example, they could be critical aspects relating to organizational
inputs and outputs and the stakeholder positions. They could also be environmental
changes, external constraints, and 'organization-environment fit' to which sufficient
attention is not paid. Though, Porras, does cite environmental shifts as triggers for
organizatio~ialchange (Porras & Silver, 199 1), the model however, does not lead to a
systematic study of how organizationscope with environmental threats and
opportunities.
I)iagnor~\ The exam illation of interdependenciesamong system elements and componentsare
r1nt1 Intcr\cntinn significant to the model. Yet, envrronmental interchangesare not focussed upon and
interr~alinterdependenciesremain cursorily examined.
Yet another disadvantage ofthe model is its limited application ofdiagnostic
principle5 and procedures-the model hardly examines gapsor fits. It looks simpler,
but d~fficultto apply. Considerableexperience and knowledge in the area of
orga~~izational behaviour is needed for users to distinguish symptoms from problems
and to idcr~tifycore problems. For this reason, organizational members who take part
i n di;i3nosis may find the model hard to use.-In the end, the model may be better suited
for consul ,ant-led diagnosis than for client-centered diagnosis or for self-diagnosis by
orgall17at1~nal members.
--
-1)IAGNOSIS OF THE METHODS OF DIAGNOSIS
11.'7
-
With regard to the data collection methods there is no single method that is applicable
to a particular context. It may require a combination of methods to ensure appropriate
mirrorins of the complex reality of the organization. Therefore, an attempt ismade to
present the process of organizationaldiagnosis (W.L.French & C.H.Bel1 jr, 1990)
whic:Ii reflects the targets for diagnosis, typical information desired and common
metliocls of obtaining the information.
1 -1 SELF-ASSESSMENT QUESTIONS
- - - -- -- p p - -
1) Discuss the open system analysis and explain the utility of this system.
2) Describe the Weisbord's six box model and its advantages in diagnosis.
3) Describe Porra's stream analysis and its merits and demerits.
4) Explain as to what factors to be taken into consideration for diagnosis.
UPWI' 12 INTERVENTIONS IN
ORGANISATIONAL CHANGE
Objiectives -
Structu~~e
12.11 Introduction
2 F'ocus on intervention
12.3 Intergroup Intervention
12.4 I'ersonal, Interpersonal and Group Process Intervention
2 ComprehensiveInterventions
12.6 Structural Intervention
12.'7 !;elf-Assessment Questions
12.8 Further Readings
12-
- 1 INTRODUCTION
Tht: term intervention refers to all the planned programmatic activities aimed at
bringing changes in an organization. These changes are intended to ensure
improvement in the functioning of the organization-in its efficiency and
eff(:ctiveness. The changes are brought through the employees in the organization
while consultants facilitate the change process. Any OD intervention, therefore,
involves close interaction between the consultants and the client organization.
Intervention basically refers to an intended activity to bring change in the organization
ancl the consequent activities within the organization. In a general sense, intervention
refkrs to activities that happen in the organization's life.
1
Who makes the interventions? The intervention can be brought by an external
1
cor~sultantwho acts in consultation with the client members. A member within the
org,aniza.tion,acting as the in-house consultant can also make the intervention. The 1
org,anizationitself could plan the intervention without employing either an internal or I
external consultant. Where a consultant is employed, any intervention is a
collaborative activity between the client and the consultant.
I
Wlhere does an intervention take place? An intervention can take place at the task, I
process, and system levels and their interface or at any hierarchy levels of an
org;aniza.tion.
For example, it can be at a task level as to how a decision is made or at the level of a
series of'tasks to improve their interconnectivity,to identi@ an underlying problem or
at ii team level to create a better synergy at work. The intervention can also relate to
ths whole organization as to how to achieve better vertical integration/horizontal
integration among all the different levels.
Orgailizations need to basically analyze where, how, when, what etc., to carry out an Interventions in
intervention to improve their p w m a n c e , which in other words, refers to Orgrnisatiennl Change
'intervention strategy'.
lnterveiltionsare carried to move an organization from its current position to a desired
position and to achieve the desired change a number of techniques are used.
To quote, French & Bell, Jr. (1994), "Interventions are sets of structured activities in
which selected organizational units (target groups or individuals) engage in a task or a
sequence of tasks where the task goals are related directly or indirectly to
organizatio~lalimprovement. Interventions constitute the action thrust of organization
development; they "make things happen" and are "what's happening".
,Assuggested above a number of interventions can be carried out. They may be
classified as to their focus and purpose and the intensity or depth.
The focus of interve~~tioncould be: Individual, interpersonal, group or team (intra and
inter-group), system or subsystem, organization and the external environment.
The purpose of intervention could be to improve the process (for ex., process
reengineering), Action (ex., performance), and provide feedback (ex., has the system
produced the intended results)?
The depth of intervention could be less intensive (setting up of a task force) or more
-
intensive (dealing with individual self and emotions).
Specific reasons for intervention could be:
.
i to provide feedback about task, individual, team and other aspects of'
- orga~lizatioilaldynam ics .
.: to provide awareness of changing nonns, to confront and deal with issues
cor~structively
to develop positive attitudes, openness and improve interaction among people,
to educate employees, improve their knowledge and skills
to bring constructive and desirable changes to improve individual and
organizational performance
Utilization, etc
- Relationships, especially interpersonal or
interunit conflict, and underutilization of each
other as resources
- processes, especially communications,
Decision-making and task allocations
I a How the goal is related to other roles in the department and in the organization?
Di:~gnosis Role Analysis Technique (RAT) has been developed by Dayal(1969) for redefining
ant1 Intervention
the managerial roles in an organization. The technique has the following steps
(Pareek, 199 8).
Analysis of the role by the occupant as to the main functions of the role, its
location in the organogram, why it should be there - or its relevance in the
~rganiz~ation,and how does it contribute to organizational goals.
Discussion by the group as to what does the role occupant expect from the other
ro'les in their role set in order to arrive at a consensus.
Building the consensus regarding the expectations of other roles in the role set
from the role occupant.
Dr:veloping of a role profile by the role occupants of their roles, classifying what
are the 'prescribed' and 'discretionary' elements ofthe role, (b) the obligation of
one role to anothe; in the role set, and (c) the expectation of this role from the
others in its set.
The role anallysis process includes
1. Preparation: this involves (a) identifyingthe focal role which is being examined
and wlic~is the role occupant (b) identifying the other roles in the role set that
have expectations from the focal role such as: the boss, subordinates and peers
having fiequent interactions.
2. Mlission~Statement of the Focal Role: developed through discussion by the role
set members
3. Expectrrtions of the Focal Role: Defined by the focal role occupant. Taking in
to ; ~ C C O how
U ~ ~the role contributes towards the departmentaVorganizational
goals.
4. Expectations of the role set members regarding the focal role as to the
beliavioural norms necessary for the role occupant's effectiveness and the critical
attributes for the focal role that the occupant should possess such as key
competencies, experience, qualifications,etc.
5. Co~nsoli~dation of Expectation: Is done through systematic documentation and
comprelhensiverole analysis
Comprehensive role analysis (CRA) is a six-step model of role analysis that deals
with:
Contextual analysis (mission, goals and tasks of the organization)
Activity analysis (activities performed by the various roles, identified by the role
occupants, role set members ar~doutside experts through interviews, diaries, log
books, and questionnaires)
Competc:ncy analysis (knowledge, skills, abilities, orientation, and experience
needed to perform a role effectively)
Pel-farmanceanalysis (indicators of process and outcome indicators of role
performimce)
Functiordtask delineation (grouping activities into broad functions)
Discrepancy analysis (between activities reported by different resource persons,
the importance given to and the time spent on activities, the existing and required
competencies, etc.
arid Intervention the group. The technique does not deal with personal attitudes of likes and dislikes
among the members.
Harrison details the steps invol,ved in the technique:
Contract setting: Deals with setting up the ground rules and establishing the required
clirnate, which is set by the consultant. What actually examined are work behaviours,
not feelings about people. Each individual should be specific in stating what helshe
warits others to do more of, do better, do less of or stop doing, or retain unchanged.
'These expectations and demands are clearly written down.
Dia~gnosis:Is concerned with how others' behaviour influences one's work
eflkctiveness. Individuals specify how others need to change their work behaviours to
contribuxe to hislher own effectiveness. Each person fills out an Issue Diagnosis Form
for eveqrother person in the group. On this Form, the individual states what he or she
woluld like the other to do more of, do less of, or maintain unchanged. These messages
are then exchanged among all members, and the messages received by each person are
written on a chalkboard or newsprint for all to see.
Influence Trade: or negotiation period, in which two individuals discuss the most
important behavior changes they want from the other and the changes they are wiling
to nnake 1:hemselves. A quid pro quo is required in this step: each person must give
soniethirlg in order to get something. Often this step is demonstrated by two
individuals with the rest of the group watching. Then the group breaks into negotiating
pairs. The negotiation process consists of parties making contingent offers to one
another such as "if you do X, I will do Y." The negotiation ends when all parties are
satisfied that they will receive a reasonable return for whatever they are agreeing to
giv'e.All agreements are written, with each party having a copy. The agreement may
be published for the group which the group may either see or may not see. The
infli~enct:trading, is concluded when all the negotiated agreements have been made
and written down. It is best to have a follow-up meeting to determine whether the
contracts have been honored and to assess the influence of the contracts on role
effkctiveness.
Behaviour Modeling
Behaviour nodel ling is a training technique designed to improve interpersonal
competence. Firstly tlie most pressing problems/issues facing a target group, say,
first-line si~pervisorsare identified. These could be issues such as counseling the poor
performel-,correcting i~nsafework behaviour, etc. Training modules for each of about
10 problems are developed, with videotapes showing a person (model) correctly
handling the situation. Weekly training sessions of four hours each are scheduled for
each module for groups of approximately 10 participants.
At tlie training sessions the problem situatio~iis announced and briefly discussed.
Participants then observe avideotape in which the model (who looks similar to them)
successfi~lly solves the problem by enacting specific behavioural skills. The trainees
discuss the behavioural skills and then role-plays the situation, receiving feedback
from the group and the trainer on their performances. Role-playing continues until
each participanr successfully masters all the specific skills. Participants then commit
to practicing the new skills on the job in the coming week. At the beginning ofthe next
session participants report on how their new skills worked on the job. If necessary,
additional practicc is held to ensure mastery of the skills. Then a new problem is
addressed, the model is observed on videotape, and role playing and feedbackoccur
i~ntilall part~cipantslearn how to solve the new problem. Behaviour modeling teaches
the ski1Is and behaviours needed to deal with interpersonal problems.
Diagl~osis Life and Career-planning Interventions
and Intervention
Managing against a set of objectives is important for individual and organizational
effectivenl=ss.A series of interventions are planned that focus on the life goals and the
career goals of employees so that they may better exert control over their own
destinies. 'The interventions have a time focus i.e. past, present, and future. The tasks
are cornp1t:ted by individuals and then discussed in small groups.
The surv~:yfeed back method refers to the systematic collection of data about the
sys1:emand feeding back the data to individuals and groups at all levels of the
organizalion to analyze, interpret the meaning of, and then design corrective action
steps. Thms it includes major components; the use of an attitude survey and the use of
feecl back workshops.
Sur~eyFeedback steps as follows:
Step 1. Organization members at the top of the hierarchy are involved in the
preliminary planning.
Step 2. Data are collected from all organizational members.
Step 3. Data are fed back to the top executive team and then down the hiefarchy to the
functional teams.
Step 4. E,achsuperior presides at a meeting with his or her subordinates (a) the
subordinates assist in interpreting the data, (b) plans are made for making constructive
changes, and (c) plans are made for the introduction of the data at the next lower level.
Step 5. Most of the feedback meetings include a consultant who has helped the
supe:riorto prepare for the meeting while he also serves as a resource person.
The Survey Feedback technique is essentially a procedure for giving objective data
about the system's functioning to the system members so that they can change or
improve selected aspects of the system.
--
1 2 ~ 6 STRUCTURAL INTERVENTION
This refers to interventions or.change efforts aimed at improving organization
effectiveness through changes in the task and structural and technologicai sub-
systems. This class of interventions includes changes in the division of overall work of
the organization into units, reporting relationships, work flow and procedures, and Interventions in
Organi~tionalChange
role definitions, methods of control, and spatial arrangements of equipment and
people, etc.
Structural Interventions
Job Design
Job design refers to the way that set of tasks, or an entire job, is organized. Job
t
design helps to determine:
What are the tasks done, how they are done and what is the order in which they are
done, etc.
It takes into account all factors, which affect the work, and organizes the content and
tasks so that the wllole job is less likely to be a risk to the employee. Job design
involves administrative areas such as:
job rotation,
job enlargement,
tasklmachinepacing,
work breaks, and
Working hours.
A well designedjob takes into account the basic principles of ergonomics that will.
encourage a variety of 'good' body positions, have reasonable strength requirements
and reasonable amount of mental activity. A well designed job also contributes to
r
feelings ofachievement and self-esteem.
Job design principles can address problems such as:
work overload,
, work under load,
repetitiveness,
I im ited control over work,
isolation,
shiftwork,
delays in filling vacant positions,
1 excessive working hours, and
Limited understanding of the whole job process.
C
Job design also assists in minimizing job stress.
Good J'obDesign:
Allows for employee input i s . the option to vary activities according to personal
needs, work habits, and the circumstances in the workplace.
Gives employees a sense of accomplishment.
Includes training so that employees know what tasks to do and how to do them
properly.
Provides good worklrest schedules.
Allows for an adjustment period for physically demanding jobs.
Provides feedback to the employees about their performance.
Minimizes energy expenditureand force requirements.
Ba1,ancesstatic and dynamic work.
Job design is an ongoing process. 'The goal is to make adjustments as conditions or
tasks change within the workplace.
Actiieving good job design iilvolves administrative practices that determine what the
employel: does, for how long, where, and when as well as giving the employees choice
where ever possible. In job design, you may choose to examine the various tasks of an
ind ividui~ljob or the design of a group ofjobs.
Cornmoi-Iapproaches to job design include:
Job1 Enls~rgement:It is to include more andlor different tasks to provide job variety.
It adds interest to the work but rnay or may not give employees more responsibility.
Job1 Rotsltion: It is to move employees from one task to another. It distributes the
group tasks among a number of'employees.
Job1 Enrichment: It is to provide employees more of responsibility,accountability,
and independence in d ~ i n the
g job. If satisfied higher order needs by allowing for
greater participation aid ~tewopportunities.
Work Dtsign (Job engineering): Work design allows employees to see how the work
methods, layout and handling procedures link together as well as the interaction
between ;peopleand machines.
Go:alsof Job Design: Goals can be in many difference areas and include:
To alleviate boredom, a goo job deign avoids both excessive static body positions and
repetitive movements. Jobs must be designed in order to have a variety of tasks that
require changes in body position, muscles used, and mental activities.
Two methods used for a good job design are job enlargement and job rotation. For
example, if an employee normally assembles parts, the job may be enlarged to include
nevr task:;such as work planning, inspection I quality control, or maintenance.
Altt:rnatively, ihe tasks may include working in the same department, but changing
tasks every hour as it provides for a change in physical or mental expenditure.
Work Breaks 1 Rest Breaks Interventions in
Organisational Change
Rest breaks help alleviate the problems of unavoidable repetitive movements or swic
body positions. More frequent but shorter breaks are sometimes preferable to fewer
long breaks.
During rest breaks, employees must be encouraged to change body position and to
exercise. It is important that employees stretch and use different muscle groups. If the
employee has been very active, a rest break should include a stationary activity or
stretching.
Provide Training
Training in correct work procedures and equipment operation must be provided so that
employees understand what is expected ofthem and how to work safely. Training
should be organized, consistent and ongoing. It may be either a classroom training or
on the job training.
MBO
MBO is es'sentiallybased on a very simple fact-wherever people work in an
organization together there will be a wide variety of objectives. Each individual has
his 01- her own personal goals (e.g. better working conditions, better training, better
pay); each department has its own business targets (higher output, better equipment,
more funding), and the top management, too, has its own strategic aims
(organizational success, corporate identity, corporate image). MBO is the art of
getting all these varied interests to correspond to one common goal. Talks can also be
conducted collectively with the departmental teams. The main object of MI30 is to
make individual goals voluntarily coincide with the goals of the organization. MBO
only works when management and staff agree to support mutual goals in an
atmosphere of confidence and trust, commitment and motivation. The concept is based
on the asslimption that employees are, by nature, willing to perforni. MBO succeeds
where there is a dialogue on objectives between the employee and the management
founded on fairness and clarity.
Structure
13..3
- -I'URPOSE AND CONTEXT OF EVALUATION
Evalluation prior to carrying out any intervention presents the current status of an
organization. It explains about the organizational changes need to be brought out.
Evaluation study carried out subsequent to the intervention assists to gauze the
effe~:tiven~ess
of the introduced change.
Research based evaluation facilitates examining practical problems associated with Evaluation of
the initiated change and making decisionsabout particular courses of action necessary OQanimtionaI Change
for the intended changes to happen. Evaluation carried out during the early stages of a
change programme is often beneficial to improve or fine-tune the change process and
is referred to as 'formative evaluation'. While evaluation carried out during the later1
end stages either to assess the impact of the change, or determine the extent to which
the set goals have been met with, or whether to still continue with the planned change
activities, is termed "summative evaluation". Applied research can take place at any
of these levels.
r-l
Initial action
or change
intervention
objectives
Related to
the criteria
for the
original
change
intervention
fulfill aims of
original change
planned action
implementationand
interventionas
planned action
implementation
and effects
Clarity of Purpose
The most difficult aspect of any evaluation is coming to a clear understanding of what
is being evaluated and why; in other words the precise purpose and objectives. And it
is essential to ensure that both the person undertaking the evaluation and the sponsor
have the same understanding. Another, and equally important, aspect of ensuring
clarity of purpose relates to the understanding and insight the person undertaking the
evaluation brings to the context of change.
Strategies
Once a clear purpose for evaluation has been established, a range of strategies may be
adopted. Those are divided into five categories:
survey
case study
experimental
lo~igitudinal
Cross-sectional.
These strategies should not be thought of as mutually exclusive, for example a case
study of an organization may well involve collecting data using a survey. Similarly an
experimental strategy such as testing the relative impact of a number of different
interventions will often be undertaken at a number of different times as a longitudinal
study. However, despite this overlap these categories provide a useful way of repre-
senting the main strategies.
Survey Strategy
Survey is the most popular strategy for obtaining data to evaluate change. Using this
strategy, a large amount of data can be collected from a sizeable population in an
economic way (Saunders et al, 1997). The strategy is often based around a question-
naire. Questionnairesenable standardized data to be collected, thereby allowing easy
comparison. They are also relatively easily understood and perceived as authoritative
by most people. However, the questionnaire is not the only data collection technique
that can be used within a survey strategy. Structured observations and structured
interviews with standardized questions can be employed.
Survey questions can be asked to both individualsand groups. Where groups are
interviewed, their selection will need to be conducted carefully. It is appropriate to
take a sample of horizontal hierarchy through the organization to select each group.
As a result, each member of an interview group is likely to have similar status. In
contrast, a group comprising of vertical hierarchy would be influenced by status
differences(Saunders et al., 1997).
--
--
13.6 DATA GATHERING TECHNIQUES
The data-gathering techniques employed need to be consistent with the purpose ofthe
evaluation. For all change evaluations, it is important that data appear credible and
faithfully represent the situation. Data can be gathered in two ways i.e., secondary
data and primary data. The details are as follows:
Secondary Data
When considering data for evaluating change most people automaticallythink in terms
of collecti ng new (primary) data only. However, secondary data can provide a useful
insight to begin to evaluate a change intervention. Secondary data include both raw
data and published summaries that could be collected within the organization or
externally. Most organizations collect and store a variety of data to support their
operations,such as payroll details, copies of letters, minutes of meetings and accounts
of sales of goods or services. Increasingly these data are stored in electronic form and
in the case of human resource data often as part of a computerized personnel informa-
tion system. Although data have been collected for a specific purpose, they can also be
used for other purpose. Data collected as part of performance and development
appriiisal rnight be combined with data on competencies for career management or
succession planning.
External slources of secondary data tend to provide summaries rather than raw data.
Sources include quality daily newspapers, government departments' surveys and
published official statistics covering social, demographic and economic topics. Where
limited appropriate secondary data are available, primary data will need to be col-
lected specifically for the purpose.
Primary Data
Obs~ervattionMethod
Where change is people related, such as how they respond after a particular training
intervention, the best way to collect the data is to watch them while implementing their
learning This process involves the systematic observation, recording description, Evaluation of
analysis and interpretation of people's behavior. There are two main types of observa- Organizational Change
tion. Participant observation is qualitative wherein the researcher attempts to become
fully involved in the lives and activities of those being researched and shares their
experiences not only by observing, but by feeling those experiences (Gill and Jonson,
1997).
By contrast, structured observation is quantitative and, as its name suggests, has a
high level of predetermined structure. It is concerned with the frequency of actions
r
such as time and motion studies and tends to be concerned with fact finding. It is
essential to note that observation method or no such method alone fulfill the require-
ments. Therefore, a combination methods should be employed. For example, it is
necessary to supplement observation with other methods of data collection such as
interview and questionnairesto validate the findings.
Data Type
, lntynai
I
Secondary
, Exty~al , ,
T i o n , ,Inteyiew
Primary
Questionnaire
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Figure 3: Main Techniques of Obtaining Data
Interview Method
Interviews have been described as 'a conversation between interviewer and respondent
with the purpose of eliciting certain information' (Moser and Kalton, 1986:271).
These interviews could be classified as less structured, highly structured and semi
structured. 'The unstructured interviews are used to explore the change situation in
depth and are often referred to as 'in-depth' interviews. There is no predetermined
list of questions although the person undertaking the interview needs to have a clear
idea of those aspects of the change. These are often noted down prior to the
interview checklist. Interviewees are encouraged to talk freely about events,
behaviors and beliefs in relation to the changes and it is their perceptions,
which guide the interview.
In semi-structured interviews, tlle interviewer will have a list ofthemes and questions
to be covered. As in these interviews, questions may vary from interview to interview
to reflect those areas most appropriate to respondents' knowledge and understanding.
It means that sonie questions may be inappropriate in particular interviews. Additional
questions may also be required in some semi-structured interviews to enable the
objectives to be explored comprehensively. The nature ofthe questions and the
ensuing discussion means that data from semi-structured interviews are usually
recorded by taking notes. However, as it could happen with in-depth interviews, tape
recording may be used provided it is acceptable to the interviewee.
Diagnosis Questionnaire Method
and Intervention
Structured interviews can be viewed as a form of questionnaire. In both structured
interview and questionnaire method, the respondent is asked to respond to the same set
of questions in a predetermined order. The questionnaires are one of the most widely
used data collection techniques and each respondent is asked to respond to the same
set of questions. A questionnaire provides an efficient method of gathering data from a
large sample prior to analysis.
Responses to questionnaires could be recorded easily as they are based on a
pretleterrnined and standardized set of questions. In structured interviews, there is
face-to-E~cecontact as the interviewer reads out each question from an interview
schedule and records the response, usually on the same schedule. Answers are often
pre-coded in the same way as those for questionnaires. There is limited social
interaction between the interviewer and the respondent, such as when explanations are
provided, and the questions need to be read out in the same tone of voice so as not to
indicate any bias.
Questionnaire data may also be collected over the telephone, by delivering and collect-
ing the questionnaire. Like other data collection techniques, the questionnaire will need
to be pilot tested and amended as necessary. The piloting process is of paramount
importance as there is unlikely to be a second chance to collect data. Even if finances
are adequate to re-canvas questionnaire people may not be willing to provide further
response!;.
An alysia
Anillysis of data is obviously a precursor to feedback. Analysis evaluates the change
against the agreed objectives. A,nalysis of large amounts of data, whether quantitative
or qualitative, will involve inevitably the use of a computer and those undertaking
analysis !;houId be familiar wit11 the computer software. If objectives, strategy, and
techniques of data collection artd analysis are better integrated, the data could have
been analyzed more effectively.
Feedback
Findings derived through systematic data analysis are fed back to the sponsor,
usually in the form of a report or a presentation. While reporting the critical findings,
it is impclrtant that the findings are fedback withoi~tbeing filtered even if it is
offc:nding few. This would immensely benefit the organization in terms of having a
open feed back. In case of large organization, where large groups are involved, a
sunrmaqrofthe feedback is ~ascadedfrom the top down the organization. This may
make use:of existing communication structures such as newsletters, notice boards and
tearn briefings. Alternatively, if rapid feedback is required, additional newsletters and
tearn briefings might be used. k t first, the research sponsor reviews the full report of
the findings. Subsequently, a summary may be provided for circulation to all employ-
ees As part ofthe team briefing process, each managerial level within the hierarchy is
likely to see its own data and is obliged to feed the findings down to subordinates.
Managers at each level are expected subsequently to report about what they are doing Evaluation of
about any problems identified, in other words the actions they intended to take. Organizational Change
Schein ( 1 990, 1995) argues that such a top-down approach may be problematic in
managing change as it reinforces dependency on the organization's hierarchy to
address issues identified. If some issues raised by the evaluation are ignored then
employee morale may go down. It also places managers in a difficult position as they
are in effect telling their subordinates about issues that the subordinates thought were
important. Then they tell them what they (the managers) are going to do about it.
Instead, Schei~iadvocates an alternative of bottom-up feedback that he argues also
helps to prolnote change from within.
In bottom-up feedback, data are shared initially with each work group who generated
them. This process concentrates upon understanding the data and clarifying any
concerns. Consequently, the focus shifted to the area where change is needed rather
than the whole orga~iization(Zuber-Skerritt, 1996). Issues arising from the data are
divided into those that can be dealt with by the group and those that need to be fed
back to the organization. The work group is therefore empowered by more senior
managers to deal with problems, rather than being dependent upon the organization's
hierarchy. Feedback continues with each group in an upward cascading process. Each
organizatio~~al level therefore only receives data that pertain to their own and higher
levels. Each level must think about issues and take responsibility for what they will
work on and what they will feed back up the line. This helps to build ownership,
involveme~itand commitment and signals management's intent to address the issues. It
sliould be noted that bottom-up feedback may take longer duration to get data to the
top level.
However, a top-down approach to disseminating findings can enable relatively rapid
communication. It also allows management to maintain control ofthe process and
decide the nat~lreofthe message, who receives it and any actions that will be taken.
By contrast a bottom-up approach involves employees thinking about issues,
deciding and taking responsibility for the actions they will take, and selecting those
issues they need to feed back to their line managers. It is inevitably more time
consuming, but will only work where an organization's culture allows employees
to be enipowered by mangers to take ownership of the changes. The approach to
feedback, like tlie rest ofthe evaluation process, needs to be tailored to the precise
reqi~irernentsof tlie organization and that particular change intervention or stage
within a change process.
15.14 Self-AssessmentQuestions
15.15 Ekther Readings
I
1 Those who make change happen;
Those who react to change;
I STRATEGY (
What is the apparent business strategy and
does it seem to 'fit' the enviroment and the
Organisation
I environment a Diagnose areas
external forces
inertia as levers of
Hav r*o identified the exk~rlalr1r;vers of change, the next step to diagnose an
organisa'iion's capability to cope with and deliver to the demands of the market and the
external environment. It is to be recognised that it is the organisation through which
performimce can be delivered. Mast of the leaders recognise it and know what needs
to be changed. However, they iind that the organisation is beset with a lot of inertia
and neecl to struggle to get the organisation move fast enough. Some managers push
the change through cosmetic variations but this does not bring sustainable results.
There are others who take recourse to simple one-dimensional solution like
restructuring. But it is to be realised that the organisation needs extensive change,
which p,x-rneatesinto all aspects like structure, processes or system, people and
culture. Any change in one ofthe elements of the organisation, would impact other
elements as well. For example change in technology influences task, structure, style
and people. Similarly, change in structure influences processes, style and people.
However, a number of organisations resort to some changes like restructuring without
due diligence and end up with skill loss, employee issues and IR problems.
--
15.3 ORGANIZING FOR CHANGE: STRATEGY
Having,identified the levers of organisational change, assessment of organisational
capability is the next logical step. Without the capabilities of an organisation there
cimnot be any sustainable strategy.
Literature on organisational change indicates that both continuous and discontinuous
changc:form are part of an organisation's life. In the initial stages of an organisation':,
life chimge is continuous, incremental and slow but thereafter there are short periods
of rapid and transformationalchange which can be explained with the help of
punctu.atedequilibrium mode:l given below.
Competition
Phase 2
First
Meeting
+Transition
Phase 1
I I
(Low) A (A+B)/2
time
FigurQ: The Punctuated-Equilibrium Model
Source: Robbins, S.P. Organisational Behaviour, PHI, 2001.
The model indicates that an organisation goes through two phases-One a stage
characterised by a phase of inertia when there is no progress or slow progress and u
predetermidedcourse of action. Almost halfway new insight develops which
challenges the inertia patterns and there is a phase of transition. This period is
marked by focussed burst of changes giving up the old ways and adopting new
perspeciives. A second round of inertia follows after transition. This phase is marked
by new equilibrium or a phase of inertia when change implementers get together and
accelerate their efforts to compete the work started during transition period. This
pattern is called the punctuated-equilibriummodel. If managers involved in change
implementarion can sustain their energy and enthusiasm during the first phase of
transition, the process of change will be greatly expedited.
People
Strategy attitude/skill's gaps
capability of managers
CHANGE
Therre is a clear trend since 1990s for organizations to reduce their layers of
ma~lagementto improve efficiency, reduce cost, and improve flow of inflation.
22
Skills for Managing
15.8 SYSTEMS FOR CAREER DEVELOPMENT Change
In the past people used to join an organisation for lifetime and wanted their career
pat11 to be charted out for growth in the organisation. In the changing scenario,
neither the employers nor the employees want to commit for such a long period. At
the same time the challenges of 1990s demand that employees' motivation, morale and
commitment be high. The following challenges need to be addressed in the changing
environment.
Managing the expectations of young entrants
How to develop horizontal opportunities for career growth
How to keep motivation level high in aflat structure with few opportunities for
career advancement
How to place responsibilityof individual career development on the employee.
MANAGING TRANSITION
COMMUNICATING EFFECTIVELY
I
CHALLENGING THE STATUS QUO
Mobilising commitment
Managers as a catalyst
Shorter time- frame horizon
Balancing work and personal life
Maximisation of information flow
An effective change agent needs the following areas of expertise:
1) strategy formulation
2) human resource management
3) marketing and sales
4) negotiationlconflictresolution
For successful management of change, the change agent needs to follow the steps
which would serve as building blocks.
Skills for Managing
15.12 ROLE OF HRD IN MANAGING CHANGE Change
15.13 SUMMARY
One of tlie potelit ways to prevai I in globally competitive and changing environment
across sectors is to identify, cultivate and utilise competenciesof people in the
orga~iisatio~ito adapt to changing environment. Thus, the competencies are the roots
of co~npetitive~iess and companies are found in race to build competencies that
determine market leadership. It is, therefore, imperative for an organisation to share its
vision, articulate its mission and adopt a strategic architecture to achieve it. Scanning
tlie environment, diagnosing organisational capability, adopting strategies leveraging
structure, systems and people have become required competencies for managers
during the turbulent business environment of present and the unexpected and unknown
Structure
16.1 Nature of resistance
16.2 Reasons for Resistance
16.3 Sources of Individual Resistance
16.3.1 Lack of Knowledge
16.3.2 Selective Perception
16.3.3 Fear of Uncertainty
1 G3.4 Aversion to Risk
16.10 Summary
16.1 1 Self-Assessment Questions
16.12 Further Readings
i
Role of Change Agent
--
16.1 NATURE OF RESISTANCE
Introduction of change is highly complex process. The uncertainties caused by the
change resulting inequilibrium results in resistance to change.
One of the most challenging and baffling probleins faced by managers in handling
change is erriployees' resistance to change. The resistance may be explicit in
the fonn of
a Voicing Disagreement
a Slrike
a Go slow
a Emplo:ree turnover or implicit in the form of
a Loss of' loyalty
a Lowering of morale
a Absence
a Avoidance
Low to1erance
16.2 -
- RElASONS FOR RESISTANCE
The main reason behind the employee's resistance is the u n m a r a ~ anxiety d
caused by urwxtah.ies of change. In most situations resistance arises out of indi-
visual l~roblemsrather than technical problems. Resistance is often because of
attitudinal factors and blind spots, which the functional specialists have as a result of
their concerrr for and preoccupation with technical aspects of new ideas.
One of the common reasons for resisting change is the feeling of discomfort with the
nature of change itself, which may violate their moral belief systems. Another reason
for resistance may be the method by which change is introduced. This is observed
when authoritarian approach is used and people are not informed. Other reasons for
resistarrce m,aybe inequity where the employees feel that someone is likely to get
greater benefit than they are likely to get.
Coch and French conducted a study in clothing factory. The researchers worked with
four groups of employees who were paid on piece- rate basis. As part of the research
design their mode of payment was slightly modified. This was followed by simple
change in their method of work. The researchers recorded if there had been any
incidence of resistance. The groups were matched on various parameters and the only
independent variable introduced was nature of participation. The study revealed that
the different modes of participation used with the four experimental groups brought
different results. The group with no participation had the highest drop in its output
and its outpult remained at this level for the entire period of 30 days. Drop in output
occurrc:d immediatelyafter the introductionof change. Resistance appeared in the
form oj'aggression against their management, hostility towards supervisor, drop in
production, inadequate cooperation with the supervisor. 17% of the employees left the
job during th,efirst 40 days of the introduction of change.
It is generally assumed that resistance is only negative and bad. The fact is that
resistarlce to change is neither good nor bad. The only difference may be whether it is
based CIII sound principles or not.
A Positive Approach to Resistance Managing Resistance
to Change
Resistance has usually been seen in negative terms. The proponents of a change are
unhappy with resistance shown by some persons or groups. The general experience
has been that in many cases resistance plays a positive role. If individuals and groups
had not resisted some changes like urbanisation of some rural or forest areas, or
construction of roads which disturbed ecological balance and so on, we would have
been poorer in our ecblogical heritage. In the flush of enthusiasm, the proponents of a
change do not see some negative (and often unintended) consequences of change.
Resistance help t o bring some of these to their notice. Resistance also brings to the
notice of the planners the likely difficulties in the implementation of the change. So,
resistance at least gives warning which if needed can lead to better implementation of
change.
Resistance to change is like dissent. The value of dissent is to stimulate the individuals
and the group to consider many factors they may otherwise ignore. It also helps to
generate alternatives. Resistance may bring to the attention of those involved in
introducing change factors that are likely to disrupt the basic cultural fabric, or
threaten core values of the group. The earlier attention is paid to them the better it is
likely to be for the change programme.
Resistance may also point out flaw in the process of introducing change. If a change is
being introduced by outsiders in the organisation or thecommunity, it will not be
"owned" by them. Resistance may show lack of "ownership"of the change
programme by the community, in which it is being introduced. Resistance may show
that the process of change has ot been participative.
Resistance may, therefore, be helpful in bringing attention to some aspects neglected
by the change planners - threat to the core values and life styles, unintended distur-
bances causing problems, "bad" process of introducing changes, etc. Resistance can
be used for making the change process more effective. Taking such a positive ap-
proach to resistance Karp suggests 4-step approach to resistgance as shown in Table
16.1. This relates to bringing out resistance (surfacing) by encouraging people to
express resistance; giving importance to it as reflected in listening and acknowledging;
explori~~g the reasons of resistance to learn what can be done; and rechecking after
analysis if stills the resistance is substantial.
Table 16.1: Four Step Treatment of Resistance adapted from Karp, 1988
16.4.3 Gra~upPressures
Group norms evolved by an organisation over the years become a bottleneck in
bringing about change. It is common observation that a single member of a group
accepts change suggested by the management willingly. However, his group affiliation
with a r~niondoes not allow him to do so. Therefore, he is likely to resists change.
Individual
1. Homeostatis (the tendency to revert to old ways)
2. Habit (ingrained accustomed ways of doing things)
3. Primacy (first experiences powerfully determining our actions)
4. Selective perception and retention (using one's own ideas)
5. Dependence (learning from role models becoming internalised)
6. Super-ego (internalised traditions determining behaviour)
7. Self-distrust (blaming oneself rather than seeking external change)
Organisations
1. Confirmity to norms (tendency to follow known ways of behaviour)
2. Systemic and cultural coherence (tendency to remain homogeneous)
3. Vested interests (groups or individuals affected by change)
4. Th~esacrosant (some areas having strong emotional sensitivity)
5. Rejectior~of "outsiders" (the question of "ownership"). Considering both the individuals and
tht: orear~isations.ten sources of resistance are suggested in Table 16.4 (next section).
I
1
the actual time and effort required adjusting to change and the time given to adjust.
This call be resolved by adjusting the time requirement, extra efforts to be put in to
learn, economic cost of change, technical feasibility of change and reducing possibility
of less desirable conditions.
I
1 16.5.3 Social Resi'stance
Resistance occilrs due to social values, political coalition, labour union values and
even community value. 'This is, in a way sociological resistance, which can be
handled by making conditions as favourable as possible.
16.7 ORGANISATIONALCULTURE
Organisational culture is represented by norms, values, expectations and ways of
thinking and behaving of people in the organisation. As culture evolves over a period
time, it becomes part and parcel of organizational life. Any attempt to change the
established assu~nptionsand approved ways of performing various tasks is sure to
meet resistance.
16.8.3 Negotiation
Another method used by change agent to deal with potential resistance to change is to
offer of something of value to reduce the resistance. Negotiation is usually adopted
when some powerful source is behind resistance. Offer of good package for VRS,
Golclen Handshake, MOU of non-retrenchment are some of tactics that are used by
organsiationsto manage resistance. Though negotiation helps overcome resistance in
many situations, one cannot ignore high cost involved in it and the risk of exposure of
the negotiator to the members of his group or other powerful position holders.
lti.8.6 Coercion
,Coercion is applying threat or pressurising the employees implicitly or explicitly to
accept (changeunder duress. Situations of closure of a plant or downsizing or bank-
ruptcy could be examples of implicit coercion. Other examples of this found in
organisationsare adverse performance evaluation, transfer or threat of transfer and
depriving promotion etc. Coercion should be used as the last resort. Jt leaves bitter-
nless behind therefore, is not a very gAod method for managing change.
--
16.9 TECHNIBUES FOR MANAGING RESISTANCE
16.9.1. Counseling
Counselling has been found to be very effective in reducing individual resistance.
Individual resistance occurs because of anxieties and fears and by.letting people talk
through their problems and anxieties can help them come to terms with change. This Managing Resistance
technique is used on one- to- one and also in formal communication system with the to Change
whole team.
16.9.2 Force- Field Analysis
This technique provides an assessment of any change situation and presents a balance
between the driving forces and the resisting forces. The participants are advised by
the change agent to identify these forces. While identifying the restraining forces the
group develops insight about ways of handling them. In a number of organisations
this technique is used effectively to create a shared change processes foi thinking
through specific changes.
16.10 SUMMARY
For c l i a n to
~ be effective management of resistance to change at individual and group
level is extremely important. By anticipating, identifying and welcoming resistance
tlie managers will get an opportunity to change tlie objections into the energy for
cliange. Instead of opposing and arguing with the people who resist cliange, it would
I be desirable to allow people to express and share their anxieties and fears, which
would help in k~iowingthe cost and then converting them into believers in change.
Co~nmitmentcharting would help in persuading key resistors adversely affected by
change in reducing painful effects ofchange.
Structure
17.1 Introduction
17.2 Transformational Leadership Skills
17.3 Differences Between Transactional and Transformational Leadership
17.4 Key competencies in Change Agents
17.4.1 Clarity of Goals
17.4.2 Clarity About Role
17.4.3 Professionalism and Knowledge of Subject
17.4.4 Creativity and Innovativeness
17.4.5 Collaborative and Networking Skills
17.1 INTRODUCTION
Organisations today are confronted with growing competition within and outside
national boundaries. Globalisation has heightened the need for overcoming compla-
cency, conservatism and conceit in organisations for their survival and growth in the
present scenario. Most top management have come to terms with the fact that frag-
mented changes are not sufficient to stem out the tendencies of complacency and
conceit which plague managerial behaviour in a large number of organisations.
However, at middle level management this has not happened and this can be observed
in their orientation to the past rather than to the future. Conceit is also evident in their
allegiance to narrow departmental goals rather than to overall organisational goals.
Role of Change Agent Consequently, may senior and top management have adopted or are in the process of
adopting revolutionary attitude towards change.
The cliangi~~g market requirements and rapid technological changes have created
opportunitil:~on the one hand, and intense domestic and global competition has
shortened product life cycle and has created turbulencefor some businesses on the
other. Change leaders are responding positively and vigorously by taking initiatives
and adopting strategies like business process reengineering, mergers and acquisitions,
quality initiatives that match the requirements of the turbulent times. Transformational
leadership has become the buzzword today and the top and senior managers are busy
acquiring these skills though management development programmes organised nation-
ally and internationally.
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17.2-
TlWNSFORMATIONAL LEADERSHIP SKILLS
Transformational leaders are said to possess the following skills and attributes.
Ability for assessment of current situation
Challenging the status quo
A,daphbilityto the changing environment
A.bility to have a long term vision
C apabi~lityto articulate and practise a set of core values
Risk taking ability
Communication skills
Sensitivity and ability to arouse passion
Understanding and practice of equity, power and freedom
Building coalitions
Flexibility and openness to experience .
Ability to make fast decisions
Ability to modify systems
Ability to align cultural systems
The success h l change in an organisation depends on not only availability of re-
sources, technology, systems and practices but also, to a large extent, on changing the
mindset of people and creation of an appropriate organisational culture. As it is the
human resource (managerial decision) which determines proper deployment and
various resources-choice of technology, systems, practices; people and
organisational culture form the bedrock of organisational effectiveness. Therefore, it
devolves upon the manager as an onerous responsibility to provide effective transfor-
mational leadership to his contingent of technical, managerial and non-technical staff
so that not ollly the goals of the or
has connpetitiveedge over its rivals.
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17.3
DIFFERENCES BETWEEN TRANSACTIONAL
APJD TRANSFORMATIONAL LEADERSHIP
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Tra~lsfor~national Leadership Transactional Leadership
Proniotes change Maintains stability
Shares vision, values, and emotional bonding Goes into contractual
arrangement
Provides Intellectual Stimulation Provides guidance & role
clarification
Role of Leadership in
17.4 KEY COMPETENCIES IN CHANGE AGENTS Managing Change
The management can take action in favour of change in the form of behaviour modifi-
cation and providing trainingopportunities. Alongside management needs to knock
down or eliminate barriers that prevent people from accepting change. As far as
possible the environment ou&t to be such which is free from punishment or negative
feedback. The management can judiciously try both the approaches to bring about
change:.Change leaders ( champions) require to take the following actions.
I
which is conducive to bringing about change.
I
17.5.4 Declaring Early Victory
Referring to Lewin's model the steps mentioned above will initiative the process and
unfreeze or stir the preset stage. Having achieved that, the change processes can be
initiated. This stage provides multiple options -a number of ideas can be developed to
deal with the new challenges but the executives ought to be selective keeping in view
the importance and the time to be taken by various ideas. As a manager, leading
change, seems to be working in a emergency situation with limited resources, he needs
to establish priorities which optimize importance and urgency. As the process of
change niay take years before providing any significant return, people may loose
patience and therefore, the leader needs to make an effort to do things which produce
results. This implies that opportunities for early victories have to be identified while
pursuing the change efforts. There is a lot of untapped potential among people at
various levels which needs to be harnessed. It has been observed that an average
Japanese worker gives more than 100 ideas every year. In case of Toyota 80% of the
ideas given by works have been implemented and have been found to be useful.
However, in order to have early victories one does not have come up with quick- fix
solutions. It bas to be borne in mind that early victories help in sustaining energy and
molnentiltn in the change process.
The concept of learning organisation given by Peter Senge has been now considered as
a prerequisite for developing competencies, having competitive advantage and en-
hancing productivity. Organisations, like individuals, need to learn overcoming their
learning disabilities and blind spots. Learning i~ivolveslistening, questioning, reflect-
ing chal lenging, experimenting. unlear~iingand discontinuing. Leading change is more
of an attitude as overall change progresses.
Role of Change Agent All the organsiations learn from the experience but learning organisations continu-
ously choose to learn for their sustained existence. Examples of learning
organisations are General Electric, Wall Mart, TISCO and Tata Motors.
A look at the organisations that engage in learning one would find that
mc~stof them are engaged in single-loop learning wherein errors are rectified
based on past practices and present policies. On the other hand, learning organisation
engage in double-loop learning in which when mistakes are detected it is made part of
modificrition of the organisation's objectives, policies and routine procedures.
Double- loop learning challenges long-srandingassumptionsand norms of an
organisiltion and looks for drastically different solutions to problems and
considelrable improvements.
17.10 SUMMARY
Change is inevitable aspect of organisational life and is the essence of organisational
growth. For facilitating organisational and business growth ,the organisation requires
a leader wlio builds shared vision and communicates the vision across the
organisation. A leader requies certains skills and competencies to do so which can be
acquired by hi~nmlher.Championing change ought to go through some proceeses
which have been discussed in the unit.
Structure
18.1 IIVTRODUCTION
Every organization/individual goes through different changes, which are usually
external in nature. In change is said to be inevitable i.e. it has to occur one day or the
other Change is always followed by a transition phase wherein, the internal
adjustmenl proce;s works. When we talk about change, say in an organisation we
mean to sa.y that change has taken place e.g. new a boss with a new team has joined
the organisation or the organisation structure is changed etc. usually the charging
process takes place quickly and at times we do not even feel the effect of change as we
flow alongrvith it. In this situation, the transition process may be prolonged, which
may 2ccustom the organisation/i~~dividual to new changes. In the modem era, the
changes are taking place so fast that it becomes essential for a manager to pay
attention to the transition stage i.e. to make a balance between the old and the new.
Therefore it has now became important to stress more on managing transition than
managing change. In this unit, an effort llas been made to discuss the concepts of
transition an how to manage it. Cart Jung, a known personality in philosophy states
"We cannot cliange any thing until we accept it".
In thili unit.,an effort has been made to discuss the concepts of transition and row to
manage it (''a known personality in philosophy states cannot change anything until
we accept it.")
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18.2 TIUNSITION AS A CONCEPT
The diction;ary meaniog of transition states 'the process of changing from one state to
another'. I n general terms we can say that it is an internal adjustment process
occurring in every organisation/individualslife cycle. The transition phase is
Managing Transition
experienced in different ways and each organisation/individualtakes it in its own way
a~idacts at its own pace.
Transition is a state that change puts people into, while change is an external
phenonlenon involving change in policy, structure or practice, which a leader is trying
to bring about. Transition involves internal psychological reorientation that people
need to undergo before the change can happen. It is generally assumed that transition
is automatic and will happen naturally in the process of change. It may appear that -
the two co~npaniesthat have merged are operating as one and the benefits ofthe
merger will flow. But it does not happen as a normal process even though the
apparent signs may indicate it is working.
Change is external whereas transition is internal. Let us take an example of an
individual who wishes to switch histherjob. Ifthe person is prepared to switch the
job Iielshe is going to plan accordingly. During this process hetshe may go through
transition, for example mental stress, mood swings etc. In this case ifthe person in
questions tries to adjust to the changing situation and is managed properly, then the
i~ifluenceof change becomes less to a certain extent. We have to accept change by
effectively managing transition.
Let 11stake another example, whicll explains the concept oftransition, New Delhi, the
capital of India is witnessing many changes, for example, infrastructure changes
(Metros). Here, it is i~nportantto note that all changes are followed by a big
transitio~ithese. For example, the imple~nentationof CNG (compressed Natural Gas)
systems for all the vehicles in Delhi. For us it is a big change but it has gone through
a transition of converting the old system to the present system. Another example is of
CAS (Conditional Access System) wherein the viewers of different TV channels are
supposed to purchase a set-top box to view the pay channel on air. This system is still
in the transition phase and it may take a long time before it is implemented.
These exa~nplesand many more like these in the offing explain the concept of
transition. Analyzing these, we can state that, ifthe transition is manage properly
then the influence of change becomes less to a certain extent to have to accept change
by effectively managing transition.
a) List ally three examples from the business would, where transition phase is on.
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b) List any three examples where transition phase is followed by a bigchange.
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2. The lag between the old and new (neutral zone): At times it becomes
difficult for individuals to adjust to change and it takes quite a lot of time for
theme to adjust. The time taken to reorient from the old ways to new ways
can be termed as 'neutral zone '. Though it is normal but is quite dangerous.
To pass through this zone requires lots of efficiency.
3. Creative Lag: The neutral zone can also be transformed into a creative
zone, whereby the individuals in the organization can be creative. It is upto
the nianager to use this creativity effectively so as to bring a positive
change.
When an a Id system says bye, the new system says Hi!. A whole new era comes to an
end with the new system coming up. Let us take the example ofthe independence era
wher'e tongaslrickshaws were the most popular form of conveyance for the masses.
Then came:the auto rickshaw. Slowly and slowly they made there presence felt, hence
ending a whole system oftongas/rickshaw. Though slowly, people accepted the auto
rickshaw and now it has became a part of life. In this case transition has resulted in
development. Therefore the managers should manage the transition such that it results
in development
Stage I: ~ i v e u ~ . Say
~ h Goodbye
d To Old System: The first stage is to give up and
say goodbye to the way things were before. For a person who has spent years
working a in a particular way and has developed personal preferences cannot totally
disengage l~imselffrom the processes that made him successful in the past. It becomes
a question of sense of identities or the reality itself.
Stage 11: Shifting To Neutral Zone: The second process is shifting into the neutral Managing Transition
zone. The neutral zone is the in- between state and is full of uncertainty and
confusion and consumes a lot of energy to cope with it. The neutral zone for an
organisation becomes extremely
Difficult in case of merger or acquisition when core decisions remain in suspense
while the two organisations which have become one are busy resolving their questions
of power and decision making. People react differently to this uncomfortable neutral
zone while some become impatient and get into any new situation that comes their
way, others retreat and regress into the past. It is imperative for successful transition
that the organisation and the people therein spend considerable time in the natural
zone thereby not wasting the time in the neutral zone but utilizing this time for
creativity and energy, which will help the real transformation. Ifthe transition is not
dealt with properly the change effort may collapse; therefore, it is desirable that
change moves forward while transition is taken care of alongwith.
Stage 111: Forward Movement: The third stage involves forward movement. It is
not necessary that everyone will get through the transition stage successfully. It has
been observed that the people who do not give up the old methods or those who feel
frightened and confused by the neutral zone fail. It is comparatively easier to cross
the earlier two stages oftransition viz., saying goodbye or shifting into neutral zone,
but it is more difficult to sail through the third stage because this involves people to
behave in the new way. An organization where people have been penalised for
mistakes, people hesitate to try new methods and want to wait and see how others are
handling the new situation.
List an example along with the name ofthe organisation for each state:
18.7 SUMMARY
Transition involves internal psychological reorientation that people need to undergo
before tlie cliange can happen. It is generally assumed that transition is automatic
and will happen naturally in tlie process of change. But it does not happen as a
nor~nalprocess and needs to be managed before change can be accepted and
institutionalised.
Change has become a fact in today's organsiation. Sometimes change is optional, but
often, it is unavoidable. Change has become inevitable for the survival and this is due
to the tough competition arising in this materialistic world. Change cannot be
avoided and so is transition. Tlie people who blame change are the ones who do not
understand transition and lag behind. Tlie ones who understand transition are the
ones who keep on moving. Transition is a continuously evolving process and it is the
duty of tlie leaders to manage the transitio~iin an effective manager. It is not the
change that does wonders but it's the ability to effectively manage transition which
scores.
Role of Change Agent
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18.8 SELF-ASSESSMENT QUESTIONS
1. Differentiate between managing change and managing transition.
II
2. Take the example of an organisation you are working in or are familiar with and
analyze different stages of transition and discuss how the organization succeeded
in transforming from the old to the new system.
I
3. Take a hypothetical organisation and apply the rules for managing transition
to it.
4. Is it possible to establishan effective communications with your employees
during the transition stages. If yes, then how? Discuss.
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18.9 FURTHER READINGS
Harigopal. K. (2001). Management of Organisational Change-learning
Traiisforrnation. Response Books.
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w w-
. h u d son.com, December 2003
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w w-
. w m bridges.com, December 2003