UNIT 1 UNDERSTANDING CHANGE

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.

1.2 DEVELOPING THE CHANGE MINDSET

'The times they are changing', sang Bob Dylan, and 'more's the pity' perhaps you
say. Perhaps, you are a managerin a manufacturing or Service Company or a public
authority, and 'they' won't let you alone to get on with things. Always something new
is coming in, the organisation is restructured, the company gets taken over, or new,
government regulations or deregulations come in and change everything. Change - it's
the one aspect of life that never seems to change. It happens all the time. The only
thing is that there seems to be more of it and it happens more and more quickly.
There's never ti~iieto catch your breath.
 Concept of You are then totally fed up with change. 'There is no stability nowadays'. 'You no
Rdanaging C:hange sooner get 1:hingssorted out and there is a restructuring, a product change or new
competitor, running away with our business', 'You just get the line running smoothly
,
and reject to a minimum when in comes some new technology or a new product is
introcluced and chaos is let loose'. You sigh for the old days when you knew where
you were; yes, things did change then, but much more steadily. You had time to absorb
the cliange- or so you think now.

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 &-

organisation alive through the activities of the kitchen.

I
What is Management?
It may be defined as: "Risking yourself in the rnobilisation of resources and
relationship to add value to the enterprise". Let us now analyse this defecation phrase
by phrase.

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.

Change at the heart of life

It is really meant tliat change is at the very heart of life. Think about it for a moment,
independe~ltof business as such, and look at the role of change in general. You could
say that life is change. From conception to death we are changing physically every
inicrosecond, and certaily from the first moment of independent existence we are
cliangi~ig~ne~itally, emotionally and spiritually. Physically we know that in every seven
year period every molecule of our body has changed, very slowly and gradually, and
we are certainly not tlie persons we were. Similarly we are not the same in our mental,
emotional and spiritual senses.
For one thing, i n every wakiilg moment, and probably when we are asleep as well, we
are taking in new impressions and rearranging the old i~npressionsin the light of the
new, so that tliere is no such thing as stability. Neither would we want there to be.
Several significant schools of philosophic thought have stressed this.
We are all the time taking into our minds new impressions through the senses. We see
tl~ings,we liear things, we touch things, we taste things, and beyond that we have
feelings about the messages our five senses bring to us. They make us sad, happy,
impatient, excited, worried, angry, uplifted, determined, uncertain, jealous, envious;
they make us love, hate, syrnpathise, empathise, co-operate, oppose, fight; and these
emotions, being stirred, provide us with energy and impel us to action.
All these impressions and tlie emotions tliey stir are recorded in our memories.
Everytliing we have ever seen, heard, tasted, touched, smelt and the related emotions,
are indelibly written down in our human audio-video-taste-tactile-olfactory type
madihes,-in our brains or at least in our minds, if these arenot the same. These data
are all getting added to all the time. As more ingredients come in to the mind, so the
earlier ones seem just a little different - they are expanded of perceived in a new light.
Of course, if we had the whole ofthe tape machine playing at once, we should 'go out
of our minds', and so memory is selective. The whole range of materials is not making
its presence felt consciously all the time. A lot of it is buried, as we sometimes say, 'in
tlie depths of the ~~nconscious', but it is still there and gets called up by new events,
and by being linked with them it is changed.
Concept of We have an exciting picture ofthe human mind as a flow of impressions, and
Managing Change eniotior~sand ideas which connect them. The thinking we do about the impresssions is
part of the change process, because the bringing ofthings into new connections
present:jthem in new light- indeed changes them.
So if change is the microsecond by microsecond essence of living, our theme of the
need for a change mindset should not be difficult to absorb, because it fits with the
very structure of our minds and of our thinking.
Liife as Interaction
A significant contributor to this perception of existence is George Henry Mead, late of
Chicago University. He lectured much and wrote little, but his students felt that what
he was saying was so powerful that they took detailed notes and produced his material
sct that we, after his death, can reflect upon it. He gave rise to a sociological and
psychological theory, academically known as 'symbolic interactionism'.
A major aspect of it is that people interact by symbols - words and non-verbal signals
in particular. Every interaction makes a contribution to the mental make-up ofthe
oi.hers. When you have had an interaction with someone, you go away a different
person. You have each added something to the other. Mead described each individual
a!; having of being a central 'I' around which a whole lot of 'me s' - less stable and
derived from the interactions with others- were revolving. The 'I' then constantly
reactecl to all these constantly changing 'me s' and absorbed them into itself. It was, of
course, a concept rather than a literal fact, but when we think about the people who
have irrfluenced us and changed us, we know it to be true. You who have read these
words, as a result of our interaction, are a slightly different person from the one you
were a few moments ago. So being human and change go together and this should
niake the quest ofthis unit easier.
Living:Experience
There is another who has something to offer to this theme of human becomings and
what they become. He is the Case Western Reserve University in Cleveland, Ohio,
David Kolb. A
Work and
Life

Testing out Retlection

Principles in
Experience

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).

1.3 SOME KEY CHANGE THEMES

Predicting the future is a tricky business. However, there is a need to have a future
perspective in order to introduce constructive change into the business ofthe
enterprise. One needs to have some broad awareness of whither tlie future is tending, a
picture of future trends Stan Davis saw an interrelationship between physics and
management. Both pllysics and management are concerned with "the interrelationships
of tlie parts with a whole". He saw time, space and matter which are funda~nentalsof
physics, as equally fundamental to the shaping of tomorrow's business and
organizations. He was seeing them as resource-time, space, and matter-not as
constraints, and lie considered them as business resources from the customer's point
ofview.
Any time
The first dimension of physics which he links with business needs is time. As we
respond to and persuade customers, they use out time until they decide to buy. Then
we cdelivt:r, we are using theirs. We have to shorten the elapsed time between their
decision:; and the fulfillment oftheir need. The customers want the product of service
when they want it, not when the company deigns to provide it. They want it any time,
and techliology already provides many examples of meeting this need. There are
thousand of services, from provision of spectacles to the development of your holiday
snaps, where customer waiting time has been reduced from days and hours to minutes.
Davis suggests that this should be seen as the beginning of a conceptual shift, a
change toward getting as close as possible to immediate meeting of the customer's
needs.
1m;mediatelyavilable response is growing in the banking industry, with the growth of
instanta~ieousaccount debiting by automatic tellers at any time of day or night.
Information has a time value, so that monitoring the production line in real time; or
answering a business query immediately, benefits customer and provider. Computer-
aided design and development straight to production and consumption.
The technology is there. It is simply that managerial thinking hasn't caught up with it.
This is vvrhere future mindset comes in, developing all the time to keep pace with the
unfoldis~gfuture. Those who provide goods and services in real time gain competitive
edge ov1:rthose who don't there is no time lage between the identifying of a need and
its fulfil Iment.

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

Thirdly, the customers want the goods or service to be accompanied by intangible

benefits associated with availability at the right time and place and to express values
they require. For example, the man who came over the Christmas holiday, diagnosed
and corrected a very small fault which had put Edgar's central heating out of action,
and put it right, wasn't seeling him a spare ;art. H; was selling peace of mind. That is
the value he gives even when he's not needed, because he will come if he is a Edgar
knows that.
r
Productivity is defined not in terms of tones of goods produced, but in value added per
employee. People, as Theodore Leavitt pointed out long ago, don't really buy goods
and services. They buy a value - something they value. The enterprise providing the
value is able to share economics with the consumer by using as little matter as
possible in the preparation ofthe goods or services. So automation and materials
technology keep down the amount of processing and actual stuff which has to go into
the provision. It will be produced more quickly and cheaply, and with less final bulk
and weight. Davis encapsulates all this competitive advantage in his phrase 'no
matter'.
'No matter' as a concept also includes the role of the disposable, though we have to
watch its impact on the environment. But there are throwaway razors, diapers,
cameras and pens. The idea of 'no matter' also covers the idea of the invisible purpose
behind a sale. To perceive it opens up opportunities of lateral thinking and further
L
beneficial change. The invisible purpose behind a drill is not the selling of drills as
r such, but rather to sell holes. If you use a laser drill, you are very much into the realm
of 'no matter', for the laser is itself non-material and its produces holes which are by
r definition the absence of matter. This is all a question of tangible products hlfilling
L intangible needs. Ideas like this can transform a business. It is all about effectivenees
of outco~nesrather than efficiency of inputs. So the physical and the intellectual blend
in the marriage of the change mindset and the future mindset.

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.

k Future Trends and Change

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.

The Future at Work.

We liave already mentioned, in dealing with 'any place', the changes which are
happending in the nature of work. Some of the best writing on this subject has been by
Charles Handy in his books The Future of Work and the Age of Unreason. A proper
understar~dingof the changes which are developing in working methods and hours,
and in caseers and employment patterns, can help people to be less anxious about the
apparent insecurity caused by changing technolagy, methods and external market
forces. As the pattern of work changes, lifetime work for one employer will become
increasingly rare, and wider opportunities will emerge, though not without some
hartlsliip on the way.
Work is being affected bythe way in which technology and social and economic
change act together to create an information society, where information not only keeps
us inforn~edto an unparalleled degree, but also actually tells inanimate things what to
do, thus drastically reducing the need for human beings to mind machines and
perform basic processes. In his two books Professor Handy makes it clear that the
days where everybody expected to work 47 hours 47 weeks for 47 years are gone.
We are into the age af what Handy calls the 'shamrock organization'. Answering to
tlie three levels of dlb ~liamrock,organizations are increasingly employing three
categories of worker. Tkn*n arn ~ 1core 1 ~ernployees who provide the permanent staff,
perfc9nning tlie central act;. ::y: then there are the specialist functions increasingly
can., --lt h\/ ont tractor^ ,'the.- -, individuals or as companies; and, thirdly there are
the casuill and part-time workers who carry out the functions which are irregular,
seasonal or variable. At different times oftheir lives, people may find different work
styles suit them better. The parent with care of a child may prefer for a period to the
part-time; a person retired from his or her main career as a core worker may prefer the
fre~:dom which contract work provides.
People niay actually have a portfolio of approaches ofwork from which they invoke
tlie element which suits the particular part oftheir life cycle. The portfolio may
include wage work, feel work, home work (domestic, do-it-yourself, etc.) gift work
(for charity or the community), and study work (self-education), hobbies. It's all
work, arid our identity as people does not depend on a particular full-time employment
which people refer to when they ask what we do.
The implications of all this are vast both for business and the individual. If society can
get it right, it may mean more leisure and freedom. It will also have a bearing on the
concept of career for life, which is also liave a bearing on the concept of a career for
lifi. which is also creating problems fo; many companies where the career ladder has
fewer rungs up which to climb, giving rise to the phenomenon known as 'the plateued
manager'. In fact, ladder climbing may go out offashion with the reduction in the
number of rungs, due to the removal of whole tracts of work through the impact of
information and other technology. The challenges ofthe work itself will have to be the
nain motivator, and the cut and thrust of seeking promotion will be diminished, to be
benefit perhaps of both company and individual.
In addit ion, the types of employees required are undergoing radical change. Handy
es1:imatesthat 70 percent of all jobs in Western Europe will require menial rather&an
manual skills by the year 2000. Half of these brain workers will require higher
education, which enough ofthem are certainly not getting in Britain or indeed in most
countries.
The role of rewards in companies will iuidergo change, and all sorts of ideas are being Understanding Change
canvassed and linked with tlie tax system: zero income tax, social dividends,
edi~cationalcredits to be spent over a life time, a national income and ingenious ways
of ensuring tliat the money is there from types oftaxation which leave more choice
and yet enhance the incentive ways of ensuring tliat tlie money is there from types of
taxationwhich leave liiore choice and yet enhance the incentive to be entrepreneurial.
Businesses and governments are going to have to study all tliese proposals with care,
and tlie work of hi~manresource mnagement will undergo a radical reappraisal.
lfall employees could understand tliese trends and regard tliein as a bandwagon to be
-jumped on rather than as a threat to be resisted, and if trade unions could see them as
opportunities, the resistance to beneficial change would be diminshed to the advantage
of all. But even an insecure status quo is i~suallypreferred to an i~nknownfi~ture.
However. managers and tlie whole workforce are going to have to come to grips with
the alternative ways of rewarding achievement, and at tlie same time paying for the
needs of society. To i~nderstandtliese future scenario now will make it possible to
introduce change i~icre~iientallyon a 'win-win' basis instead of by a destructive
process of contl ict.
In this whole area of employments tlie need for a change mindset which does not
assume tlie permanence of tlie status quo, and of a future mindset which projects itself
into tlie f i ~ t i ~and
r e sees new possibilities, is going to be vital. There are revolutionary
trends at work. It will be folly to ignore them.

1.4 CATEGORIES OF BUSINESS CHANGE

Change can be better understood by the following box.

The Nature of Change

1 . Change call be defined as to make or becorne diflerent, give or begin to have a
t?iffhler~t,
fi,rnl.
2. Change also means c1is.sutisfaction with the old and beliefin the new.
3 . Cliange underlines a qualitatively d@erenr way ofperceiving, thinkin and
helraving to iniprove over the past and present.
4. Change can be seen as continuous and intrinsic to an organization or as
e-~trinsic trnd discontiuous.
5 . Change can be patterned andpredictable or complex and zmnpredicatable.
6 . Change is dzml or b@olar. Continuity without change leads to stagnation,
frustration ad boredom in i~idividualsand change witliout continuity leads to
ambiguity, conflict and degenerative pathology in individuals and organizations.
7. The r.c,te oj'churige is faster than our ability to co~npreliendand cope with it.
Sozlrce: K . Harigopal (200 I ), Manage~nentof Change, p. 26.

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.

Organizational Life Cycles

A usefill way of being prepared to cope with business change lies in tlie concept of an
organi2atio11allife cycle. The idea that the individual human life passes through a
series cf stages is at least as old as Sl~ekespeare,with his 'Seven Ages of Man'. It has
been popularized by Daniel Levinson in The Seasons of a Man's Life (1978) and by
Edgar Schein in Career Dynan~ics(1978). We will in particular have read about and
perhap: experienced mid-life or mid-career crises.
The organizational life cycle concept simply applies the same idea ofthe life of a
businesq. We now present three possible phases:
14
 Pioneering Understanding Chahge

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

No. of companies = 178

Financial losses 24
Drop in profits
1ncrt:ased ~ompetition
Loss of miirket share
Industry in recession
New chief executive officer
Proactive
(opportunities or threats foreseen)
Technolog,icaIDevelopment
Staff utilization
Note: There is frequently more than one trigger for change in any one organization.
 Organizational structure 44
B. MARKET-LED ISSUES
, Cusorner market orientation 30
New products 8
Reductioii to core 10
l~iternationalize 14
Quality emphasis 11
C. PEOPLE ISSUES
Co~nrnunication/participation 23
People matters 10
Reward Development 6
Emphasis on training and development
New work practices

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.

People and Change

Market-led cliange and the concern with quality again demonstrate the primacy of
people when undertaking change. It is a truism that people are a company's most
vali~ableresources, but effective cliange agents really mean it. Every type of change so
far mentioned depends for its success on people, thus it is not surprising that British
Airways launclied a campaign for effective service with the slogan 'Putting People
First'. Similarly, tlie search for quality in the two French firms mentioned above was
rooted in people; a major purpose of their quality circles was to give their employees a
sense of owning tlie enteprise and to create an inner compulsion to provide quality.
People just have to be central to all change activity. The plain fact is that while
machines, materials, and vehicles have change imposed upon them, they will not
answer back. They are passive recipients of change. But people do and will answer
back, and none of tlie changes brought about in relation to things and material can
happen without people playing their part.
So the Ashridge data base has a lot to tell of how people's heart and minds were won,
or how they were alienated by lack of clear communications.Resistance to change is
natural and cannot be bulldozed out of tlie way. Understanding this is important to
success change.
Thus qommi~nication,participation, training and development, new working practices,
and team developlnent feature prominently in tlie types of change taking place in
organizations. Rewards development is not mentioned so frequently in our sources,
but it is often associated with the whole package of change, even when not singled out.
The really effective change agent empowers people. Everyone in the company is
helped to realize that can make a difference, that they have more power than they think
they have. Quality circles, improvement groups, and decentralizationscan all help
people to grow.

Training and Development '

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.

Rand-Xerox based its corporate development on a similar concept. It viewed a

co1~pora1:ion as having a n organic life. It saw it as a living entity which grown and
lesiriis and breathes and thinks, where every activity contributes to growth of the
corporate being (or becoming). Every action or reaction in the whole body, human or
corporate, is a means of learning to perform more effectively net time - a concept
ofien described as the 'learning organizations'. At all levels Rank-Zerox set up
enlployees groups to seek business improvement, especially in quality but going
beyond quality circles.
Many afthe companies in the Ashridge data base work on this principle of continuous
in~provement(kaizen as the Japanese call it), where it is recognized that the people
doing the actual job have vast resources of talent and understanding which it is foolish
to leave untapped. The heritage of Taylorism was that it segregated thinkers from
doers instead of recognizing that the capacity to have ideas resided in every part of an
enterprise.
b1asse;y-Ferguson responded a severe business slump in the early to mid 1980s in farm
rnachi~reryworldwide by the risk of open communications, conveying the sense of
we're ;ill in this together'. Any early step management took was to hold a series of
presentation to all workers in workshops, where the serious trade position was put on
the table. Half the labour force was trained to switch between machining and
assembly. These steps were fundamental to getting the company on course by 1987.
The workshops continued then as means of combating complacency.

Qualityand improvement circles

7;he French hypermarket Continent considered that quality was its key change issue. It
introduced quality circles in a big way, but only after proper training and preparation.
Ilaiiiel Maitre was appointed quality circle director after a training programme with
the French Quality Circle Association, which under George Archier, head of a food-
11roce:;singcompany, successfully tranplanted these cirlces from their Japanese
hoineland. Their success was due to the participation ofeveryone, rather than a
copycat following of Japanese collective cultural norms. Participation within well-
,specifiedand practical limits became a way of life in a French individualistic culture.
[t encouraged a move away from merely 'top down' management system and changed
the company's cultural mentality.
Maitre made a significant point when he said our training system teaches young
peoplle to participlate in the learning process'. He is here defining the 'learning
organization' mentioned above. A successful organization is a learning organization,
one vvhere the whole organization and all those who comprise it are on a continual
voyage of discovery living in the expectation of new insights and findings them in each
day'!; work. Learning is about changed, and you will in turn change something or
somebody in your environment.
As in the Japanese companies visited by these French companies, kaizen became the
way of life, where all employees were on the look out all the time for all the things
they could improve, including the little things which in their own right or in total could
make a big difference. This approach implies that no one is powerless. Everyone has Understanding Change
some power to change something and should exercise it. Quality circles should not be
viewed as an irn~nutablesystem following a precise pattern. They need to be properly
organized, but essentially they inspire a perspective whereby everyone is committed to
a restless search for better ways of doing things - of serving the customer. Maitre saw
them as making people more interested in their work better.
Cuntinent's 7000 employees ail took part in quality circles throughout the 1980s,
beginning with a video programme, followed by meetings and training till, by the
second half ofthe 1980sthere were I00 quality circles in twenty-eight stores plus a
top management quality circle. This vast programme was a proactive approach taken
because it would enhance success.
Motorola holds se~ninarson the formulation of stgrategy and to help managers to
understand tlie nature of tlie threat from the Asian Pacific Region, Jacobs-Suchard
organized everyone in changes during the 1980s by publicizing 'corporate themes',
establishing 'rallyi~lgpoints', and 'selectively invoking martial law' to'deal swiftly
with crucial issues'.
Company has been using its Crotonwille training centre to nurture a new breed of
managers WIIG will encourage initiative and ensure that is results are successful. Jack
Welch, tlie CEO, says 'You want to open up the place so that people can flower and
grow, expand, hit tlie run. When you are tight bound, controlled, checked, nitpicked,
you kill it.

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.

1.6 CREATING THE FUTURE

Purpose here is to get manager and workforces to think ahead in the sense of living in
possible progressive futures and reflecting them back into the present. While
organizing that we don't know what tlie future will be like, we should exercise and act
of wil l to create new future will be like, we should exercise an act of will to create new
futures. This is a mental approach - a mindset which projects itself into a changed and
better future, and wliicli resolves so to handle affairs that in one way or another,
depending on inward and outward circumstances for its precise form, it will come to
Concept o f pass. E;usin~:ss
managers will be looking for the opportunities and threats in all the
Managing Change alternative scenarios. But they cannot presit the future.
With this point of view we don't say 'We will do this'. Rather we place ourselves in
the desired .future and look back to now from that vantage point. We use the future
perfect tense and say by 2010 we will have ....' This tense takes us to then and sees
now from there. Thus Professor Stan Davis called the American version of his book
on the future ofmanagement, Future Perfect. The British title is 2001 Management,
with tjhe subtitle 'Managing the future now'.
Davis's theme is that too often in business life we are too preoccupied with managing
the afterma.th of what has hapened in the past, in dealing with the consequences of
events which have already happened. He goes on to add to the English language in his
stiking sentence; 'In the new economy, however, we must learn to manage the
beforemath, that is the consequence of events that have not yet occurred.

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.

Loo king IBack from the Future

This future mindset is essential to the successful management of change. It engenders
a confident approach, where change is welcomed as the only way to achieve anything
worthwhile. It may seem a bit poetic and unrealistic; but try it at a meeting to discuss
future plans. Get everyone to describe the future as what they have done to get to the
future. Treat the meeting as a review of what has been done. Instead of debating what
you will do, assume it has been done and remind each other ofthe debates which led
to the decisions which yielded success. This will create some fun - serious fun -and
take some of the heat out of the inevitable disagreements. It could create a new style of
brainstorming. Like Peter Scudamore, you describe all your plans, proposals and
vistrons in the past tense. You start your journey at the end. You create a self-fulfilling
prophecy.
It need not be as absurd as at first sight it might seem. A board meeting to discuss the
five-year plan can be anything but enlivening. It tends to lok at all the possible
ob:;tacles and vary the figures, trying to limit the constraints. It keeps saying: 'But if
we did this ....' It all to easily become timid and tentative.
I

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.

1.8 SIELF-ASSESSMENT QUESTIONS

1. What do you understand by change? Discuss.
2. Discuss different factors which affect business change.
3. Explain the factors which trigger for change.
4. Discuss the future mindset and how one can be ready to adapt to change.
--
1.9-
- FlJRTHER READINGS
Harigopal, K.(2001),Management of Organisational Change, Response Books.
Nilaltant, 'V. and S. Ramnarayan (1998),Managing Organisational Change, Re-
sponse Books.
Prad ip N. Khandwalla ( 1 988), Fourth Eye: Excellence through Creativity, A.H.
Wheleler & Co. Private Limited.
 - --

UNIT 2 TYPES OF CHANGE

Objectives

From this unit you will have an understanding of

kinds of change
turnaround management
planningchange
process of transformation

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

2.12 Self-Assessment Questions

2.13 Further Readings

' 2.1 INTRODUCTION

There are several models of organizational change. A model is an integrated way of
explaining why and how change takes place, based on a known and acceptable basic
explanation (theory) of relat ionships of several aspects involved. It would be obvious
I that there can be different ways of explaining change, depending on what theory we
follow or use.
I
Two contrasting models of change are the "trickle down" model vs. "identity search"
model. The first is also termed in Sociology as Sanskritisation, i.e., following the
examples ofthe elite group. According to the first model organizational change occurs
because the top management takes a decision and adopts some new ways (technology,
Concept of systems, structure etc.) and others follow it. According to the second model, the urge
Managing Change to develop one's own uniqueness and identity will make the group or individuals
accept change.
Another way is to look at the external or internal forces as determinants of changes.
The adaptation model emphasiries the role of external factors (a new government
poliLcy,competitive environment) in producing change in organisations (more emphasis
on quality, restructuring etc.). According to the proaction model, the explanation
con~esfrom within the organisation (the decision of the organisation to set an example,
to be a leader, to anticipate future) and act and change itself in response to such an
internal urge.
Yet another explanation of organisational change may lie in emphasis on the structure
or the process. Successful change, according to the first model (structure model),
wauld require preparing the necessary structural details (technology, design of the
organisation, systems), and introduce them systematically. People will also change,
according to the process model, successfid change can be planned by helping people to
develop process competencies (ways of planning, decision-making, problem solving,
collabol~ating,communicating etc.), and then people will find new ways of organising
etc:.
A more comprehensive way is to look at the main emphasis in producing change-the
in~dividuals,the roles, the teams, or the organisations. We shall use this way of looking
at some models af organisational change.

-- 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- - -

Organisational change can be brought about by changing the organisational roles. It

has been argued that indiviual change is too expensive in terms of time and effort, and
may not necessarily lead to organisational change. If organisational roles can be
modified, these will on the one hand increase individuals' involvement, and on the
other increase organisational effectiveness.
One approach used for organsational change is that of role efficacy. Organisational
roles are analysedfor role efJicacy (potential efictiveness) in terms of the following
IOdimensions. The more these dimensions are present in a role, the higher the
efficacy of that role is likely to be.
1) Centrality Vs. Peripherality
The dinnension of centrality measures the role occupant's perception of the
significance of his or her role. The more the people feel their roles are central in the
organisation, the higher will be their role efficacy. For example, "I am a production
manager, and my role is very important."
2:)Integration Vs. Distance
I~ltegreitionbetween the selfand the role contributes to role efficacy, and self-role
distance diminishes efficacy. "!am able to usemy knowledge very well here."
3) Proactivity Vs. Reactivity
When a role occupant takes initiative and does something independently, that person is
exhibiting proactive behaviour. On the other hand, if he or she merrely responds to
vvhat others expect, the behaviour is reactive. For example, "I prepare the budget for
cliscussion"versus "I prepare the budget according to the guidance given by my boss."
4) Creativity Vs. Routinism
When role occupants perceive that they do something new or unique in their roles,
their e:fficacyis high. The perception that they do only routine tasks lowers role
eficac:y.
5) Linkage Vs. Isolation Types of Change

Interrole linkage contributes to role efficacy. If role occupants perceive

interdependence with others, their efficacy will be high. Isolation ofthe role reduces
efficacy. Example of linkage: "I work in close liaison with the production manager."
6) Helping Vs. Hostility
One important aspect of efficacy is the individual's perception that he or she gives and
receives help. A perception of hostility decreases efficacy."Whenever I have a
problem, others help me", instead of "People here are indifferent to others".
7) Superordination Vs. Deprivation
One dimension of role efficacy is the perception that the role occupant contributes to
some "larger" equity. Example: "What I do is likely to benefit other organisations
also."
8) Influence Vs. Powerlessness
Role occupant's feeling that they areable to exercise influence in their roles increases
their role efficacy. The influence may be in terms of decision-making, implementation,
advice, or problem solving. "My advice on industrial relations is accepted by top
management". "Iam able to influence the general policy of marketing".
9) Growth Vs. Stagnation
When a role occupant has opportunities-and perceives them as such--to develop in
his or her role through learningnew things, role eficacy is likely to be high. Similarly,
ifthe individual perceives his role as lacking in opportunities for growth, his role
efficacy will be low.
10) Confrontation Vs. Avoidance
When problems arise, either they can be confronted and attempts made to find
solutions for them, or they can be avoided. Confronting problems to find solutions
contributes to efficacy, and avoidance reduces efficacy. An example of confrontation:
"If a subordinate brings a problem to me, I help to work out the solution." "I dislike
being bothered with interpersonal conflict'' is a statement indicating avoidance.

2.4 FOCUS ON TEAMS

Some models of organisational change are based on effective teams as the medium of
change. Organisation Development (OD) emphasises team development. Work design
is also based on making work groups more effective. While OD mainly emphasises
organisational processes, work designing focuses on distribution of power in the
organ isation.

Organisation Development (OD)

OD model of change is based on the assumption that effective organisationalchange
would require change in basic values or ethos of the organisation, strong teams, and
involvement of organisational members in the different stages of planning of change
(problem identification, diagnosis, searching alternative interventions, using an
intervention, i.e. action, and evaluation). The change would be effective if the entire
organisation (including the top management) is actively involved in designing and
implementing change with an external process expert.
OD emphasises both team building and development of values, mainly OCTAPACE
values (openness, confrontation, trust, authenticity, proaction, autonomy,
collaboration, and experimenting). Team build in^ i s hoth the objective and an
important rnedium of change. Members of organisation work in teams at different
levels ofchange. Enough experience on OD is available, although not much research
has been done. Experience has shown that OD is a useful model of change, if internal
facilitators can be developed to sustain change. Both research competence and process
con1petenc.yis needed in OD.

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.

2.5 FOCUS ON THE ORGANISATION

Structural change models have been extensively used for organisational change. The
emphasis is on developing a new structure of the organisation, in response to the
changing erivironment or the changing priorities of the organisation, and to designing
relevant systems (budgetary and informati011systems). 'l'he changes introduced
demand new ways of working, and individuals respond to such demands. Some good
accounts are available of such changes. Some turnaround work done is also in this
category.
MBO is a specific example of structural change, using a structured way of helping on
organisation plan its time-bound objectives at all levels, and working to achieve the
objectives set. Specific ways are adopted to monitor the working of group and
individ~~alson these objectives.
While the various models have been suggested in this unit, it should be emphasised
that these do not work in isolation, and in practice many approaches are combined.
Experience has shown that structural changes, for example, cannot be sustained
witlio~~t
relevant process si~pport.Similarly, process facilitation must be followed by
relevant structi~ralchanges so that the processes could be institutionalised and
sustained.

2.6 TYPES OF CHANGE

Ramnarayan ( 1998) in his book discusses four different types of change:
I) Co~iti~iuous
or incremental change,
2) Discontin~~ousor radical change. 33
-,
Concept o f 3) Participative change.
Managing Change
4) Directive change.
The first two types of changes are related to change process and the last two are
related to ~mplementation.The changes which take place in the environment can be
visualised as to how change in organisation grows. First1,y managers have to know
which asplsct of the change in the organisations to continue which to discontinue.
Secondly, managers must "acquire" the skills and "abilities" to change both in a
directive and participative manner. Finally, managers must be aware of the different
change strategies and learn to use appropriate strategies.
According to K. Harigopal (20011) 'Directional' change occurs because of intense
competition among the companies, changes in government policies and when there is a
failure in business strategy. "Fundamental change" occurs because there is a change in
organisatisn's purpose or in its goals. "Operational change" is as a result of
improvement in quality, quantity, as per given schedule, unit cost of operations in
developinj; products/services. "Total change" occurs when the entire existing system
needs a revamping. "Planned change" occurs because of certain internal and external
demands. 1e.g. golden hand shake. "Happened change" is unpredictable. It is not in
one'!; control. The change is required as a result of external causes.
"Tralisfor~nationachange"' occurs because of basic shift in goals. "Revolutionary
changes" are sudden changes, e.g. aut~mation."Recreation change" occurs when an
organisation wants to be ettirely different from the one which is at present. When
there 1s change in ~xostof the organEsations components, then 'strategic' change takes
place. Whsn there is a change ac a result of an event 'anticipatory' change occurs.
"Relative change" occurs tleca115,eof an event or series of events.
Increasri. : -'-mtional compet;.:,h- ,rid rapid technological change have magnitude
expectations about organizdtional performance and adoption. Deregultion and
globalization of our postindustrial society are putting an enormous amount of pressure
on organizations. Changes in political alliances and orientations over the entire offer a
host of new opportunities. In response to the new challenges, a number of models of
organizational analysis and decision making have come to the fore. Unfortunately, in
spite of all these up-to-date management technologies and technique, disasters such as
the nuclear explosion of Chernobyl. oil spills, as the loss ofNASA shuttles challenges
and <:olulr~biastill seem to be inevitable. Notwithstanding systemetic analysis ofall
possible contingencies, in all these instances something went terriby wrong.
Traditional focus on rational thinking will not be able to tell the total truth'. The reality
ofthe situation requires different approaches to different situations. We need to learn
more about the puzzles to reach get some clues in solving them.
Let us firsl. examine the process of turnaround in organizations. There is a river in
Africa where every year tens ofthousand of wildebeasts attempt a crossing. Many are
swept away by the swirling waters. Quite a few fall prey to the snapping jaws of
crocodiles. Several more are hunted down by staking lions, leopards, cheetahs and
hyenas. Olily a few survive.
The corpo~~ate world is not very different. Many companies fall to the grenades of
completioii: or of adverse technological or social change. Many more fall because of
internal wc:akness. But unlike the wildebeasts, whose deaths may sustain other lives,
corporate details can put thousands out of work, bringing misery to them and their
depel~~dents.Large pools of skills, assiduously build up over the year, quicky dry up.
Specialized machinery, often unsaleable, instead ofproductively humming, may turn
into a saurian graveyard. Uncleared debts may ruin. or at least discomfort, legions of
vendors ar~dlenders (Khandwalli~.2000).
This grin1 scenario is not imaginary. Many companies, large and small, fall by the Types @$Change
way side by the thousands every year. In India, during the 1980s, the number of sick
units grew some ten times, from around 22,500 at the end of the 1970s to over
200,000 ten years later. Several financial institutions were facing grave illness
because the money they had lent to these companies were practically irrecdverable.
Should we let sick companies die and should society suffer the consequences? We do
treat such hunians, and many do recover. Should we not also treat sick companies and
help them recover?
On the outside there is life, richly turbid, a river enriching and absorbing all in its
path, providing space to its citizens to live, lean and die. But inside these
organizational cages are unseen forces dissecting humans and sucking away all the
juices that tlie river of life honours, leaving only an electronic, robotic flicker.
But to students of turnaround management, organizationsare a lot more than
wastelands of padlocks and turning them around can be as lively as a storm and as
creative as a forest. In these organizations, people can be creative, heroic, friendly,
generaous, caring as also nasty. Turnarounds can be stuff a high drama and griping
novels.Not always, perhaps, but often enough.

By a~ialyzingsome of the important organizational case studies and understanding the

approaches undertaken by people who were responsible for turnarounds, Khandwalla
sbserves that:
Tur~iaroundscan create rather volatile situation - they evoke images such as
those of war, endangered survival, junkyard pile.
During a crisis the turnaround leader acts on numerous fronts. Helshe articulates
a credible vision and strategic intent. The CEO's job is shaping the concept and
tlie structure by which the concept would be impIemented across the board, and
often draniatically (boom; strike; crash). Helshe becomes a bridge to various
stakeholder to rope them into the turnaround. The CEO tackles the immediate
cash or other crises on the war footing. Helshe imposes a philosophy (Do it
now!'), sometinies by crying a credible wolf ('The leader's job is to help
7
everyone see that tlie platfor~nis burning ). The CEO keeps up the energy of
people by personal example (work harder than anybody else, seven days a week,
24 IIOLI~S a day). To be able to do this need energy, purposiveness, versatility and
loads of infectious motivatio~land optimism in a scenario of despair. As Business
Week put it, 'Turnaround artists have uncommon stamina, a thirst for action, and
some of tlie biggest egos in business'.
The turnaround leader often simplifies the immensely complicated turnaround
task to get the organization moving ('fix it, sell it, or shoot it'; improve corporate
image, and that's it; VERC: volume, earning, returns, c ~ ~ l 'business
ii; don't fail,
people do'). But at the same time helshe reserves flexibility ('one pill cannot kill
a11 ailments; strategies are simple, there execution is not).
The turnaround leader asks some tough questions that can shatter preconceptions
(what's strategic, what's diseases, what's under performing). To get answers he1
she needs to circulate among the workers (how could we achieve 20-20-20). He1
she needs to break up big problems into smaller manageable ones, and scrape
away tlie encrustations to get to the core of problems.
0 The ti~rnarouridleader often has to take risky actions that can go either way.
The turnaround leader has to discriminate between what is good for the
organization and good for employees, especially tlie no performing ones. Helshe
Concept of cannot afford to be soft and sentimental but helshe need not be callous either.
Managing Change Some turnaround leaders may, however, use separations or punishments to send
a message to the rest ('if you can't get under the limbo rack, good-bye'; 'public
hangings' of change resisters). Others may move those that can deliver into
stratlsgic positions.
e The .turnaround leader acts authoritarian on the assumption that people like
dependencey ('A lot of people want to be led'; 'People need to be told here's
where we are going and why').
e The 1:urnaround leader has to manage the anxiety and insecurity of the staff, and
turn ithem into constructive action througll straight talk, consultation, credible
plan of action, incentives, decisiveness, tolerance for honest mistakes, and new
skills.
e The turnaround leader has to co-opt the doubters, the indifferent, even the
advexaries, into a team inspired by a common purpose (sing from the same song
sheet).
e The turnaround leader has to empower people down the line to take decisions.
Not all turnaround leaders are alike, of course. Some are real Theory X, while others
may be more. Theory Y, humane participative types; some are intuitive while others
may have Inore of an analytical professional approach, some are dramatic and some
can be paranoid and narcissistic. .

2.7.1 Key Constit-r.entsof Turnaround

A turnaround is a process, ;a I-iappening spread over many moons, full of passion and
. =
drama :ml:edy and triv- ;, ,jut it is also a structure, an architecture of management
actio~ls;.ii~&hhang together it1 dl.i~nctiveedifices. But to build an edifice there must
be constitutes. Fortunately, turnaround scholars have been quite prolific in producing
lists of turnaround actions which can cohere into 'gestalts' of success. The problem is
not one of availability; the problem is one of sifting the marginal or less important
from the critically important. Fortunately, there are studies that indicate the relatively
frequently used or more important elements in turnarounds.
Pradip Kittzndwnlla conducted a study of 10 Indian turnaround attempts (some were
more successful than others). He analyzed the cases in terms of 10 categories of
turnaround action. These ~ncludedboth internal and external focus actions. The
internal focus actions were : top management changes, credibility building actions by
the new management, initial attempts by the new management to control finances and
operations, mobilization ofthe staff for turnaround, coordination of activities, quick
payoffs projects in various functional areas and quick cost reduction. The external
focus actions were: negotiation of support of outside stakeholders and neutralization
of external pressures, revenue generation and asset liquidation for generating cash.
Later, he reported a study of 42 'complete' turnarounds and 23 'break-even'
turnarounds from all over the world. He utilized eight major categories of turnaround
actions for analysing each of these turnarounds. These were: personnel changes,
diagnosing and troubleshooting, stakeholder or people management, operations
management, management systems and structure, financial management, strategic
manag;ement,and miscellaneous. But several ofthese major categories included
subcategories. The largest category with 13-sub categories was stakeholder or people
management.The sub-categlries were: credibility-buildingactions of management;
securiingstakeholders' support; increased training of managers and staff; public
articulation by management of mission, goals, etc.; management communating with
staff, lower level managers, etc. incentives, motivating, grievance redressal; example
 participative management, elliphasis on core values, etc. Operations management Types of Change
included five categories: significant retrenchment, other cost reduction measures, plant
modemization, retooling arid reorganizatio~ifor greater efficiency, quality,
productivity, other efficiency, quality, productivity enhancing action, and marketing-
related actions. Two areas had three subcategories apiece, namely, management
systerns and structure, and strategic management. Personnel changes, diagnosing and
troublesliooting, and financial management has two sub-categories each. In all there
were 27 subcategories and each turnaround case was analyzed in terms of the sub-
categories utilized in the turnaround.
When tlie 42 tur~iaroundswere scored on the usage of these 27 subcategories, an
interesting insight emerged. 'There were six turnaround elements that were used by
' 60 per cent or more tur11arounds.These Kllandwalla called foundational turnaround
elernents. These were: product mix changes, changes at the top, marketing related
actions, restructuring, cost reduction measures (other than retrenchment), and plant
modemization for greater productivity, efficiency, quality, etc. Seven other elements
had Inally linkages to otherele~ne~its (as measured by number of significant
correlations), so that a change in one could trigger changes in several other turnaround
elernents. Khandwal la called them strategic elements. These were: use of staff
motivational devices such as incentives, garnering the support of stakeholders,
participation of lower level managers in turnaround related diagnosing and problem
solving, increased HRD, formal diagnostic work, mass layoffs, and creation of
organization-wide consensus on core values and required changes. Turnaround
resembled each other because of reliance on 'foundational' elements; they differed
because of differential resort to 'strategic' elements.
Scholars who have studied turnarounds have come from many different disciplines.
'Those with a strong strategic management orientation have tended to use turnaround
categories popi~larin their field, such as acquisitions, diversification, plant expansion,
R&D, new product development, and the like. Those witli a finance/economic
background have tended to utilize those variables for which secondary published data
are readily available, sucli as tlie PIMS database or the Disclosure Worldscope
database. Those witli a strong organizational behaviour background have tended to
include a number of 'people management' variables related to organizational
~iiobilization,leadersllip, c o ~ n ~ ~ ~ i ~ ~ i iincentives,
c a t i o ~ ~conflict
s, resolution, etc. Those
witli a strong organization theory background tend to include mechanisms for coping
with uncertainty such as forecasting, planning, and MIS; mechanism that facilitate the
carrying on of a variety of tasks such as delegation of authority and various fu~ictional
departments. and 1necha11is1n of coordinating and inter-departmental collaboration. As
of now it is difficult to separate the wheat from the chaff. One thing is certain:
turnaround requires the taking of many different actions.

2.7.2 Process Models of Turnaround Management

Grinyer and McKiernan: "The process of inducing major and sustained improvements
in co~iipaniestliat are stagnating is of fundamental and lasting importance', so opined
two British Peters, Grinyer and McKiernan, they studied 25 UK cases of 'sharp-
bending' tliat is, companies that underwent transitions to much higher performance.
Although sharp benders may not all be turnarounds from decline, the processual
insights of the study can be illuminating for turnarounds. According to their model,
sharp-bending seems to begin with a dramatic crisis, a situation triggtd by internal
dissatisfaction over the gap between corporate aspirations and realized performance.
This gap may arise on account of any of several internal or external factors. Next, the
organizations may follow a widening sequence oftrying-out options tliat can get
results. Initially, it may seek to analyze function-wise the operational problems and
then launch a cost-cutting programme. Iftliis does not achieve desired results, it may
then go on to modest changes of a strategic nature, such as some changes in markets
served (bul still mostly in familiar terrains). If these two steps are found inadequate,
the organisation may seek radical options such as major changes in technology,
mark~:tsserved or the distributive chain, and involving divestment, acquisitions, or
unfamiliar diversification. This, however, would require the organization to adopt a
new paradigm of beliefs, practices, and methods. For this, the management may
borrow an existing recipe, or learns to change by trial and error processes. This
mindset change may require a new management team. Diagnostic'work may then be
initiated, such as analysis ofthe company's position is a work may then be initiated,
such ils analysis ofthe company's position in a competitive environment.
Declines apparently do not autorr~aticallylead to sharp-bending actions. The latter
requil-etriggers. Grinyer and McKiernan found links between various causes of
decline ant1events triggering sharp-bending changes. Where the causes of decline were
external, such as change in product technology or arrival of substitute products in the
markct, the,triggering event to be an intervention by an external institution, such as an
involved financial institution. An existing management tended to respond to marco-
sociallyenv~ronment-includeddeclines (such as from demogrphic changes or changes in
income distribution). But interestingly, it had difficulty responding to decline on
account of competitive pressure and seemed to ignore decline caused by poor quality
of management. The response to poor management seemed to be sharper when there
was a change at the helm andlor there was threat or actual change of ownership. There
were some additional findings that were interesting. Intervention by external
institutions, such as the involved banks or stock market authorities, usually pointed
the organi~~ation towards cost cutting but away from strategic change and service1
quality improvement. Threat or alctuality of ownership change too usually pointed the
organization towards cost cutting, but away from strategic change and servicelquality
imprc)vemc:nt.Threat or actuality of ownership change too usually pointed the
organizatic~ntowards cost cutting, but also towards fresh blood in the board and
greater decentralization but with tighter financial control. A new CEO tended to bring
a new visicln and attitudes, and also tighter controls. It was apparently only when
management initiated action on the basis of a recognition ofthe problems causing
declirie that attention was paid to quality and service.
Some further findings on primary and secondary steps in sharp-bending were
interesting Apparently, it was the ingress of new functional directors rather than of a
new CEO that triggered a flurry of 'strategic' changes such as vigorous extension of
markets or greater product differentiation or market segmentation. Also, it triggered
imprc~vementsin quality and service. The incoming CEO, however, brought with him
or her new value and attitudes, and tended to trigger divestiture. Three other primary
steps seemed to trigger various changes. Diagnostic work related to product market
focus seemed to stimulate a whole lot of 'strategic' changes, like acquisitions, exist
from inon-core business, greater segmentation and differentiation. It also triggered
actior~sto improve quality and customers service and steps to improve quality and
servic:e, as well as greater opport~inities,they had no effect on strategic options. And
they clid seam to weaken financial controls. Another primary trigger was
decentralization of operating and innovative decisions. These triggered new
invenments diversify into new markets, greater utilization of capacity, rightsizing of
the head office, and divestiture to reduce debt. All in all, and most powerful and
pervasive trigger seemed to be diagnostic work related to product market focus,
followed by ingress of new functional directors, profit incentives, decentralization, and
last of all, :I new CEO.
Grinyer anti McKiernanYsstudy highlights the useful role oftriggers in helping the
organizatic~nto do something about decline. It points to phases in sharp bending. It
also liigl~liglitstlie importance of changes in the board and change or threat of change
in ownership as important triggers for initiating sharp-bending steps. It underlines the
importance of strategic product market a~ialysisas the starting point for widespread
sharp-bending actions, and also the secondary but useful roles of profit incentives,
new firnctional directors, and decentralization. Their study suggests that it is not
enougll to get hold of new CEO; for sharp-bending success he or she must rebuild the
top team. get a diagnosis done of current product market strategy, get the management
to recognize problems, offer incentives, decentralize and tighten controls.
.John Sropfordund Cl~urlesBuden-Fuller: Stopford and Baden-Fuller examined the
renewal process of six British manufacturing organizations in disastrous straits. The
distinguished between 'turnaround', which they defined as oriented largely to financial
solvency and efficiency, and 'rejuvenation', in which system-wide changes in strategy,
structure, management systems and processes culminate in a metamorphosesand
powerfill new business capability. The previously limited, hide-bound organzation is
replaced by a 111i1climore resilient, distinctive organisation. They highlighted the
importance for this metamorphosis of a challenge initially posed by tlie CEO and his
definition ofthe programme to be solved, the choice ofthe competitive battleground,
the breaking down of earlier organizational rigidities, new skills, experimentation,
innovation and learning. Rejuvenation is a three-stage process which begins with
reduction in the company's scope of actitvities (downscoping) to what it can complete
in. Tlie CEO's belief in the new opportunities that could be available by the
organization deter;minestlie scope influence the focus of change. Tlie next state is
acquisition of skills and information to speed up learning in theorganization,
characterized by questioning, experimentation, and innovation. The final state is
recompilation of business, that is, enlargement of the company's scope.
During these stages, managers ask a lot of new questions, find out what they do not
know, go about plugging gaps in their knowledge, and in the process uncover many
unforeseen opportunities. It is in pursuilig these opportunities that the organization
invests in new approaches, lnetamorphoses and diversifies (see Box I).

Triggers to Trunaround Action, Strategic Direction, and Focus of Change

at Two British Companies

bought some of the products from-qanussi, which made

between Zanussi a n d h o t ~ i nefoducts.
t --- -*
--
process improvements. He got the organization to focus on improving gr@ng
a ~ o l o g qLater,
. he took up the challenge posed by Sears Roebuck, a customer, to
produce a knife that needed no sharpening: and a 'laser' knife ?as produced. The CEO
% i Y @ t - R M m ~ C uonm&leting.
s One major change Richardson made was in
moving C > m m ~ ~ (because
r k it created headaches in quality, supervision, overheads.
and disputes)&~n-:urly wages system. Richardson also added new products. Later,
Richardson was taken oSr-~%%WanBninterests which added financial strength that
enable Richardson to go global.

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.

2.7.3 Types of Turnaround

Turnaround types are distinctives configuration and turnaround elements. Typology
are useful in various ways. They help us conceive multidimensional, internally tightly
linked phenomina such as species of plant, insect, or animal life, types of cuit,ures,
political and econo~nicsystems, and types of organization. Once we have a useful
typology. tlie working of each type can be examined under a microscope, so to speak,
to understand what liolds its various elements together, and how they interact to enable
the type to functio~i.A typology also helps us think about the circumstances in which
each type evolves and the consequences of its existence. This knowledge can help us
modify if approximately. This is true of turnaround types. A couple of studies *
illustrate what turnaround types look like.
C
Hanibrick and Schecter attempted to identify turnaround types or designs in their
study of tlie turnarounds of 53 US business operating in mature industrial products
industries. These businesses were rnostly divisions or corporations.Through cluster
analysis they identified three designs, two ofwhich they had anticipated and one they
had not. The largest cluster, of 28 firms, was the one they had not anticipated, the one
they ca Iled piecemeal productivity turnaround. This was relatively high both on
capacity utilization and employee productivity and just about average on 10 other
variables. The second largest of 19 firrns labeled selective productlmarket pruning.
This type of turnaround appeared to be secured by generating cash by liquidating
receivables and inventories. possibly to reduce borrowings, cut in expenses like
marketing, a push on higher productivity (either through incentives or some
downsizing), arid on quality, relatively premium priced products, even iftliis led to
lower capacity utilization. suggestive of a niche positioning. The third cluster, of only
six finns, was labeled asset and cost surgery. This turnaround appeared to b:achieved
by sllarp cuts in R&D, divestiture of tlie older plant and equipment, and reduction in
~iiarketingexpense, with liquidation of i~ive~itoriesand receivables to release further
cash, and a very strong push indeed for higher productivity (probably through large
downsizing) and capacity utilization, that is, for a low cost market position. Of
Hanibrick and Schecter's three clusters, only two were truly multidimensional. These
were selective productJmarket pruning and asset and cost surgery. Of these two, the
Concept of asset and cost surgery cluster had only six out of 53 business. The only 1
Managing Change . multidimensional cluster of note was selective productlmarket pruning, and this may
t11erc:fore be an 'archetypical' turnaround design for mature industrial products
I
1

business i n the US.

Pradip Khandwalla divided 42 'complete' turnarounds from several countries into two
roughly equal groups of surgical turnarounds, involving substantial layoffs, and non-
surgical turnarounds, involving virtually no layoffs. Through cluster analysis he
iderrtifiecl two sub-types of non..surgical turnarounds. The two surgical subtypes were
'surgical reconstructive' and 'surgical productivity/innovation orientation'. The two
non-surgical sub-types were 'non-surgical innovation orientation' and 'non-surgical
trar~sfornlation'.
Thr: surgical reconstructive seemed to be the classic, slash-and burn tumaround,
involving managerial overhaul, mass layoffs, divestiture, restructuring (decentralized),
sharper iiccountability, other structural changes, a marketing push, and product mix
ch;inges(diversification, prodt~ctline rationalization, capacity expansion, etc.). The
surgical productivity/innovationorientation turnaround also involved mass layoffs,
managerial changes, product mix changes, and marketing push, but it was much more
comprel~ensive,with a strong productivity and innovation orientation. It resorted to
giving incentives to staff and motivating them to contribute to turnaround, disciplining
reluctar~tor non-performing staff, new product development, several ways of cost-
cutting (beyond mass layoffs), a strong push for operational excellence through
borrowings and equity, often 1.0fund modernization, diversification and expansion.
T'ne fir:;t sub-type mostly chopped away what was thought to be malfunctioning,
mended the sorry tinancials, restructured, but did precious litle to build up the
p:oductive and innovati\-:,capability of the organization; the second invested in
-
c..;.atinp a strong op-; 2nal and strategic platform for further growth.
?'he non-surgical innovation sub-types invested relatively heavily in changes at tlle
top, innovation and product development, product mix changes, marketing push and
cost reduction (without resorting to mass layoffs). The most compressive the best
performing of all four subtypes was the non-surgical transformation turnaround. It
tleveloped as many as 14 turnaround elements (versus five by the non-surgical
innovative, six by the surgical reconstructive, and 1 1 by the surgical productivity1
i n~lovationturnarounds).
'The non-surgical transformation was a highly participatory turnaround in which a
determined effort was made to involve both the internal and the external stakeholders
in designing as well as implementing the turnaround. There was also considerable
efforl at expert diagnosis of the organization's problems,~professionalizationof
various management systems, and emphasis on core valued. It did not neglect
restn~cturing,changes at the top, product mix changes, cost reduction, marketing
push, productivity push, etc. that are foundational to most turnarounds, but it went
further than any other sub-type in creating a participatory revolution in the
functioning of the organization. In several ways it was prolific in its use of what John
Stopford and Charles Baden-Fuller described as rejuvenation processes.

2.7.,4 Turnaround Performance

Several studies shed light on what makes for turnaround success. In several studies
insitghts were gained by comparing sick companies that were turned around with those
that could not recover or recover as well. Let us look at some of them.
Schendel and Patton did a study of 36 pairs of US manufacturing firms in 20
different industries. In each pair, one firm had experienced a relative decline and then
relative recovery and the other from the same broad industry had experienced decline ,
but no revival. While the tumaround firms reported lower income and sales rates of
 -

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

I c~n~prehe~isive tends to be the tur~iarourldeffort.

lConcept of Turnxounds tend to be rich not only in terms of variety of actions taken but also in
Managing Change
the v,arietyof process activated. These processes include those events than can trigger
off a stron:; turnaround, effort, rnanagment change processes, vision building and
leadership, problem defintion and decision making processes, intervention process
involving (outsidestakeholder, rejuvenatory and mindset change processes, processes
by which the organization empowers itself with new skills, etc. It is when we see
turnaround actions as part of wider organizational processes that we realize what a
flux a turliaround is, a river in which a large number of currents, some horizontal,
some sideways, some vertical, and some diagonal are at play, interacting with and
influencing one another. These processes are the stuff of organisational dynamics.
Alsc. these processes cannot be switched on and off by the people in power. They
have tnon~entumand a futurity and almost inevitably alter the culture ofthe
organization. Turnaround wjsdom lies substantially in unleashing the creative and
gerniinal orocesses and snuffing out the deadlier ones.

--
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".

"Fortune favors the brave".

(Terence)
There are some rules that govern the interaction of competitors, the evolution of
compler. systems and the behaviour of human beings in organizations.
That they are sometimes soft, often derived through observation, usually followed
more by instinct than conscious design, and never wholly deterministic for any given
does not mean we cannot base our actions on them. Indeed it means the
sit~~atiorl
opposite:. The whole purpose of strategic managment is to have the courage so to do,
and thereby to beat not just cornpetition but evolution itself.
However, to do so means using our heads as well as our hearts, pitting others'
experience against our hope, and dealing with reality as it is, not as we wish it were.
Such is life for those who wou~ldlead.
Leaders.are busy for having to deal with the pace of change and intensity of
46 competition that has been thrust upon us in the last few years. Qusy because they are

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

2.9 WORK REDESIGN AS A TECHNIQUE OF PLANNED

OiRGANIZATIONALCHANGE
There are reasons both for optimism and pessimism about the use of work redesign as
a device fix organizational change. When meaningful improvements in jobs can
actually be made and supported over time, their effects can be powerful. Yet
significant restructuring of work is vey difficult to accomplish, especially under
"normal" circumstances when organizational systems are operating relatively
smoathly Just how feasible is it to use work redesign as a point or leverage for
planned cinange in organizations?
Work redsign has some special advantages in dealing with three key change problems.
The first is simply getting behaviour to change. Many change attempts are based on
the hope that if people's attitudes change, or if they learn better what they are
supposed to do and how to do it, or if they are helped to understand better the
nonobvious causes oftheir and others' behaviour in organizations, then behavioural
changes will "naturally"follow.
Research evidence forces us to be skeptical about such hopes. People do not always
behave consistency with their attitudes or with what they cognitively "know'' they
should do. People who have high job satisfaction do not always work hard and
effectively. And, in most organzations, vast amounts of task-relevant knowledge and
ski1Is are untapped either because people choose not to use their talents in
organizational work or because they do not have the opportunity to.
On he other hand, people do perform the tasks they have accepted. How well they
perform them depends on many factors, including how the tasks are designed. But
people pe:rform them. Redesigning jobs, then, is almost certin to result in changes in
the overt behaviour of the people who hold th&e jobs. I f p changes require people to
know more than they now kriow then they may become motivated to increase their on-
the-job slrills. And if the changes turn out to prompt hard, task-oriented work, the
people may over time develop beliefs and attitudes that support these new work
behaviours.
Work redesign, then does not rely on getting beliefs or attitudes or skill changes first
(such as by inducing a worker to "care more" about work outcomes, as in zero defects
pro:grammes)and hoping that such changes will generalize to work behaviour. Instead,
the thrusl:of the change is to alter behaviour itself. Attitudes, beliefs, knowledge, and
skills will follow these behavio~urand gradually become consistent with them.
Tho second problem of planned change is getting behaviour to stay changes. After
jobs are changed it is difficult fbrjobholders to slip back into old ways of behaving.
The old ways are just not appropriate for the new tasks. Moreover, the requirements
and reinforcements built into the new tasks support the new ways of behaving. So one
need not worry too much about the kind of "back-sidings" that occurs so often after
training cw attitude change activities, especially those that take place away from the
job itself'. The stimuli that direct and constrain the person's behaviour are experienced
right on 1 he job, day after day. And once those stimuli have been changed, they are
likely to stay the way until the job is once again redesigned.
The thircl organizational change problem is getting the changes to spread to other
organizational systems and practices. What happens in an organization is completely
and redundantly detertnined. A change in any single organizational system or practice, Types of Change
no matter liow competently carried out, ca~iliotbe expected to result in a basic
reorientation of liow an orgaliization operates. If overall orga~iizationalclia~igeis
desired,-then- eventually
-- ,. .
iheinitial clianges must spread to and affect otlier structures,
syste~iisand practices.
Cliangcs in jobs invariably place strains on otlier aspects of tlie orga~iization- ranging
from personnel practices and reward systems to the style of orga~iizational
management. These pressures, followed u p witli vigour and competence, can serve as
points of entry for brad-scale orga~iizationalimprovements. Even organizational
practices that previously may be defied at all atteinpts at planned change (such as
compensation arrangements or control systems) may now become amenable to clia~ige
because everyone agrees tliat tliey need to be changed to fit witli tlie new ways tlie
work is being done. And beliavioural science professionals may find themselves freed
liom tlie old difticulty of selling their wares to skeptical managers who are not really
sure anything is wrong - or, if there is, tliat tliey want to liear about it.
Much is recli~iredfor competent organizational cliange and for following up
and d iffils ing changes tliat are made. There are many more "change proble~ns"
than tlie three -getting behaviour to cliange, getting it to stay changes, and
getting the c l ~ n g e to
s spread.-are critical. And for tliese problems work
redesign has sonie special advantage in co~nparisonto other organization .
development approaches.

2.9.1 Alternative Uses of Work Redesign

Our suggestion tliat work redesign can only occasionally be used to
"tun1 arouncl" intact work systeliis cot~ldbe-taken as an occasion for great pessimism.
Indeed. one conclusion could be that we should give up on job redesign as a change
strategy. This appears to be the view of Dr. Hamy tevinson, as well-known
management psycliologists, as reported in theblew York Times article
reproduced in Exliibit 1.

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.

2.9.2 Designing New Organizational Units

The use ofwork redesign as an organization development technique and its proble~ns
stems pr~marilyfrom the difficulty of getting changes in jobs to take root and prosper
in relatively stable, ongoing organizational units.
When, however, new organizations are designed (or when there is a major
reorgani:tation of an existing unit), it is possible to design organisational systems,
stri~ctures,and practices from the ground up, and to design them in a way tliat
supports rather than undermines nontraditional work structures. The result can be
substa~itialinnovations in the design of work that have powerful and beneficial effects.
At mininium, an organizational structure provides the following:
a Means for managing organization-environment relations, including responses to
environmental changes (in the laboi~rmarket, tlie competitive environment, or
rrg~~latory
c~ntext).
a Means for coordinat ;ng organizational units and assuring an appropriate flow of
infr~rmationand infl*mce - both up and down the organizational hierarchy and
IatcraD1y across a;:,,'! ent fllnctional and substantive areas.
a Mcans for suppxting and managing the work activities or organization niembers
- providing direction, information, supplies, technical assistance, and so on, to
those who are actually generating and goods or services tliat the organization
exists to produce.
*
Traditiol~alwisdom about organizational design suggests that the structure of an
organization should be responsive to (1) the imperatives ofthe core technology ofthe
organization, (2) the demands and opportunities in the environment (including how
stable and predictable the environment is), and (3) the strategic directions for the
organization that have been selected by top management. Tlius, the shape of an
organization that produces inexpensive furniture for a stable mass market using
production line technology would be quite different from that of an organization tliat
produces hand-crafted custom furniture in response to special customer orders.
First, the strategy oftlie organization would be determined by top management. Based
on the properties oftlie organizational environment, the position ofthe organization in
its market, and the goals and values of management, tlie major aspirations and
performance objectives oftlie organization as a whole would be specified.
Second, designers would identify those special resources and constraints in tlie
organizations and its environment tliat bear on the accomplishment oftliese strategic
objt-ctiu:s. These might include tlie availability of special work technologies,
regulatory constraints, the supply of capital, the character of the labour market, the
level of managerial talent available and so on.
'Third, explicit consideration would be given to how the work should be arranged to
contribute most directly to the accomplisliment of strategic objectives given any
specific resources ofthe orga~iization(sucli as a readily available pool of skilled
wol-kers)and any constraints within which it must operate (that only a single type of
technology is viable for the kind of work that is to be done, for example).
F inally, attention would turn to alternative structures for si~pportingand managing key Types of Change
work activities, for coordination and controlling organizational units, and for
managing organization-environme~it relationship. Decisions about these matters would
follow from. and be respo~isiveto. tlie three issues highlighted above: the strategy of
the organization, special resosurces and constraints, and tlie design of core work
activities.

2.10 CHANGE: THE CHALLENGE OF

TRANSFORMATION
"Managing Change" is tlie name given, in cornillon with many others, to the
generalized version of tlie management paradigm that is taking place of "Command
and Control" as tlie new era begins. I n a world of increasing uncertainty, change is a
journey \vitIioi~ta tangible destination. We know little more about where it will take 11s
than that. at its end, we will have to be able to go on managing change better than any
of our competitors if we are to survive and prosper over the long haul. Like a nomadic
tribe, the modern corporati011maintains its competitive health internally by the endless
renewal of its capabilities, and exter~iallyby continual migration to markets where its
capabilities, old and new, can sustai~iit. The organization, its competitors and its
markets are in constant flux. The winners are those dynamically able to develop
distinctive capabilities, with special value, to particular parts ofthe market-place.
Fi~iancialperformance is the nieasure of success at doing this at a particular point in
time. Sustained tinancial performance is the nieasure of success at doing it over time,
i.e.. of tlie superior aoility to change in a competitive world. Where the old
management paradigm, "Cornmand and Control". Was eminently suited to a static
world, the new management paradigm, "Managing Change", is the destination as well
as the transition process of the transformation projects all of tlie world's business
enterprises ~ieeclto undertake, and o~ilya few have really begun.
Grand strategy is the ovrarcliing discipline tliat deals with defining and refining the
way an organization is managed so as not just to succeed in the current period, but to
maintain its competitive Iiealth into the indefinite future. When faced with massive
change in multiple aspects of the competitive environ~nentthe steady, continuous
refinement of an organization's management paradigm, that typifies the leadership
task in stable times, will not longer suffice. Now the very assuniptions on whicli the
paradigm rests are changing. Now so~netliingmore dramatic, more discontinuous,
more far reaching is needed. Tliis "something" is transforniation - of tlie way the
organization is managed, of its busi~iessprocesses, oftlie behaviouc of its people, of
its use of information teclinology, ofthe way it treats all its stakeholders and ofthe
way it is competed; in other words tlie development and adoption of a wliole, new,
grand strategy suited to a whole, new, economic order.
The shift from one economic long wave to the next is tlie definitional time of
transformation for business. Thus tlie particular from that grand strategy takes in such
a period is businesses transformation. It was seen how, each of previous times this
have happened, there have been equally fi~ndamentalchanges, first in the industries
tliat drove tlie economy, and then in tlie busi~iessenterprise itself and the way it was
managed. One more time a generation of business leaders face the challenge-to
transform the way their organizations are managed, to make them the winners in a
new. this ti~iieglobal, economy.

The Process of Transformation

We start by taking the first two dimensions of competitive health strategy and
integration -and use them to define the axes of a two dimensional chart. Then we
Concept o f imagine ourselves as an organization in trouble without a winning strategy and in need
Managing Change
of a process, for bringing about internal integration. In other words, we are in the
bottom, left-hand corner of the chart, wanting to get to the top right - which is reached
by having a well defined, fully detailed set of strategies and a well aligned smoothly
operating organization (see Fig. 1).

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

Top Team Aligned

Organization
b
\~
INTEGRATION
Figure 2: The Transformation Matrix-]

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.

2.12 SELF-ASSESSMENT QUESTIONS

1) Describe different models ofchange, which focus on the individuals.
2) Explain the ten dimensions which bring about organisationalchange through role
efficacy.
3) Explain OD as a useful model of change.
4) What is process consultation? Explain.
Concept o f 5) Explain the seven pahses ofwork redesigning, as suggested by Nitish De.
Managing Change
6) Discuss in detail how turnaround management can be applied for an
organ isation.
7) Describe as to how to plan change in an organisation.
8) Expl;lin the phase oftransformation in bringingchange in the organisation.
--
--
2.13 FURTHER READINGS
N.A, Flanders pioneered work on change through feedback, reported in his volume
AnaiIvsing Teacher Behaviour (A.ddison-Wesley,1970). Udai Pareek and T.V. Rao have
reported results of work done in Indian in "Behaviour modification in teachers by using
feedback using interaction analysis" (Indian Educational Review, 197 l,6(2), 11-46).
An excellent account ofdevelopment ofachievement motivation in an Indian town is
available in Motivating Economic Achievement (Free Press, 1971) by D.C.
McClella.ndand D.C. Winter. Prayag Mehta has described in detail the work done on
dev'elopingachievementmotivation in high school boys in DevelopingMotivation in
Education (NCERT).
Developing role efficacy and other role-related interventions have been discussed in
detail in Udai Pareek's Making ~ r ~ a n i i a t i o n~aol l eEffective
s (Tata McGraw Hill,
1973).
Or:<aniztationDevelopment by W.L. French and C.H. Bell (Prentice HaU of India,
1983) is a good elementary book on OD. Edgar Scheins' Zvolume edition of Process
Consultcztion(Addison-Wesley, 1980) is an excellent source on process consultation.
Nil ish Ce's Alternative Designs of Human Organization (Sage, 1984) contains
:sc.c:ient material on work redesigning in different settings.

-. . *,.
..
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'

3.2 The Axis of Organizational Change: The Prime Factor

3.3 Wliat Makes Excellent Companies Tick?
3.4 The Emergence of Humanistic Philosophy in Management ofchange and
Organizations
3.5 Facilitation of Planned Change
3.6 The "Rational and Natural-System"Models of Organizational Analysis Related
to Change
3.7 Organliation Development Action Research and the Intervention Model
3.8 Summary
3.9 Self-Assessment Questions
3.10 Further Readings

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

i ,. + i:dve significant control over their own lives,

$ tllf,! t e ~ ; * :;s respected for the contribution they make, and
T , . . .e; t.1t.v arc contributing to something worth doing.
I I ., t * .;c;ades there has been a change in organizations for some very good,
l f * ~ n ,.*: . \!-?pot ling reabons and the one needs to find ways of managing, suited to
.. n k * I :.+* .
cir~umstances.
,r.pa~~rtations, most of the people haven't been very happy much of
'
* b d y of contrast, it is a common observation that the opposite-
. tiions and happy people-tend to go together most of time. Many
Ilm that there were considerably more of those successful
1.1

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.

3 . 'IrHEAXIS OF ORGANIZATIONAL CHANGE: THE

PRIME FACTOR
It is clear that any attempt to understand a coroporation's operations must necessarily
involve an in-depth discussion with the Chief Executive who heads the corporation. It
is loften said that an organization is a long shadow of its Chief Executive. However, it
is suggested that though the statement might be somewhat hyperbolic, there is no
doubt that -so long as they are in position - they exert an enormous influence on the
sb-ategies,style, values and objectives of their respective corporations. It was,
therefore, essential for developing understandingabout excellence of a company, the
exercise must involve a discussion with the Chief Executives of the selected
companies. While it is true that they provide the strategy for long-term thinking about
the future of the corporation, it is also true that since, in the final analysis, they are
ac:couc,table for the performance of their corporations, their ability to think objectively
is ofter~influenced by the various events relating to the corporation in which they are
the prime actors. Asking a Chief Executive to evaluate the quality of the managerial
excellence of his own corporation is almost like requesting the prime actor in a play to
ble both the viewer and the critic! Yet given his level of involvement, the actor can
provid~ean insighful perspective and thinking about the play which the audience or the
critic may not be able to perceive. This will particularly be the case if he is a 'method
school' actor totally immersed in the role, who lives and breathes the character that he
portrays.
,4nother set of perspective observers about the corporation are its lower level
managers and employees who have greater degree of detachment and, therefore, are
able to bring to bear greater objectivity to their assessment. In this context, depending
on tht: career path of the concerned employee, he could see the company's operations
through rose-tinted glasses if he is a successful manager on the make or be a bitteer
critic, if he feels or imagines that the corporation has failed to recognize his talents or
misjlrdged his contribution The element of bias, therefore, is very real also in lower
level managers' or employc:es7comments, particularly if the concerned manager or the
employee aspires to greater status and recognition.
The customers, suppliers, distributors and dealers are the most unbiased assessors of a
company which deals with them extensively. A customer who buys - and continues to
by - the product of a company, particulary non-consumer goods, has deep
understanding of the managerial process in the operations of the suppliers corporation.
Similarly, suppliers to these companies often have understanding and insights not only
about the product and managerial processes, but also about the nature, strategies and
values of such companies which are truly unique. Perhaps the quality and the depth of
their observationsare derived from the fact that they also supply goods and services to
the competitors of the company.
Tlie analogy is also applicable in relation to dealers and distributors of the products of Factors Critical to Change
the company since it is extremely likely that they also deal with the products of the
company's competitors. In some cases, they are often cynical in viewing the
managerial effectiveness of the corporation. At other times, in the case of other
companies, their comments often have an element of admiration bordering an
sycophancy.
In a study by S.K. Bhattacharya (1989)of all the available published material relating
to tlie operatio~isof Reliance appearing in the financial press were analyzed.
Advantage was taken of interviews with everal Reliance dealers, distributors and
suppliers in obtaining the required comments, including their understanding about the
~nanagerialstrategies, styles and systems of that company.
In tlie initial stage. several brainstorming sessions were conducted with the members
of the team on the one hand, aiid with individual members of the advisory committee
on the other, to obtain a feel for the various factors which contribute to a
corporations's excellent managerial performance. A search of published material was
also coiiducted to benefit from the thinking reflected in the research experince in this
regard. However, most of the conclusions turned around somewhat generalized
aspects of a corporation's operations in identifying their contributions to managerial
excellence.
Soine of these diinensions identified in earflier research publications related to:
Long term corporate objectives;
Culture and values;
Management styles;
Business strategy;
Organizational structure;
. Management systems;
Quality of human resources;
Workiog climate; and
. Leadership
,

While many of these dimensions appeared to be extremely interesting issues and

aspects for conducting in-depth analysis, the fact remains that they were oftennot
clearly definable (or measureable) and there was no framework which could weave
them into a coherent and consistent fabric of organizational reality. This difficulty
arose out of the inability to put them in specific forms or issues which could be clearly
conveyed to the persons to be interviewed (without evoking 'motlierhood' or 'salute-
the-flag' kind of the statements often repeated ad nausem in best-seller management
books) or specific questions which could be shared in advance for briefing the persons
to be interviewed.
Further analysis and additional rounds of brainstorming led to the conclusion that
some of the following could be viewed as overarching considerations in achieving
managerial excellence:

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.

3. Decision,-makingand Commrrnication Progress

(a) The extent of delegation and decentralization in the company. Is delegation
encouraged, and does it take place without interference in the delegated task?
(b) 'The extent, process and quality of communication among the managers. What
.arethe formal and informal mechanisms that result in effective and speedy
comn~unications?Value of time as resource.

Business and Policy Objectives

(a) Are the company's functional (e.g. finance, personnel, R&D, etc.), strategies
cons istent with each other?
(b) The ~:ompany'sstrategic respones to change in the extenal environment
(espectially changes in government policy, competition and consumer preference)
and their success in the past.
(c) The rate (in terms of numbers) of new product development, and the time taken.
Work Organization
(a) Structure resulting in clarity of relationships, and simplicity and ease of
management.
(b) Structure allowing for problems solving and entrepreneurship.
Pe~rsonal(or Human Resources) Management
(a) Prctmotions and rewards based on considerations of merit or performance.
(b) Po'licies the company adopt so as to allow for personal growth of the employees
(job enlargement, job rotation, etc.)
(c)~ The extent of motivation. and level of morale and commitment among employees,
esjxcailly lower level operatives.
(d) The record of the company in managing its industrial relations situation?
(e) Sense of commitment of employees to achieve the organisational goal extent it is
self-geneated or is it reward based?
(f) The ability of the employees to share credit and recognition for achievement as a
group rather than as individuals.
McKinsey, being one of the premier management consulting outfits in the world, had
decided to mount an inhouse study headed by Thomas Peter in mid-seventies for
identifying factors which contributed to organizational effectiveness. The notion
prevalent at that time was that organizational effectiveness was basically a function of
the three hard Ss, namely Strategy, Structure and Systems. This was a very
c;onfo~mablesituation since all three were susceptible to change by deliberate or
conscious direction by the top management and could be changed by fiat. However, Factors Critical to Change
the real life experience was that change in strategy, structure and systems by
themselves did riot lead to substantive improvement in organization effectiveness. The
McKinsey study attempted to identify those 'soft' organizational dimensions which
influence, rather than direct, improvement in organizational effectiveness. The
Waterman, Peters and Philippe study represented a watershed in thinking about the
underlying concepts relating to organizational effectiveness. The McKinsey 7-S modes
developed during this study identified four new dimensions which equally important in
this context, namely:
Superord illate goals;
Style;
Staff; and
Skills.
However, this new type of view of organization not merely represented an advance in
terms of identifying these four dimensions which influenced organizational
effectiveness but, more importantly, put forward the hypothesis that the interaction of
these seven organizational factors, and tlie balance achieved between them determine
orgarlizatio~ialeffectiveness.
The 7-S chart graphically demonstrated their interaction and provides us with an
understanding why the requirement of balance between them is so important and
critical. This is so because each of the seven factors affects or influence the others
and, in turn, gets influenced. No one contends that to be an excellently managed
organization, it must attain tlie highest level in each of these seven factors, and
monitors and directs their interaction purposively and positively to attain the required
level and quality of organizational effectiveness.
The second conclusion was the sharing the model with the managers to be interviewed
in advance by itself would not be very productive since it is pitched at a level of
abstraction higher than most conceptual understanding of organization. Its best use
would, therefore, be for tlie use ofthe members of the study team to keep it in their
minds as a frame of reference (somewhat like a programme in a computer memory).
The comments during the interviews with managers, customers, dealers suppliers, etc.
could then be related to this mental frame of reference to generate consciously (or
eve,, in subliminal fashion!) understanding and insights which would be invaluable.
'The ability to evoke and generate meaningful comment would obviously be a function
ofthe interviewer's capability to ask questions which are not directly derived from the
7-S model but are related to the organization's operations and history (but for
purposes of subsequent analysis, are susceptible to correlation with the model).

3.3 WHAT MAKES EXCELLENT COMPANIES TICK?

The publication of Thomas J. Peters and Robert H. Waterman's book in Search of
Excellence has lead to the evolution ofa new cult in management thinking which seeks
to relate all outstanding and excellent management performance. The perspective
nature of tlie basic principles contributing to managerial excellence is the cause of
uneasiness among tlie more serious writers (for example, Danier T. Carroll's article in
Harvard Business Review November-December 1983 issue, "A disappointing search
for excellence", and comments of many original thinkers (such as Peter Drucker).
Given the nature of motherhood statements that they embody, few writers or analysts
directly clial lenged them initially. They somehow gave the appearance of clearly
Concept of However, ihe feeling persisted that there must be deeper managerial dimensions to
[Managing Change
excellence beyond the catch-all prescriptions, though at that time such insights were
not quite available. NotwithstandingPeter Drucker's rejection of the Peters Waterman
line of thinking, the authors were able to turn the whole tide of criticism by the neat
argument, namely, that the eight basic findings were not to be treated as principles but
as distilled management wisdom. They were quite right in arguing that there is no such
thing as a surefire and foolproof rnechnical prescription which will work for all
companies all the time. Peters and Waterman followed up with an even more profound
simplicaticlnthat ultimately we must have a passion for excellence and that the real
thing was to have a feel for the business which could be generated by following the
principle ofMBWA, i.e. management-by-walking-around.
The search for organizational effectiveness in the earlier years had focused on
basiciilly three distinct streams of organizational functioning, namely:
Strategy;
!3tructure; and
Systerns.
While: the oliagnosticeffort, partic:ularly in terms of analysis and prescriptions, had
traditionallyfocuses on strategy and structure, it also embraced recommendations
relating to supportive management systems which would provide a rational and logical
process of accomplishing what was sought to be achieved by changes in structure and
strategy. To illustrate, strategic recommendationsrelating to product-market
realignment and product positioning was often accompanied by the suggestion that a
properly designed and purposively administered budgeting system (and related
performance monitoring system) be introduced to ensure that the strategic
recorn,mentlationswere in fact translated in terms of specific action programmes.
Similarly, structural changes which focused on creation of Strategic Business Units
were rlccorr~paniedby personnel-related recommendations which sought to identify the
attributes of effective managers who had to operate such a structure, their recruitment,
placement, training, development and appraisal.
While changes in the strategy, structure and systems could be brought about by
manal:ement directive - and when necessary, fiats for overcoming opposition to such
changes - ii[ was often evident that after the initial upsurge in terms of organizational
performance, the original momentum was not maintained or in any case, there rate of
progress tended to be sluggish. In the early seventies, while no significant conclusions
had emerged, it had become evident that there were organizational factors which
relateti to beliefs, styles, values and culture which subsequently determined the
sustenance (oforganizational effectiveness. Since they were somewhat ephemeral of
soft (in the ;sensethat they could not be clearly quantified or measured), why came to
be called thle'soft factors. In contrast, the t!ree organizational effectiveness
deternlinants identified earlier, namely strategy, structure and systems, came to be
known as the three 'hard' factors because it was possible to change them by deliberate
and cc~nscious decision, and managerial direction.
While it was clear that soft factors centred on people, mushy sentiments relating to
what slre usually called the 'people-related factors' at an idealized level, were often of
limited praatical value in actionable terms as they seldom went beyond idealistic
notions. Also, they rarely permitted the identification of organizational dimensions
which coultl be pin-pointed as leacling to organizational effectiveness. The continued
search for die non-prescriptive managerial dimensions led tothe understanding that
they irrtluea,ced,shaped and sustained organisationaleffectiveness rather than
deternl~nedit in any 'cause' and 'effect' sense. To quote the original Business Horizon
"Business organizations are basically large social structures with diffused power. Factors Critical to Change 1
Most of the individuals who make them up have different ideas of what the business
ought to be. The few at the top seldom agree entirely on the goals of their enterprise,
let alone on maximization against one goal. Typically, they will not push their ideas so
hard as to destroy tlie social structures of the enterprise and their own power base."
All this leaves the manager in great difficulty. While the research seems valid and the
message of complexity rings true, the most innovative work in the field is descriptive.
The challenge to the manager of how to organize better his goal is organizational
effectiveness. What the researchers are saying is that the subject is much more
complex than any of our best perspective models allowed for."
Arising out of this continued search for the newer dimensions or organizational
effectiveness, management thinkers came to the conclusion that effective
organizational changes if really determined by the relationship, and the balance,
between structure, strategy, systems, styles, skills, staff and super ordinate goals.
r

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.

3.6 THE "RATIONAL AND NATURAL-SYSTEM"

MlDDELS OF ORGANIZATIONAL ANALYSIS
RELATED TO CHANGE
- - - -- - - - - - - - -

Alvin W. Gouldner proposes that a major task confronting organizational analysts is

the I-econziliation of two major methods for conceiving of how organizations operate. ~
The Ralional Model of Organizational Analysis
In tlie rational model, the organization is conceived as an "instrument"-that is, as
I
rationally conceived means to the realization of expressely announced group goals. Its
structures are understood as toc~lsdeliberately established for the efficient realization
oftliese group purposes. Organizational behaviour is thus viewed as consciously and
rationally administered and changes in organizational patterns are viewed as planned
devices to improve the level of~efficiency.The rational model assumes that decisions
are madc: on the basis of a rational survey ofthe situation, utilizing certified
knowledge with a deliberate orientation to an expressly codified legal apparatus. The
focus is, therefore, on the legally prescribed structure - i.e. the formally "blueprinted"
patterns -since these are more largely subject to deliberate inspection and rational
manipuliition.
This model takes account of departures from rationality but often tends to assume that
these deipartures derive from random mistakes, due to ignorance or error in
y7
calculalion. Fundamentally, the rational model implies a "mechanical mode, in that it
views the organization as a strli~ctureof manipulable parts, each of which is separately
mcdifial~lewith a view to enhancing the efficiency of the whole. Individual
or~yanizationalelements are seen as subject to successful and planned modification,
en,actahleby deliberate decisic~n.'Ke long-range development of the organization as a
whole is; also regarded as a subject to planned control and as capable of being brought
into increasing conformity with explicitly held plans and goals.

The Natural-System Model of Organizational Analysis

,
The nat ural-system model regards the organization as a "natural whole" or system.
The rclization of the goals of the system as a whole is but one of several important
needs to which the orgarllzatlon is oriented. Its component structures are seen as
eniergent institutions, which can be understood only in relation to the diverse needs of
the total system. The organizaltion, according to this model, strives to survive and to
maintain its equilibrium and this striving may persist even after its explicitly held
goals 11~nvebeen successfully atkained. The strain toward survival may even on
oc:caslcns lead to the neglect or distortion of the organization's goals. Whatever the
66 plans oFtheir creators, organizations, say the natural-system theorists, become ends in
I

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.

The Two Models Compared

Needless to say, these two models are ideal types in the sense that few modern
sociologists studying organizations adopt one to the complete exclusion ofthe other.
Nevertheless, as we have ~nentio~ied previously, some socillogists tend to stress one
model more than the other.
Each of these models has certain characteristic strengths and weaknesses. The rational
model, for example, has the undisputable merit of focusingattention on some of the
very patterns which the modern organization shares with "natural" groups may also
affect beliaviour within them. The fact is, ofcourse, that the distinguishing
cliaracteristics of a bureaucratic organization are not its only characteristics: ,
systematic attention must also be directed to those features of modem organizations,
such as tlie need for loyalty, which tliey have in common with other types of group.
The natural-system model, on tlie other hand, has themerit of focusing attention on
the spontaneous and unplanned (that is, "informal") patterns of belief and interaction
that arise even within the rationally planned organization. Often, however, the natural-
systeni model tends to neglect the distinctively rational features of the modern
organization.

The Classic Model of Organization

Despite the fact that tlie classical model oforganizational might seem old gasholder or
outdated when compared witli some of the behavioural'science ideas, it is extremely
importarit historically and in terms of current practice. Historically, the classical
model is deeply entrenched in our culture. Max Weber's writing on the structure of the
bureaucracy liave a strong parallel to the classical model in terms of the mechanical
approach to the problems of organizational design. And the work of Frederick Taylor ,
Concept of in subdivjiing tasks through time and motion studies gave strong impetus to and is
Managing Change
bawd on the "sound principles" ofthe classical model. Even today many businessmen
adhere to the principle of the classical model in thinking about organizational issues.
The classical model focuses primarily on the relationship between two groups -
~nan~agernent and the (production) workers. In discussing these two groups, the
classical authors makemany assumptions and value judgements about the individuals.
For instance, workers are viewed as instruments, solely motivated by economic
motives, existing to carry out organizational objectives. Managers, on the other hand,
are cliaracterized as rational omniscient, and possessing outstanding personal qualities
such as kir~dnessand fairness. However, despite there quantities, the manager's role
define him as having to be firm with workers.
Because of the model's view of workers as "economic man", rewards and punishments
to the workers should be economic in nature. An astute classical manager would give
detailed in:;truction of his subordinates. Then, according to the model, he must
measure or assess exactly what has been done by the workers and if the employee
shoulld be rewarded or punishment for his performance in executing the task.
The classical authors recognized that the task assigned to the worker would often
create an inherent conflict for the employee between his personal goals and those of
the organizition. Under the model's assumptions, however, the workers are expected
to accept the superordinate goals of the organization. The resolution of this conflict
and the ensuring acceptance by the worker of the corporate position were to be
resolved by fitting the "right" mand into the "right" job. This fit was to be defined by
personal ch,uacteristics such as physical strength, manual dexterity or specific craft
skill. Further, in additon to this fit of the individual and the job skills required for a
specific task;, heavy formalization of procedures was to minimize the potential conflict
by clearly defining what was expected of organization members. This emphasis on
formal organization, formal communications, and fonnal job and task descriptions
would keep the worker oriented toward the organization's goals rather than his
personal objectives.

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)

Autlior~ty Responsibility (Execution of Task)

(Con~municationof T3sk5)

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.

Organizational States and Process

Speciulizution. Within this pyramid structure, specialization is major tenet of how
tasks are to be assigned. The principal goal the classical authors were concerned with,
apropos of specialization, was to divide the task of the organization so that each
individual would have the narrowest task: while at the same time, the total activities of
all individi~alswould add up to the organization's superordinate goals and objectives.
This is so because it was assumed that Inen differ in capacity and skill can better their
individual performance through specialization, that a man can't learn everything in a
lifetime, and that no individual call perform more than one task at a time. Men were
therefore assigned specialized tasks of a finite nature within their departments. In
turns, the Inen were expected to become highly skilled at perfor~ningthat particular

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.

Sources of the Classical Model

The classical nlodel is descriptive ofthe early organizational structure with which we
all are fanliliar-the church, the military, and the railroads. We can easily picture the
military organization as a pyramid with the commander in chief at the top and the
structure spreading out below down through the majors, lieutenants, ~~o~~commissioned
officers, and finally privates. Each individual reports to one other individual on this
execution of a specifically designed task. And, the cumulative total of these tasks
should add LIPto the mission ofthe entire military organization.
Descriptions ofthe classical model can be found in the works of Fayol(1916), Koontz
and 0' Donnell(1950s), Newman (1963). Gulick and Urwick (1937), and Mooney.
Concept of While there are a number of variations in their thinking about the model,
Managing Change depending on their own experience and the time during which they were
writing, t h views
~ expressed in this short note were mostly universal as concern all
organizations. That is, while there might be minor variations from these principles,
they were to be rigorously adhered to in all organizations regardless sof taik, location,
and, to a large extent, size. In essence, applying these principles to the design of
organizations facing any and all conditions would lead to effective permanence
of the orgarnization.

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.

Organizaition States and Processes

According 1:o the participative theorists, the overall objective of the organiztion is to
achieve a satisfactory integration between the needs and desires of the members of the
organization and the persons functionally related to it such as consumers,
shareholders, and suppliers.
It is ar;sume:dthat management can make full use ofthe potential capacities of its
human resources only when each person in the organization is a member of one or
more r:ffectively functioning work group, thus participating in the overall
organ-izational effort. Further, it is required that these groups have a high degree of
group loyalty, effective skills, and high performance goals.
These groups are to be linked together into an overall organization by means of people
who hold overlapping group membership. Exhibit 2 depicts what this overlapping
organ~;zation looks like. The individual who is represented by an " X in the exhibit is
referred to ;is the "linkage pin".
i

Exhibit 2

Linking Pins

Figure I: An introduction to Organization models (the linking pin organization)

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.

Interaction within the System

The participative organization modelists make a number of assumptionsabout
interaction within the system both at the level of the individual and inlight of the entire
organizational system.
At the individual level, integration of the individual into the entire organizational
system is described by the principle of supportive relationships. The principle states
that organizational interaction should be conducted so that individuals will view their
interactionsas supportive. That is, that in all interactions and in all relationships
within the organization, the individuals in light ofhis background, values, and
expectatioilswill feel these interactions build and maintain his sense of personal worth
and importance.
The participative modelists believe that high managerial goals are a precondition to
high subordinate goals. And that in order of the subordinates to accept these goals
without resentment, the supportive relationships described above should exist. Further,
they believe the ~naxi~num participation in decision-making and supportive behaviour,
defined by the model, help establish these high goals and produce a high level of
commitment to the goals achievement.
Supportive behaviour and group decision making, according to the participative
model, contribute to good communication and coordination within the framework of
overlapping groups. The best-performing organizations, according to this model, are
Concept of ' those which motivates the individual to cooperate, not complete. In achieving this
Managing Change cooperati'on, the group leader is accountable and must accept final responsibility for
the group performance. However, in spite of the leader's responsibility for group
performance, he must consider accepting group decisions with which he does not
concur if he feels he could adversely affect group loyalty by not following the group's
decisions.

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

Intervening Less group loyalty Greater group loyalty

Variables
Lower performance goals
Greater Conflict and less
cooperation
Less technical assistance to
peers
Greater feeling of unreason-
. . pressure
I 1
Less favorable attitudes
toward manager
I / Lower motivation to produce 1
I And His Organization ~ i l l x t a i n :
End-Result Lower sales volume
Variables Higher sales cost
Higher performance goals
Greater cooperation
More technical assistance to
peers
Less feeling of unreasonable
pressure
( More favourable attitudes 1
toward manager
Higher motvation to produce
I
I
Higher sales volume
Lower sales cost

I I Lowr quality of business sold

Lower earnings by salesmen
I' ~ i g h equality
r of business sold
Highr earnings by salesmen
I
Taken from Rensis Likert: The Human Organisation (New York, McGraw Hill, p. 67)

3.7 ORGANIZATION DEVELOPMENT ACTION

RESEARCH AND THE INTERVENTION MODEL
Here we intend to help faculty and students initiate small-scale intervetion in chosen
organizations, on the lines of the standard model. To achieve these aims, focus is on
organization development and action research how the two relate in interventions.
Introspective and projective experiential exercises to be undertaken to crystallize and
make explicit certain assumptions and value, as well as to provide specific training in
needed skills. These experiences are complemented by asystematic, related set of
readings.
Investigation ofa Change is an exercise intended to help participant surface his or her
introspectionsabout a personally experienced organizational change episode, to make
them available for examination and comparison with those of others.
Organiztion development is a portmanteaux, people-centered approach to
organizational change. The would-be change agent needs to grasp securely what
organization development is - to internalize a working definition - in order to be able
to read, understnd and draw upon the varied literature weitten under the banner.
Concept o f The intervention Model outlines the standard data-gathering and feel-back action
Managing Change
research model this book advocates for training change agents, and provides a
commentary on its use and development. Given the time it takes to carry out even a
minimum scale intervention, the instructor should require students to begin drafting
their intervention, should be firrr~edup and launched as rapidly as possible. In the first
few weeks of the course the there-and-then experiences and models and schemes
studi1:d anti discussed should be targeted toward ensuring the viability of these field
effor~s.

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

Wave Phase Length Dates Drivers

(Years)

First A 33 1972-1 925 Coal, Canals, Textiles, Wrought Iron

B 22 1825- 1847

Second A 27 1847- 1874 Railways, Steam Power Gaslighting,

B 19 1874- 1893 Smelting Technology

Third A 20 1893-1913 Steel, Petroleum, Telephone

B 26 1913-1939 Automobiles I. Electric Power

Fourth A 35 1939- 1974 Automobiles 11, Electric

B 1974- Appliances, Aircraft and Aviation,
Chemicals,
Synthetic Fibers,
Pharmaceuticals. Radio and
Television 75
Concept o f We c.ansee how the depressions of the 1840s, 1890s and 1930s in the United States
Managing Change marked the end of recessionary, "B" periods of the first, second and third waves. In
each case the industrial drivers of the ending wave had lost all their ability to
propagate economic growth and the new industries and not yet reached the size of
where they could take over. Much of theNineties "doom-predicting"has been driven
by the siir~pleexpectation that history will repeat itself at the end of the fourth wave,
resulting irn another depression. Whether one accepts this pessimistic view of our
short-term prospects or not, the data certainly suggests that we are fast approaching
another ir~flectionpoint where a "B" phase ends, and, if the long wave phenomenon
repeats itself, an "A" phase begins. This would accord with what we have recently
experienced in the shake-outs arid shifts in the companies and industries making up
our econclmy.
It would ;alsoexplain the changing nature of the business cycle. During growth periods
the short-term business cycles, which are oscillations around the long wave, are
inh~zrentlymore benign (shorter, and less severe) than in slower times, because of the
influence of the underlying direction and performance ofthe economy.
The Six Economic Revolutions
1. Aftermath of the Financial Crash in the world's money centers (New York,
~ o l l d o nand Tokyo in particular).
2. Slc8wdownin Growth (until the next "A" phase really gets going, if it does).
3. Collapse ofcommunism (but maybe the re-emergence of Fascism);
4. Importance of education (as knowledge becomes the source of value-added,
rather than merely labour).
5. Rise of Communitarian Capitalism (in Germany, Japan and rnabye the rest of the
Pacific Rim).
6. Competititve Convergence (ofthe major economies on the drivers of future
growth).
This presages tiworld far more complex than the waves experienced by the relatively
more separate, national economies of the past two hundred years. On top of these
"revolutions" is the emergence of the Newly Industrialized Economies (NIEs), such as
9
"the little tigers '- South Korea, Hong Kong, Taiwan and Singapore and China,
which ;ire making the new global economy more than just the world of the Traid -
Americal, Europe and Japan. One of the reasons we are not experiencing the
depres:jion which has characterized the ending of previous long waves may be that the
hlEs' !stronggrowth is at least in part making up for the recessionary tendencies in
the de\'eloped economies. In this context it is interesting and important to remember,
as the economist recently pointed out, that for most of recorded history China has had
the largest national economy in the world. The last 150 years or so have been a
temporary exception, not the historical rule. In a newly interdependent, genuinely
g,lobaleconomy the re-emergence of China as an economic world power surely has the
potential to be the single most important force ofall.
Ilowever, regardless of whether there is a recognizable "fifth wave" or not, the
tliscor~tinuityinwhat has been called the "technoeconomic paradigm" is really not very
differc:nt to what has happened in the previous shifts from one wave to the next. Nor is
the recent ferment of activity in the area of management technique. We can now see
illat the last twenty years have formed most of the "B", or deflationary, phase of the
fourth long wave of American economy beginning, according to Mandel's
~Chronology,in 1974. All four of the "A" phases of previous waves have been
relatively simple (from the management perspective) periods of rapid growth, driven
by tht: technological innovations clustered toward the end of the preceding "B" phases.
An illustration ofthis clustering of innovation is shown by the period 1876-1903,
spanliilig the end of the second wave, which Mandel put at 1893. In this twenty-seven Factors Critical to Change
year period there were twelve basic inventions which were a major part of what drove
tlie third wave:

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

, appl-oximatelyto the stage we were at in the fourth wave in the mid-Eighties),

we iind:
It is silrprising to observe to what extent able, intelligent businessmen have turned,
and are siill turning, to the methods and counsel of the quack with his boasted, ready-
made, dogmatic and infallible methods of dissecting the mental and moral qualities of
persons i n relation to given task.

--
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

Emery. F.E. and Trist, E.L. (1 965)'The casual texture of organizational

em)iro11111~?nts',
Hum, Rel. Vol. 18, pp.21-32.
Khand walla, P.N. (200 1 ) Turnaround Excellence Response Boob.
Xees, J.R.( 1945) The Shaping of Psychiatry by War Norton.
(ice, A.K. (1 963) The Enterprise and its Environment, Tavistock Publications.
t Trist, E. L. and Barnforth, K. W. (1 95 1 ) Some social andpsychological consequences
of the Longu~almethod of coal-getting, Hum. Rel. Vol. 4, pp. 3-88.
UNIT LC ORGANIZATIONAL CULTURE AND
CHANGE: CROSS CULTURAL
EXPERIENCES

After studying this unit, you will be able to understand

organizational culture,
need fix indigenous management,
environmental factors which affect culture,
how to bring about cultural change.

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.

4.3 ORGANIZATIONAL CULTURE AND

OIRGANIZATIONALCHANGE
The impo,rtanceof organizationsfor man and society can hardly be over-estimated.
Froni life to death one or other form of organization plays a role in the life of the
individual and impact on societies, nations and communities, be it political, religious,
culb~ral,educational, judicial, ec;onomic, industrial or sport organizations, etc.
Organization is the vehicle through which groups, collectives and individuals work to
achieve their goals, aims and objectives.
Being an age old phenomenon, almost universal in its appearance and application,
there is litr le doubt that a well led, well organized, well managed, well planned, well
resourced, well monitored organization can be a powerfbl tool to improve quality of
life or product or process to achieve excellence, to benchmark, to excel, to develop, to
grow, to optimize the condition of man or to produce and to profit. The opposite
howewer is also true.
- Here we would like to focus on NO aspects of organizations in addition to the pivotal
role of leadership namely organizationalculture and organization change as major
detennents of organizational effectiveness, efficiency, sustainability and overall
success as 'instruments for development.
Loosc:ly defined an organization is a collectivity where people work together to
achieve fairly specific goals, objectives with a fairly formalized structure and
processes often strongly influenced by environmental factors.
Orgar~izationalculture entails all that govern, guide and shape the organizations
people-rela tionships.
organizational change may be defined as ".....the movement of people from a current
state to a dc fined state, different, improved and desired new state through a set of
p1annr:d ancl integrated interventions.
With these :ooseimperfect definitions in mind we would like to focus on the role of
organizatiornal culture and organization change in organizations.
What is clew is that the discussion centers around people, human beings in a specific
social set- up or structure; that it centers around goals and objectives, that it centers
arounti responsiveness or the lack of it to outside pressures and forces that infiuences
the activities, relationships, the cotnmitment of people, the effectivenessand efficiency
of the cxiiei.tivity, its ability to prosper to make profit or even to survive, whether it
adds vaiw t 2 the humar, coritiltion,develop people and communities or whether it adds
to their misery.
Organizatio~rlal
culture could be one of the key ingredients in determiningeffectiveness
and efficiencyin understanding, benchmarking in becoming a world-class business
and oqyiniz~tion.
 Given the importance of organizational culture it might be worth our while to consider Organisational Culture and
Change: Cross Cultural
the factors that have influenced its development.
Experiences

The Pactors that have Influenced Organizational Culture

I History nnd Ownership

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.
$'

- Control System: Formal, informal, bureaucratic.

- Orgainzational Structure: Who reports to whom on a formal basis and who
have an informal relationships?
- Power Structures: Who makes the decisions, who influences the decisions.
How. When.
& ..+,-.nq
I- .k MA.-'
( 85
Concept of Need for understanding Organization Culture Research
Managing Change
Organizational culture research predates the "corporate culture boom" of the past
decade. Traditional organization research, often objectivist and abstract, has proved
incapable of providing deep, rich and realistic pictures of objects of study, and the
dolminar~ce of qualitative, hypothesis-testing studies has discouraged alternative
approaches. This kind of situation gives a feel of being put in a straitjacket. One needs
to 'have a moe open and context sensitive approach for implementing change
programmes. It has been often observed and experienced that a type of programme
when implemented in one country leads to huge success and appreciation, but the
same programme falls flat on its face when brought to another country. Productivity
problerr~sof Western society, especially the USA may have provided a more distinct
material base for the exploration of new ideas. Japanese success appear to have
connection with the national ethos of Japan. The emergence of new forms of
or#ganizqxtion have also helped to make the cultural dimension more salient. The
developing countries are all the more required to understand and optimize the cultural
tre:nds to reach the goals of efficiency and effectiveness.

-
Higher levels of work
Organizational motivation and performance
effctiveness: with among organizational
respect to human members relative to
management' previously established standards

Management practices and

employe behaviour reflected in
I

Organizational Inclividual p;ocesses ~ r ~ a n i z a t i o nprocesses

h~
beha~iour(at micro a Motivation a Technology
ancl macro levels):- Perceptions a Design
a Values Structure
Leadership a Training and developmeA
a Behaviour at Behaviour at strategic level
operational level

Organizational
Work
culture: - Shared norm, values, attitudes,
beliefs about work and
organization among managers
and employees

External
environmental
conditions: --+ - cultural

F'igure 2: External and internal environmental factors influencing organizational effectiveness

(Source: Kanungo and Jalger, 1990)
 Organisational Culture and
Since there is evidence that at1 organization's culture is a key factor in its success, it Change: Cross Cultural
is important for the orga~iizationto have an appropriate culture for its context and Experiences
type of operation. It is to be expected, therefore, that managers should at times want
to chaoge tlie culture ofthe organization with the aim of producing better
performance. Culture change may, in fact, become desirable for a number of
reasons. lf the company has grown very rapidly, the culture which was appropriate
when it was smaller may no longer suit a larger organization.Takeovers, mergers or
other forms of reorganization will also normally require adjustments to the culture,
particularly where there are significant differences between the cultures ofthe
I organizations concerned. Tecl~nologicalchanges in production ad changes in the
environment, such as increasing competition, will also have cultural implication. It
is not, therefore, surprising that 'culture change' has become a growth industry for
manage~nentconsultants.
It has to be said, however, that changing culture, if it can be done at all, is a
difficult and long-term process. This is not surprising when it is considered that in
most organizations the existing culture is extremely well embedded. It has usually
been set by the original founders and in many cases developed and reinforced over
long periods of years. Even relatively new organizations will often have absorbed
their culture from forerunners or from organizations with which they feel an affinity
or which they perceive to be similar. Universitiesfounded in the last halfofthe
twentieth century, for example, have absorbed much oftheir culture from their
medieval forebears. The way we relate to students and the commitme~itto research
and scholarship and many of our practices all derive from this source. It is quite
surprising how long some of these practices have survived, even though of doubtful
relevance to modem life.
Despite the difficuIties, many com pan ies have made quite significantchanges in
culture; how is this done? Cummings and Huse (1 989) provide some practical
advice by suggesting a series of stages that must be considered and appropriately
managed:
Clear Strategic Vision: Tt is important to start a culture change with a clear view of
the direction and purpose of tlie proposed change. Why is it necessary to change
*
and wliere is it hoped to elid up? Very often this will be enshrined in a company
'mission statement'. This is a statement of the company's goals and how it intends
to achieve them. It is important that this should be a clear and precise statement of
operationalizablegoals, not just a set of 'motherhood' statements, as is often the
case in practice. The importance of the mission statement, from the point of view of
culture, is that it will embody the values which the company leadership espouses,
and thus provides purpose and direction for the cultural change.
Top Management Commitment: It is important that top management are committed
to the change, and are seen to be committed. Culture change can o~ilybe managed
from tlie top down. This is because only top management has the power to make
changes in the values ad deeper structures ofthe organization.
Synlbolic Leadership: Senior managers must behave in ways which are consistent
with the new culture. More than this, it is necessary to do so with enthusiasm, so
that tlie new culture is communicated through their actions. Hence the need for real
internalized commitment at the top.
Supporting ~iganizationalChanges: It is essential to make changes in the
orgaliizational structure, reporting procedures and management styles to bring thern
into line with the new culture. It is, for example, impossible to move towards a
culture enibodying participation and empowerment if the organizational systems
still require detailed reportingin a strictly hierarchical line system of management.
New organizational procedures can also be used to make people aware of the
changes that are taking place and encourage tlie new behaviours which are required
Concept of
--
Managing Change Change Ckganizational Membership: Bringing new members into the organization,
who already subscribe to the required organizational values and practices is a
considerable help to the process of change. By the same token, helping those who
do not wish to accept the changes to leave will aso speed the process. (An activity
which Cu~nmingsand Huse rather sinisterly refer to as 'termination of deviants').
One organization we know of has made the change from being a government-
funded research organ ization to become a commercial consultancy. This entailed a
change of culture from that resembling a universitydepartment to a reasonably
aggrassiver sales-orientated culture. While new mission statements were issued and
considerable restructuringtook place, one of the main factors in the culture change
was a deliberate policy ofhiring new personnel with commercial experience and
value:^, colipled with redundancy programmes which enabled those who disliked the
new philosophy to leave.
Changing organizational membership, in this context, does not only mean hiring
and firing. It is possible to change, by a number of means, the attitudes and beliefs
of inclividuals who remain within the organization. The most obvious of these is
through training and development, but other techniques include formal
comniunic~~tion programmes, use of role models who display the required new
behaviours (often these are provided by new members hired as part of the change
prdgramme), counselling programmes and participating with organization members
in developing the new culture. Attention to the reinforcement patterns is also
important, to ensure that only the required behaviours are being reinforced, and the
old pattern:; which it is wished to change are extinguished.
Hofstlede hits suggested that successful culture change needs the joint action oftwo
parties - apower holder and an expert. These terms are derived from a German
study and are translations ofMachtpromotor and Fuchpromotor. In practice the
Machitprom~otorwould normally be the chief executive or a group of senior
managers; the Fachpromotor would be an outside expert. The exerpt's role is to
provicle a diagnosis of the existing culture. An outside expert is needed for this, as it
is virtually impossible for a member of the organization to have a clear and
unbiased vilew of its culture. Based on this diagnosis, the power holder can then
make the required culture changes part of the organization's strategy.
By way of summary and in concluding this section it is worsth noting Hofistede's
view of culture change:
'Although culture is a "soft" characteristic, changing it calls for "hard"
nteasures. Structural changes may mean closing departments, opening other
d e p m e n t s , merging or splitting activities, or moving people a r d o r groups
geogr~rphiclzlly.The general rule is that when people are moved as individuals,
they wlll adopt the culture of their new environment; when people are moved as
groups, they will bring their culture along. People in groups have developed, as
.part oj'their culture, ways of intercting which are quite stable and dzflcult to
changtl. Ch~mngingthem means that all interpersonal relationships have to be
renegotiated. However, ifnew tasks or a new environment force such a
renegotiation there is a good chance that undesirable aspects of the old culture
will be clea~redup. '
The renegotiation will, ofcourse, include renegotiating the psychological contract.
Now that we have looked at what is meant by organizational culture, its
signific;anceand how it may be changed, we will move on in the next section to
considt:r a theory of how organizations grow and develop, and what implications
this has for the culture of the developing organization.
Source., Pete:r Makin, Cary Cooper and Charles Cox (1996), "Organisations and
Psychological Contract", pp. 253-256.
 Table 4.1 Key Factors in Cultural Change Organisational Culture and
Change: Cross Cultural
Understand the old culture. Managers can't change their course until they know where they are. Experiences
Encourage change in employees. Reinforce people in changing the old culture and those with
new ideas.
Follow outstanding units. Recognize outstanding units in the organization, and use them as a
model for change.
Don't impose cultural change. Let employees be involved in finding their own new approaches
to change and an improved culture will emerge.
Lead with a vision. The vision provides a guiding principle for change, but must be brought into
by employees.
Large-scale change takes time. It may take three to five years for significant, organization-wide
cultural change to take effect.
Live the new culture. Top management values, behaviours, and actions speak louder than words.
Soztrce. Donald R. Brown (1996), An experiential approach to organistion development, p. 74.
According to K. Harigopal (2001) the following aspects have to be taken care before
proceeding for cultural change:
1. Formulate a clear picture of the firms's new strategy and of the shared values,
norms, and behaviours needed to make it work.
2. Take a close look at the inner functioning of the organization and determine if
cultural change is necessary.
3. ldentify aspects of the current culture that could still be valid and other aspects
that need to be modified or changed.
4. Identify the depth of cultural change needed.
5 . Co~nmunicatethe change translated into goals, subgoals, activities, and
behaviours.
6 . Make changes from top down. The top management's commitment must be seen
and felt (for example, Donald Kendall, the chief executive of PepsiCo, is said to
have demonstrated the kind of ingenuity and dedication he expects from his staff
by using a snowmobile to get to work with a blizzard).
7. Involve employees in the change process.
8. Check on the leadership and suppport processes to overcome anxiety among
managers in giving up their earlier responses (for example, when PepsiCo
changed its culture from passivity to aggressiveness, the shift was accompanied
by supporting changes in reward systems and interdepartmental relations. A
positive and competitive tension was nurtured among departments).
9. Monitor the progress from time to time; build momentum in terms of initial
success.
10. Defuse resistance. Despite this, expect certain casualties to occur (for example,
some employees may leave the organization and a few setbacks may occur to the
change effort).

4.4 THE NEED FOR INDIGENOUS MANAGEMENT m

DEVELOPING COUNTRIES
Organizations are socio-technical systems with specific objectives of producing goods
and services for their clientele. In order to manage such organizations effectively, it is
necessary to understand how these systems work. Social scientists working in the field
of organizational behaviour have proposed many theories and techniques that have
helped management practitioners not only to understand the complexities of
organizational systems but also to manage them effectively in order to achieve their
production and service objectives.
89
Concept of Most widely dispersed management theories and techniques have their origin in the
Managing Change indusitrialized countries of the West. Many organizations in these industrialized
countries have benefited from their prescriptions. As a result, Western management
thought ant1 practice have turned into 'sacred cows' for industrial development.
Coun1.ries in the developing worlcl are advised, and feel themselves, that they must
strive to adopt Western thought arid practices to achieve economic prosperity within
the shortest possible time. Hence lnany organizational practices and management
training prcbgrammes in the developing countries in modem times are based on 'an
uncritical emulation and extrapolation from the experiences of the economic growth
mode I of western countries, grossly disregarding the fundamental differences in socio-
cultural coi~straintsand local contiitions and circumstances' (Sinha and Kao 1988).
Uncritical transfer of management theories and techniques based on Western
ideolc~giesand value systems has in many ways contributed to organizational
inefficiency and ineffectiveness in the developing country context.
Managing oganizations requires a thorough understanding of the dynamic
relatic~nshipswithin the socio-technical system (the internal environment) and the
relationship to the external environment with which the system is in constant
interaction. Since the extenal environment of organizations in the developing countries
is diffi~rentfrom that of the Western industrialized countries, management theories and
practices developed in the developed country context may have only limited
applicability in the developing world. If one accepts the above premise, it becomes
clear that there is a need to develop indigenous management theories and practices for
use in the developing country coni.ext.

The need For indigenous management

Every orgaiiization must deal with the management of its internal and external
envirclnments, i.e. the management of the people and technology within the
organ~zationas well as the management of relations with the enironment external to or
outside the organization.
Every orgarlization has the basic purpose of achieving two sets of objectives with
respect to the management of its human resources. The first has to do with improving
the pe!pformanceof organizational members to deliver goods and services for which
the orl:aniziition is formed in the first place. Productivity of a given organization -
whether it i!; measured in terms of units produced, volume of sales accomplished,
quality of st:rvices rendered, amount of profit margin, or cost effectiveness of the
operation - is largely dependent on the performance of organzational members, be
they managers or rank and file workers.
The second set of objectives has to do with developing and maintaining the human
potential that serves as the backbone of the organization. To survive and to respond to
competitive challenges from time to time can only be sustained and moblized when the
organizatio~ihas highly competeni and motivated manpower. The effectiveness of the
management of an organization is very much dependent on the nature of the human
resources it possesses. In other words, an effective organization is one that has
members who exhibit high levels of both work-related motivation (job and
organizatiorlal commitment) and work performance.
Viewing organizational effectiveness in this way presupposes the existence of a system
of mariagen~entpractice and employee behaviour that is conducive to high levels of
work rnotiviition and performance Such management practice and employee
behavl our within an organization In a major way results from managerial and
employee viklues, attitudes, and beliefs regarding work and organizations. Every
organizatioli has an internal work culture of its own which influences the behaviour or
practices of both the management and the workers. The organizational work culture
represents a form of organizational reality that shapes both the micro-level individual
processes (day-to-day practices and behaviours of organizational members) and Organisational Culture and
macro-level organizational processes (design of organizational structure, technologies Change: Cross Cultural
Experiences
employed and strategic activities).
The shared values, beliefs, and norms about the nature of work and organization, the
work culture is constantly influenced by the environment in which the organization
operates. As tlie survival and growth of an organization depends on its developing an
appropriate corporate culture that can adequately respond to external environmental
forces. As tlie effectiveness of an individual depends on how adequately he or she
copes witli the surrounding environmental demands, the effectiveness of an it also
depends on Iiow it adapts to its environmental demands by developing an appropriate
corporate culture. In developing the appropriate coping strategies, it must be sensitive
to environmental constraints and opportunities. Such sensitivity implies identifying
and responding to three major aspects of the environment: (a) economic and
technological, (b) political and legal, and (c) socio-cultural.
The econoniic-technologicalenvironment provides constraints and opportunities with
respect to tlie technological, material, monetary, and human resource procurement
necessary for the organization to function effectively. For instance, organizations must
respond adequately to the prevailing labour market conditions. Management must plan
the manpower needs of the organization according to the avilability and flexibility of
labour. Manpower planning effectiveness depends on whether management has a free
hand in hiring, firing, retraining, or retrenching workers with minimal legal and
political interference. Effectiveness in manpower planning for increased productivity
and better service alsb depends on wage levels and the flexibility with which wages
can respond to existing realities. For example, if economic or market conditions
necessitate lower wage levels, or a moderate increase in wages, or even a wage freeze
or reduction, then organizational effectiveness is enhanced to the extent that the ethos
governing wages permits a flexible response to these conditions. The success of the
organizatio~iwould also depend on its adequate response to the challenges to its
financing activities posed by economic conditions such as the availability of
investment capital, inflation rates, interest rates, taxes, etc. The level of technology
available for carrying out the organization's tasks is also an important consideration
for the organization's success along with the development of an infrastructure which
facilitatesthe procurement of materials, the location of suppliers, and distribution outlets.
Besides the ecoiiomic and technological environment, the political and legal
environment also provides eitlier facilitatory or inhibitory conditions for the successful
operation of organizations. The stability of governments (local, regiona, and/or
national) creates business confidence. Legal systems which provide protection from
foreign competition and establish specific labour mores and practices either promote
or inhibit healthy organizations. Political interference in the management of
ortganizations and the bureaucratic hurdles that management often encounters are
widely known to contribute to organizational failure.
Finally, the socio-cultural environment provides challenges for dealing with human
resources (a product of the socio-cultural environment) within the organization and for
dealing with the clients (customers, community served) outside the organization. The
socio-cu ltural environment of any given society determines collectie norms and values,
and individual beliefs, attitudes, and action preferences. Since organizational
hnctioning depends on the behaviour and attitudes of people within a given society,
organizational behaviour is profoundly influenced by the socio-cultural environment
within which tlie organization operates. Sensitivity to the socio-cultural environment is
most important for effective human resource management in organizations. The
preceding discussion is summarized in Figure 2, which depicts the extenal
environmental and internal organizational forces that influence organizational
effectiveness with respect to human resource management.
Concept of Both international business and cross-cultural management studies recognize the
Managing Change inlportelnceof environmental variables, particularly those relating to the socio-cultural
environment as a major determinant of organizational effectiveness both within a
given country (Kanungo 1980) and across various countries in the world (Kanungo
and Wright 1983; Adler 1986). However, in the context of developing countries,
systematic explorations of what these environmental and cultural variable are and how
management can deal with them for greater organizational effectiveness are just
beginn Ing to take place (Kiggundu et al. 1983; Sinha and Kao 1988).
Most of our knowledge and technology about how best to manage human resosurces
within organizations stems from the social science research and management theories
aid practice of the developed world. American based knowledge and technology have
been imported by developing countries with the hope that what has worked for
American economic and human resource development will work for development in
the rest of the world.
The uncritical acceptance of Western development strategies is based on the beliefthat
the socicwulturalfeatures of developing societies commonly referred to as
'traditionalism' are inimical to economic development. For instance, it has been
airgued that the lack of a Protestant work ethic, religiosity, and consequent fatalism,
dependence, farnilism, etc. are the common socio-cultural constraints on economic
development in the context of developing societies (Weber 1958)-hence the perceived
need for change and modernization through the emulsification of
VvTeste1-n experiencesof organizational efficiency and entrepreneurship (McClelland
and Winter 1969).
~lnfortunately,the proven knowledge and technology in one socio-cultural context
does not necessarily work effectively in another context, primarily because of the
potent role of the contextual variables in determining organizational functioning and
effectiveness. Developmental strategies that utilize socio-cultural features of the given
society may actually be more desirable for overall organizational effectiveness. This is
clearly seen in the case of newly industrialized Asian countries such as South Korea,
Taiwan, Singapore, and Hong Kong, as well as in Japan. The success of organizations
in these countries is 'widely attributed to both management styles and work attitudes
t!hatare rooted in Confucian values, familism, and institutional structures that are not
necessarily Euro-American' (Sinha and Kao 1988).

4.5 CHARACTERIZATION OF ENVIRONMENTS OF

DEVELOPED AND DEVELOPING COUNTRIES
How can we characterize the economic, political, and cultural differences between the
cleveloped Western industrializedand developing Third World countries? How do
these differences impact the internal work culture and the developing practices and
wnployee behaviour in organizations in developing countries? Can managers improve
the handling of human resources within the specific environmental and cultural
constraints? What are the facilitation and inhibiting conditions inherent in the
environmental contexts for the effective utilization of human resources? These are
some of the complex issues that have no easy solutions. Howver, some general notions
with respect to such differences can give a better appreciation of the need for
indigenous management in developing countries and may provide some clues as to
what lbrms it might take.
,4lthough organizations in each country of the world have to adapt to the unique
:Featur.esof their own environment, for the convenience of analysis a look at the
environment of organizations in two commonly understood clusters is provided to
(competethose located in Western industrialized countries and those located in Third
World or developingcountries.
The two clusters differ on several dimensions with respect to their external Organisational Culture and
eriviron~nentand internal work culture which influence bothmicro- and macro-level Change: Cross Cultural
Experiences
organizatioi~albehaviour. These dimensions can be grouped into three categories:
dimensions relating to the economic and political environment, dimensions relating to
the socio-cultural environment, and dimensions relating to the internal work culture. A
listing oftlie dimensions on which the two clusters differ is presented in Table 4.2.

Economic and political environment

The economic-tecli~iological and the political-legal environments with which
organizations interact can be characterized in terms of two critical factors suggested
by Triandis (1 984): (a) tlie predictablity of future environmental events and
(b) tlie difficulty in obtaining resourcesfrom the environment. Variations in the
environment 011 these dimensions haw a significant impact on overall organizational
behaviour as well as on tlie beliaviour of individuals and groups within the
organization. As Triandis points out, 'predicatblity has implications for the difficulty
of tlie environment. Very predictable environments are easierthan very unpredictable,
and both very simple and very complex societies live in very predictable
environments'.

Table 4.2 Dimensions on which organizations in developed and developing countries differ

Dime~isions Developed countries Developing countries

A Chmtrcteri-ntion of economic and political environment

Predictability of events Relatively high Relatively low
Difficulty of obtaining Relatively easy Relatively dificult
resources from
environmenl
B Clzc~rtrcterizationofsocio-czllt~rralenvironment
Uncertainty avoidance Relatively low Relatively high
Individualism-collectivis~n Relatively high Relatively low
individualism individualism
Powcr distance Relatively low Relatively high
Relatively high Relatively low
masculinity masculinity
Relatively high Relatively low
abstractivellow abstractive/high
associative thinking associative thinking
C Clzaracterization of internal work culture (managen ent value and climate of beliefs and assumptions)
Descriptive assuniptions about human nature
Causality and control of Internal External
outco~nes
Creative potential Unlimited Limited
Malleability Malleable Fixed
Time perspective Future oriented Past and present
oriented
Time units for action Long term Short term
Prescriptive assumptions about guiding principles ofbehaviour within organization
Task orientation Proactive Passiveheactive
Success orientation Pragmatism Moralism
People orientation Collegial/participative Authoritarian1
paternalistic
Environment orientation Context independent Context dependent
So~rrce:Kanungo and .lalger. 1990 93
The Western industrialized environment represents a high degree of complexity: a
multitude of firms are engaged in producing a vast array of products and services.
Their characterization as 'developed' means that the infrastructure is developed, the
supply o f a trained labour supply is developed, the capital markets are developed, and
btrsiness-government relations are developed to the point of facilitating commerce or
atleast not hindering it. Thus the difficulty of obtaining resources is comparatively low
ancl predicatablity is on average relatively high.
Developing countries environment represents complexity of a different kind. They no
longer rc:present the traditional agrarian society but are on the way to industrialization
and modernization. The developing country environment becomes complex because of
the non-availability of resources to meet the high aspirations for development. Thus,
co~nplexityis the result not just of what is, but what 'is not'. Organizational means
anti goals tend to be incongruous and create diff~cultiesfor effective management. The
develop]ng country environment can be characterized as being on aveage relatively
more unpredictable. The political and legal climates in most developing countries are
perceived to be relatively less stable. Very often they also represent certain
chiiracteristics of 'loose societies' where 'norms are not well developed', and where
lavvless corrupt practices are more the rule than an exception. This type of
environment also poses problems for obtaining the required economic, technological,
and skilled human resources. Thus the challenge facing the manager in a developing
country is quanlitatively very different from that facing his or her counterpart in the
developed world. Managing organizations in a developing country requires some very
different approaches and skills in order to be successful.
Significant changes in the environment are necessary to make it more predictable and
ea:iy. Th,eseinclude the supply of adequate financing, vocational training programmes,
tec.hnologydevelopment, political non-interference, judiciary and executive reforms,
etc:., and,in the realm of organizational behaviour, management training and
development, time management, reward system reforms to reinforce appropriate
be liaviour, etc.

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.

Work culture within organizations

Peoples' assumptions, beliefs, and values about different aspects of their world are
shaped by environ~nentalforces. Members of an organization in a given environment
therefore would share a common set of assumptions, beliefs, and values that in turn
would guide their modal pattern of behaviour in the organization. In other words, the
external environmental forces shape the internal work culture of an organization.
Analysing culture from a broader perspective, Schein (1985, 1988) described three
levels of culture: basic assu~nptionsand premises; values and ideology, and artifacts
Concept o f and creations. The first level includes such things as the relationship of man to nature,
Managing Change time orientation, beliefs about human nature, the nature of man's relaltionship to man,
and man's concept of space ant1 his place in it. These are usually taken for granted by
members of a cultural group and are 'preconscious'. But it is these taken-for-granted
asslimptions that determine values and ideologies (including ideals and goals as well
as paths for 'getting there') and the cultural artifacts and creations (such as manifest
behaviour, language, technology, and social organization). Schein therefore argues
t h a ~in
, order to understand how organizations work, one needs to understand the
internal work culture, particularly the taken-for-granted assumptions of organisational
members.
In 'Table 4.2, part C, we can set: the contrast between the developing countries and
developc:d countries on the dimensions of work culture. The various culture-
determined assumptions that affect the work behaviour oforganizational members can
be broadly categorized under two headings: descriptive assumptions about human
nature a ~ i dprescriptive assumptions about guiding principles of human conduct. The
two sets of assumptions are different in the sense that the former describes what
human beings are like whereas the latter provides normative guidelines for engaging in
andjudp ing the appropriateness of behaviour.
The work cultures of organizations in developed and developing countries differ with
respect to the assumptions regarding the nature of cuasation and control over
oul:comc:s (pleasant and unplea~sanl)which one experiences in life. Some tend to
bellieve that they are responsible for the outcomes, or their behaviour causes and I
coi~trolsthe outcomes (internal locus of control). Others tend to believe that the
outcomes they experience in life are determined by forces outside themselves (external
locus of control). The locus of control beliefs in developing countries tends to be more
external, indicating more of a sense of fatalism in the internal work culture.
Arlother difference in work culture can be traced to the difference in beliefs about
human potential and malleability. Within organizations in developing countries, human
capabilities are often viewed as more or less fixed with limited potential. Hence career
planning and progression with supporting training facilities are extremely limited. In
the devoloped countries, however, organizations emphasize malleability and unlimited
creative: potential of human resources. Thus the internal work culture in the
developing countries is more conducive to the Theory X (carrot and stick) model of
management (McGregor 1960), whereas in the developed countries the Theory Y
(participative) model is relatively more suitable.
The unl)redicatable and difficult environment in developing countries has created a
tiine perspective that excluder; future orientation and long-term planning. In a
predictable environment, being future oriented or having a long-term perspective
favours;planning, where in an unpredicatble environment a short-term past and
present orientation seems more desirable and hence would not favour planning.
T'he success in task-related be:haviour is often judged by pragmatic considerations in
the develped countries. 'fie in~dividualisticachievement orientation ofthe Western
world ooupled with high masculinity has encouraged the use of pragmatic norms. In
the developing countries, on tlie other hand, high collectivism and femininity have
encouraged the use of moralirsm based on traditions and religious beliefs as the norm
forjud:gingthe success of an individual's behaviour. People are judged successful not
because of their nurturant and moral stand to serve interpsonal well-being (rather than
person-idwell-being).
The characterization of people orientation in developing country organizations as
authoritarian and patenialistic ir~dicatesa high power distance, whereas the collegial-
participative nature of relationships in developed countries is indicative of a relatively
lower power distance. In the superior-subordinate relationship, paternalism and
dependence are valued and encouraged in developing countries. The trend is quite the Organisational Culture and
%pposite in developed countries. Finally, the behaviour orientation towards the Change: Cross Cultural
Experiences
environment reveals context dependence in developing countries. This is indicative of
the associative mode oftliinking. The context independence of the developed countries
reflects an abstractive nlode of thinking. Abstract principles, rules, and procedures are
considered absolutes and traliscend contextual forces in guiding behaviour in the
developed country context. In developing countries, such principles are only relative
and contextual forces override principles when the two in conflict.
Indigenous management theories need to address the impact ofthese cultural factors
on individual beliaviour in organizations. One assumption implicit in most work in the
areaof comparative or cross-cultural management, and one shared by the authors, is
that the organization is indeed an 'open system' and cultural values from the
environment are brought into the work place and have a very strong impact on the
organization's work culture.

4.6 THE EMERGENCE OF INDIGENIZATION AND THE

CHANGE PROCESS
For long, countries in Asia, Africa and the developing world have generally taken for
granted that economic and industrial development are possible only through the
diffusion of modern technology from the West, which inevitably necessitated the
wholesaSe adoption of management practices, patterns of work organization and
interpersonal relationships prevalent in industrially advance countries. This paradigm
has not remained unchallenged. Instances of variations along cultural lines in the
beliaviour of members of organizations are innumerable. To mention only a few, it has
been observed that while British managers rely mostly on formal communication, the
Chinese communicate face to face or use tlie grapevine, being more relationship-
oriented. Again, tlie Chinese have their own particular approach to the international
trading network based not on contract but on trust and family ties. It is, therefore, not
surprising that an increasing number of behavioural scientists have begun to have
serious doubts about the universal applicability of single management techniques such
as participation, incentive systems and job enrichment.
There does not seem to be the 'one best way' in management. Not only has the narrow
concept of development of the 1950s and the 1960s been seriously questioned and
widened to include non-economic and human dimensions, but factors considered
'u~iiversal'with regard to effective management and organizational functioning are
regarded as ethnocentric and applicable only within very specific socio-cultural
coliditions. Management and work activities in an enterprise depend critically on
social values of its members which are culture-bound. The cultural embeddedness of
industrial organizatiolis has to be recognized. The recognition of 'cultural relativism'
in people's social and work values and in the management practices found to be
effective in different countries is a corrective to the hegemorlic yet optimistic
assumption implied by 'scientific management', by the Weberian 'bureaucratic' ideal
type, or even the enlightened human relations school, that there exists a universal or
monolitl~icprescription for the management of work organizatians. Often cited is the
case of Japan which has risen phoenix-like from the ashes of World War I1 and
become within a very short period one of the foremost industrially advanced countries
in the world, without having to cast off its traditional social values and cultural
characteristics. In fact, for several decades-particulary during the 1970s and
1980s-the economic success of Japan and of some Asian NICs (Newly Industrialized
Countries) of the Pacific rim were widely attributed to management styles, work
attitudes and values rooted in Confucian social philosophy, familism, and institutional
Concept o f 'experimenting' with a large variety of management styles and organizational
Managing Change models which are indigenous in that they are based on concepts and ideas embedded in
their cultures, philosophical systems and traiditions that are in sharp contrast to those
of the West.
Alithough recent economic problems in Asia have somewhat blurred the heroic image
of Japan and of the 'Asian Tigers', their past economic progress has served to arouse
Western-oriented theorists from their torpor. Indigenous developments have posed a
serious challenge to the presumed universality of Western theoretical formulations.
This may be somewhat disconcerting for a majority of us who have been fashioned by
our backgraound of a pre-eminently Western education and orientation. Knowledge in
the fielcl of management-and, for that matter, in the entire field of social sciences-
has corrle to a point where what used to be taken for granted and was considered
sacrosanct. It has become essential in today's world to abandon a parochial and
ethnocentric outlook and become sensitive to alternative formulations and approaches.
There is need to evolve the management in the cultural contexts of Asian realities. It
has now been conceded that the study of management practices and organizational
behavic~urhas to be conducted with a broader perspective and a receptiveness to ideas
and inspirations drawn from non-Western experiences in the workplace, especially
from Japanese management and from the successes of the East Asian economies of
China, Hong Kong, South Korea, Singapore and Taiwan.
The patterns of management and organization in evidence in East and South Asian
countries as well as in many parts of other non-Western regions are ofren regarded as
exemplifying what has often been called indigenization, i.e., a process by which
orga11ii:ations in their functioning are adapted to the socio-cultural soil of the host
country so that the end-product is appropriate as well as unique. It is to be noted,
howev~:r,that in most of the Asian countries, including the 'Dragon' and the 'Tigers',
rn anagement practices and organizations contain many elements of Western practices.
But it hiasrightly been remarked that Japanese and American management are 95 per
cent the same, but differ in all important respects. The patterns that emerge display a
kind of'adaptation of the requirements of work and modem technology to specific
elements of culture. They constitute a synergistic blend of traditional indigenous roots
and modern techniques.

--
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.

Domain development strategy

Since domain development (rather than market exploitation) is a major objective of
strategic developmental organizations, there is need to develop a number of options for
this. C)neoption is networking with a number of institutions in the domain in order to
develop a domain development strategy(Paul1982). As an example, Indian term
lending institutions, mostly government owned, have created an inter-institutional
meeting forum to coordinate their activities with a view to channelling capital to the
private manufacturing sector. Public enterprises in India have created an institution
called the standing Committee for Public Enterprises (SCOPE) for sharing problems
and concerns.
A second option is one of institution building, i.e. of helping existing sub-strategic
organi.zatiorrswith training, resources, etc. to build up their capacity for
developmental action. As an example, the Indian Institute of Management at
Ahmeclabad has helped a number of other MBA programmes in India and other Third
World countries to get going; the Ahmedabad Textile Industry's Research Association
conducts a vct-iet.: oftechnical and operations-related studies in textile mills with a
view to improv;llg their efficiency, productivity, etc.
A third option is for strategic developmental organizations to start one or more
specific purpose organizations, each playing a specialized role in the overall
developmental strategy for the sector. For example, the Industrial Development Bank
of Indial, the iipex term lending institution in India, has helped set up the
Entrepreneurship trainers; in association with governments of various Indian states, it
has also formed state-level subsidiaries for channelling term finance to small- and
mediurrt-scale enterprises. Major nationalized Indian banks have collaborated in
setting up the National Institute of Bank Management to train bankers and conduct
banking-related research. Several large Indian public enterprises such BHEL and the
State Bank of'India have set up staff colleges for training purposes. HMT, a well-
known Indian public enterprise, took the lead in the setting of the Central Machine
Tool Research Institute. The Behavioural Research Centre has been setting up village
coopera'tives of low caste persons in Gujarat to increase their self-reliance; the
Nationa Dairy Development Board has been playing a major role in setting up
'Anand pattern' cooperative dairries in other parts of India. A number of voluntary
organizations such as the Self-employed Women's Association and Tilonia (Roy 1986-
87) have assisted in their replication in other parts of India.
These dc~maindevelopment strategies may be usefully contrasted with the 'secure
market domin:~tion
to cream the market' strategies pursued by corporate organizations
(Porter 1980).
 Organisational Culture and
4.9 CLOSING CULTURAL GAPS Change: Cross Cultural
Experiences
Without a supportive culture, every action by top management wil l be discounted by
the groups below -even top-down efforts at introducingcultural change.
There are many cases in which executives have taken dramatic cultural change
initiatives even in their own behaviour coupled with symbolic deeds and fiery speeches
in order to dictate cultural change to the company - but to no avail. Only when work-
group members encourage one another to be receptive to overtures by management,
can the whole cultural change programme be successful. For example, virious work
groups might include such new norms as: Give management another chance; assume
good intentions. Managers and consultants, therefore, have to work especially hard to
encourage the work groups, including the executive groups, to meet one another
klfway if cultural change programmes are to succeed.
How can culture change initiatives close the gap?
How can an organisation move its culture from the actual to the desired?
Will cultural change initiatives take it out of a culture and put it back on track for
solving present and future problems?
Will the organisaiion survive the shock of cultural change?
When the current culture is at least hopeful, the impact of survey results on workers is
almost miraculous. In fact, some cultural change from the actual to the desired norms
can take place just by listing the agreed new set of norms as people start "playing
them out" immediately. But when the current culture is cynical, depressed and in a
deep cultural rut, the response to the survey results is quite different. Even when large
cultural gaps are shown or when listing demonstrates the tremendous differences
between actual and desired norms, employees seem apathetic and lifeless. They
respond to 'cultural change needs by saying that their work units cannot change for the
better until the level of management above them and the rest ofthe company change.
They believe that the external system is keeping them down.
Curiously, when a cultural gap survey is done at the next highest leve, the very same
argument is heard again. "We have no power to initiate cultural change; we have to
wait for the next level to let us change; they have the power"! It is shocking (after
conducting the cultural gap survey for an entire organisation), to present the results to
the top management group only to find the same feelings of helplessness. Here top
management is waiting for the economy or market forces or something to change
before they feel that could take action. In actuality, it is the corporate culture that is
saying: Don't take on responsibility, protect yourself at all costs; don't try any cultural
change initiatives until everyone else has changed; don't lead the way, follow.
This the perfect example of a company in a culture rut, where the shock of realising
the discrepancy between actual and desired norms is just too great to confront.
Instead, the organisation buries its head ad hopes everything will be sorted out by
itself, or shuts the plant/site/department/division/business-because it feels the
problems are insurmountable. Even in the face of strong evidence of a serious
problem, time and time again, it has resulted in organisational denial promoting the
norm better to use energy to fight for good severance pay than effect the cultural
change needed for survival. Such organisational denial of impending doom is a much
more powerful and perhaps destructive force than any case of individual denial. The
group's power to define reality clouds everyone's better judgement. The bureaucratic
culture "wins" again.
Closing the cultural gap through cultural change initiatives requires accurate
information (from all areas), commitment (from top to bottom), and multi-levelled and
Concept of functionid groups actively participating in cultural change management techniques to
Managing Change promote new norms.
In one case a 3 day cultural change management workshop was held at a large
industrial organisation that included the chief executive and 10 directors. It was
suggested that a representative survey of cultural gaps be subsequently conducted
across all divisions in the company. (In this way, a cultural change report on the
collrlpany's specific culture could be produced and used to generate a lively and
interesting discussion). A few days later the director for human resources called and
declared: "No, we had better not do this, I don't think the executive group realy wants
to know what is going on in the company. Besides, we can't take the chance of
surprising them with your survey results". An organisation possibly beyond help!
Ga,iriingcontrol of the corpora1:eculture is not only possible but necessary for today's
organisations. As strategic changes in corporate direction is planned, cultural change
to replace old cultures - in one or more divisions or for the whole organisation - is
often imperative. But just as old cultures can become out-of-date and dysfunctional,
the same can happen with new ones. Changes in the organisation's setting - and
corresponding changes in its strategy, structure and reward systems - can make any
culture 11:ss functional than before. An important part of managing corporate cultural
change tiherefore is to continue monitoring and assessing norms. If the cultural change
is not managed explicitly, it may be just a matter of time before the organisation is
once again disrupted. But, where cultural change is managed explicitly, the company
car1 expect significant improvements in both morale and performance; it will be, in the
bes,tsense of the word, a cultural organisation.

4.31 0 SELF-ASSESSMENT QUESTIONS

1) What is organisational culture?
2) De:;cribe how organisational culture change can take place? Illustrate from an
organisation where culture change has taken place.
3) Describe some cross-cultural experiences of organisational culture and change in
the present scenario.
4) What aspects have to be taken into consideration for closing cultural gaps?

4.11 FURTHER READINGS

--
Adler, N J. (1986) International Dimensions of Organizational Behavior, Boston, MA: Kent
Publishing Co.
Hofstede, G. (1980a) Culture's Consequences: International Dzflerences in Work-related
Values, EIeverly Hills, CA: Sage.
Kanungo, R.N. (1980) (1980) Biculturalism and Management, Toronto: Butterworths.
Kanungo, R.N. and Wright, R.W. (1983) 'A cross-cultural comparative study of managerial
job ;~ttitudes',Journal of International Business Studies, Fall: 1, 5-29.
Kilcpundu, M.N., Jorgensen, J.J. and Hafsi, ST.(1983) 'Administrative theory and practice
in developing countries: a synthesis', Administrative Science Quarterly 26, 1: 66-84.
Mc:Clelland, D.C. and Winter, D.G. (1969) Motivating Economic Development, New York:
Free: Press.
Schein, B.H. (1985) Organizational Culture and Leadership, San Francisco, CA: Jossey-
Bass.
Schein, E.H. (1988) 'Innovative cultures and adaptive organizations', Working Paper, Sloan
School of Management, Massachusetts Institute of Technology, Cambridge, MA.
 Sinha, D. and Kao, H.S.R. (1988) 'Introduction value-development congruence', in D. Organisational Culture and
Sinha and H.S.R. Kao (eds.) Social Values and Development: Asian Perspective, New Change: Cross Cultural
Experiences

Triandis, H.C.(1982) 'Review of culture's consequences: international differences in work-

related values', Human Organization 41, 86-90.
Triandis, H.C. (1984) 'Toward a psychological theory of economic growth', International
Journal qf Ps,vchology 19, 79-95.
Weber, M. (1958) The Religions of India: The Sociology of Hinduism and Buddhism,
Glencoe, IL: Free Press.
Khandwalla, P.N. (1986) 'Performance deteminants of public enterprises: significance and
implications for ~nultinationalisation'in A. Negandhi, H. Thoman, and K. Rao (eds.)
Research in Ititernatiotial Business and International Relations, vol. 1, Greenwich, CT: JAI
Presee.
Murthy, K.R.S. and Nath, N.C.B. (1988) 'Can a holding company be an effective buffer for
government enterprise', Vikalpa 13, 3: 3- 15.
Patil, S.M. (1982) HMT Over Three Decades, New Delhi: Documentation Centre for
Corporate and Business Policy Research.
Paul, S. (1982) A4unugmg Development Programmes: The Lessons of Success, Boulder, CO:
Westview Press.
Porter, L.W. and Lawler, E. (1968) Matzagerial Attitudes and Performance, Homewood, IL:
Irwin.
Roy, S. (1986-7) 'The Tilonia model as a new approach', presented at the International
Conference on Organizational Behavioural and Perspectives for Social Development, IIMA,
Ahmedabad, 29 December 1986 to 2 January 1987.
Scherer, F.M. (1980) Industrial Market Structure and Economic Performance, Chicago, 1L:
Rand McNally.
I
Sreedhar Sharma, J. (1982) 'The enterprise contract system in public enterprise
management - the French experience', IPE Journal 5,4: 41, 69-76.
 -

NOTES
UNIT 5 EMERGING ORGANIZATIONAL
FORMS AND STRUCTURES

After reading this unit you will be able to understand:

the emerging organisational 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.

5.2 2lSTCENTURY ORGANIZATIONALTRENDS

There are five key organizational trends

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.

5.3 ORGANISATIONAL DESIGN

Organizational design deals with structural aspects of organizations. It aims at
analyzing roles and relationshipsso that collective effort can be explicitly organized to
differentiated

,
I

exploit regional betfer communication, customer needs

costlexpertiselneeds and transpotlation
differences lechnolojy
Forms of Olg.nb.Uor.1 achieve organizational goals. The design process leads to the development of an
Change
organization structure consisting of units and positions. There are relationships
involving,exercise of authority and exchange of information between these units and
positions.
Organizational design is "The process of systematic and logical grouping of activities,
delegation of authority and responsibility and establishing working relationships that
will enable both the company and employee to realize their mutual objectives"

5.4 ORGANISATION STRUCTURE

An organizational structure defines howjob tasks are formally divided, grouped and
coordinat~:d.
Managers need to address six key elements when they design their organization
structure
a Work specialization
a Departmentalization
a Chain of command
a Span of Control
a Cen1:ralizationand Decentralization

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.

5.6 AMOEBA-SHAPED ORGANIZATION

It is another form of boundary-lessorganization which is structured like an 'amoeba',
with a central nucleus and a flexible operating structure enabling it to move into
different types of projects and markets while operating as cross functional teams.
An amoeba structured company could spin off into smaller independent companies.
For example, ENTACT Inc., an environmental services company based in Texas, US
divides like amoebae to form new companies. When it has about 40 employees, it
spins off another business with the first company retaining a 90 % stake hold in the
new business, while the employees of the spin off unit retain 10%, in this manner,
ENTACT Inc., is able to attract new companies. Since it operates without much of a
structure and has no middle level management, there is a lot of latitude and fieedom in
its operations and it can be divide into new operative units with ease.

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

Accountiability flow from the lowest level to the highest level. 1

Advantages
1) Efhctive analysis of factors and efficient decision making are possible as a
number of managers at different levels supervise and check the activities.
' 2) Therse organizations provide better communication of company's mission, goals
and objectives to all employees.
3) This structure enhances coordination of functional areas and ensures that each
area is working closely with otlier functions.
Disadvantages
1 ) Too many hierarchical levels may waste time in communication which may in-
turn lead to delays in decision-making.
2) There is too much centralization in vertical organizations.
3) Tight operatima1control delays the decision-making process.

5.b EIORIZONTAL / FLAT ORGANIZATION

The horizontal organization is a more appropriate model for the knowledge age.
Co~npaniesincreasingly find this structure more effective. Frank Ostroff in his book
"Tihe Hclrizontal OrganizationV(l999)emphasizes the need to start with an
understandingof an organization's core competencies and to develop a horizontal
str~~cturt:from there. His fairly academic book advances a trend that is already well
documented. Horizontal organizations promote more decentralized, downsized, team-
oriented organizations with empowered workers.
In ithe U:Ssuch well-known corporate giants as AT&T, DuPont, General Electric, and
Motorola are moving towards what is becoming known as "the horizontal
cot-poration"in which traditional internal departmental divisions and well-defined
layers olfauthority are blurred or destroyed to allow an organization to respond more
qullckly;andeffectively to market changes.
Flatness, or the absence of an organizational hierarchy, does not mean the elimination
of individual roles or responsibilities. It does mean the end of people with over-riding
I0 aulliority over other people's work.
- - -
- - - - --
Forms of Organisational
--
Change --
9 INVERTED PYRAMID
The traditional business is styled in the form of a pyramid with the chief executive
officer at the top, senior executives underneath, and so on. There are many layers in
the management structure, which reflect who reports to whom. Once the pyramid is
sluetchad on a white board, the crucial question is asked: Who are below the rank-and-
file employees? The answer sought is: The customers.
Once the customers are drawn at the bottom of the pyramid, just below the lowest-
level empbyee\s, the process of rending one's garments begins. How can the senior
management of a company tolerate such an arrangement, with the most important
p~sople(the customers) being kept at the bottom! It is obvious that the enterprise has
n13hope of getting anywhere with this obsolete management structure - especially in
today's beleaguered markets.
Fortuniitely, management is offered a fix -simply, turn the management structure
upside down, and put the most important people in the business, namely the
customers, at the top. Reversal of the pyramid not only gives the customers the most
in-lportantrole in driving the business, it also gives the front-line employees a similar
ability. As they are closest to the customers, this appears to be a reasonable and long-
overdue: proposition.
Tl~us,the inversion ofthe management pyramid is not only deemed to improve
' relatior~swith the customers, but also to improve the business itself. The flow of
cc~mmunicationfrom the customers and within the enterprise should vastly improve.
Once the inverted pyrawid idea is presented, it is postulated that the role of
nr -~.'a~.r.rne~.t
needs to L fvom a commanding role to a supporting one.

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

Employment Training & Administration Industrial

Development Relations

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

Co~llpaniesproducing more than one product structure their organizations basedon

product structures. Activities are divided on the basis of individual products, product
line, services and are grouped into departments in product organization structure. All
important functions viz., marketing, production, finance and human resources are
contained within each department.

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

Scooters Cars Vans

5.16 SELF-ASSESSMENT QUESTIONS

1) What are the reasons for organizations to design and redesign in order to be
efficient and effective? Discuss.
2) Discuss different types of organizational structures and their merits and demerits.
3) For example, if your organization requires restructuring which type of structure
would you choose and why? Give reasons.

5.17 FURTHER READINGS

1) Management of Organizational Change Leveraging Transformation - Prof. K

2) IWanagement and Organizational Behavior - P Subba Rao.

3) Organizational Behavior - Stephen P Robbins.
UPlJIT
- - 6 MERGERS AND ACQUISITIONS
Objectives
After readling this unit you will be able to understand:
a reasons for formation of mergers and acquisitions
a role of agencies whose help is required, and
a alternatives to mergers and acquisitions

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.

6.2 HISTORY OF MERGERS

Historically M&A could be traced to the American or the British business and
commerce activity. The four waves occurred between 1897 and 1904; 1916 and 1929;
1965 and 1969; and 1984 and 1989. Merger activity declined at the end of 1980s but
resumed again in early 1990s. This evoked major activity and impacted the structure
of American business transforming medium size businesses to huge multi-national
corporations.
1.2.1 The First Wave, 1989-1904, occurred after the Depression of 1883. These
mergers affected major mining and manufacturing industries with certain industries
clearly demonstrating a higher incidence of merger activity. Ralph Nelson in his
research study at National Bureau of Economic ~esearchidentified food products,
petroleu~n,chemicals, transportation equipment etc accounting for two thirds of all
mergers during this period. By the end of the first merger wave, a marked increase in
i
the degree of co~icentrationwas evident in American industry. The steel industry for
example declined dramatically and in some areas only one firm survived. The
develop~nentof the US transportation system was another major factor that initiated
tlie first merger wave. The establisliment of the railway system, transcontinentalrail-
roads etc were some of developments that could be seen in this period. As firms
expanded, they exploited economies of scale in production and distribution. The
banking and business community adopted its own code of ethical behaviour. These
develop~ne~its were affected by the stock market crash of 1904. and hence the first
takeover period canie to a halt.
1.2.2 The Second Wave, 1916-1929, was characterized as "merging for monopoly"
verses "nierging for oligopoly". Tliis wave consolidated several industries and resulted
in an oligopolistic industry structure. The American economy continued to evolve and
develop, primarily due to the post World War - I economic boom, which provided
capital for tlie securities markets. Many companies in unrelated industries also merged
which resulted in the first large scale formation of conglomerates. Industries into
primary metals, petroleum, food, chemicals, transportation, etc experienced
disproportionate number of mergers. Investment bankers supported merger activities
during this period which gave the financial impetus for successful M&A.
1.2.3 The Third Wave, 1965-1969, featured a historically high level of merger
activity which may be partly attributed to a booming economy. Often known as
conglomerate merger period, it was not uncommon for relatively smaller firms to
target larger colnpanies for acquisition. In contrast, a majority of the target firms were
significantly smaller than the acquiring firms during the two earlier waves. The
coiiglo~neratesfound during this period were diversified firms. General Motors with
subsidiaries in industries such as electronic data systems, a computer company and
Hughes aircraft. an aircraft manufacturer is an example of diversified firms. This
trend was accelerated because of the rapid growth of Management
Science.Management Science developed methodologiesthat facilitated organizational
management which could be applied to a wide variety of organizations. American
industry however, could not capitalize on the trends because of accounting
manipulations whicli led to tlie decline ofthe third merger wave. Many ofthe
Forms of Organisational acqil isiticlns were thus followed by poor financial performance. The conglomerate era
Change
also represented a movement away from specialization, with the result established
companie:~ (like Revelon, a firnil with a record track of success in the cosmetics
industry) saw core businesses suffer when they diversified into unrelated areas.
1.2.4 The Fourth Wave, 1981-1989, continued the downward trend of the third
wave. The unique characteristic of the fourth wave is a significant role of hostile
mergers, which had become an acceptable form of corporate expansion in the third
wave. This period can also be d~!sti.~guished from the earlier waves by the size and'
prominence of the M&A targets, with the result this period became the wave of mega
mergers. All the same not all intiustries experienced a rapid growth in mergers during
this period. The oil industry for example, experienced more than its share of mergers,
which resulted in a greater degree of concentration within that industry. The drugs and
medical equipment deals were tlie most common among the industries.
Deregulation is often cited as one of the reasons for this disproportionate number of
M&As. The airline industry is z~classic example where air fares became a subject to
grea,ter cc)mpetitionleading to a competitive position of air carriers where some
deterioraled unable to compete effectively. This resulted in numerous acquisitions and
a consolitlation ofthis industry i11 the US. The aggressive role of investment bankers,
increased sophisticationof takelover strategies, legal and political strategies,
shareholcler activism, foreign takeovers etc were other unique characteristics for the
fourth wave.
1.2.5 Mergers o f the 1990s, featured large mega mergers, fewer hostile deals and
more strategic rnergc-c. As the economy recovered from recession, companies began
to expancl and merge for efficie~lcy. Unlike the earlier mergers, the transactions of the
90s erivphasized strategy tha- quicic financial gains. Drugs, medical equipment along
with Ii~-~.ing,finance etc .:.-ti~ltreA to be the most common categories of M&A.
M&A thus came to be used in so ntany connotations and so many terms often used
interchangeablyconfuses even a careful reader. Clarity in the concept and definition of
M&A alc~ngwith related terms provides a good starting point for further discussion on
the :subject.

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.

6.4 TYPES OF MERGERS

Mergers are often categorized as horizontal, vertical or conglomerate mergers. A
horizontal merger occurs when two competitors combine. The recent Hewlett
Packard and Compaq merger is an example of horizontal merger. If a horizontal
merger causes the combined firm to experience an increase in market power that will
have anti competitive effects, the merger may be opposed on anti trust grounds. In
recent years however, the governments all over the world have been liberal in allowing
many horizontal mergers to take place unopposed.
A verticalmerger are combinations of companies that have a buyer-seller
relationship. Merck, the worlds largest drug company acquired Medco, the largest
marketer of discount prescription medicines in the US is an example of vertical
merger. This transaction enabled Merck to be not only the largest pharmaceutical
company but also the largest integrated producer and distributor of pharmaceuticals.
This transaction too was not opposed by anti trust regulators even though the
combination clearly resulted in a more powerful firm.
A conglomerate merger occurs when the companies are not competitors and do not
have a buyer-seller I-elationship. For instance, Phillip Morris, a tobacco company
acquired General Foods and these companies were in very different lines of business.

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.

6.6 PURPOSE OF MERGER AND ACQUISITION

The (:ompiiny which proposes to acquire another company is known differently in
different modes of acquisition, the familiar ones are :predator,offeror, corporate '
raidtr etc. The transferee company is also denoted as victim, offeree, acquiree or
target etc.
The purpose for an offeror company for acquiring another company shall be reflected
in the corporate objectives. It has to decide the specific objectives to be achieved
through acquisition. The possible purposes for acquisition are :
a) Procurement of supplies : Acquisition could be to safeguard the source of
suppllies of raw material or intermediary product, to obtain economies of
purchases in the form of discount, savings in transportation costs, overhead costs
etc and also finally to standardize the materials.
b) Revalmping production facilities : One of the most important purpose of
acquisition is to achieve economies of scale by amalgamating production
facilities through more intensive utilization of plant and resources. Acquisitions
also are resorted to standardizing product specifications, improving the quality of
product etc. Obtaining improved production technology and know how from the
 offeree company to reduce cost and improve quality is also one of the purposes
of acquisitions.
c) Market expansion and strategy : The most important purpose behind M&A is
to eliminate competition and protect existing market. In the process acquisitions
also aim at obtaining new market outlets ofthe offeree for new product
development or diversification and enhancing product range. Market expansion
also reduces advertising costs, improves public image and allows strategic
control of patents and copy rights
d) Financial strength : One of the most important purposes of M&A is to improve
liquidity and cash. The financial strengths lie in the disposal of surplus and
outdated assets, which automatically enhance capacity and enable them to avail
tax benefits.
e) General gains : The purpose of M&A is to improve its own image and attract
superior managerial talents to manage its affairs. The general gains from M&A
also include offering better customer satisfaction and services to the users ofthe
product.
f) Development plans : The purpose of acquisition is backed by the offeror
company's own development plans. The plan might include expansion of
operations, supplementing funds, eliminating competition, strengthen its market
position etc. Thus, the purpose and the requirements of the offeror company go a
long way in selecting a suitable partner for merger or acquisition in business
combinations.

6.7 ROLE OF AGENCIES

The task of acquiring another company invites skills of experts for expeditious and
successfi~lconipletion of the transaction adhering to all formalities and procedures as
required under the law, accounting convention and practices. Moreover, in-house
talents available with an acquirer company with its executives are required to be
supplemented with advice from outside experts. Thus, a number of agencies and their
role assume significance in the merger process. Some ofthe agencies whose help is
needed in mergers and takeovers are :
1) Advisors : The advise of Chartered Accountants or Financial Consultants,
Merchant Bankers, Stock Brokers and Legal Consultants are important.
The Chartered Accountants and Financial Consultants offer a wide range of services
in the matter of mergers. Firstly, he lias to give opinion on the financial strength of the
acquirer. Secondly, lie examines in detail the accounting position ofthe offeree
conipany. This is followed by a critical assessment of all related aspects ofthe merger
and concludes his comments with summary of basic findings. He must also give his
opiniorl to the acquirer on the commercial viability or otherwise.
The role of Merchant Bankers is complementary to the role of Accountants or
Financial Consultants. He has to advise the management about the commercial
soundness of the merger plan. He also advises on the status of legal requirements and
helps in the preparation of offer documents and circular to be sent to shareholders of
both the companies. He has to ensure compliance of all formalities prescribed by
SEBI.
The Stock Brokers in developed nations have multifarious activities. Their role covers
consultancy to the acquirers and raiders. In UK and USA, they also find a client and
promote sale and purchase of the undertaking and charge for the transaction. Because
of their knowledge on the functioning of the companies, they can render first hand
knowledge about the corporate raids, possible target companies, etc.
Forms of Organisational The Advoc;ltes and Legal Consultants provide the jugglery of law. No proposal of
Change merger or takeover can go through without involving the legal experts. The
requirlsmen ts of law and formalities under different statutes applicable to companies
can be coml)lied with only under the expert advice and supervision of legal experts.
Hence, very specific expertise is g,ivenby the legal advisors.
. 2) Financia I Institutions, Banks and BIFR : In mergers and takeovers between the
companies where one or both ofthern are debtors to the financial institutions like
lDBI, LIC, UTI, GIC, Banks etc, the proposal of merger is required to be approved
by institutions and banksjointly so that they could safeguard their institutional interest
as lenders / creditors. The BIFR established under the Sick Industries Act, 1985 plays
a significant role in arranging merger of viable units, through package deals settled
with the creditor financial institutions and banks with regard to means for future
finance, coi~tinuedbusiness activity, major changes to be introduced in business,
continr~edemployment of employees of offeree company and its subsidiaries etc. Thus,
all these agoncies help leading to meeting their future requirements.

6.8 LEGAL PROVISIONS

Invol\emer~tof social interest in economic activities implies application of law with a
view to regulate the activity to ensure safeguard of general public interest. In business
combinatio~is,in any form oftakeover or merger, the individual and community
interest of d ifferent parties namely, shareholders, creditors, employees and consumers
are in\rolved from different angles. Legal provisions for regulating the formation and
organizational framework have be:en formulated to safeguard public interest and
consumers in every country.
The laws regulating mergers in the developed nations have been formulated as and
when 1.1ieactivity of M&A begun. Takeovers and mergers are very frequent in UK and
Europe. In IJK "city code" was evolved to discipline the corporate enterprises which
go in volunlarily or by force into business combinations. In addition, the MRTP Act,
1948, Prevention of Fraud Act, 1956, Financial Services Act, 1986 etc ensure
business coinbinations do not go against public interest.
In the case of USA business combinations have been much more frequent than
anywl-eree Ise in the world. Despite the free economy, top priority is given i11 the USA
for the investor. The major IJS anti trust regulations include the Sherman Act, 1890
which prohi bits any restrained of trade or attempt to monopolize trade and the Clayton
Act of 1914 which prohibits acquisition to create a monopoly, the Anti Trust
Improvement Act of 1976, Security Exchange Act, 1934 etc are other laws. These
have been amended from time to time to keep pace with the changing times.
India's economic system has been a regulated economy and the objectives of
socialistic pattern of society have led to the regulatory framework which is more in the
nature of 1e:;soning the concentration of economic power in few hands. The 1990s led
to the I iberalization of the economy demanding much more restrictions in-built in the
legal system. The mergers and takeovers of corporate enterprises are governed by the
Companies Act, 1956, Industries Act, 1951, MRTP Act, 1969, FERA, 1973, SICA,
1985, lnconle Tax Act, 1961, SEHI Act, 1992 etc. These legal provisions regulate the
takeoh er and merger of corporate enterprises.
--
6.9 ALTERNATIVES TO MERGERS AND ACQUISITIONS
'
There are a wide variety of alternative strategies focusing on the building of external
relationships that achieve the same objectives as M&A. The primary difference among
these strategies is a degree of control that results between the parties after the
consummation of the relationship. Joint ventures, franchising, licensing, strategic Mergers and
Acquisitions
al lia~icesand distributorshipsare all alternatives which envision a dynamic apd
synergistic working relationship. In some cases, these strategies and relationships are
designed to be long term and truly independent, in other cases the relationships are
slightly more non committal and merely have shared objectives. These alternative
strategies are :
I) Joint Ventures: One strategic alternative to an acquisition available to today's
small and growing companies is a legal structure known as Joint Venture (JV). A JV
is typically structured as a partnership or a newly formed co-owned corporation where
two or more parties are brought together to achieve a series of strategic and financial
objectives on a short or long term basis. JVs are designed for direct capital infusion in
exchange for equity, a capital substitute, or a shift of the burden and cost of
develop~nentin exchange for a potentially more advantageous position. JVs or
strategic alliance is considered to develop a new market, a new product, share
technology, com bined technology, pool resources, acquire capital, execute government
contract, access a distribution network or sales capability. This is one of the most .
frequently used strategy in the modern era.
2) Franchising: Over the last two decades, franchising has emerged as a popular
expansion strategy for a variety of product and service companies especially for small
businesses that cannot afford to finance internal growth. Estimates evidence that 45%
of all retail sales in the US have been franchised. Franchising is a method of
marketing and distributing products and services is appropriate for certain kinds of
companies. This is because ofthe many legal and business pre-requisites that must be
satisfied before any company seriously considers for rapid expansion. The reasons for
franchising are eco~io~nies of scale, operating eff~ciencies,cost effective market
penetration, reaching tlie targeted consumer, ability to sell products and services to a
dedicated distributor network, replacement of internal personnel with motivated
ownerloperators, sliift in primary responsibility for site selection, employee training,
personnel management and other administrative concerns. Responsible franchising is
the only way that growing companies and franchisees will be able to harmoniously co-
exist I n tlie 2 1 century. They depend on certain key components of their relationship
which include a proven pro-type location, a strong management team, adistinctive and
protected trade identity, proven methods of management, a comprehensive training
program for franchisees, a comprehensive legal documents that reflect companies
business strategies and operating policies, a demonstrated marked demand, a genuine
u~iderstandingofthe competition, R&D facilities, communication system etc.
3) Technology and Merchandise Licensing: Licensing is a contractual method of
developing and exploiting intellectual property by transferring rights of use to third
parties without the transfer of ownership. From a legal perspective, licensing involves
co~nplexissues of contract, tax, antitrust, IPR, etc. From a business perspective,
licensing involves a weigliing of the economic and strategic advantages of licensing
against otlier methods of bringing the product or service to the marketplace such as
direct sales, distributorships,or franchisees. Benefits like spreading the risk and cost
of development and distribution, market penetration, enhance consumer loyalty and
goodwill, test new applications, avoid and settle litigation, etc are certain advantages
that accrue to tlie organization through this method. The two types of licensing are:
Technology licensing. where the strategy is to find a licensee for exploitation of
industrial and technological developments and Merchandise andcharacter licensing,
where the strategy is to license a recognized trademark or copyright to a manufacturer
of co~lsumergoods in markets not currently served by the licensor.
4) Distributors and Dealerships: Many growing product-oriented companies choose
to bring their products to the market place through independent third-party distributors
and dealerships. This type of arrangement is commonly used by the manufacturers of
Forms of Organisational electron IC and stereo equipment and automobile parts and accessories. These dealers
.Change'
are generally more difficult to control than a licensee or franchisee; the resultant factor
would then be a more informal than a franchise or license agreement. Distributors are
often co~ifusedwith sales representatives. A distributor buys the product from the
manufacturer at wholesale prices, who sells it to a retailer or a customer directly.
There is no fee paid by the distributor for the grant of distributorship and he is
permitted to carry competitive products. A distributor is expected to maintain some
retail location, storage and other facilities. In most cases, distributorshipnetwork
offirs a viable alternative to franchising, though it is not a panacea. A sales agent on
the other hand, is an independent marketing recourse for the manufacturer. Unlike the
distributor, the sales person need not purchase merchandise or maintain inventory or
lociitions, etc.

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

After studying this unit you will be able to understand:

concept of trunarou~idmanagement, and
how turnaround can be used in different countries.

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.

7.3 KJNDS OF TURNAROUND SITUATION

There is a broad spectrum of turnaround situations, which might occur. The nature
and urgency of the situation in often influenced by certain key parameters which
include:
a) the ownersliip structure of the company
b) the urgency of tlie crisis
c) whether the company must be radically cost reduced
Forms of Organisational d) the management team presently in place
Change
e) whcther the turn around manager would be the long term CEO or not
f) whether he is assisted by others or not
g) the degree of freedom given to him
h) the time available to decide on priorities and actions
i) the suitability of networks and tools used
In addition to these parameters, a number of factors also affect the turn around
situations. They are:
a) wht:ther it is a trading conipany or service or manufacturing company
b) which industry it represents
c) the product structure
d) the size in market share
e) reputation of the company
f) the competitor profile and position
In addition to these factors and parameters influencing the turnaround situation
organizations usually experience situations which could be described as given below:
a) Many turnaround managers would do their homework first in a situation which
faces an immediate cash crisls. When there is no time for extensive homework
when the company is running out of cash two urgent things are done - producing
cash by delaying cash payments and calming the stakeholders including
employees, clients, banks, etc. The turnaround management has to befast and
firm in such situations.
b) An unprofitable subsidiary may also lead to a turnaround situation. This is more
so with headquarters functioning as the rather friendly and patient banker and a
situation which does not last long. Thus such Strategic Business Units (SBUs)
are keenly looked at for turn- around situations before implemhting any
strategic changes in the company.
c) Organizations also face situations where cost cutting and downsizing Vs volume
improving or margin improving marketing solutions arise in the company.
Thc~ughcost cutting is no1 only the way to improve the profits, new profit
improvement methods have to be thought about along with where the emphasis
has to bk placed.
d) Leadership crisis is one ol'the often-repeated kinds of turnaround that
organizational practices have experienced. In the leadership change, the CEO
wil' himself could be brought about as a turnaround expert to see that the
conipany survives and attains sustainable growth.
e) Existing turnaround literature is very scarce. Most of the practice could be
traced to the US. Very few European turnarounds or cross border turnarounds
are documented. Moreover, the country and the context where the turnaround is
taking place itself add a new dimension to the entire exercise. The environment,
the legal, social, political, economic processions have a strong bearing on the
turw around situation. Thus the context and the country also reflects a distinct
turnaround situation.
Tur~naroundmanagement has to keep all these different kinds of situations in view
before all organization and works on such strategies.
 Turnaround Management
3.4 STEPS INVOLVED IN TURNAROUND
MANAGEMENT
The ti~rnaroundmanagement process passes through different stages before finally
turned around. These steps are:
a) Discussions before accepting the turnaround assignments is extremely important
wlletller it is an external turnaround management team or an internal CEO
brought in tlie turnaround organization.
b) Ifthe distressed compaliy is not in the middle of a life and death fight, some
llornework may be done before arriving on the organizational premises. The
annual reports, accounting, an other published material on the organization can
be scanned through for a good insight.
C) Establishing numerical benchmarks based on performance standards of other
organizations is tlie next step. This allows not only a comparison with others but
also determines the exact changes along with the key elements in the turnaround
strategy.
d) Cash is tlie first concern, if not profits. Hence, cash flow projections for the next
one-year has to be done for financial grounding.
e) Taking charge and confronting the issues on the ground assumes significance
here. rt becomes absolutely essential at this stage of how he does that rather than
what the strategy is and its style.
f) If the organization is for a cash squeeze, establishing tighter set of costs and
payment controls is a next measure in the process. This allows the turnaround to
have a deep understanding ofthe financial influences.
g) Learning by systematically followinga cross-functionaltrail for business re-
engineering becomes crucial.
h) Defining tlie business mission and the blueprint for the future company would be
arrived at based on the work done. This includes a definition of the future core
businesses, one or more mission statement with a target description and a
strategy document. 'The action plans are also spelt out in the process.
I i) Once this is done, gaining acceptance and formal approval ofthe turnaround
plan falls in the next step. This is followed by implementing the plan with
rutliless determination. The implementation phase would have a capable CEO, a
well designed blueprint with a full approval. The chronology of actions and
overall timeframe becomes a necessary priority in the implementation phase.
Thorough monitoring would lead to an understandingof the evaluation. This
cycle continues ti1I the organization succeeds in the turnaround strategies.

7.5 EXAMPLES OF ACTIVITIES IN MAJOR

TURNAROUND SITUATIONS
Successfill examples often cited include the Chrysler Corporation and General
Motors. I n 1982 Clirysler sold of its defence division. This made CEO of Chrysler,
Lee lacocca to claim the turnaround situation and claiming profits to the company. In
a similar way General Motors offered Delphi which employed 200,000 employees,
which is tlieir ~nanufacturingunit on shares with only retaining a majority holding.
This move also made General Motors attain a turnaround sibation. These examples
thus evidence successful turnaround management involving both huge size and
volume.
Forms of Organisrtional
--
Change 7.6 CATEGORIES OF TURNAROUND MANAGEMENT
Turnaround is not a 'push button' exercise. A variety of actions are needed in the .
entire exercise. Ten categories were considered by Khandwalla as building blocks.
They are - managerial overhaul, asset-cost surgery, tighter controls and financial
mencling actions, transformationalchanges, restructuring and empowerment, strategic
shifts like mergers, acquisitions, etc, product market refocusing actions, sales push,
actions to raise operating excellence in terms of productivity, quality and efficiency,
and cost schedule. Thus these building blocks would influence the turnaround
situation.

7.7 T'ILTRNAROUND 11N DIFFERENT CONTEXTS

Conditions in the third world are different from the developed context, that they raise
questions a.nd issues of different nature at times and also are alike at some times. For
example, i l l the steel sector the turnaround of the Steel Authority of India Limited in
India is sin~ilarand yet different from the turnaround of British Steel. In the 1980s
both of them were dominant steel companies in their respective countries. Both were
owned by t ne respective Governments, had run down plants, obsolete technology,
bloated hurnan resources, IR problems, etc. But both were turned around remarkably
by using remarkable turnaround strategies. In terms of the building blocks eaoh of
them ,reflected similar and dissimilar strategies. In terms of managerial overhaul,
neither Mr Krishnamurthy, CEO of SAIL nor Mr McGreger of British Steel brought
in outsiders as turnaround experts. The asset cost surgery of SAIL revealed no
layoffs or disinvestment but British Steel reduced its workforce to one third. Tighter
controls and financial mending by writing off loans by the British Government saved
British Stee:lwhereas SAIL redesigned its financial matters. Significant diagnostic
effort:; through consultants, surveys, etc were not reported by British Steel. But in the
case of SAIL, the CEO met an estimated 25,000 people to know where SAIL stood in
the market. I n terms of restructurnng and empowerment, British Steel reorganized its
management structure. Each division became a profit center where as SAIL gave
greater autc~nomyto its various production plants and units. While multi-skilling was
provided by British Steel, SAIL motivated its staff towards empowerment. Nothing
much was done by British Steel in terms of strategic shift but SAIL planned
diversification to exploit its product structure. British Steel got into newer lines of
steel t ut SAIL did not do anything for product market refocusing. The sales push was
totally absent in both the organizations. This may be because of they are already
sound position and status in their respective countries. The action for operating
excel b:nce was modernization along with cutting the overstaffing by British Steel and
SAIL also vigorously improved its operations. The strategy both of them employed
was more in relation to cost cutting rather than laying off employees. Thus both the
turnarounds was successful where there were some similarities and sharp differences.
In both the turnarounds there was management support, intense communication,
disciplined staff, technology up-gradation, modernization efforts, restructuring and
energy savings. The British Steel turnaround was tough and tender at the same time
where as the SAIL turnaround wa:; tender and not tough. Thus, these examples show
turnaround strategies and their performance in different contexts highlighting that
turnaround :;ituationswould lead to transformational changes leading to change
management initiatives.
Turnaround Management
 UNIT 8 PROCESS BASED CHANGE
Objective;
When you have completed this unit, you should be abk to :
understand the process change
different reasons for process change
1 echnrques to manage the process change

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

Recently your organization has undergone a large-scale restructuring programme.

Explain your experience about the change process in the light of the characteristics as
mentioned above.

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
-

Reengineering Fundamental rethinking

, a Radical redesign
Process
Dramatic improvement
Measures
Return
Risk
Process Activities
Customers
Measures
Work ordering
Time
Space
Beginning
Ending
. Inputs
Outputs
Structure
Action
Baseline

Table 2: Critical Redesign Activities

Understanding and improving existing processes
1. Describe the current process flow
2. Measure the process in terms of the new process objectives.
3. Assess the process in terms of the new process attributes.
4. Identify problems with, or shortcbming of, the process.
5. Identify short-term improvements in the process.
6. Assess current information technology and organisation.
Forms of Orgrnisrtionrl and prototyping a new process
Change
ESrainstorm design alternatives
2. Assess feasibility, risk and benefit of design alternatives.
3. Elelect the preferred process design.
4. Prototype the new process design
5. 1)evelopa migration strategy.
Implement a new organirational structures and systems.
Sozirce: Davenport, T.H. (1993). Process Innovation: Reengineering Work Through
information Technology, Hanard Business School Press, Boston.

Table 3: High-level Reengineering Activities

Identifying process for innovation.
Identifying change levers (that is enabling or transformation technologies).
Dt:veloping process visions.
Ui~derstandingand improving existing processes.

Source: Davenport, op. cit.

Reelrgineceringand Organisational Change

One ofthe best known BPR sayings is the exhortation by Michael Hammer (1990):
'Don't Automate, Obliterate'. This indicates the importance attached in the BPR
paradigm to deep and radical change. BPR involves the total creative rethinking of
one or more of a company's key business processes. The process of reengineering
itsell'has n1o fixed rules. Hammer, in his landmark book, identified common themes
fountl in raengineered processes. Some of these include:
Several jobs are combined into one Work normally performed by a number of
specialists in different functional departments can now be performed by one
individual or team. Through shared databases and decision support systems this
generalist has access to all the required information and expert systems make a
sound decision.
Worlcers make real decisions. They have a full grasp of the entire process and
can take responsibility if a customer is dissatisfied. Creativity, ability to work
independently and a sense of responsibility are required attributes of this "new
work~:r." Managers act more as coaches than "bean counters."
Worlr is performed where it makes the most sense. A product development
team, for example, instead of being spread out over multiple locations and
(departmentsis now under one roof or group. When a team member makes design
changes those changes are immediately propagated to other team members for
]review.
(Checksand Controls are reduced, Reconciliation and the associated over-
lhead is minimized. For example, in the case of Ford Motor Company invoices
;we no longer reconciled with what is shipped because a shipment is not received
unles:; it agrees with the original invoice. Further, suppliers are not paid until
iheir parts are actually used in production, thus forcing the supplier to deliver
q~lalityand to be in tune with Ford's production schedules.
'4 case manager provides a single point of contact When a customer calls with
a complaint, one person is responsible and takes ownership for the resolution of
that complaint.
 BPR involves significant organisational change and that managing the change process Process Based Change
must therefore be critical to the success of such undertakings with all its major
implications.
Cultural Change: Many of the BPR writers or commentators address the cultural
issues in more than one way. The social scientists, see culture, or at least the neglect
of people, as an inhibitor to effective implementation of BPR. A number of HR
commentators have highlighted the BPR pre-occupation with the processes. The
protagonists, predominately management consultants, appear to see organisations as
systems with BPR another, a-be-it significant, change to be systematically imple-
mented. At best cultural aspects are seen as an enabler to be directed towards the
organisation's new goals, at worst as an inhibitor, to be neutralised, for example
through forced or coerced redundancies. Academics take a broader view but the
contenders among them see failure to consider the human dimension as the reason for
a supposedly high failure rate. Whilst they see culture as an inhibitor, they would see
this as natural part of a human social system, and something to be seen in a positive
light (e.g. diversity). Other viewpoints would take a middle stand, emphasising a need
to equally manage the system and human aspects within what is a complex change
management issue. They would emphasise the significance of power and politics
within the organization. Whilst all writers on BPR highlight the importance ofthe
human factors in implementation
1 Hammer & Champy clearly see a new culture as the outcome of BPR and the process
of implementing a new process. These force new behaviour which will, in due course,
change the culture and thus the characteristics of the organisation. They map this out
in their 'business system diamond': 1) business processes determine 2) the jobs and
structures which are then 3) managed and measured to 4) shape values and
beliefs (p 8 1).
Hammer & Champy do recognise that the culture may not be conductive to even
initiating BPR. Their response is quite vicious giving the example of a CEO who:
"[first] created a new organizational structure that emphasized the autonomy of major
business units and eliminated cross subsidies, installed a new senior management
team, and carried out a significant reduction in the workforce that slashed costs and
signaled the end of [a] traditionally paternalistic culture. None of these steps fits our
defi~~ition of Reengineering, but they helped create an environment in which
Reengineering could succeed" (Hammer & Champy, 1993, pl10).
This is very mi~cha case of breaking down the cultural resistance to change rather
than creating a positive atmosphere for change.
Changing Role of Employees: Reengineering also needs change in the behavior of
employees, their mindset, attitudes etc. Hammer & Champy's "New World of Work"
is very much addressed to those that survive BPR, change their behaviour and are self
managed. They shall be rewarded with more fulfilling work. They also advocate for
'empowering staff, encouraging 'team working', and developing a 'communications
programme'. Hammer is quite clear where he stands:
"'Tea~nwork' and 'empowerment' are abstractions and generalities around which it's
impossible to get one's arms. They describe characteristics or attributes that one might
want an organisation to exhibit, but there is no direct way to achieve them. They are
consequences of process designs and they can only be achieved in that context."
(Hammer & Champy, 1993, p32)
Changing Role of Leaders: Despite a reduction in managerial layers there is still a
role for leaders:
Forms of Organisational "The leatler's primary role is to act as visionary and motivator. ... From the leader's
Change
convictions and enthusiasm, thc: organisation derives the spiritual energy that it needs
to em barlc on a voyage into the unknown. .... Ambition, restlessness and intellectual
curiosity are the hallmarks ofthe Reengineering Leader". (Hammer & Champy,
1993, p103).
Work Redesign: Reengineering leads to several changes in the job characteristicsof
e~nployees mainly because of two reasons: (1) reengineering requires employees to use
a wider viuiety of skills to perform theirjobs; and (2) reengineering typically results in
downsizi~igand short term periods of understaffing. However, any attempt to change
jobs freq~~entlyvery often leads to a diminution or even a reversal of anticipated
outcomes.

Any quality approach used by an organization must be treated as an organization

change. Si~ccessin implementingTQM and receiving a return on investment depends
upor1 undexstanding, positioning and managing TQM as a large-scale organizational
change. TiQMdoes impact almost all of an organization's components (work, people,
struc.ture,culture, values etc.). TQM focuses on customers' needs and demands that
the manager be primarily accour~tableto the customer. Besides customer service, the
essentials of quality management cal I for accurate measurement, continuous improve-
menl-. work relationships based on trust and teamwork, and the support of upper
management.
According to Fred Luthans, "TOM is an organisational strategy with accompanying
techrlique:; that deliver quality products and/or services to customersW.TQMis also
deficed as "an integrated organisational approach for delighting the customers (both
internal alld external) by meeting their expectations on acontinuous basis through
everyone involved with organisation working on a continuous improvement in all
prod~~cts. ,ervicesalong with proper problem solving methodology"
(Anandaram,200l).Thereare four common TQM principles:
0 Do it right the first time to eliminate costly rework;
e l,isten to and learn from cus,tomersand employees;
Make:continuous improvement on everyday matter; and
0 Bu i Id teamwork, trust and mutual respect
The above basic principles can be implemented by putting into practice suitable TQM
methods. A descriptive analysis of some of the important TQM methods which need
large- scalt: organizational changes is given below:

Design of :Experiments (DOE): DOE was first developed by Ronald Fisher in

Engltu~din the 1920s to evaluate agricultural experiments in the natural conditions
while in the fields and was further developed by Taguchi in 1950s.
Purpose: DOE is a branch of applied statistics dealing with planning, conducting,
analysing and interpreting controlled tests to evaluate the factors that control the value
of a parameter or group of parameters. It is often used in conjunction with Quality
Function Deployment.

Qualiity Function Deployment (QFD): QFD was originated in 1972 at Mitsubishi's

Kobe Shipyard site. Toyota began to develop the concept shortly thereafter and it has
been used slince1977. Today companies like GM, Ford, Xerox, and IBM successfully
use QFD.
Purpose: QFD is a structured method in which customer requirements are translated Process Based Change
into appropriate technical requirements for each stage of product development and
production. The QFD process is often referred to as listening to the voice of the
customer.

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.

Zero Defects: Zero Defects is a performance standard developed by Philip B. Crosby

(1984) to address a dual attitude in the workplace. People are willing to accept
imperfection in some areas and at the same time they expect the number of defects to
be zero. This dual attitude had developed because of the recognition of the fact that
people are human and humans make mistakes. However, the zero defects methodology
states that, ifpeople commit themselves to watching details and avoiding errors, they
can move closer to the goal of zero.
Purpose: Zero Defects allows teams to experience the success involved in meeting
over more demanding target without demotivating them by not achieving absolute
success at once.

Concurrent Engineering (CE): CE refers to the cross-functional integration and

concurrent development of a product or service and its associated processes.
Purpose: CE is a ~nethodologyfor the design, development and manufacture of
products that meet the market/customer demand for high quality, low cost and fast
delivery.
Process: Generally, CE occurs by assigning product development to a cross-functional
project team consisting of people from the key functional organisations like marketing,
reengineering, manufacturing, quality engineering and suppliers.

Benchmarking: Xerox developed the system of benchmarking in 1979 and subse-

quently it has been widely adopted by others. Benchmarking is an improvement
process in which a company measures its performance against that of best-in-class
companies. It determines how those companies achieved their performance levels and
use the information to improve their own performance. The subjects that can be
bencll~narkedinclude strategies, operations, processes and procedures.
Purpose: Benchmarking identifies and fills gaps in performance by putting in place
best practice. Thus it establishes superior performance.
Process: There are three distinct types of benchmarking which can be used by an
organisation progressively to stimulate the improvement process. These are:
Internal benchmarking: It is the cornparison between functions, departments or a
similar organisat ion as a means of improving performance.
Competitive benchmarking: It is a cross-comparison within one industry sector
aimed at establishing best practice through the identification of gaps between own and
competitor's performance.
Comparative benchmarking: It is the comparison across all business sectors aimed
at establishing best practice in all areas of operation.

Zero Defects: Zero defects is a performance standard developed by Philip B. Crosby

(1 984) to address a dual attitude in the workplace. People are willing to accept
imperfection in some areas and at the same time they expect the number of defects to
Forms of Organisational be zero. This dual attitude had developed because of the recognition of the fact that
Change people are human and humans make mistakes. However, the zero defects methodology
states that, if people commit themselves to watching details and avoiding errors, they
call mobe closer to the goal of zero.
Purpose: Zero Defects allows teams to experience the success involved in meeting
over more demanding target without demotivatingthem by not achieving absolute
su(:cess $atonct.

Continulous Improvement (C9:

Purpose!: CI includes the actions taken throughout an organisation to increase
the effectiveness and efficiency of activities and processes in order to provide
added benefits to the customer and organisation. It is considered as a subset of
TQM and operates according to the premise that organisations can always make
improvements.
Process : A number of tools have been developed over the years for achieving CI,
beginning with the pioneering work of Shewhart at Bell Laboratories in the 1920s.
Kaoru Ishikawa made the next major practical contribution to the QC tool kit in the
19(iOsby combining Shewhart's work with some of his own and describing seven
Quality Control (QC) tools (Ishikawa, 1971). Also in the 1960s, the Union of
Japanese:Scientists and Engineers (JUSE) fostered the development of seven
management tools for QC .

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

Table 4: Requirements of IS0 9000

IS0 9001 IS0 9002 IS0 9003

Management responsibility w a
Quality system w a
Contract review w a
Design control A A
Document control w w
Purchasing w A
Purchaser-supplied product w w
Product identification and trace ability w a
Process control w A
Inspection and testing w w
Inspection, measuring, and test equipment w w
Inspection and test status w a
Control of nonconforming product w a
Corrective action w a
Handling, storage, packaging, and delivery w w
Quality records w a
Internal quality audits w a
Training w •
Servicing w •
Statistical techniques w A

w Full requirement a Minimal A Not required

Source: Cartin, Thomas 3.2000. Principles and Practices of Organisational
Performance Excellence, Prentice Hall of India Pvt. Ltd: New Delhi .

Internal Customer Satisfaction (ICS):

Purpose: The purpose of ICS is to build positive relationship between customers and
suppliers both inside and outside the organisation. In a quality organisation,
employees realise that providing outstanding service to the internal customers also
enables the organisation to provide outstanding service to external customer.
Process: The customer-supplier chain given in the above Figure shows that any work
can be seen as a customer-supplier chain in which customers receive inputs from their
suppliers, value to those inputs and then pass those outputs on to their own customers.
Therefore, everyone in an organisation must understand that,
a One becomes a customer when he gets materials, information or service from
others inside tlie organisation or from outside.

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.

TOM and Associated Organisational Changes

Successfi~lTotai Quality Management requires both behavioral and cultural change.
A successful TQM Systen~brings two other management systems together with a
beh;~vioraland cultural commitment to customer quality.
TQYvl becomes a system within itself by default or by choice.
These three management systems must be aligned in a successful TQM initiative:
OM (organizational management system),
HRM (human resource management systems) and
TQM (total quality management).

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.

In-house Domestic Virtual International

Labor Cost High High Moderate ModerateILow
Overall Cost High Moderate Moderate Low
Day-to-Day Control High Moderate Low Moderate Low
Risk Low . Moderate Moderate Moderaternigh

The outsourcing process has a significant impact on the people and their way of
working in the organization.

8.3 THE PROCESS TO MANAGE THE CHANGE

lmplementation of the above processes bring large scale organizational changes which
must be managed properly. First, every employee must strive to appraise the situation
so as to identify major barriers and evolve strategies to deal with the new situation.
Forms of Org~nisational And seco~id,the organization itself must clarify the mission, vision, and reasons for
Change change; establish the roles, responsibilities, and structure to support change ; deter-
minle the lcey strategies for achievingthe change;develop implementation plans,
including support mechanisms; and implement and monitor progress.

--
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.

8.5 SELF-ASSESSMENT QUESTIONS

1) What kind of role does Business Process Reengineering (BPR) play in bringing
abcst change in organisations? Illustrate with reference to an organisation where
this process wvas used and was successfil.
2) Explain the concept of Total Quality Management and discuss the relevanceof it.
3) De:;cribe the System of Benchmarkingand its role in bringing an effective
performance. illustrate with reference to some orgmisations.
4) Describe the Process of Outsourcing and what impact does it make in
functioning of the organisations. Illustrate.

8.16 FUTHER REA1)INGS

Anandaram, K.S.2001. "Total Quality Management: A Goalfor Organisations",
Indian Journal of Training and Development, Vol. XXXI, No. 2,
April-Jime, pp. 44-53.
Ju ran, J'oseph M. 1995. Managerial Breakthrough: A New Concept of the &ager 's
Job, New York : McGraw-Hill, ISBN 0070340374 (originally 1964).
H:~rnmer,M. & Champy, 5.1993. Reengineering the Corporation: A Manifestofor
Btrsiness Revolution. Harper Collins: New York .
Hi2mmt:r, M. & Champy, J. 1993. Reengineering the Management: The Mandatefor
New Leadership, Harper Business: New York.
Harigopal, K. 2001. Management of Organisational Change. Response Books: New
Delht.
Harvey, B.H. July 2000. 'Technology, Diversity, and Work Culture-Key Trends in
the Next Millennium', HR Magazine, 45, (7).
Luthans, Fred .1995. Organisational Betzaviour, McGraw Hill International Editions,
Sevent'n Edition, Singapore.
Pleltu, Malcolm. 1996. Forunt Four: Proceedings Business Process Re-engineering:
The Htrman Issues, Chris Clegg and Reg Sell given at Warwick University on
April 30th .
 -

UNIT 9 GROUP BASED APPROACHES TO

CHANGE
Objectives
When you have completed this unit, you should be able to:
a Understand the reasons for growing popularity of the group approach.
Be familiar with diverse group approaches used in different business
organisations.
a Make use of the techniques and exercises used in team building.
Structure
9.1 Introduction
9.2 Different Group Approaches To Change
9.3 Other targe Group Approaches
9.4 Summary
' 9.5 ~e~'~ords
9.6 Self-AssessmentQuestions
9.7 Further Readings

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.

9.2 DIFFERENT GROUP APPROACHES TO CHANGE

1 I. SensitivityTraining
Sensitivity training refers to a method of changing behaviour through unstructured
group interface. It goes by a variety of names such as Laboratory Training, Encounter
Groups, T-Groups etc. T-group began to emerge in 1946 through a series of events at
, the New Britain Workshop. Learning groups were set up consisting of group
members, a leader, and an observer who made notes about the interactions among the
members. From this experience, the National Training Laboratory in Group
Developme~itwas emerged .
The T-groups aim at the following:
Understanding one's own behaviour and how one's behaviour affects others
Understanding why people behave the way they do 47
Forms of Organisational Encouraging one to try out new ways of interacting with people and receiving
Change
feedback
U ndarstanding group processes.
Dev~:lopingtolerance for other people's behaviour
The T- training session is an unplanned gathering of individuals who are brought
together i n a fee and open environment, first as strangers, away from their routine
role!; and responsibilities. These gl-oupsare directed by a professional behavioural
sciel~tistwho persuades them for interaction and participation. The group is process
oriented, .where individuals be taught through observing and participating rather than
being tolcl .The training period usually varies from a few hours to a few weeks. The
trainer plays a relatively inert role during the entire process. They create prospect for
part icipar~tsto state their ideas, be1iefs, and attitudes towards other members.
Sensitivity training helps members ofthe group to:
Attain increased sensitivity to their own behaviour, the behaviour of others, and
to the nature of group development.
Achieve more pragmatic self-perceptions and greater group solidarity.
Reduce dysfunctional interpersonal conflicts, which is indispensable for a better
assitnilation between the individual and the organisation.

Il. The Formal Group Diagnostic Meeting

The formal group diagnostic meeting allows a group to be its own critique in order to
identify if s strengths and problem areas. It encourages every group member to
conlributr: and generate ideas. The data collected during the meeting serves the
four~dationfor future actions.
Whether formal group meeting is to be held or not depends upon the group leader.
By and large, the leader and the consultant talk about the idea first, and if it appears to
thenn that a actual need for a diagnostic meeting exists, then it is put before the group.
Naturally, the leader structures a set ofquestions in order to receive the group's
reaction. The primary purpose of group diagnostic meeting is to surface those issues
and problems which need to be worked out. It is generally a problem identifying
meeting.

III.Team Building Activities

A team is a group of individuals who tend to work interdependently to satisfy
organisational as well as their own individual objectives. According to Reilly and
Jones ( 1 974), teams as different from other grocps, are characterised by:
1. A reason or charter for working together.
2. Interdependency-where the skills, abilities of individuals are mutually
supportive.
3. Conlmitment to and belief in working together, and
4. Accountability for their performance
A nation wide survey ofteam members from many organisations, by Wilson Learning
Corporation, provides a useful models or benchmark of what OD specialists expect of
tearns. A~nalysisof the survey results yielded the fo!lowing eight attributes of high-
pedlonnance teams.
1. Participative Leadership: creating an interdependency by empowering, freeing
up, and serving others.
II 2.

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 7. Creative Talents: Applying individual talents and creativity.

I 8. Rapid Response: identifying and acting on opportunities.

I Team Functions

I A team functions in various stages:

The First Stage: Building Awareness And Forming The Group: In this stage, the
members are explained the need for change, and the people involved in the change
process
The Second Stage: It deals with issues of conflict, resolving intrapersonal and
interpersonal conflicts, and providing people clarity of purpose and overcoming
resistance to change.
The Third Stage: Maximizing cooperation is the key issue addressed in third stage.
Individuals are given clarity regarding their roles, and responsibilities. Member
participation is maximised in order to achieve the group goals. Individual relationships
are governed by mutual trust, openness, and communication.
The Fourth Stage: This stage is focussed on change implementation. Members are
encouraged to contribute ideas and participate in decision-making. The stage is
associated with performance and productivity. Once the team has achieved its goal by
successfully implementing the change, the group may review its performance, which
serves as feedback for future teams.

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

fo.rces, iind gradually move towards Type-11, Type-I11and Type IV teams. ,

Goal: Problem solving and selling of idea Goal: Creative problem

Focus: External solving and implementation
Blocks: Lack of empowerment Focus: Strategic
Levels: Management Teams Rlocks: Preparedness
Examples: Top Management Teams Levels: All levels
Examples: Shamrock team

Goal: Simple problem solving Goal: Integration in structure

and setting ground mles
Blocks: Lack of training Focus: Internal
Levels: First level work teams Blocks: Organisation structure
Examples: Quality circles Le-Ficst and middle levels
Examples: Cross functional
team
Low Membership Fluidity

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

a Contribute to the improvement and development of the enterprise.

a Respect humanity and build a worthwhile-to-live-in, happy bright workshop.
a Exercise human capabilities fully and eventually draw out infinite possibilities

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

Strongly Agree Agree Undecided Disagree Strongly Disagree

Place the appropriate number value next to each item.

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.

Techniques and Exercises Used in Team Building

In order to facilitate the team performance, a number of techniques are used. These
techniques help in understanding the key issues and to take the required corrective
actions, and also help in structuring the team's activities.

Role Analysis Technique (RAT)

The role analysis technique intervention is designed to clarify role expectations and
obligations of team members to increase team effectiveness. This technique is
particularly applicable for new teams, but it may also be helpful in established teams
where role ambiguity or confusion exists. The intervention is based on the conviction
that coi~sensualdetermination of role requirements for team members, consisting of a
jol~ltbuilding of the requirements by all concerned, leads to more mutually
stitisfactory and productive behaviour. Dayal and Thomas call the activity the role
analysis technique. However, ,originallyM. Thomas developed this technique for
cltrrifyi~~gthe role of the top management of a new organisation

Role Negotiation Techniq,ue

When the causes of team ineffectiveness are ascribed to people's behaviours that they
art: reluctant to change because it would means a loss of power or influence to the
7
individnal, a technique developed by Roger Hanison called 'role negotiation can
often be used to great help.
Role negotiation intervenes directly in the relationships of power, authority, and
in fluenc:e within the group. The change endeavour is directed at the work relationships
amollg members. It avoids probing into the likes and dislikes of members for one
another and their personal feelings about one another. Harrison states that the
tech~iiquerests on one basic silpposition:''most people prefer a fair negotiated
settleln~nt to a state of unresolved conflict, and they are willing to invest some time
and make some concessions in order to achieve a solution". The role being defined is
 called the focal role. The first step consists of an analysis of the focal role initiated by G r m p B a d Approach
to Change
the focal role individual.

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 Appreciations and Concerns Exercise

I

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.

IV. Process Consultation

The process consultation model is similar to team-buildinginterventions except that
much emphasis is given on diagnosingand understandingthe process events in the
former. Process Consultation (PC) representsan approach or a method for intervening
in an ongoing system. The bottom of this approach is that a skilled third party
(consultant) who works with individuals and groups to help them learn about human
and social processes and learn to solve problems that stem from process events.
Process consultation consists of many different interventions. The principal goal of
, PC is stated by ~cheinas follows:
The job of the process consultant is to help the organisation solve its own problems
by making it aware of organisational processes, the consequences of these processes,
and the mechanisms by which they can be changed. The process consultant helps the
organisation to learn fiom self-diagnosis and self- intervention. The ultimate
Forms of Organisational concern ofthe process consultant is the organisation's capacity to do for itself what
Change he has dclnefor it. Where the stantiard consultant is more concerned about passing
knowledge, the process consultant is concerned about passing on his skill and
val&fes.
Schain describes the kinds of interventions he believes the process consultant should
make:
1. Agenda- setting interventions,consisting of:
a. Questions which direct attention to interpersonal issues.
b. Process analysis periods
c. Agenda review and testing procedures.
d. Meetings devoted to interpersonal process
e. Conceptual inputs on interpersonal - process topics
2. Feed back of observations or other data consisting of :
a. Feedback to groups during process analysis or regular work time
b. Feedback to individuals after meetings or afterdata gathering.
3. Coaching or counselling of individuals
4. Structuralsuggestions:
a. Pertaining to group membership
b. Pertaining to commuilication or interaction patterns.
c. Pertaining to allocation at work, assignment of responsibility, and lines of
authority.

V.The Open Systems Group Approach

There are nearly as many change management practices as there are organizations, but
a handful stick out as having been unbeaten for many different institutions looking to
leave behind their current state and realize some fhture vision.Among these methods is
one called the "Balanced Scorecard" method which was designed to allow an
orgar~izationto control change globally without losing site of the individual needs of
its different components.
Crealed in the early 90's by Dr. Robert Kaplan from the Hanard Business School,
developed the "Balanced Scorecard (BSC)" approach .The Balanced Scorecard
provides a vehicle to transmute performance measures from four standpoints:
financial, customer, internal-business-process, and corporate learning and growth.
Using; these four indicators an organization can appraise both its contemporary
perforinanceand the change management procedures that it is currently implementing.
Whilc the linancial and customer divisions are self explanatory, the latter two requires
some definition. By "internal business processes", Kaplan means the key business
processes s~twhich an organizatio~iimust excel to meet customer expectations.
"Learning , ~ ngrowth"
d refer to the proper utilization of employee skill and motivation
by mz~intaininga strong, efficient information infrastructure within the company
which will minimize mystification during a time of change. It also concedes that
employees may be asked to take on dramatically new responsibilities, and may require
skills.,capabilities, technologies, and organizational designs that were not available or
required before.
One instance of a successful execution of the "Balanced Scorecard" approach is the
U.S. Department of Energy. DOEused this approach to "re-engineer its programs for
overs ~ghtof Federal and contractor purchasing and property management systems,
replac Ing Headquarters-based, process-oriented review programs with ones which rely
on local assessment of performance against Departmental expectations."
The core of the DOE'S move from centralized programs to a more franchised, locally Group B.sed Approaches
to Change
managed paradigm was a concept they called "Value- Based Self- Assessment"
(VBSA). Using VBSA, each business functional constituent (e.g., procurement,
purchasing, personal property, and human resource management) was required to
exercise a tailored "scorecard" specific to their iadividual planned contribution to
departmental strategic objectives and goals. The DOE found that these measures
should be tangible, controllable, and simple enough to be understood; this often meant
that each object should only gauge one thing. One mportant feature of the DOE'S
implementation of BSC is the division of objectives into two categories: "core
measures" which apply to all groups within the organization and "local measures"
which are unique to each group.
With a groupware-based change control package, it could develop and implement a
change management system that would let appropriate tracking of change throughout
the organization. Using a "Balanced Scorecard" approach, it allowed groups the
plasticity to move forward when change is required while keeping an eye on the key
success factors of the organization in general. Change could be evaluated, approved,
and documented before it takes place with plenty time provided for each group to
estimate the impact of each other group's changes. This change management
infrastructure, with its emphasis on internal information exchange, will minimize
outage of service and provide a faultless means of organized renovation.

VI. Interactive Strategic Planning

Strategic planning is the process hy which the guiding members of an organization
visualize its future and work out the needed procedures and operations to attain that
future.
Kathie Dannemiller and her co-workers use this group approach to 2 to 3 day event
of from I00 to 2300 people, to roll out a new strategic direction, to get clear on their
strategy, and to provide feedback to the top people in the organization. They lay
emphasis on planning: the use of a planning team, with much blunt advance work to
make the event successful. Their methodology is very task-focused and structured, and
involves interaction in small groups as part of the full-group proceedings. The theory
of the Dannemiller approach is based on a formula that Beckhard and Harris (1987)
attribute to David Gleicher:

Dissati~factionx Vision x First Steps > Resistance to Change

This means that three components must all be present to overcome the resistance to
change in an organization: Dissatisfaction with the present situation, a Vision of what
is possible in the future, and achievable Firststeps towards reaching this vision. If
any of the three is zero or near zero, the product will also be zero or near zero and the
resistance to change will dominate. The purposes of these OD interventions are to
bring approaclies to the organization that will enable these three components to come
to light so that the process of change can begin.
They also use the strategy suggested by Peter F. Drucker (1974) of converting words
into actions. They believe that there should be a common activity focus which is
highly reactive, yet highly directive from above. Their focus is on results, on
prioritizing choices, and on keeping the participants from feeling overwhelmed.
Dannemiller allude to an "Arthritic Model" of organizations. This refers to an
''06akizational arthritis"where there are blockages at every joint of the traditional
management-structurepyramid. Their task is to exercise the organization so that
change is not only achievable but is inherent in the structure and design ofthe
organization.
Forms of Organisational The Dannemiller approach also involves setting strategy and gathering and processing
Change
feedback on this strategy. They use a method of "preferred w r i n g ' ' (much like
Weisbord,), and concentrate on action planning to secure devotion to make the
recommended strategy develop into reality.

VII. Future Search Conference

The mode:l was originally developed by Mr. Marvin Weisbord from the US and has
beer1 used worldwide in all kinds of organizations. The Future Search Conference
Moclel is used :
As an element in a company's vision and strategy process, which requires wide
implementation in the organization
As a development of a foundation for major organizational changes
As a beginning of new marketing activities
As an involving working model creating new energy to a "burned out" or maybe
depressed culture in for example a local community or a political organization
As a way to listen to the involved peoples' attitudes to a specific problem, which
a municipalityor county council need to handle within citizen service,
development of a problematic area, priority of resources etc.
Weisbord's conference is designed to describe and move towards the preferred future,
through finding common ground among the diverse participants .This is a planned 2-
112 clay ebent. Ideally, it involves 64 people with a maximum of 72. This is clearly too
small a group for many whole-organization large-scale change events, but it works
well for srnaller groups. The preferred future approach involves the following five
stages:
1. Review thepast: Each participant writes key events for themselves, the
comlnunityand the world onto three time lines
2. Explore the present : An enormous mind map is made of trends Stakeholder
groulps identify important trends . Groups share their 'prouds' and ' sorries'.
3. Create idealfitwe scenarios : Mixed small groups develop visions- Barriers to
the visions are identified. Each group acts out its vision to everyone else
4. Identify shared vision :Small groups, then the whole group, work out the shared
vision, projects to achieve it and any unresolved differences.
5. Make action plans: Self-selected action groups plan projects and publicly commit
to their actions.
Like other practitioners, Weisbord puts an emphasis on action planning to define the
steps,that .will be taken so that the process does not end with the conference itself but
is translated into future action steps.

VII:]:.Dick Axelrod's Conference Model Redesign

This method uses a series of four 3-day conferences, held a month apart. It is based on
reengineel-ingas defined by Hamrner and Charnpy (1993).lts purpose is organization
redesign --radical changes to be made quickly and permanently in the organization,
not in incremental change and improvement methods like Total Quality Management.
Process: Axelrod's conferences are fast, and highly-participative. Axelrod also uses a
thorough planning approach, using a steering committee, a data assist team, and a
walk-through (a "staging") in advance of the meeting. His approach is customer-
focused, concentrates on the technical work flow, and develops a preferred design for
the organi.tation. The theory behind the Conference Model includes Socio-Technical
Theory, search theory, and experientiallcreativemethods. Axelrod's process involves ,
four conferences: Group B a d Approaches
to Change
a Vision Conference-similar to Weisbord's Future Search Conference
a Customer Conference-defining the requirements, the business and
relationships, their roles, and their customers
a Technology Conference-to identify redundancy and variance, and clarify
their assu~nptionsabout their business
a Design Conference- to develop a preferred design, to use"treasure hunt"
features.
This is followed by a succession of implementation steps to put the plans into action.

IX. OPEN SPACE APPROACH

This approach was developed by Harrison Owen who uses the concept of an idea
marketplace, and emphasizes learning, networking, and community building .The
purpose of this approach is to surface information and promote dialogue.
Part of the planning for Ope11Space involves open facilities, an open agenda for 20 to
100 people in a 1 to 3 day event. The approach ofthis method can be characterized
as relevant, emerging, creative, and self- shaping with personal responsibility for self
learning. The Open Space model is based on the use of ground rules, focusing on the
"here and now", and is partially based on Chaos Theory to have order emerge from an
apparent lack of plan~iing,structure, and order. The process involves networking,
clearly stating meeting themes, identifying and posting issues, breakout discussions,
and sharing in the whole group. Owen summarizes his method as:
"whoever comes"
"whatever happens"
"whenever it starts"
"when it is over it's over"

X. ICA STRATEGIC PLANNING

The ICA approach is the result of the work of the Institute of Cultural Affairs (ICA),
developed by Spencer (1989). It can be characterized as participative, creative, fast,
action-oriented, and synergistic and based on Spencer's Dialogue, on community
building, participation, and especially empowerment .Its purpose is to enable a group
to elucidate and move toward a practical vision.
The planning group usually consists of 10 to 300 people who meet in a 2 days event.
They scan the environmental, develop a shared vision (of what they see in place), and
look for i~icoiigruity(what is blocking them from reaching their vision). They then set
a strategic direction, by dealing with these blocks and moving their vision forward.
The ICA approach is awfully people-centered. It puts an emphasis on personal
involvement of the participants. It attempts to incorporate both spiritual and
humanistic components into OD.

9.3 OTHER LARGE GROUP APPROACHES

-
Simu-Real.: Don Klein (1992) has developed this method involving a combination of
reality and si~nulationfor large-group interventions.
The Mobius Model.: Bill Stockton (1985) and Marjorie Herdes developed the
Mobius Model for large-group interaction. The model is a guide to the assessment and
design of appropriate OD interventions. It works very well in integrating spiritual and
Forms of Organisational cominu nity approaches to the technology of large-scale processes. Some of their
Change methodology has its roots in the ICA Strategic Planning Approach.
The Mobius Model, like a mol~iu:;strlp promotes wholeness, there being no difference
betweerl who you are and what you do (congruence). It reflects internal dialogue, as
people fbllow their own intern?! voices, their anger and their fears. It develops
understanding, by bringing tee inside (the covert, suppressed truth) to the outside (as
overt, shared data and understanding).

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

ICA Strategic Planning: A participative,creative, fast, action-oriented, and

synergistic technique to enable a group to elucidate and move toward a practical
vision.
The Mobius Mode1:A Model to guide the assessment and design of appropriate OD
interventions
Open Space Approach: An approach to surface information and promote dialogue.
Conference Model Redesign: A highly participative conference which uses a
thorough planning approach to develop a preferred design for the organization.
Open Systems Group Approach: An approach that stresses on internal information
exchange to mini~nize outage of service and provide a faultless means of organized
renovation.

9.6 SELF-ASSESSMENT QUESTIONS

1) Describe different group based approaches to change and illustrate how these
approaches could be used to different organisations/instances.
2) Discuss different techniques used in team building.

9.7 FURTHER READINGS

Axelrod, R. 1995. The Conference ModelTMApproach, Perspectives (a newsletter of
the Axelrod Group). Wilmette, IL: The Axelrod Group.
Axelrod, R.1992. 'Getting Everyone Involved: How One Organization Involved Its
Employees, Supervisors, and Managers in Redesigning the Organization', Journal of
Applied Behavioral Science 28(4).
Axelrod, R. 1993. 'Using the Conference Model TM for work redesign'. Journalfor
Quality and Participation, December 1 993, pp. 5 8-61.
Beckhard, R. & Harris, R. 1987. Organizational Transitions. Reading, MA:
Addison-Wesley
Beckhard, R. 1972. 'Opti~nizingTeam-Building Efforts', Journal of Contempoly
Business, Sumllier ,'p.24.
Dannelniller, K., et.al. 1994. Consultant Guide to Large-Scale Meetings. Ann Arbor:
Dannelni ller-Tyson Associates.
Da~lnenliller,K. & Jacobs, R. 1992. Changing the Way Organization Change: A
Reyolution of Colntnon Sense, Journal ofApplied Behavioral Science .28(4).
French, L. Wendell, and Bell, Cecil H. Jr. 1999. Organization Development
Behuvioral Science Interventions for Organization Improvement, Prentice -Hall :
New Delhi.
Harigopal,K. 200 1 .Management of Organisational Change Leveraging
Trun,yformation,Response Books:New Delhi .
Klein, D. 1992. 'Silnu-Real: A Simulation Approach to Organizational Change',
Jourlzul ($Applied Behavioral Science 28(4).
Kreitner, Robert, and Kinicki, Angelo. 1998. ~r~anizational , Irwim Mc
~ehaviour
Graw-Hill :U.S.A
Forms of Organisational L,ubove, S. June 3, 1996 .Destroying the old hierarchies. Forbes, 62-71; ~athch,K.
Change
March1 1, 1999, Boeing finally hatches a plan. Fortune, 101-106
F:eilly,A.J. and Jones,J.E..1974."Team Building". In J.W. Pfeiffer& J.E. Jones eds.,
The 1974 Annual Handbook for Group Facilitators, University Associates, San
Iliego, CA.
S:enge.,P.1990. The Fifth Discipline: The Art and Practice of the Learning
Organisation, Doubleday: New York.
Senge:,P. 1994. The Fifth Discipline: The Art and Practice of The Learning
Organisation.New York: Currency-Doubleday.
Smith, J. & Smith, J. (1994). Notes from ASTD Future Search Coriference. Apple
Valley, MN: Southern Minnesota Section, American Society for Training and
L)evekpment.
Spencer, L.J. 1989. Winning Through Participation: Meeting the Challenge of
C;orpol-ateChange with the Technology of Participation. Dubuque, IA: KendelYHunt.
Stocktlon, W.1985. The Mobius ModelSM. St. Louis Park, MN: Mobius, Inc.
(unpublished work).
Vl'eisbord, M. & Janoff, S. 1995. Future S e a r c L An Action Guide to Finding
Common Ground in Organizations & Communities. San Francisco: Berrett-Koehler
Publisllers Inc.
VJeisbord, M. 1992. Discovering Common Ground. San Francisco: Berrett-Koehler.
The Open Systems Group, You Say You Want a Revolution? A proposed bedrock for
change management at NERDC C:\My Documents\The Open Systems Group - You
Say You Want a Revolution.htm
 b UNIT 10 ORGANIZATIONAL DIAGNOSIS:
ISSUES AND CONCEPTS
Objectives
t
After going through the unit, you should be able to:
comprehend the concepts and assumptions of organisational diagnosis,
i
understand the dynamics of issues related to diagnosis,
i identify different possible domains of organisational diagnosis,
I
, develop insight into the linkages between theory and practice of organisational
! diagnosis, and
evaluate and think criticially about the various models.
, Structure
t
i 10.1 Introduction
t

I 10.2 Diagnosis-General Considerations

i
? 10.3 Organisational DiagnosieIts Concept
1
! 10.4 Diagnocube: The Domain of Diagnosis
10.5 Tlieory in Action: The Framework of Organisational Diagnosis
10.6 Need for Effective Organisational Diagnosis
1 0.7 Organisational Diagnosis: Process, Interpretation and Methods

t 10.8 Phases in Diagnosis

1 0.9 Interpretation
10.10 Methods
10.1 1 Self-Assessment Questions
10.12 FurtlierReadings

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.

10.3 ORGANISATIONAL DIAGNOSIS--ITS CONCEPT

Diagnosis involves
defining the episode under study by picking up the relevant "symptoms"
arranging them into a pattern, and
distinguishing them from other patterns.
A systematic process of diagnosis has been widely used in natural sciences, in applied
sciences I ike forensic science and criminology, medicine, agriculture, engineering and
in such other fields. In these spheres, diagnosis quite often ends when a name can be
put to a distirlgi~ishablepattern of the mosaic of symptoms. For example, a
criminologist's diagnosis is complete when he correlates all the relevant facts of a case
and concludes it to be a murder and not a suicide; a physician or the radiologist
concludes that it is a case of spondylitis (and not myocardial infarction); a
psychologist diagnoses the man as having high achievement motivation (and that he is
not a social deviant). Organisational diagnosis, essentially, follows the same process.
But since organisational patllology has not been studied in any great detail, it is
impossible at present to integrate sy~nptomsinto such precise and definite syndromes.
Moreover. basic sciences have contributed a great deal to understanding cause-effect
relationships in other fields of science and technology. Such contributions being
limited in organisational sciences, a great deal of heuristic approaches necessarily
come into play.
Because of these limitations, there are different expectationsfrom the role of an
organisational diagnotician; (a) he should diagnose to the point ofdescribing the
present ailment; or (b) he should add to it his prognosis; his estimates of the likely
consequences over a period of time; or (c) in addition to diagnosis and prognosis, he
should recommend prescriptionsof active interventions. No firmly established norm
has yet been developed regardisng the extent to which the meaning of diagnosis should
be extended. However, it would be pragmatic, if the process of diagnosis includes
prognosis but not interventions. More importantly, it should trigger a process of self-
searching through a relationship of mutuality between the external diagnostician and
the organisation.
I n the study of Bhattacharyya, Chattopadhyay and Sengupta, attention of the chief
execi~tiveswas drawn to this mutuality. Only some chief executives (1 2 per cent) said
that the diagnostician "made his own diagnosis; and announced it to us". But other
chief executives saw different approaches: 7 per cent said, "he sold to us his way of
looking at the problem"; 12 per cent asserted that "he presented a tentative diagnosis,
sub-jectto changing"; 26 per cent said that "he defined the parameters of the problem,
invited suggestio~lsand evolved the diagnosis"; and lastly, in the opinion of 43 per
cent. "he was able to involve us in jointly arriving at a diagnosis".These studies
indicate tlx variability i n approaches but also show the dominant trend.
Diagnosis The:approaches to organisational diagnosis vary not only with the nature of
i~nclIntervention relationship between the diagnostician and the organisation, but in a very substantive
way depend on: (a) the preferred domain of diagnosis, (b) the methodology adopted in
diagnosing, and (c) the assumptions in diagnosing.
--
10.4 DIAGNOCUBE: THE DOMAIN OF DIAGNOSIS
One of the concomitant aspects of specialisation is selectivity in the preferred domain
of work. With the same patient, a hornoeopath and an allopath will have different
domains of work; so will there be differences between the approaches of a
nearosul-geon,an orthopaedic surgeon and an opthalmologist.An organisation, defined
as a synergistic aggregate of systems and subsystems, offers different domains to
work upon. The concept of domain as used here differs from that given by Van de Ven
and Ferly (1980). According to him "Domain refers to the specific goals of an
organisation in terms ofthe functions it performs, the products or services it renders,
and the liarget population and market it serves". In this definition the concept of
domain is embedded in the co~itextualfactors. The definition by which the word
"domain" has been used in this chapter refers to the areas of substantive activities or
constituents in the content of the organisation.
The dornains of organisational diagnosis can be conceived as bounded by four
dimensions: (1) systems, (2) components of the systems, (3) the coverage of area, and
(4) the surrounding external environment.
1 ) Systems: An organisation can be considered as a combination of SET-Social-
Economic-Technical systems. The social system, that is the peoples system, consists
I
4

of psychological, social, cultural and political subsystems arising out of people at

work as individuals, groups-and lnultiple groups in a techno-economicsetting. The
1
econo~rricsystem includes procurement, allocation and utilisation of all resources,
finance, cost marketing and the like, in a perspective setting made up by the other
two systems-social and technical. The technical system includes work and
tecllnology required to perform the work in aperspective of socio-economic
setting. Organisational diagnosis has often remained confined to any one of
these systems.
2:) Cornponents of the systems: There are components in each system where the
diiagnosis is undertaken: (a) structure, (b) process, and (c) function. Structure
refers to all elements in the organisation and their comparativelyenduring
and lasting relationships and arrangements which have formal sanctions.
Process refers to the manner in which events are conducted sequentially.
Function includes strategic variables, performance variable, results and
achievementsand end products.
3) The coverage of the area: The coverage ofthe domain refers essentially to the
area of'the organisation opened up for diagnostic investigation. This may be in terms
oftima, space, people, events or phenomenaoccurring within the organisation. The
coverage may be classified into three categories: (a) singularity, (b) plurality, and (c)
totality of events in the life span of the organisation. For example, a medical
diagnostician may be called in to diagnose a single episode of ailment (singularity), or
a liilm ber of episodes and ailments (plurality), or the total health of the patient
(totality). A diagnostician si~nilarlycan be called in to investigate a single episode of
say, a strike, a relationship in a given department, marketing of a particular product,
cne de:cision of a particular investment, and so on. Plurality of coverage indicates the
c~peningup of the organisation to more than one specific episode for investigation.The
range of plurality will vary. 'Totality of coverage denotes a diagnosis based focussed
o n the entire organisation, or on any phenomenon in its entirety.
4) The surroundiiig external environment: These domains are encircled by the Organizational
environment. Organisational diagnosis can be undertaken on environment relation to Diagnosis: Issues and
Concepts
any one of tlie cells of the dotnailis or without relating it to any specific cell.
Besides e~iviron~nental investigations, the model thus provides 27 typologies of
organisatio~ialdiagnosis. Each typology, represented by each cell, has three
dimensions. Economic-Structure-Plurality (ESP) will perhaps require the expertise of
structure combined with knowledge of, say, engineering or chemistry. Social-Process-
Singularity (SPS) will call for the expertise of a social scientist who is a process
diagnostician and is skilled in working on a single episode.
It is also possible that within each typology there are variant forms and emphases. For
example, with in a social system there are psychological, sociological, political and
culti~ralsub-systems, as ~ne~itioned before. Therefore, tlie specialisation of the
diag~losticia~i can fi~rtliernarrow down tlie focus of his diagnostic activity.
Often tlie diagnostician operates on more than one cell. But he can discern a distinct
bias in his e~npliasisinga specific cell. It may be better when diagnosticiansare able to
use more and more cells in combination. This typology is useful to provide the
ide~itificatio~is
oftlie base from which tlie diagnosis is made-may be by the manager
or by the external diagnostician; and tlie other bases sthat can and should be added to
it to get a ~nea~iitigfully
comprehensive picture.

10.5 THEORY IN ACTION: THE FRAMEWORK OF

ORGANISATIONAL DIAGNOSIS
Beyond tlie diagnostic domain tliat the diagnostician selects to work upon, and the
method that lie chooses to use, are some of his basic assumptions regarding man,
organisation, man-in-the-organisation,quality of work life and the interrelationships
that are crucial in organisational life. These assumptions in their turn also influence
him to decide on tlie domain to work upon and to direct the process of diagnosis in a
substantive manner.
In practice, diagnosticians have been observed to take different stances. The stance
often taken in diagnosis is to examine the present state of affairs of tlie organisation in
relation to its future goals; and then the strategic variables take tlie topmost priority.
But tlie controversy arises in determiningthe goals ofthe organisatio~i:(a) any
orga~iisatio~i pursues multiple objectives and these objectives need not benecessarily
congruent; (b) the objectives at a give phase of development are not tlie same as at
another pliase of develop~ne~it oftlie organisation; and (c) the impact ofthe
environment ofdifferent types at different points oftime will have different effects on
tlie orga~iisationalobjectives. Taken together, one may see that the goal-oriented
parameters of diagnosis are not really static but are in a state of continuous flux.
Another approacli pursued by the diagnostician is essentially normative. The
organisation, at the point of time of diagnosis, is as if sick and therefore deviant from
tlie normal. The role of tlie diagnostician is to find out where the deviations exist and
also to estimate the nature and magnitude of these deviations such tliat ameliorative,
corrective action call be taken to revert it back to tlie normal. This is the stance of the
pliysicians in diagnosing patients' ailments. When they find that tlie deterioration is
irreversible, they attempt to arrest or retard tlie further progress oftlie disease. Some
'busi~iesshealers' tend to follow the same principle.
Tlle assumptions about organisational diagnosis have been influenced by early
co~iceptionof organisations as a machine or organism. The fact of the matter is that an
organisation is neither a machine nor an organism. The analogies are valid only up to
a certain level. The mechanistic approach to find the optimal fit of factors leading to a
Diagnosis normative existence, or the organismicapproach to find adqptation to environment
and Intervention
are, therefore, likely to be functional only up to apoint.
Yet anof her approach, basically influenced by the practice of psychoanalysis, relies on
the: diagnostician analysing how he himself is made to feel at different stages of the
relatioi1:;hip between the consusltant and the client; and how those perceptions can be
used to clarify the nature of thr: problems confronting the client (Bains, 1976). There
art: quite a few practitioners of this method. In this method also, the organisation-
organism analogy is quite manifest; the client is ill; the ailment lies not in
malfunctioning at the conscious level, but the cause is rooted somewhere deep down at
the unconscious level of the organisation. Diagnosis of that mental block and the
client's deeper realisation of it are what is to be aimed at.
One uses concept like "health". But then what is health? A sense of well being. What
is well being? Diverse answers from philosophies are possible. One talks about the
guiding,concepts, like dynamic homeostasis, coping ability, balance of integration and
differentiation, negative entropy, equifinality, etc. Concepts have been borrowed from
sciences like philosophy, physics, chemistry, thermodynamics, ecology and biology.
TJiere is ~iothingwrong in borrowing. Progress of science has been accelerated by
such acculturation. But the fact that so many concepts from different disciplines are in
active use, suggests that more comprehensive and satisfying explanation is yet to
emerge:.In its absence, ane has to work with what is currently available and work
tclwards finding a better concept. Accordingly, approaches to diagnosis will also be
d [verse:.But some choice can still be exercised.
The process of diagnosis which has built-in enabling effect, which increases the ability
ofthe managers to be bettri cliagliosticians such that they can use the process
conti1111allyin the cycl"-,' diagnosis-decision-action-evaluation.This makes the
orgat;ljat;ot~self-reliant, m+i t,t' better in the long run. The process of diagnosis that
does not reduce everything into inputs, outputs and statistics, or into manipulative
numbers, may provide a greater depth of vision and understanding about an
organi,;ation.
The process of diagnosis depends entirely on the theoretical construct that the
diagnostician works with. These constructs help one understand an organisation, its
mode of functioning, its various subsystems, its structure and design and so on. They
help in developing models focussing on individual, intrapersonal and interpersonal
processes, on group and group processes and on the total organisation and its
rnacroprocesses.
l;he contemporary models indicate the diversity in approaches. But in most cases the
range extends from external environmental analysis to the analysis of organisational
performance. The diagnostician has some choices; either he can accept any of the
t:xistiog models and conduct his diagnostic exploration accordingly; or he can build
his own model to guide his own exploration. But what is extremely useful is to have
some model before the actual diagnosis is conducted. In the absence of a model, one
]nay possibly be at a loss to determine what to look for in the organisation and what
data to collect. ~veli'ifdata are amassed, they remain discrete, meaningless ad
1:hereforeuseless.
'The process of diagnosis includes two basic features, divergence and convergence.
'The divergence starts from the focal point of atheory. From the theory constructs are
~evolved;they lead to operational models; operational models indicate the network of
variable to be studied, variablegunder study indicate the data to be collected. Up to
this point, the operational area becomes wider and wider. Once the data have been
collected, the process of convergence starts. The volu~~le of data has to be graudally
reduced; analyses condense the data and ultimately they converge on the primary focal
point-the organisational need. In the process some help is also rendered to theory
building.
 Organizational
10.6 NEED FOR EFFECTIVE ORGANISATIONAL Diagnosis: Issues.and
Concepts
DIAGNOSIS
While it is understood that defining the problem itself is solving the problem partly,
effective diagnosis lies in determining what change initiatives are needed in a given
context. A well carried out diagnosis guides the development ofobjectives and
strategy for organizational change and therefore its growth and improvement
An effective organizational diagnosis would enable managers to:
a. Understand the current performance levels of organizational subsystems and
processes and how they could be improved.
b. Sti~dythe perceptions and social psyche of the individuals and groups in the
organization.
c. Break away from tried and tested practices that may have served well in past but
niay not Iiold good in the current context
d. Plan strategically for the perceived organizational challenges.
e. avoid pitfalls that often accompany unsystematic implementation of change
initiatives, and benefit from experiential learning of managing change

10.7 ORGANISATIONAL DIAGNOSIS: PROCESS,

IN TERPRETATION AND METHODS
Orga~iizationaldiagnosis is a basic prerequisite to develop strategy for systematic
improvement of an organization. Such an effort focuses on following two aspects
(Beckhard, 1969):
1. Firstly. diagnosis of the various subsystems that make up the total organization.
These subsystems may be technical and social in nature to include natural
"teams" such as top management, functional departments or different levels of
management or workforce etc.
2. Secondly, diagnosis of the organization processes that may include decision
making processes, communication patterns and styles, relationships between
interfacing groups, management of conflict, planning methods etc.
Unlike conventional research, successful diagnosis requires skillful gathering and
analysis of data. A diagnostic study can only succeed if it provides its clients with
data, interpretations, and recommendations that ire both valid and useful (Judd,
Smith, & Kidder, 1991; Tyson, Ackerman, Domsch, & Joynt, 1988, on validity;
Lawler, Nadler, & Cammann, 1980, and Turner, 1982, on evaluative criteria). To
nieet with tliese standards, the diagnostic practitioner must fill the requirementsof
three key facets of diagnosis-process, interpretation, and method and achieve
congruence alnong theni.
Process
The texture of cI ient-consultant relations poses clear requirements for successful
diagnosis. To provide genuinely useful findings and recommendations, consultants
need to create and maintain cooperative, constructive relations with clients. Also, they
need to negotiate successfully their relations with focal and other members ofthe
organization.

10.8 PHASES IN DIAGNOSIS

Diagnostic studies typically include several distinct phases (Nadler, 1977). As the
following description shows, the diagnostic tasks, models, and methods shift within
1)iagnosis and between phases, as do relations between consultants, clients, and other members
t ~ n i Intervention
l
of tlie client organization:
Scouting: Clients and consultants together explore what needs to be studied. While
tlie clie~itpresents problems and challenges, the consultant assesses the appropriate
tools and techniques of research relevant to diagnose1reconnaissance organizational
problems and strengths. Both may agree on the methodology for investigation
Contracting: Consultants and clients negotiate and agree on the nature of the
diagnosis and terms and conditions that qualify client-consultalit relations.
Study Design: The aims, objectives of the study, methods of study, measurement
procedures, sampling, analysis, and administrative procedures etc., are planned.
Da~taGathering: Data are gathered through primary and secondary measures to include
intervie-ws,personal observations, group discussions, work- shops, questionnairesand
analysis of reports, procedures, rule books and other secondary data.
Ao~alysis:The data are organized and analysed using relevant statistical tools and
techniques and descriptive methodologies such as content analysis, critical incidents
etc., and meaniligfully summarized. Consultants (and sometimes clients) interpret
them and prepare for feedback.
Feedback: Consultants present findings to clients and other members ofthe
organization. Feedback may include explicit"recommendationsor more general
findings to stimulate ;!iscussion, decision making, and where needed a further study.
I n order to ensure effective diagnosis of an organization, it is suggested to handle the
five processes related issues:
Purpose: "'+pt ale the goals crtt- rtddy? How are they defined? What issues,
challenges, and problems are to be studied? How the outcomes of the study are to be
evaluated?
Design: What organizational features are to be studied, what units and individuals to
be included for data gathering, What and how the data are collected and how the
. design and methods of tlie study will be perceived by the members ofthe organization?
Su pporl:and Cooperation: What is the support of the top management for the study,
ancl what resources will the client organization contribute? What are the attitudes of
other members of the organization and of external stakeholders towards the study?
Participation: To what extent the members of the organization are interested and
therefort: participate in the study in the various phases of gathering, interpreting, and
reacting to the data?
Feedback: When, how, and in what format will the study's feedback be given? Who
will receive the feedback on the study and what use will they make of it? How the
feedback;can be used for any further study?

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.
-- -

1 0.12 FURTHER READINGS

--
Schei n , E.H. 'Process Constzrltation: Reading, Mars', Addison-Wesley, 1 969 2nd ed.
Vol. 1, 1988 2nd ed. Vol. 11, 1987.
Bhattacharya, S.K., So~ilnathChattopadhyay and Subroto Sengupta, 1980.
"Management Consulting: Its Present Status and Future Direction in India",
Ahmedabad IIM (un-published).
Bain, A. "Presenting Problerns in Social Consultancey: Three Case Histories
concerning the Selection cfManagers". Human Relations 1976,29, 7,643-657.
UNIT 11 DIAGNOSTIC METHODOLOGY:
QUALITATIVE AND
QUANTITATIVE
Objectives
From this unit you will be able to understand:
different models of diagnosis,
methods of diagnosis.

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.

11.2 OPEN SYSTEMS ANALYSIS: ASSESSING

EFFECTIVENESS AND INEFFECTIVENESS
During the 1960s and 1 970s, tlie Open Systems ( 0 s ) approach (Katz & Kahn, 1978)
swept through the organization and social structures. According to the OS
perspective, organization/group is viewed as a system of input-through put-output.
Inputs from tlie erivironlnent are processed to produce outputs. Organizational success
depends on adapting to external change both for inputs and outputs that are valued by
customers (internal and external).
 E ~.................
~ 1 R-........O N.......
M~&7.
............
............ .....
.. *-..
a.......

.
.......... .......
Culture
f'
..zZ
;.- \ .........................-............................
.a"
f..

Figure 1: Framework for Open-Systems Analysis

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
- -

cooperation, conflict,coordination, communication, controlling and rewarding

behaviour, influence and power relations, supervision, leadership, decision making,
problem solving, goal setting, information gathering, self-criticism,evaluation, and
group learning.
Culture: Sllared norms, values, beliefs and assumptions, and the behaviour and
artifacts that express these orientations-includingsymbols, rituals, stories, and
language. Culture includes norms and understandings about the nature and identity of
the organization, the way work is done, and the prevailing values and the pattern of
relat io~~sl~ips
noticeable at different hierarchical levels
Structure: Refers to enduring relationshipsbetween individuals, groups. and
subsystems and systems, grouping of positions in to divisions, departments, and other
units; hierarchy (organizational levels as defined and made distinct by role,
responsibility and authority relationships),standard operating procedures; established
mechanis~nsfor handling key processes such as coordination (e.g., committees, weekly
meetings); and actual patterns that may differ from officially mandated ones (e.g.,
infonnal relations, cliques, coalitions, power distribution).

11.3 KEY FEATURES OF THE MODEL

The model contains several important ideas for diagnosis:
1) External conditions influence the flow of inputs (resources), intcm:rl
operations and the reception of outputs. For instance, regulatory agencies
determine standards for safety, packaging, or advertising. Figure 1 depicts the
possibility for direct effects on internal operations by showing a broken,
permeable boundary around the organization.The external feedback loop depicts
' environmental responses to products or services that affect inputs-for example,
reduced demand for the products
2) Organizations use many of their Products, Services, and Ideas as inputs to
Organizational Maintenance or Growth. This feature is shown in Figure 1 by
tlie feedback loop within the organizational boundary.
A computer firm uses its own machines and software; auniversity enlplvys some
of its doctoral students as instructors. Individual and group outcomes :tlso get fed
back into the organization.
3) Organizations are influenced by their Members as well as their
Environments. Employee actions can reinforce or alter current practices.
Change can result from visible pressure (e.g., union protests) and from hidden
deals and alliances. Change can also occur incrementally and almost
imperceptibly as people reinterpret theirjobs and their work environments.
4) The eight system elements and their sub-componentsare interrelated and
influence one another: Thus developments within one element, such as
tech~~ology, call have consequences for other elements (e.g., Employability of
current employees, downsizing, union-management relations). Even links
between elements need not be obvious or intended-for example, the acquisition of
new computer networking capacity leads to'redefinitionof departmental
objectives, tasks, and job descriptions.
5) Organizationsare constantly changing: Reactive change occurs in response to
internal or external problems, while anticipatory (proactive) change aims at
improving organization's environmental standing or internal operations before
Diagnosis system elements, whereas strategic changes entail basic changes in one or more
and Intervention critical elements such as goals, environment, or culture-and relations among
these elements (Harrison & Phillips, 1991; Newman, Nadler, & Tushman, 1988).
Both types of changes contribute to system dynamics-growth, contraction, and
changing levels of efficiency and effectiveness.
6) An organization's success depends heavily on its ability to adapt to its
environment or to find a favourable environment in which it could operate, as
well as to tie people into their roles in the organization to conduct its
transformative processes and manage its operations (Katz & Kahn, 1978).
7) An:y level or unit within an organization can be viewed as a system. When the
system model is applied to a division or even a single oper~tingunit within a
larger organization, other units within the organization will constitute the focal
unit's entire task environment. Viewing units as systems facilitates diagnostic
comparisons between them.
-- - - - - - - - - - - -

1 4 THE MODEL AS A DIAGNOSTIC GUIDE

--
The OS perspective can contribute to diagnosis in several important ways.
First, the OS framework is widely applicable. It is possible to analyze any
or:ganization, sub-unit, or set oforganizations in terms ofthe flows of inputs-such as
cash, personnel, and infornlat~on;the processing of these inputs, and the creation of
goods, services, and other outputs, Similarly, it is possible to trace links among basic
system componentsof environment, technology, structure, culture, and behaviour
(we Figure 1) and among their sub-components. The OS framework thus provides a
usefitl ctqrting point for C:.+ ,sis regardless ofthe focal organization's size,
complexity, pulpose, technology, :ife cycle stage, ownership, or cukural and
institutional context.
A second contribution of the OS frame to diagnosis is that it permits a holistic
approach (Jackson, 1992) of examining the overall environmentaland organizational
context within which problems arise and within which steps towards organizational
improvement are enacted. The OS approach can thus help practitioners of diagnosis to
consider all components of the organizational system and their interactions, rather
than just examining specific issues and problems that are easy to study pr are widely
discussed within the organization. Holism can also help consultants and managers
avoid seizing on popular or readily available change techniques that are not likely to
provide required leverage to bring about system-widechange.
Third, the OS frame can help consultants and clients deal with the complexity of
organizational performance and change and thereby resist the temptations of
management fads. Many fads encourage simplistic thinking: say, introduce Program X
and you will achieve the outcomes you desire--excellence, quality, client satisfaction,
profits, and organizational prestige. In contrast, the systems approach encourages
illinking characterized by more of analysis and synthesis of recognizing contingent '
relations and examining interactions between units, levels, and subsystems within an
(organization.
Fourth, systems-based diagnosis can help consultants and clients distinguish
symptoms of ineffectiveness from underlying systemic causes (Senge, 1990).
Fifth, the OS perspective alerts consultants and their clients to Iook for possible side
effects of actions-unanticipated and hard-to-diagnose consequences-that can alter
the status quo within the system (Senge, 1990). These unanticipated outcomes can
occur.when changes in one system component lead to developments somewhere, even
in a distant, but interdependent part of the system. For example, the introduction of
computer networking capacity can create opportunities for some people and groups to
obtain and communicate information that was previously unavailable to diem and Dlr- #rLlr.ddogy:
thereby increase their influence over communicationand decision-making processes. *a'hm *rsUtrthd
The change in computer technology can unintentionally lead to unanticipated shifts in
the distribution of power within the organization and can gradually alter decision
processes and outcomes.

11.5 WEISBORD'S SIX BOX MODEL

Weisbord's (1976)"six-box" model is considered to beone of the most
straightforward and easy-teuse system models. In presenting it, Weisbord sought to
distill years of consulting experience and to provide users yvith"Six Places to Look
for Trouble with or without Theory." The model is easy to comprehend, has an
intuitive appeal to managers, a potential application for manqgement developmentand
hence considered the most popular diagnostic model. This model is widely cited in
organization development texts (e.g., French & Bell, 1995,) and is the preferred
diagnostic model under time constraintsor when organizational participants have no
prior knowledge of the concept of open-systems (Burke, 1982).

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

fairly and equitably? Do

and controlling important tasks have
incentives?

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.

11.6 PORRAS'S STREAM ANALYSIS

- - - - - - - - -- - - - - - - - - - -- - - -

Porras's ( 1987) diagnostic approach is embedded in acomprehensive theory of

organizational diagnosis and planned change and is known as Stream Analysis. The
main steps in Stream Analysis are: diagnosis of organizational problems, construction
of interventions to bring about planned changes, and evaluation ofthe interventions'
outcomes. The evaluation phase is intended to enable organizational members to learn
effective change approaclies and techniques. Tlie diagnostic model and Stream
Analysis as a wliole is grounded in systems theory.
How is the lnodel used? Diagnosis is initiated by collecting and classifying symptoms
of ineffectiveness and tracing linkages among these symptoms. Problems and
syrnptoliis are categorized into one or more of four system components, or streams,
that characterize the organization under study: organizing arrangements, social
factors, tecl~nology,and physicalsetting. Construction of the diagnostic model then
progresses to identitication of core problems that cause or affect symptoms and
proble~nsthroughout tlie system. These core problems then become targets for planned
clia~igeefforts. Action planning and management of planned change focus on the four
streams listed above.
Streal11Analysis requires active participation in diagnosis by key organizational
decision-makers and internal stakeholders. Porras (1987) suggests forming a steering
committee whose membership reflects a cross-section of all the orga~iization's
functions, levels, and product lines. This committee guides the diagnosis, gathers the
data, and carries out tlie analysis. It may or may not be assisted by an outside
consi~ltant.However Porras, reco~nmendsusing consultants because of their expertise,
their broader perspective, and their skills in facilitating a wholistic diagnosis. An
external consultant could also facilitate tlie managers to think "out-of-the-box", and
build in them tlie necessary skills to carry out future diagnoses independently ofthe
external consultants.
The major components of the diagnostic model are portrayed in Figure 3. Two of the
streams in tlie figure-3 portray process components. These ellcompass social factors
also implying liuma~iprocesses, and technology. The other two streams represent the
structi~ralcomponents-organizatio~ial arrangements and physical setting. The relative
size of tlie sectors in tlie figure-3 can be adjusted to reflect the diagnostic importance
assigned to them by tlie steering committee.
Diagnorir
and lrtervention

Figure 3: Stream Diagnostic Chart

Key: S = Symptom; P = Problem; CP = Core Problem

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 1.7.1 Tliagnosing Organizational Subsystems

Diagnw~icFocus or Target Explanation and IndentifyingExamples Typical
/nfor:nn~!onSought Common Methods of Diagnosis
'The IOII;: rbr:.trnization (having a common "charter" or mission and a common power
s t r ~ct:!z:). The total system is the entity assessed and analyzed. The diagnosis might
also i ~ ~ c i i l\i!here
d ~ . relevant, systems external to theorganization (environmental
forces), :;LICII as customers, suppliers, and governmental regulations. Examples are a
manufncturing firm, a hospital, a school system, a department store chain, or a church
del-ro~nination. What are the norms ('cultural oughts') ofthe organization? What is the
org.anization's culture? What are the attitudes, opinions and feelings of system
men1hers toward various organizational factors, such as organizational goalsltask
goi~ls.ccrmpensation, supervision, and top management? etc. Are organization goals
unclcrstc~odand accepted? What is the organization climate? - Open vs. closed,
a 111!l!)i.ii<)l-i:~n vs. democratic, repressive vs. developmental, trusting vs. suspicious,
coc:p~;-riiit~c vs. competitive? How well do critical organizational processes, such as
del:iiiori malting and goal setting, function? What kind and how effective are the
orjr;~niz:~tio~i's "sensing mechanisms"to monitor internal and external forces1
~ l !\I Ql~rstionnaire
i l ~ ' !a11 surveys are most popular with a large organization.
In:.i:rvii\::--~ro~~p and individual, are useful for getting detailed information, based
on i.ili.,ti! c .vrm~pling techniques. A panel of representative members interviewed
pel-iocti,:nlly io clzart changes overtime. Examination of organizational" rules,
re ::~l;itioil . po!icies, symbols etc., yields insight into the organization's culture.
D.;.:e~v :':5 -,,rc>!il~g.r held at various levels at regular intervals yield a gzeat amount of
inH!r-!~::i?i~!:i i r ? a short time period.
I.:::':qc ,.;ubsytcmsthat are by nature coniplex and heterogeneous. This target group
s t a 1 >i'roii~.makingdifferent "slices" ofthe organization, could be by hierarchical
IevcI. f.~nctiouor territory etc. Two criteria help to identify this set of sub-systems:
first thi:mselves or others view them as a subsystem, and second, they are
1ic:tero::eneous in their makeup. Examples would be the middle-management group,
ccirlsisting of managers from diverse functional groups. All of the above, plus: system
ci!11;1~: E-.: 2nd intersystem interactions. For example: How does this subsystem view
the whole and vice versa? How do the members ofthis subsyste~nrelate to each Diagnostic Methodology:
uantitative
other? Wliat are the ~~nique de~nandsof this subsyste~nand how do these demands fit Qualitative and Q
in within the organizational structure and processes? Are there sub-units within the
subsyste~nwith significant differences in performance and Why? What are the major
proble~nsco~ifro~itirigthis subsyste~nand its sub-units? Are the subsystem's goals
compatible with organization goals? Does the heterogeneity of role demands and
fu~ictionalidentity get in the way of effective subsystem performance? And so on. If
the subsyste~nsare large or widely dispersed, questionnaire and survey techniques are
recommended. hterviews and ob.servations may be could provide additional
supporting or evaluating information.
S~nallsubsystems that are simple and relatively homogeneous. These are typically
formal work groups or teams that have frequent face-to-face interaction. This may be
permanent groups, temporary task forces, or newly constituted groups (e.g., the group
charged with tlie "start-up" of a new operation, or the group formed by an acquisition
or merger). Exa~nplesare the top-management team, com~nitteesof a permanent or
temporary nature, task force teams, etc. Tlie questions on culture, climate, attitudes,
and feelings are relevant here, plus: what are the major problems ofthe team? How
can team effectiveness be improved? What do people do that hinders wittingly or
unwittingly what others do? What are memberlleader relations? Do individuals know
how their jobs relate to the role set, department and organizational goals? Are the
group's working processes, i.e., tlie way things get done are effective? How well the
resources-both of individual and group are made good use of? Typical methods
include the following: irldividual interviews followed byagroup meeting to review the
interview data; short que.stionnaires:observation of staff meetings and other day-to-
day operations; and a family group meeting forself-diagnosis.
Small, total organizations that are relatively simple and homogeneous. An example
would be a local professional organization. Typical problems as seen by officers
might be declining membership, low attendance, or difficulty in manning special task
forces. How do tlie officers and the members see the organization and its goals? What
do they like and dislike about it? What do they want it to be like? What is the
competition like? What significant external forces are impacting on the organization?
etc. Questionnaires or intervien,.~are frequently used. Descriptive adjective
questionnaires can be used to obtain a quick reading on the culture, "tone", and health
ofthe organization. Diagnostic family group meetings can be useful.
Interface or inter-group subsystems. These consist of subsets ofthe total system that
contain members oftwo subsystems working together. Example is that of a matrix
organizational structure requiring an individual or a group having two reporting lines.
But more often this target consists of members of one subsystem having common
proble~nsand responsibilities with members ofanother subsystem, such as production
and ~nainte~~ance overlaps, marketing and production overlaps etc.How does each
subsystem see the other? What problems do the two groups have in working together?
In what ways do tlie subsystems get in each other's way? How can they collaborate to
improve the performance of both groups? Are goals, sub-goals, areas of authority and
responsibility clear? What is the nature of the formal and informal climate between
the groups? What do the members want it to be? Confrontation meetings between both
groups are often the method for data gathering and planning corrective actions.
Orgunizution mirroring meetings are used when three or more groups are involved.
Interviews of each subsyste~nfollowed by a "sharing the data" meeting or observation
of interactions can be used.
Dyads andlor triads Superiorlsubordinatepairs, interdependent peers, linking pins -
i.e., persons who have multiple group me~nberships- all these are sub-systems worthy
of analysis. What is the quality ofthe relationships? Do the parties have the necessary
skills for task accomplishment? Are they collaborativeor competitive? Are they
Diagnosis effective as a subsystem? Does the addition of third party facilitate or inhibit their
rtnd Intervention pi-ogress?Are they supportiv~e of each other? etc Separate interviews followed by a
1n.eetingof the parties to view any discrepancies in the interview data are often used.
Checking their perceptions ofeach other through face to face situations may be useful.
Ohser17ation is an important way to assess the dynamic quality of tlie interaction.
I~ndivitluals:Any individual within the organization, such as president, division heads,
occupzints of key positions in a work flow process, e.g., quality control, R&D. Do
people perform according to the organization's expectations? How do they view their
position and performance? 110certain kinds of problems typically arise? Do people
meet standardsand norms of the organization? Do they need particular knowledge,
skills, or ability? What career development opportunitiesdo they havelwantlneed?
What pains are they experiencing? Interviews, information derived form diagnostic
work team meetings, or problems identified by the personnel department are sources
of information. Self-assessment growing out of team or subsystem interventions is
another source.
Etoles: A role is a set of behaviours enacted by a person as a result of his occupying a
certair~position within the organization. All persons in the organization have roles
requiring certain behaviours, such as the secretaries, production supervisors,
accountants. Should the role behaviours be addedto, subtracted from, or changed? Is
tlie role defined adequately? What is the "fit" between the person and role? Should
tlie role performer be given special skills and knowledge? Is this the right person for
this role? ITsually, informatifoncomes from observation, interviews, role analysis
techn~que,a team approach to "'management by objectives". Career planning
activi1:iesyield this information as an output.
13etwt:en organizational sxJr,kmsconstituting a suprasystem An example might be the
:iysit:~c af I ~ Wa d order i l l a r p ~ ; ' . ~including
, local, country, state, federal police or
investigative and enforcement agencies, prosecuting off~cersand grand juries. Most
such suprasystems are so complex that change efforts tend to focus on a pair or a trio
of sut~parts.How do the key people in one segment of the suprasystem view the whole
and the subparts? Are there frictions or incongruities between subparts? Are there
Iiigh-performing and low-performing sub-units? Why? Organizational mirroring, or
developing lists of how each group sees each other, is a common method ofjoint
{diagnosis,questionnairesand interviews are useful in extensive long-range
i~iterventions.

11.7.2 Organisational Process Identifying remarks and explanation

typical information sought common methods of diagnosis
Communication patterns, styles and flows Who talks to whom, for how long, about
what'?Who initiates the interaction? Is it two-way or one-way? Is it top-down; down
up; la.teral?Etc. Communication flow and communication patterns-
Is colnmunication directed upward, downward, or both? Are commu~iicationsfiltered?
Why? In what ways? Do communications patterns 'fit" the nature of the jobs to be
acco~nplished?What is the "climate" of communication?What are the techniques of
cornrnunication mostly used? Observations, especially in meetings; questionnaires for
large-sized samples; interviews and discussionswith group members - all these
methods may be used to collect the desired information. Analysis of videotaped
sessions by all concerned i!; especially useful. As a cop at the traffic signal, a
conslultant could monitor/o$serve the communication process as it flows. Also leave a
tracer element and see how it travels through the communication process.
Goal setting Setting task objectives and determining criteria to measure
accomplishment ofthe objectives at all organizational levels. Do they set goals? How
is this done? Who all participate in goal setting? Do they possess the necessary skills
for effective goal setting? Are they able to set long-range and short-range objectives? Diagnostic Methodology:
Questionnaires, interviews and observation all afford ways ofassessing goal-setting QualifPtive and Quantitntive
ability of individuals and groups within the organization.
Decision making, problem solving, and action planning Evaluating alternatives and
choosing an appropriate one and the plan of action are integral and central functions
for most organization members. This includes getting the necessary information,
establishing priorities, evaluating alternatives, and choosing one best alternative over
all the others. Who makes decisions? Are they effective? Are all available sources
utilized? Are additional problem-solvingskills needed? Are organization members
satisfied with the problem-solving and decision-making processes?--The way it is
done. Observation of problem-solvingmeetings at various organizational levels is
particularly valuable in diagnosing this process. Analysis ofvideotaped sessions by
all concerned is especially useful.
Conflict resolution and management Conflicts-interpersonal, intra-personal, intra-
group and inter-group- frequently exists in organizations. Does the organization
have effective ways of dealing with these conflicts? Where does conflict exist? Who
are the involved parties? How is it being managed? What are the system norms for
dealing with conflict? Does the reward system promote conflict? Interviews, third-
party observations and observation meetings are common methods for diagnosing
these processes.
Managing interface relations Interfaces represent these situations wherein two or more
groups (sub-systems) face common problems or overlapping responsibilities. This is
I
most often seen wlle~lmembers of two separate groups are interdependently related in
achieving an objective but have separate accountability. What is the nature of the
relations between two groups? Are goals clear? Is responsibility clear? What major
problems do the two groups face? What structural conditions promotefinhibit effective
interface management? Interviews, third-party observations,and observation of group
meetings are common methods for diagnosing these processes.
Superior-subordinate relations Formal hierarchical relations in organizationsdictate
that some people lead and others follow: these situations are often a source of many
organizational problems What are the extant leadership styles? What problems arise
between superiors and subordinates? Questionnaires can show overall leadership
climate and norms. interviews and questionnaires reveal the desired leadership
behaviours.
Technological and engineering systems. All organizations rely on multiple
technologies- for production and operations, for information processing, for
planning, for marketing, etc., to produce goods and services. Are the technologies
adequate for satisfactory performance? What is the state of the art and how does the
organization's technology compare with that? Should any changes in technology be
planned and implemented? Generally this is not an area of expertise of the OD
consultant. He or she must then seek help from "experts" either inside or outside the
orga~lizatio~l.
Interviews and group discussions focussed on technology are among the
best ways to deterrn ine the adequacy of technological systems. Sometimes outside
experts conduct an audit and make recommendations; Internal auditors can also make
recommendations.
Strategic management and long-range planning Monitoring the environme3g adding
and deleting "products"/processes, predicting future events, and making decisions that
affect the long-term viability of the organization is a necessity for the organization to
remain competitive and effective. Who is responsible for "looking ahead" and for
making long-range decision? Do they have adequate tools and support? Have recent
long-range decisions been effective? What is the nature of current and future
environmental demands? What are the unique strengths or core competencies ofthe 27
Diagnosis organization? What are the threats to the organization. Interviews of key policy-
and intervention makers, group discussions, and examination of historical records give insight to this
dime:nsion.

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.

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Addison-Wesley.
Bolrnan, I,.G., & Deal, T. (1991), Reframing organizations:Artist~,choice and leadership.
San Francisco: Jossey-Bass
Budse W. W. (1982). Organization development, Boston: Little, Brown
Bur:ke, W. W. (1994). Diagnostic models for organizational development. In A Howard &
Associates (Eds.), Diagnosis for organizational Change: Methods and models (pp.53-85).
Nevv York: Guildford.
Cameron, K.(1984). The effectiveness or ineffectiveness. Research in Organizational
Behaviou,r,6,235-285.
Freeman, H., & Rossi, P. (1 984). Furthering the applied side of sociology. American
Sociological Review, 49, 560-585.
French, W., & Bell, C. (1995). Organization development (5Ihed.). Englewood Cliffs, NJ:
Prentice Hall.
Gel.sick,C. (1991). Revolutionary change theories: A multilevel exploration to be
pun~ctuatedequilibrium paradigm. Academy of Management Review, 16: 10-36.
Hannan, M., & Freeman, J. (1984). Structural inertia and organizational change. American
Sociologl'cal Review, 49, 149-164.
Harigopal, K. Management of organizational change: leveraging Transformation, Sage
Publications, New Delhi, 200 1
Hairrison.,M., & Phillips, B. (1991). Strategic decision making: An integrative explanation.
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Ackermann, M. Domsch, & P. Joynt (Eds.), Appraising and exploring organisations.
London: Croom Helm.
Jackson, M.C., (1992). @stem methodology for the management sciences. New York:
Plenum.
Judd, C..,Smith, E., & Kidder, L. (1991). Research methods in social relatiom (6'" ed.).
New York: Holt, Rinehart & winston.
Katz, D., & Kahn, R. (1978). The social psychology oforganizations (2"ded.,.). New York:
W:iely.
Lawler, Nadler, & Cammann, (Eds.). (1980). Organizational assessment. New York: Wiley.
Mintzberg, H. (1984). Power and organizational life cycles. Academy of Management
Review, 9,207-224.
Morgan.,G. (1986). Images of organizations. Newbury Park, CA: Sage.
Nadler, D. (1977). Feedback and organization development: Using data-based methods. Diagnostic Methodology:
Reading, MA: Addison -Wesley. Qualitative and Qusrtihtive
Porras, J.I. (1987). St/-eamanalysis. Reading, M.A: Addison-Wesley.
Porras. J., & Silver, R. (1991). Organization development and transformation. Annual
Review of'Psychology, 42, 51-78.
Ramirez, I. L., & Bartunek, J. (1989). The multiple realities and experiences of
organization development consultation in health care. Journal ofOrganizationa1 Change
Munup~cnt,2(1), 40-57.
Robertson, P.J., Roberts, D.R., & Porras. J.I. (1993). An evaluation of a model of planned
organizational change: -Evidence from a meta-analysis. Research in Organizational Change
and Development,7, 1-39.
Rossi. P., & Whyte, W.F. (1983). The applied side of sociology. In H.Freeman, R.Dynes, P
Rossi, & W.F. Whyte (Eds), Applied sociology. (pp. 5-31). San Francisco: Jossey-Bass.
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Tushman, M., Newman, W. & Nadler, D. (1988). Appraising and exploring organizations.
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.Londot!: Crooin Helm.
Weisbord, M.R., (1976). Diagnosing your Organization: Six places to look for trouble with
or without theory. Group & Organization Studies. 1, 430-477.
- -

UPWI' 12 INTERVENTIONS IN
ORGANISATIONAL CHANGE
Objiectives -

After going through this unit you will be able to understand

to dt:fine and explain the concept of intervention,
types of interventions and their use, and
to get acquainted with some interventions which are applied in organisations.

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

12.2 FOCUS ON INTERVENTION

Experience with Indian organizations indicates that the most frequently used
r interventions are: person focused, role focused, action research based, process
feedback based and training based.
r
C
Person Focused Intervention: These focus on individuals and can be classified in
different ways:
Who does the intervention?-Individuals themselves, a group or organization, or
facilitators.
!
I The form of intervention-self-introspection and reflection, self-study, or a
consulta~ltor facilitator who provides feedback, coaching or does mentoring.
What is the theoretical basis or school ofthought? Depending upon one's
theoretical approach interventions could have basis in any ofthe following
approaches:-Psychoanalytical(Freud, Jung etc.) transactional analysis (Eric
Berne), Operant conditioning and behaviour modification, achievement
motivation (Skinner, Pavlov and McClelland), Sensitivity analysis or t-group
(Bion's work), field forces and group dynamics (Lewin), socio-psychological and
anthropological approach to role theory (Merton and Goffman)
Diagnosis Who takes the active role-person himself or the consultantlfacilitator?Pareek
and Intervention ( 1998)classifies the intervention mechanismsltechniques.
Participant-active Interventions Facilitator-active Interventions
(Individual) (Behavioural Scientists)
1. Encounter Groups 1. Psy cho-dynamicMethods .
2. Roll: Playing 2. Motivation Arousal
3. Instrumentation 3. Training
4. Self-study and Reflection 4. Feedback
5. Awiueness Expansion 5. Coaching and Mentoring

OD Interventions are the techniques and methods designed to move an organization

frorn 'here' to 'there' or from "where it is" to "where it wants to be". The
inte~ei~tions are aimed at improving individual and team activities and efforts so that
they may better accomplish their targetsfgoals in accordance with the organization's
envisaged vision and strategy. The interventions also assist to change the culture of the
orgimization.
In today's organizations nearly 90% of the work is accomplished directly or indirectly
through groups or work-teams. Each employee performs not only as an individual but
also as a member of work-group. Some times, one may be a member of multiple
tearns. For example, one can be member of production planning group and also
member of quality circle apart from one's own job as a tool designer. There is a
significant degree of interdependency between individual work and teamwork and such
a recipro1:ity is part of organizational architecture. Work teams exert influence on
individual work behavior. In turn, individuals also influence team behavior. According
to L,ikert. organizationsare best conceptualized as systems of interlocking groups.
Work groups are connected by linking pins- individuals who occupy membership in
two groups (as a subordinate in one group and a boss in the other). Most of the
organiza1:ional work gets done though the interlocking groups. It is the recognition of
the signilicanceof the teamslwork groups for organizational efficiency and
effectiveness that forms the basis of the theory and practice of OD.
OD is concerned with the different types oftechniques or interventions that contribute
to 'cteam-effectiveness".
Most important single group of interventions in OD are the team-building
activities, the goals of which are the improvement and increased effectiveness of
varl~ousteams within the organization. The interventionsfocus on different types of
groups: those that are more enduring and rather permanent such as the role-set
(superior-subordinatesand colleagues), the others which are created for a specific
purpose imd hence are less enduring (such as specific task-teams constituted to
facilitate mergers, acquisitions, or organizational restructuring).
The team-building interventions are typically directed towards four major substantive
areiis: diagnosis, task accomplishments, team relationships, and team and organization
processe:;.

The Family Group Diagnostic Meeting

The purpose is to examine the performance of the group and to take stock of the
situation-the what, and how? of its performance in the context of the goalsltargets to
be achieved. Such an examination will assist the group to identify its strengths and
weaknesses and the problems it could be currently facing. The group could benefit
from the suggestions of its members in addressing its problems and in planning its
future actions. - I
 Variei~esol I earn-Building interventions Interventions in
Organisational Change
Diagnostic meetings
Team building focused on:
- Task accomplishment,
including problem solving, decision making, role
clarification, goal setting, etc.

- Building and maintaining effective

lnterpersonal relationships, including
TEAM-BUILDING boss-subordinaterelationshipsand peer relationships
ACTIVlTIES
- Understanding and managing
Group processes and culture
- Role analysis technique for role clarification
and definition

Special Groups - Role negotiation techniques

(Start-up teams, / diagnostic meeting
Special project team building focused
-T\ ) .cie
Teams, Task
Problems,
accomplishment,
role and goalespecially
clarification,
special
resource

Utilization, etc
- Relationships, especially interpersonal or
interunit conflict, and underutilization of each
other as resources
- processes, especially communications,
Decision-making and task allocations

\ - Role analysis technique for role

Clarification and definition
- Role negotiation

The Family Group Team-Building Meeting

The family group team-building meeting has the purpose of examining its
performance, culture etE., to improve its performance and managing of the task
demands, internal relationships and group processes. The meeting is aimed at
developing appropriate strategies to improve its operations while minimizing the
dysfunctional behaviours.
Most often, a consultant may be employed with the knowledge and acceptance ofthe
group of the need for studying its activities and behaviour. The consultant talks to the
I. group leader and the members of the group to gauze what their problems are, how
i they think ofthe group functions, and what are the difficultiesor hindrances affecting
the group's performance. The collected data is analyzed and presented to the group for
P further analysis. The group examines the information, prioritizes the problems, works
on solutions and prepares an action plan for improving the group performance.

Role Focussed Interventions

These aim at bringinglimprovingthe compatibility between a job incumbent and the
role demands and expectations associated with hidher job.
Role Analysis: Role analysis is a structured exercise to provide:
i a Why the role exists?-the rationale
I a What the role is supposed to achieve?
!
! a How the role contributes to the achievement ofthe groupJdepartmentIunitgoals?

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.

Role ElEcac:y Lab

Role efficacy refers to the psychological factor underlying role effectiveness and the
potential effectiveness of an individual occupying a particular role or the potential
effectiveness of a role. Role Efficacy Lab (REL) used to develop work commitment.
REL is a sllort process-oriented programme aimed at: Interventions in
Organisational Change
a) Sharing of thoughts and of individual as well as group commitments with the top
management,
b) Get moral support and reinforcement from the top management, and
c) Providing an opportunity for the top management to examine why certain
expectations are unrealistic or unattainable, and suggest their own action plans
taking to account other suggestions.
Role Efficacy Lab: A Suggested Design
Writing an essay on my role, completion of Role Efficacy Scale for
Subordinate roles and other instruments (1 hour)
Micro lab (I hour)
About the REL (112 hour)
The concept of role efficacy, its aspects, and scoring method concept
Session with discussion and examples (1 and % hours)
Scoring one's own essays (314 hour)
Exchange of essays in triads, and scoring (1 hour)
Plenary session, discussing some essays (314 hour)
Scoring of RES (112 hour)
Small group-work on own and subordinates' roles to identify areas for
Strengthening (1 12 hour)
2. Plenary session, reporting and integrating (314 hour)
3. Work on increasing one's role efficacy (1 hour),
4. Work on increasing efficacy of subordinate roles (314 hour)
5. Force field analysis for role efficacy in the organization (small group)
(314 hour)
6. Plenary session (314 hour)
7. Work on expectations from the organization (in three or more of eight
to ten groups) (314 hour)
8. Plenary session (314 hour)
Day 3: 1 . Co~lsolidatingrecommendations and action suggestions (in three
Groups) (314 hour)
2. Plenary sessio~lfor finalization (1 hour)
3. Action planning for role efficacy (individual, then group work) (1 hour)
4. Review of action plans and collaborative plans (1 hour)
5. Preparation for dialogue with top management (1 hour)
6. Dialogue, evaluation, and closing (2 hours)

Role Negotiation Technique

This tech~liqueis developed by Roger Harrison. The technique assists to improve
work relatio~lsllipsalnong members. One of the causesfor the ineffectiveness ofteams
is members' behaviour influenced by their unwillingnessto lose power, authority and
influence they wield or have to share it with others. Role negotiation intervenes
Diagnosis din:ctly in the relationships of power, authority, and influence of the members within a

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.

Foirce field analysis

Force field analysis is a management technique developed by Kurt Lewin for
diagnosing situations. It is useful when planning and implementing a change
managenlent program and also in 'team building' efforts.
Any change implies movement- movement towards something or away from
something.
Force Ficld Analysis enables listing, discussing, and evaluating the various forces for
and against a proposed change. The analysis includes identifying the driving forces-
whi~chgive change momentum, and restraining forces-which inhibit change. Force
field a~ialysishelps us to look at the big picture by analyzing all of the forces
impacting the cliange and weighing the pros and cons. By knowing the pros and cons,
we can develop strategies to reduce the impact of the opposing forces and strengthen
tlie supporting forces.
Lewin a:,silmes that in any situation there are both driving and restraining forces that
influeric~:any change that may occur. Driving Forces are those forces affecting a
situation. They tend to initiate a change and keep it going. For example, pressure from
a supervisor, incentive earnings, and competition tend to be driving forces to improve
group productivity.
Restraining Forces Interventions in
Organisational Change
Restrailling forces are forces acting to restrain or decrease the driving forces. Apathy,
hostility, and poor maintenance of equipment may be examples of restraining forces
against increased production.
Equilibrium: Refers to the balancing between the driving and restraining forces. Most
often situations exist in a state of quasi-equilibrium. This equilibrium can be raised or
lowered by cllanges in the relationship between the driving and the restraining forces.
A desired situationlcondition can only be achieved by dislodging the current
equilibrium by adding driving forces or by removing restraining forces.
Force Field Analysis assists to develop an action plan to implement a change, more so,
to:
1. Determine if the proposed change can get needed support
2. Identify obstacles to the intended change
3. Suggest actions to reduce lovercome obstacles
The Force Field Analysis involves the following steps:
Step 1. Identification and description of a problematic situation, which needs to be
improved
Step 2. The desired condition is carefully and completely described.
Step 3. Identification of the forces and factors (force field) operating in the current
situation--driving forces pushing towards the desired condition and restraining forces
pushing away from the desired condition. This should be done thoroughly and
exhaustively to get a clear picture ofthe situation
Step 4. Analysis the forces as to their relative strengths, weaknesses, extent of
susceptibility to influence, amenable to control etc.
Step 5. Developing strategies for moving to the desired condition, which could be:
increasing the intensity/strengthof the driving forces; minimizing the strengthlintensity
ofthe restraining forces; or does both. As restraining forces are minimizedlremoved,
the equilibrium shifts toward the desired condition. New driving forces may also be
planned and action plans developed to implement them.
Step 6.1 ~nplementingthe action plan in order to achieve the desired condition.
Step 7. Description of those actions requires freezing the equilibrium at the desired
condition and imple~nentingthose actions.

12.3 INTERGROUP INTERVENTION

Often two or more independently working groups have to coordinate tasks, on either a
temporary or permanent basis, to achieve the required organizational goals. This could
give rises to disagreement and conflict among groups affecting group morale and
productivity. Where there is competition among groups, it may give rise to tension and
conflict and each group may perceive the other as an "enemy".
To resolve such intergroup conflicts many strategies are identified.
These include:
Increasing the interaction and communication among the groups (increased
interaction under favourable conditions enhances positive feelings and
sentiments)
7
Identifying a "common enemy ' (another group that both groups dislike, which
brings the groups closer together);
Dingnosis Finding a superordinate goal (a goal that both groups desire to achieve but that
ant1 Intervention neither can achieve w i t h o ~mutual
~t support);
Rotating the members of the groups; and instituting some forms of training.
To get success in these strategies a number of interventions are used.

Intergroup team-building Interventions

Till=focus of this team-building group is to improve intergroup relations. It is to
increase communication and interactions between work-related groups, reduce
dy:;functional competition, and the need for interdependence of action to maximize the
best effc~rtsof both the groups. Organization development methods assist to enhance
i~it~ergroup
cooperation and communication.
The ~notleldeveloped Blake, Shepard, and Mouton has a strong application to improve
relation:; between groups that are strained or are overtly hostile. It has a number of
steps:
Step 1. The leaders of the two groups (or the total membership) meet with the
consultant and are asked to express their opinions ifthey think the relations between
thr: two groups can be better and if they are willing to search for mechanisms or
procedures that may improve intergroup relations. Ifthey are positive in their ideas to
do so, they are asked to commit themselves.
Step 2. The intergroup intervention commences with the two groups meeting in
separate rooms and building two lists. In one list they give how they think, perceive
and feel about the other group - as to what it is like, and what it does that gets in their
way, eti;. In the second list, the group tries to predict what the other group dislike
about them, how the other group perceives them, etc. The two lists are prepared by
both groups.
Step 3. The listed information is shared between the two groups.
Sttep 4. Each of the two groups react to and discuss what they have learned about
themselves and the other group. This assists to sort, of the many areas of disagreement
and friction between the groups that can be easily resolved through information
sharing: of the lists. Consequent to this discussion, the group is given a second task,
which .ISto make a list oftlle priority issues that still need to be resolved between the
two groups.
Step 5.. The two groups share their lists with each other, and together discuss to list
out issues and problems that should be resolved. Priorities are set to the items in the
list as to their importance and immediacy. Then jointly they prepare action plan for
resolving the issues and assign responsibilities for the intended actions. Roles and
responsibilities are agreed upon for the most important items. That concludes the
intervention.
Step 6. Finally, it is desirable to have a meeting of the two groups or their leaders
to determine the effectiveness ofthe action plan. This ensures that the momentum of
tlie intervention is not lost.

Orgainization Mirror Interventions

The organization mirror refers to a set of activates in terms of which a given group
gets feedback from representatives of several other groups about how it is perceived
and regarded. Such mirroring assists to improve relationships between groups and
increases intergroup work effectiveness.
In this process, an organizational unit that has working relationships with other units
could get a feedback from key people of those other units as to how they see the host
unit. The co~isultantoften interviews the people attending the meeting before hand to Interventions in
get an awareness of the problems and their intensity. This enables the Consultant to Organiaational Change
prepare the participants, and to get the best out of the whole process.
Tlie discussio~istake place in a fish bowl kind of a setting. A fishbowl is a group
seating and talking configuration in which there is an inner circle for those who talk
and an outside circle of observers and non-interactors. The invited participants talk
about tlie host unit in a natural, uninterrupted way while the host group members
listen and learn. In the host group members fishbowl turn, and talk about what they
have heard, ask for any clarification, and generally seek to understand the information
they have heard.

12.4 PERSONAL, INTERPERSONAL, AND GROUP

PROCESS INTERVENTION
Tlie central theme of the interventions is learning through an examination of
underlyi~igprocesses. In process consultation, which is generic to OD interventions,
the focus is exclusivelyon the diagnosis and managementof personal, interpersonal,
and group processes. Third-partypeacemaking focuses on interpersonal conflict and
the dynamics of cooperation and competition among groups. Sensitivity training
typically yields learning's about self, interpersonal relations, and group dynamics.
Transacrional analysis (TA) can be a form of psychotherapy, a framework for
analyzing i~iterpersonalrelations and transactions. TA has also been used as a
technique for team building. Behaviour modeling is atraining technique designed to
increase effectiveness in problematic interpersonal situations. Life-and
career-plannii~ginterventions are less process oriented than the other interventions
and reflect more a systematic approach to a substantive area.

Process Consultation Intervention

Process Consultation (PC) is a method for intervening in an ongoing system. In this
approach, a skilled third party (consultant) works with individuals and groups to help
them learn about human and social processes and learn to solve problems that stem
from process events. This is an often- used approach by many OD consultants and
practitioners.
The process consultant helps the organization to solve its own problems by making it
aware of organizational processes, ofthe consequences of these processes, and of the
~necha~iisnisby which they can be changed. It is to enable the organization to address
its problems by itself.
The consultant works with the organization, in work teams, and helps them to develop
the skills necessary to diagnose and solve the process problems that arise. The
organizational processes that are important to be dealt with, include: communications,
clarifying tlie roles and functions of group members, group problem solving and
decision making, group norms and group growth, leadership and authority, and
intergroup cooperation and competition.
The process consultation follows the order-agenda setting, feedback of observations
or other data, counseling and coaching. Suggestions for structural modifications
could take place but most often they are least likely.

Third-party Peacemaking Interventions

Third-party i~iterventionshave the potential to control (contain)the conflict or resolve
it. The two groups must be willing to deal with the conflict and appreciate that it has
L)i:tgnosis consequences for their effective functioning. The third party must know how, when,
a ~ t t lIntervention and where lo utilize confrol~tationtactics in resolvi~igthe conflict.
First it must be able to diagnose co!?!!ict situations. The Diagnostic model of
interpersonal conflict is based on fo~lrbasic elements: what are the conflict issues?
What events, factors liave precipitated it? What are the co~iflict-relevantacts of the
groups involved and the consequr:nces of the conflict. Conflict is a cyclical process,
and the cycles may be benevolent, malevolent, or self-maintaining. The accurate
diagnosis ofconflict will be facilitated ifthe source oftlie conflict is identified.
In a conflict situation both substantive and emotiorial issues are involved. Substantive
issues relate to disagreements over policies and practices, sharing of resources, and
differences in the perception of roles and role relationships. Emotio~ialissues arise
from negative feelings between the parties finding expression in behaviors such as
anger, distrust, scorn, resentment, fear, rejection.
Understanding as to what is tlie substantive and emotional issue in\rolve3 in
under lying the conflict is necessary for constructive conflict resolution. While
substantial issues are dealt with by problem solving and bargaining be11:iviors engaged
by the groulos, emotional issues could be dealt with by restructuring tlie perceptions
and feeling:; ofthe members within the groups. A third party interventio~iin settling
intergroup conflict is in terms of structuring confrontation and dialogue between the
group in conflict.

Sensitivity Training Laborat!>ries

A T-group I S an unstructured, age:ida less group session for about 10 to 12 members.
A prol'essional "trainer" acts as a catalyst and facilitator. The data for discussion
arises from the interaction of the group members as they strive to create a viable
societ:y for themselves. What are discussed and analyzed etc., are tlie actions,
reactions, interactions, and feelings arising out oftlie member interactions. Conceptual
material relating to interpersonal relations, individual personality theory, and group
dy~ian~ics also form a part oftlie program. The 'group-experiences' form the fulcrum
of learning.
The T-group is a powerful learning laboratory facilitates learning more about oneself
as a person, learning how others react to one's behaviour, and lqarning about the
dyna~r~ics o-Fgroup formation, groap norms and group growth. It assists to improve
one's interpersonal skills.
These insights are coupled with growth of skills in diagnosing and taking more
effective iliterpersonal and group actions that provide the participa~itsthe basic skills
necessary for more compete~~t action taking up in the organization.
Uses of T-group in OD are varied. bui they are particularly appropriate to give a
basic skills level relevant to youp a ~ l dindividual dynamics to learn. T-group may
also be constituted in several diffeN.e~iiways jepending upon the desired outcome.
There could be:
"~:ousi~i"laboratories consi.;ti.ip of peilpie from tlie same organization who do
not have direct working relatio~?sl~ips dnd in fact may not know each other.
"Cluster" lab consisting of perscj;!~froin different parts of the organization but
each group has "clusters" of u,ori,-related people. For example, a 12-person
group ]nay liave three separa~legro:lps of four persons each who are related in
their own work teams.
A "stranger" lab composed of people from different organizations.
Transactional Analysis (TA) Interventions in
Organisational Change
It was developed primarily by Eric Berne. TA is a valuable tool both for disturbed
people and for healthy individuals. It is use in OD mainly as an educational
intervention, ofcourse to deal with healthy normal people.
Tra~lsactionalAnalysis focuses on such areas as the structure of the personality
(structural analysis), the way in which people interact (transactional analysis), or the
way i n which people structure their time (time structuring), and the roles that people
learn to play in life.
In terlns of Structural analysis human personality is made up of three ego states: the
parent, the adult, and the child. Individuals are always acting out of one ofthese three
ego states. The parent ego state reflects the behaviors of superiority, authority, being
right, ji~dgingothers, and tlie like of that of a parental ego. The adult ego state reflects
maturity, objectivity, problem solving, logic, and rationality and capacity for mature,
wholesome cornlnerce with the world. The chiId ego state reflects one's behavior as a
child when one is dependent, rebellious, and perhaps inadequate.
Analysis of the transactions or communications between peopIe is a major aspect of
TA. Transactions call be ( I ) complementary, (2) crossed, or (3) ulterior.
Complementary transactions are transactions across appropriate ego state where
response is natural and expected such as Adult-Adult, parent-child, parent-parent, and
so forth. Crossed tra~lsactionsinvolve messages from one ego state responded to with
lnessages from an inappropriate or unexpected ego state. Crossed transactions make
people feel angry, hurt, and put dofin. Ulterior transactions are those in which the
lnessages are not directed by the real ego states.
When co~npleme~ltary transactions ale increased, and ulterior and cross transactions
minimized interpersonal relations and tlie communication process are vastly improved.
People are trained in seminars to identify dysfunctional life scripts, time structuring,
games, and crossed and ulterior transactions in themselves and others so that they may
enjoy better relations with themselves and others. The assumption is made that this
knowledge will make them more effective in their organizational roles and personal
lives. Anecdotal evidence from the Inany organizations using this intervention suggests
that it makes individuals more effective in theirjob-related interactions with others.

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.

I. An assessment of life and career paths as up to the present, noting highlights,

important events, clioice points, strengths, and deficiencies
2. A formulation of goals and objectives regarding the desired life style and career
path --which are future-oriented goals
3. A realistic plan for achievil~gthe goals. The goals are specified, action steps
needed to reach the goals are determined, and schedule of target dates is
established for measuring progress.

12.5 COMPREHENSIVE INTERVENTIONS

--
The Confi-ontation Meeting
'The confrontation meeting,'developed by Richard Beckhard, is one-day meeting d t h e
entirl- management of an organization to take a stock of the organizational health. In a
series of activities, the management identifies the organization's major problems,
analyzes the underlying causes, develops action plans to correct the problems, and sets
a schedule for the remedial work. The confrontation meeting is a quick, simple, and
reliable wily in which to generate data about an organization and to set action plans
for o~rganii!ationalimprovement.
The steps nvolved in the confrontation meeting are as follows.
Step 1. Climate Setting (45 to 60 minutes). Is done by the top manager and the
Consultant goals for the meeting are stated citing the necessity for free and opens
discussiol~of issues and problems, and tlie importance ofcommunication within the
organizations, and the desirability of addressing and solving organizational problems.
Step 2. In formation Collecting (1 hour) Small heterogeneous groups of seven or
eight members are formed with people from different functional areas and working
situations for each team. However, bosses and subordinates not be put together on the
same tean-I.The top management group rrieets as a separate group during this time.
Several issues are examined by the groups like:
Wliat are the "demotivators," inadequate procedures or policies, unclear goals, or
poor attitudes etc. Also examined are the different conditions, that would make the
organization more effective and life in the organization the better?
Step 3. Information Sharing (lhour): Each group makes a presentation of the
group's cc~mpletefindings to the total group and these are also exhibited for the
groups' reference. The list of items is categorized into a few major categories that may
be based an type of problem (e.g., communications problems), type of relationship
(e.g., troubles with top management), or type of area (e.g., problems with the
accountii~;;department), etc.
Step 4. Priority Setting and Group Action Planning (1 hour and 15 minutes). In a
15-minute:general session, the meeting leader goes through the list of items and puts a
category assignment on each one every member has his or her own copy of the
categorize:ditems. The participants then form into functional, natural work teams
 reflecting the way they are organized in the organization. Each group is headed by the Intervent~ons~n
I Orgasirational Change
top manager in the group. The group's are asked to do three tasks:
First, they are to identify and discuss the issues and problems, decide on the
priorities of these problems, and determine early action steps to remedy the
problems that they are prepared to c-mit themselves (in the total group) to
i work on.
i Second, they are asked to identify the problems which they think should be given
r
top priority.
Third, how they will communicate the results of the confrontation meeting to
their subordinates. This completes the confrontation meeting for all the managers
I except for the top management group.
Step 5. Immediate Follow-up by Top Team (1to 3 hours). The top-management
team meets after the rest of the participants have left to plan first follow-up action
steps and to determine what actions should be taken on the basis of what they have
learned during tlie day.
Step 6. Progress Review (2 hours). A follow-up meeting with the total management
group is held four to six weeks later to report progress and to review the actions
resulting from the confrontation meeting.
Confrontation riieeting provides a quick and accurate means for diagnosing
organizational health promotes constructive problem identification and problem
solving, enhances up-ward communication within the organization, and increases
involvement and commitment to action on the part ofthe entire managerial group.

Strategic Management Activities

Strategic Management refers to the development and implementation ofthe
organization's "grand design" or overall strategy in relation to its current and future
envil-onmentaldemands. According to Schendel and Hofer six major tasks
co~nprisethe strategic management process: (1) goal formulation(2) environmental
analysis; (3) strategy formulation; (4) strategy evaluation; (5) strategy
implementation;and (6) strategic control." These six components ofthe
process are related to each other.
~ e v e l o ~organizational
i~i~ goals is the first step, followed by an assessment ofthe
constraints and opportunitiesafforded by the environment- both the present
environment and the future environment. Environmental analysis includes monitoring
the present environment and seeing the constraints and opportunities with respect to
the future environment. Strategic plans, derived from goals and environmental
analysis, are then developed, implemented, and monitored for results.
A strategic planning technique developed by Thomas Rogers uses a series oftwo-day
meeting with tlie top policy makers. The group discuses to examine issues such as
what business are we in? What is the organization's mission? followed by the
mission statement, the various"domains" or environmentalsegments that make
demands on tlie organization. For example, the suppliers, consumers, competitors,
and reg~~lators." The domains are (1) analyzed with respect to how the
organization is responding to demands made by the domain (2) What are the likely
domain demands in future and how the organization needs to respond, and
(3) What will be ideal or desired domain demands alongwith the ideal responses.
Next an action plan along with its implementation is designed to act on the
environment to bring about desired conditions. Subsequently, the action
plan is initiated and implemented.
Diagnosis
and Intervention

Figure 1: Schendel and Hofer strategic management process

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.

Difference between Job Design and Work place design:

Job design and workplace design are often used interchangeably because both
I
contribute to keep the physical requirements of ajob reasonable.
I
Job design refers to administrative changes that can help improve working conditions.
In comparison, workplace design concentrateson dealing with the workstation, the
tools, and the body position that all influence the way a person does his or her work.
Good workplace design reduces static positions, repetitive motions and awkward body
positions.
Diagnos~s Fe;aturt:sof Good Job Design:
and Intervention
Good jot)design accommodates employees' mental and physical characteristics by
paying attention to:
Muscular energy such as .workirest schedules or pace of work, and
Mental energy such as boring versus extremely difficult tasks.

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.

Allowance for an Adjustment Period

When work demands physical effort it is necessary to have an adjustment period for
new employees and for all employees after holidays, layoffs, or illnesses. Employees
must be given some time to become accustomed to the physical demands of work to
"get in shape."

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.

Vary Mental Activities

Tasks should be coordinated so that they are balanced during the day for the
individual employee as well as balanced among a group of employees. Employee
must be allowed some degree of choice as to what types of mental tasks they want to
do and when. This choice allows the employees to do tasks best suited to their
'alertness' patterns during the day. Some people may prefer routine tasks in the
morning (such as checklists or filling in forms) and save tasks such as problem
solving until the afternoon, or vice versa.
Job design can be used for teams also. In some cases, teams can be created that have
an overall responsibility for larger task or set of tasks. The tem will make decision as
to who will do what and when and how the job will be accomplished. In most cases,
team members will be multi-skilled which allow them to change jobs from time to
time. As with job design for individuals, additional opportunities such as inspection1
quality control, maintenance, and related tasks such as ordering supplies are often
assigned to the team in addition to their regular tasks.

Quality Circles (or) Quality Control Circle

Quality Circles have been extensively used in Japan since the introduction of quality
control techniques. Quality Circles usually include a group of 7 to 10 employees from
a unit (or across units) who volunteer to meet together. The group regularly analyzes
and make proposals about product quality and related problems. Recommendations
are forwarded to a coordinatingor steering committee once a week for an hour or so,
on company time. An employee elected from the group chairs the meeting. A high
degree of participation is created within the group.
Prior to the formation of quality circles, the group (the supervisors and members) is
trained by quality control experts and facilitators in all matters of quality control
concepts including statistical tools, participative group discussions, group dynamics
and co~nmunicationskills. The facilitators also help each circle in its linking with
other groups and with the overall coordinating committee. Groups are also encouraged
1)iagnosis to use:experts within the organization where their specialties are relevant. The QC are
and Intervention authorized by management to make changes without prior approval whenever feasible.

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.

Socio-technical Systems and Work Restructuring

The term aocio-technical system is largely associated with experiments of the
Tavistock Institute in Britain and have stemmed from the Tavistock approach. The
approach is to achieve a better "fit" among the technology, the structure, and the
social interaction of a particular production unit in the organization.
One of the earliest studies was in British coal industry. The consultant researchers
found that by reintroducing a team approach to mining coal, broadening job scope,
and lsrovitiing team pay incentives a number of benefits accrued, including improved
productivity, safety, and morale.
Corr~moncharacters in socio-technical systems are use of semi-autonomous work
teams, participative decision making, and considerable team autonemy in planning
and ,controllingproduction and in screening new team members, and pay geared multi
skills an employee is capable of.

Quality of Work Life Projects

Quality of worklife is a "attempt to restructure multiple dimensionsof the
organization"and to "institute a mechanism which introduces and sustains changes
over time." Aspects of the change mechanism are usually an increase in participation
by employees in shop floor decisions and an increase in problem-solving between the
union andl management.

QPJL Projects include some of the following features:

Voluntary involvement ofthe employees
Union agreement with the process and participation in it
Assurance of no loss ofjobs
Training of employees in team problem solving
The use of quality circles where employees discuss problems affecting the
pedormance ofthe plant and the work environment
Team participation in forecasting, work planning, and team leader and team
member selection
 Regular plant and team meetings to discuss such matters as quality, safety, Interventions in
customer orders, and schedules Organisational Change

Encouragement of skill development and job rotation within work teams

Skills training and Responsiveness to employee concerns

12.7 SELF-ASSESSMENT QUESTIONS

I) What is intervention and what are the reasons for intervention to be used in an
organization?
2) Examine as to when Person-focussed intervention could be used.
3) What is the rationality for using Team-based intervention?
4) 1 llustrate with regard to Mole-focussed intervention.
5) When do you use Survey Feedback?
6) Examine some of the structural interventions and how could they be used.

12.8 FURTHER READINGS

Organization Development (Behavioural Science Interventions for Organization
Improvemient),(Wendell L. French, Cecil H. Bell, Jr.) (Eastern Economy Edition).
(A Human Resource Strategy Approach) Managing Change (Adrian Thornhill, Phil
Lewis, Mike Mi Ilmore, and Mark Saunders), (Financial Times - Pearson Education).
Managing Corporate Change (Klaus Doppler, Christoph Lauterburd
Diagnostic Organizations (Methods, Models, and Processes) - Second Edition
(Michael I. Harrison) (Sage Publications)
 ORGANIZATIONAL CHANGE
Obj ecti\,es
After stud.yingthis unit you will be able to understand:
a approaches to Evaluating change,
a methods of Evaluating change,
a role of data analysis and feedback in evaluating change.

Structure

13.2 Approaches to Evaluating Change

13.3 Purpose of Context of Exahation
13.4 Evaluation and Action Research Approach
13.5 Purpose of Evaluation a.nd Strategies
13.6 Dlata Gathering Techniques
1 3.7 Dlata Analysis and Feedback
13.8 S elf-Assessment Questions
13.9 Further Readings

Effective evaluation and promo1:ion of change needs a systematic collection of data

that are a~~alyzed and presented in an appropriate form. Without the subsequent
- -

evaluation, one cannot be certain of change interventions' effectiveness. Evaluation

helps an c'rganizationto understand the outcome and impact of a particular interven-
tion. Also, it helps the feed forward cycle of further change initiatives. In most ofthe
cases, external consultants are iilvolved in the change process, and they leave the
organizatlon before seeing the effects of the planned interventions. Managing change
is not an cmasy process, and hence it is essential to get to know about the success and
failure of an intervention, which will have the benefit of assisting to learn about
managing change.
--
13.:2 APPROACHES TO EVALUATING CHANGE
To find the effects of change interventions, systematic research should be undertaken.
Any systematic evaluation depends upon the data and employing rational analysis.
One's belief and intuition does not supporta scientific evaluation. Therefore, the
collection and analysis of data should be done in a systematic way, independent of
one's own assumptions or guesswork

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.

13.4 EVALUATION A N D ACTION RESEARCH APPROACH

Within applied research, a distinction is often made between evaluation research and
action research. Evaluation research is concerned with testing of the effectiveness of
an action or activity with data gathered and analyzed on the basis of what is happen-
ing or has happened (monitor). Findings based upon the analysis of these data are
subsequently disscminated back,to the sponsor. A wide range of strategies including
experimentation, survey and longitudinal studies and a variety oftechniques such as
interview, questio~i~iaireand observation etc., may be employed.
Lewin first used the term 'action research' in 1946. Action research makes use of the
same strategies and data collection techniques that are used by evaluation research.
Action research differs from other forms of applied research such as evaluation
research due to an explicit focus upon action and in particular promoting of change
within an organization. In addition, the person undertaking research is involved in the
action for change and subsequently the application ofthe knowledge thus gained
elsewhere.
Evaluation Research
It commelices with a clear understanding by the person undertaking evaluation ofthe
action or activity that is to be evaluated.
In the first step, senior managers define the objective clearly. Like what is to be
changed? Where is the need for change etc? It includes finding out employee's opin-
ions towards their line manger's styles and skills, the senior management's commit-
ment to the changes, communication process, and the future direction of the organiza-
tion and employee's commitment to the organization. Data collection process is done
by applyi~iga variety of techniques like questionnaires, interviews etc. The final data
is analyzed and the findings reported to the organization. Based on the examination of
the evaluation report, further change interventions are made by senior management to
address issues arising out of the examination.

r-l
Initial action
or change
intervention

objectives
Related to
the criteria
for the
original
change
intervention

fulfill aims of
original change

Figure 1: Evaluation Research

Diagnosis A'ctionResearch
and Intervention
The promotion of change is explicit within the action research process. The action
re,searcllprocess commences with an initial idea for a change which is expressed as an
otjective. Fact-finding and analysis is carried out about the intended change to
generate an overall plan and decision about the first steps to be taken. The remainder3
of the first cycles involves revising the change intervention to ensure that it meets the
needs o Fthe organization using information gathered through the monitoring and
evaluation process. Further planned action steps are amended and implemented to take
account of unforeseen changes. Their effects are monitored and evaluated and further
amendments made (Fig.2).
The strengths of action research rests upon
Ha.ving a focus upon the change
thc: recognition that time needs to be devoted to reconnaissance, monitoring and
ev;iluation;
The involvement of employees (practitioners) throughout the process.
Schein ( 1995) emphasizes the importance of employee involvement throughout the
process so that they own up the change process. Once employees have identified a
need for change and widely shared this need it becomes difficult to ignore and the
prcssura for change comes from within the organization. Action research therefore
combines both information gathering and facilitation of change. The reconnaissance
stage is (oftenseen by employees as recognition ofthe need for change (Cunningham,
1995). F'lanning encourages people to meet and discuss the most appropriate action
steps and can help encourage group ownership by involving people in the change
process. These plans are then implemented. Once monitoring and evaluation have
taken place, change interventions can be modified as required.

planned action

implementationand

interventionas

planned action

implementation
and effects

Initial idea snd

criter~afor change
Reco~~t~aissance
(Fact finding and analysis)
E~ialuate
I
Plan action steps for
the intervention
Monitor
Imp~ementation
and eRec1s
l
L
Implement J
planned action
*PS
Figure 2: Action Research Spiral
 Evaluation of
13.5 PURPOSE OF EVALUATION AND STRATEGIES Organizational Change

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).

Case Study Strategy

Robson (1993:40) defines case study as the 'development of detailed, intensive
knowledge about a single "case" or a small number of "related cases"'.
This strategy is undertaken to conduct a research on change management within an
organization or part of an organization. The data collection techniques of a case study
include interviews, observation, and analysis of existing documents.
Diagnosis Exp~erimientStrategy
and intervention
Typically.,an experimental strategy involves
Definition of a clear hypothesis;
Selection of samples from known populations;
Allocation of these samples tb different groups of experimental conditions;
Introduction of a planned change to one or more of the sample groups;
Control of as many other factors as possible;
Comparison between the groups.

Longitudinal and Cross-Sectional Strategies

The final two strategies, 'longitudinal' and 'cross-sectional' offer two mutually
exclusive time perspectives for the other strategies..Themain strength of a
longitudin~alperspective is the ability it offers to evaluate change over a period. By
gathering data about people or events over a time, it may be understood the impact of
change (Adams and Schavaneveldt, 1991). In contrast a cross-sectional perspective
describes the incidence of a particular phenomenon, such as the information
techliology skills possessed by managers in one organization, at one
particular time.

--
--
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!;.

-DATA ANALYSIS AND FEEDBACK

13.7
-
Analysis and feedback are important in both evaluation research and action research.
Eva.luationresearch ends usually with the presentation of findings from the analysis.
In contrast a researcher involved in an action research project, perhaps as a process
consultant, is likely to be involved also in developing actions and revising the change
intervent ion as necessary.

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.

13.8 SELF-ASSESSMENT QUESTIONS

1) Explain in detail the two approaches, evaluation research and actions research
for evaluation.
2) Explain the varioi~sstrategies in order to evaluate.
3) Discuss different niefhods of collecting data for the purpose of evaluation.
4) What significant role does data analysis and feedback play in evaluation?

13.9 FURTHER READINGS

Adams, G . and Schvaneveldt, J. (1991) Understanding Research Methods, 2nd edn,
New York: Longman.
Cunningham, J .B. ( 1995) 'Strategic considel.ation in using action researchfor
improvingpersonnel practices', Public Personnel Management, 24(2), 515-29.
Diagnosis (Gill,.I. and Johnson, P. (1997) Research Methodsfor managers, 2nd edn, London:
nnd Intervention Paul Chapman. Moser, C.A. and Kalton, G. (1986) Survey Methods in Social
Investigation, Aldershot: Gower.
Robson, C. (1993) Real World Research: A Resourcefor Social Scientists and
Pr,uctitionerResearchers, Oxford: Blackwe lI.
Sauntlers, M.N.K., Lewis, P. and Thornhill, A. (1997) Research Methodsfor
Business Students, London: Financial Times and Pitman Publishing.
Schein, E.H. (1995) 'Process Consultation, action research and clinical enquiry: are
they the same?', Journal of Managerial Psychology, 10(6), 14-19.
Zuber-Skerritt, 0 . (1996) 'Emancipatory action research for organizational change
and management development', in Zuber-Skerritt, 0.(ed.), New Directions in
Action Research, London: Falmer press, pp.83-105.
-- 15 SKILLS FOR MANAGING CHANGE
UNIT

After going through this unit you should be able to:

unde:rstand key roles in managing change;
appreciate various steps involved in organisational change;
understand how to leverage structure and systems for managing organisational
change;
identify skills in managing organisational change.

15.1 Slmning the Environment

15.2 D~iagnosingthe Organisation's Capability
5 . Olrganizingfor Change: Strategy
15.4 Formulating A Strategy
15.5 Leveraging Structure
I:j.5.l Flat Structure
15.5.2 Network Organisiition
15.5.3 Cellular Organisation
15.ti Leveraging Systems
1 5.6.1 Strategic Considerations for Change in Appraisal Systems
15.6.2 Strategy of Step-by-step Change
1 5.6.3 Strategy of Level-by-level Change
1 5.6.4 Strategy of Department-by-department Change
15.6.5 A Mixed Approach
15.'7 Reward Systems
15 .:5 S'ystemsfor Career Development
15 .I3 C:ommunication Systems
15.10 Cultural Change as a Lever
15.11 Skills Required for the Role of A Change Agent
15.12 FLole of HRD In Managing Change

15.14 Self-AssessmentQuestions
15.15 Ekther Readings

15.1 SCANNING THE ENVIRONMENT

Ma~nagir~g change has become an integral part of a manager's job. Managers need to
have broad understanding of an environment surrounding their business and need to
constantly monitor external drivers of change. 'The external drivers of change could
be:
Market / customers;
Share holders;
Technology;
 Economy; Skllls for Managtng
Change
Social trends.
Managers need to pick up signals for change ifthey do not want to be boiled alive like
a frog. It also helps in assessing if the business is on the path of growth or otherwise.
The manager is also required to look at the 'stakeholders' in the business and assess
the nature of change and its impact on the business, in other words, monitoring trends
I
I and identifying issues which make one's organisation vulnerable. Understanding
t
change and surviving implies adapting to and influencing the business environment
t one operates in.
1
Hewlett Packard (HP) is a good example of adapting to change. Before 1987-1992,
HP used to sell around 12 'state ofthe art' measuring devices per month to specialised
and sophisticated customers and by 1997, it started producing 1 Lac 25 thousand
laser jet printers a week and has been distributing across the globe against mail orders.
In contrast IBM, with its huge success and market leadership in mainframe computer,
became complacent and did not see the writing on the wall in 1990s that customer
preferences were changing for personal computers. It has not been able to regain its
market position. The companies, which have been proactive are Shell, Microsoft,
Infosys and NIIT.
Learning from the lessons of companies it is desirable to allow each level of
management to scan the environment and act as a source of 'buy-in' change which
will help an organisation plan for the change before change overtakes one. As there
could be three types of managers:

I
1 Those who make change happen;
Those who react to change;

t Those who wonder when change has happened.

Diagnose Organisation Capability

I STRATEGY (
What is the apparent business strategy and
does it seem to 'fit' the enviroment and the

4 What people * Are the necessary * What is the existing

attitudes/skills gaps do?
* How capable are
managers?
* How appropriate is
pastlpresent?
* What is the culture?
systems in place to
make organisation
- Operational?
- People maintenance
- Reward systems
- communications
structure, i.e. functional or
divisional or business?
* Span of control, levels of
hierarchy, accountability,
degre of specialisations?
* Is the structure working?

Figure 1: Organisational Change

Role of Change Agent
--
15.2 DIAGNOSING THE ORGANISATION'S CAPABILITY

Organisation
I environment a Diagnose areas

external forces
inertia as levers of

Iiigure 2: Role of a Change Agent in Managing Organisational Change

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

Span of control, levels of

operational hierarchy, accountability,
Reward systems Specialisation
accountability, degree of
specialisation?

Figure 4: Business Strategy and Environment Fit

15.4 FORMULATING A STRATEGY

Organizational strategy will flow fiom the vision of the organisation. The vision
ought to be relatively constant however, business strategy needs to be aligned with the
change in the market. It needs to be pragmatic. Though the responsibility for
corporate strategy rests with the CEO,he alone cannot bring about change.
Rok of Change Agent The organisation and responsibility for bringing about change is shared at various
levels. It is often observed that people in the organisation look to the top for strategic
direction when there they reach a position of ambiguity. Howeveryitis desirable that
evely manager should be encouraged to be a leader in his or her own right and be,
encouraged to manage a part of the researches and provide inputs strategic thinking.
--
15.5 ]LEVERAGING STRUCTURE
--
There is a general perception that structure is diagrammatic presentation organisation
chart. But structure includes how people relate to one another, the ways things
happen, who is influential, how politics can be used to bring about change or how
momentum for change can be created. Effective change requires involvement of both
fotmal 2nd informal structure of the organisation.
Structure can be leveraged for change by bringing out reorganisation in the
organisation. Reorganisation or restructuring involves reallocating the resources
wlhere they are needed. Companies restructure themselves to reduce cycle time,
service time and become more responsive to customer needs. There is a clear trend
since 1'390s for organizations to reduce their layers of management to improve
efTicier~cy,reduce cost, and improve flow of inflation.
Some new forms'of &ucture have been described below.

15.5.1 Flat Structure

?'he vo:rtical, hierarchical ctrqctures with traditional organisation which worked well in
stable environment but are unsuitable for situations of dynamic change are being
h structures. N9-x. xstomer figures on the top and the segment figure at
placed ~ ~ ' tflqi
the bottom, taking the shape of an inverted pyramid.

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.

15.5.2 Network Organisation

Thl: recent focus on total quality and responsiveness to customer needs has laid stress
on horizontal processes in an organisation which eventually benefit the customer by
linking various elements of the customer/supplier chain. In this set up everyone is a
cu:stomer of some one else. Information technology has created network organisations
through telecommuting in which people form teams across the globe. However, some Skills for Managing
companies provide informal system for networking as a means of getting people to Change
share ideas like coffee room, smokers' room, where new information circuits develop
which promote creativity.
British Airways has designed physical environment it's corporate in headquarters to
promote networking. Some Microsystems and most Indian and Western computer
savvy organizations have corporate intranet linking all the employees through the net.

15.5.3 Cellular Organisation

Another way of leveraging structure is to create 'cells' within the organisation. A
collection of small teams with a high degree of autonomy is what constitutes a
cellular organisation. When a group reaches the size of about 50 people, it forms its
own 'cell' which is responsible for all the aspects ofthe organisation except payroll.
In this set up the 'cell' handles everything and there are no central staffdepartments.
An example of this structure is a Dutch firm called BSO, which is a software house
and co~isistsof 2000 people who work in cellular set up.

15.6 LEVERAGING SYSTEMS

It is often observed that the systems and business processes adopted by the
organisation in the past became outdated an inappropriate in the new context.
This has been observed particularly in late 1990s. The old systems act as a
drag on the ability of an organisation to go ahead with change. These systems may
relate to operational aspects, HRor organisational communications.
Systems can be changed but it is a slow and gradual process and very often it is
observed that the systems evolve over a period of time, therefore, reinsurance is not
that high. The system which has undergone change in organisations
or require change are as under.

15.6.1 Strategic Considerations for Change in

Appraisal Systems
Appraisal systems in 30% of organisations in India had been introduced with a view
to controlling the bellaviour of an employee, using it as a means of giving him
rewards, threats or punisliment, to make decision regarding salary increases etc. The
assumptio~iswith which the appraisal systems had been designedcontext.
Organiations are expected to treat their employees as human resources who can
contribute and bring about competitive advantage through their competencies.
Therefore, the command and controI method of appraisal needs to be replaced with
feedback, counseli~lgand mentoring. Some organisations have gradually moved from
annual corifidential review to, performance appraisal, performance management and
360-degree feedback systems. Since appraisal is linked with career decisions and
increments, these need to be s u ~ t a bmodified
l to suit an organsiation.
Considerable thought needs to be ~ i v c for
n changing the appraisal system. Movement
from system of annual confidential reports to open appraisal system needs careful
planning. Some of the approaches have been described below.

15.6.2 Strategy of step-by-step Change

This strategy would invohe gradual change over a period oftime proceeding in step
way. From nierely trait-based appraisals thcre could be a shift in trait plus
performance based appraisal. The performance-based appraisal could take into
consideration Key Performance ,Areas (KT1/Zs).After some period self-appraisal
Role o f Change Agent could be added to it. Their appraisal system can further be modified as performance
managenlent system.

15.,6.3Strategy of level-by-level Change

This strategy involved introducing new appraisal system at a particular level in the
initial stages and then extending it to other levels vertically upwards and downwards.
It r ~ i lbe
l moreconvenient to commence it at higher levels as the number of officers
involved will be comparatively srnaller and thorough understandingcould be
developed by involvingthem intensively, This strategy would work better in
organizations, which would be adopting totally different system from the earlier one.
For example, moving from behavioural dimension to performance dimension and then
to self-iippraisal and performance management system.

1!5.6.4 Strategy of department-by-department Change

This strategy involves dividing the organisation based on geographical distribution or
based on departments or functions. In this approach the change appraisal system
could l ~ introduced
e in the whole geographical area / region I department over a year
or two. The experience gained through this selected introduction of change can be
u~tilisedfor extending the new appraisal system to other regions and department. The
aldvantage of this approach is that the people involved in implementing this approach
at one region could serve as resource to other regionsldepartments, which plan to
introduce it. The small area ofjurisdiction brings about effective monitoring.

15.6.5 A mixed approach

Depending upon the nature of the organisation and the prevailing conditions therein,
any of the three or a combination of the above three approaches could be tried. As the
orgar~isationmay like to see the results, it may move at a slow pace in the beginning.
How~zver,having gained experience, they may decide to go at a macro level, region-
wise or unit wise horizontally and vertically across the organisation.
In reaspect of the strategy adopted by the organisation for introduction of a new
appraisal system, proper and systematic planning is essential to cope with the impact
and pressures created by the above mentioned changes.
-
15'7
- REWARD SYSTEMS
Reward is a kind of positive reinforcement of performance. What is reinforced or
rewarded gets produced again. But for deciding the reward the measurement of
periormance assumes great significance. The simple principle of Skinner's operant
conditioning advocates that let the person operate on the environment to get the
reill forcement. However, it is to be seen how reward system can be leveraged for
change. For deciding this, the following criteria for reward may be kept in mind:
whether to reward individual performance or group performance;
whether to reward 'soft' or 'hard' skills;
whether only performance is to rewarded or risk taking/cost/profits/salesl
innovation and effort;
whether rewards recognise one's contribution in cross functional teams;
designing cafeteria benefit system to offer choices to employees.

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.

15.9 COMMUNICATION SYSTEMS

With the advent of a variety of technologies, organisations have gone throughlgoing
through revolutionary communication processes ranging from an electronic mail to
video conferencing. While the impact of technology on communication system in
organsiations has been accepted, the challenge faced by organisation is to educate
people about the use of sophisticated communication systems. This will be another
skilled to be mastered by the change agent.

15.10 CULTURAL CHANGE AS A LEVER

Culture is the DNA of an organsiation. In organisations culture is observed in formal
as well as informal forms. The vision, mission, goals and objectives of an
organisatio~iconstitute a formal culture; however, attitude, behavioural practicesand
norms form part of informal organisation culture. Without understanding and
cha~inelisingthe energies of individuals and teams, any change brought about by the
organsiation cannot succeed. Cultural change can act as a positive instrument for
change. With liberalisation command and control hierarchy have diminished andthe
changing business environment requires a new set of attitudes and behaviours as a
genetic code which will guide the people to sail through uncharted waters.
The organisations having a strong culture clearly articulate and passionately
communicate the cultural values, in particular, to socialise and induct new recruits in
the organsiation. Organisations that have taken to cultural change are British Airways,
ONGC, WIPRO and others. The comnlitment from the top management and demon-
stration of practising the professed values are necessary to leverage culture for change.

15.11 SKILLS REQUIRED FOR THE ROLE OF

A CHANGE AGENT
The wind of change is sweeping the organisations across the globe and in the
uncertain times nothing is more certain then a constant change. The change agents
would require the following skills to be able to keep themselves and the organisations
a float in the future.

I A sensor of the business environment

I Vertical to horizontal functioning

1 Leadership at all levels 23
Role of Change Agent
REFREEZE CHANGE

Providing suppofi to sustain in embed change

I
1
IMPLEMENTING CHANGE

MANAGING TRANSITION

Incremental changes for improvement

-

COMMUNICATING EFFECTIVELY

Developing awarenesslwinning confidence

I
CHALLENGING THE STATUS QUO

Stirring the environmental of psychological discomfort

I DEVELOPING VISIONARY LEADERSHIP

- - -

Creating shared vision

1
I

PREDICTING AND MANAGING RESISTANCE

Mobilising commitment

DEVELOPING PROCESS OF CHANGEIPROMOTING

CULTURE

Figure 5: Building Blocks of Managing Change

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

With the advent of internet and web-based technologies, Human Resource

Development is experiencing a revolution in terms ofaccess, speed and affordability
across the globe. Web-based training is a form of distance education, commonly
k~iownas on line learning, e-learning or web-based instructions. The web-based
enviro~i~nent has changed the landscape oftraining. HRD professionals using the
web-based instructional methodology can assume the new role of e- trainer and
develop new compete~icieslike electronic system skills, technical competencies of
research skill and intellectual competency of visioning skills along with retaining the
trad itio~ialtraining competencies. They need to overcome technological and personal
barriers to be effective in the emerging environment. Trainee's role also has changed
into a self-directed and independent learner thus marginalizing the role of a trainer.
Besides tlie technology-based changes, there has been paradigm shift in the field of
training from 'pedagogical approach' to 'andragogical approach' -the training being
'learner-centred' rather than 'instruction-centred'. Another shift can be observed is in
instructional framework from -passive learning - 'objectivism' to 'constructivism -
acquiring meaning out of experience. Also, knowledge has moved from being 'fixed'
to 'flexible' promoting potential for change rather than being influenced by the
- provider.
thinking of i~ifor~iiation
Future projections indicate a number of changes based on technology moving an
organisation into a world of digital work place. The ability to decide on and use an
emerging array of learning technologies is becoming a required competency for HRD
professio~ialsto be a change agent. The trainer is expected to be 'the expert learner' to
enhance his h e r existing competencies to be effective in the e-environment. A new
concept whicli lias developed is learning in-real-time learning which can be leveraged
for developing and nurturing creativity for handling workplace related 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

To meet the increased expectations of their organisation in the changed scenario,

managers are required to focus more on deliverables of their work in terms of the
value they create. Their effectiveness has direct impact on business competitiveness
and therefore, demand for intellectual capital and organisational capability expect
more of tlie ~na~iagerial staff now than ever before. As far as organisational human
capability is concerned, HR professional ought to play a crucial role as the capability-
led growth comes not through geographical expansion but through the development of
less visible capabilities and soft skills.
Thus H R has four major tasks: to function as a partner in strategy execution; to serve
as an expert in organisatisn and execution of tasks; to adopt the role of employee
clia~npio~i
and to be a dynamic change agent. Training and development are powerful
mechanisms to bring about change.
 -

UJIT 16 MANAGING RESISTANCE TO

CHANGE
Objectives
After completing this unit you sliould be in a position to:
appreciate the nature of resistance;
understand sources of resistance;
plan action to manage resistance to change.

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

1 6.4 Sources of Organisational Resistance

16.4.1 lnertia of a Structure
16.4.2 Threat to Power Dynamics
16.4.3 Group Pressures
16.4.4 Blinkered View of Change

16.5 Types of Resistance

16.5. I, Emotional Resistance
16.5.2 Rational Resistance
16.5.3 Social Resistance

16.6 Implications of Resistance

16.7 OrganisationalCulture
16.8 Methods of Handling Resistance
16.8.1 Communicate Effectively
16.8.2 Participative Decision-making
16.8.3 Negotiation
16.8.4 Co-optation and Manipulation
16.8.5 Providing Support
16.8.6 Coercion

16.9 Techniques for Managing Resistance

16.9.1 Counseling
16.9.2 Force-Field Analysis
10.9.3 Co~nmitment~ h k i n g

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

1. Surfacing Make expression of resistance safe

Ask for it all
2. Honouring Listen
Acknowledge
Reinforce permission to resist
3. Exploring Distinguish authentic from pseudo resistance
4. Rechecking Probe

The Language of Resistance

In a change process, some gain and some lose. Resistance may show that some
persons are threatened by change. If resistance is not legitimised, it is likely to come
out in different ways of expressing difficulties with change. Various alibis are likely to
be given against the change process. In the absence of legitimate channels of exploring
the dissent, the language of alibis is likely to distract attention to non-issues. Murthy
has suggested a large number of alibis people use for resistance to change. This is
shown in Table 16.2 The more an organisation encourages and analyses resistance, the
less the alibis are likely to be used.
Role of Change Agent Table 16.2: Alibis for Resistance to Change
(From PVR Murthy's Managing Change, Unpublished)
--
Bmd theory alibis
1 This is all theory
2. Theory is different from practice
3. It is nice to hear and easy to say but difficult to practice
4. Ple have been doing it for thirty years
5. It is not the best solution
68. Let us get the best solsution then we shall implement it
7'. FVe have to get more facts
. Let us form a committee
lilnsuitable Alibi
'Me are not in Japan
'We should all visit Japan if we have to believe all that
'We are all divided by Caste, Community etc. So we can't bring changes
[t won't work in our country
We tried it before and it didn't work
The other company tried and gave up
No one can help us. Company is beyond repair
We are not yet ready
We don't have money for all these changes
We don't have time at all

Too risky alibis

1. We need consistency. We cannot keep on changing
2. We can't take risk..... you see
3. It is impossible
4. What will happen to the present people?
5. We need the change..... but you see
6. The customer will jump on us
7. The competitor will exploit our failure

Unacceptable to others alibis

I follow, but our people are bad
I understand but others cannot
It is not my problem
The problem is with the government
The problem is with the top management
Boss won't Iike it
All the problems are because of the top management's incompetency
My bosses should change first
The problem is with the mlddle management
The problem is with the supervisors
The union won't like it
The problem is with the inter-union conflict
The workmen can never understand
The old employees won't understand
The younger employees do not have patience
Our youngsters do not have maturity

Nla gains alibis

1. We are not paid Japanese salaries
2. What do I get out of the change?
3. Why should I work for the change?
4. Last year I worked hard, what did I get in turn?
5. Why do we have to stretch outselves?
6. 1 suggested all that long back. Nobody bothered at that time. Why should I listen to them now?
7. Benefits are limited, why trouble ourselves?
 Managing Resistance
16.3 SOLTRCES OF INDIVIDUAL RESISTANCE to Change

Various sources of individual resistance are discussed below.

16.3.1 Lack of knowledge

In situations when people do not have sufficient knowledge about the causes and
effects of change they feel anxious and stressed and consequently resist change.
Employees also resist change because it threatens their needs for security, self-esteem,
competence, status and social interaction. Irrespective of the nature of change it has
been found that employees make efforts to protect them from effect of change and the
reaction may range from simple complaints and grievances to passive resistance,
sabotage, absenteeism and slowing down of work. Resistance to change takes place
irresbective of the level of employee in the organization-whether one is white collar
or a blue-collar worker.
However, when change becomes inevitable, the employees try to offset the facts of
change by desire for new learnings / experiences and for the rewards that may come
with change. In that case changes are requested and sought for by employees. Change
reaction effects are seen in feeling of insecurity and the change of working situations
or job. Change can have cascading effect when one person receives promotion; it
leads to promotion of ten other people's at lower levels. This is indicative of change
reaction effects of a single precipitating event.

16.3.2 Selective Perception

When change is introduced employees are more concerned about how it affects them
personally rather than how it would affect the entire organisation. This is often
observed when mode of payment is changed or reorganisation is done. Also individu-
als assess the compatibility ofthe change with their belief and value systems.

16.3.3 Fear of Uncertainty

Uncertainty about the effects ofchange personally and professionally is another
reason for individual resistance. The threat perceived by the employees may be
imaginary, intended or unintended, big or small, direct or indirect. A number of fears
like loss of status, power, income and uncertainty about their ability to cope with work
-demand come in the way of accepting the change.

16.3.4 Aversion to Risk

Change threatens those who like comfort ofthe familiar. Change often requires
personal transition wherein familiar has to be destabilized. It calls for giving up the
status quo, unlearning or unfreezing the present to integrate and absorb new learning.
It is interesting that a number of individuals consider change to bring new opportuni-
ties. Research findings also support the view that positive approach to change results
in opportunities for individuals during the transition period.

16.4 SOURCES OF ORGANIZATIONAL RESISTANCE

Factor built in the organizational system also lead to resistance to change.
It has been observed that organizations are conservative and are therefore slow to
change.
Role of Change Agent 16.4.1 Inertia of a Structure
A number o Fbuilt- in mechanisms provides stability to organisations. Every
organisation has got its own systems, processes, policies and procedures, which ought
to be followed for uniformity and formalization of the process. Consequently any
changc: in the structural aspects has cascading effect on other related systems and
processes. This creates a hurdle in introducing organisational change. In organiza-
tions where structural changes are introduced, it takes long for people to accept and
assimilate the structural change.

16.4.2 Threat to Power Dynamics

Structural ct~angewith ensuing changes in decision-making pattern can destabilize
power relationshipsestablished over a period of time. Change in decision-making
process frorr~centralized decision-making to participative or democratic decision-
making can 1:hreaten managers effected by it.

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.

16.4.4 Blirlkered view of change

Any organization consists of four basic elements namely, task, structure, technology
and p'eople. Focus on any one of the elements of the organization will bring about
correspondiiigchange in other elements as well. Therefore, change cannot be intro-
duced in one sub-system without affecting the others. Change cannot have lopsided
and limited perspective.
Table 115.3:Forces of Resistance to Change in Individual and Organisation (From Watson, 1969)

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).

16.5 TYPES OF RESISTANCE

16.5.1 Emlotional Resistance

Emotional re:dstanceoccurs due to employee attitude and feelings about change.
Feeling;of insecurity, loss of self esteem, fear of the unknown, desire for status quo
andforinistnlst in the management are some of the possible sources.
t
I
I 16.5.2 Rational Resistance Managing Resistance
I to Change
This is based on reasoning, logic and disagreement with the fact. It may result from

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.

16.6 IMPLICATIONS OF RESISTANCE

For any change to be accepted by the employees cooperatively, it is important for a
manager to anticipate and handle the employees. Only looking at the technical and
logical dimensions of change will not help as change is finally to be accepted and
ilnplemented by the employees themselves. Recognizing the effect on social factors is
extremely important for the success of any change effort. It has to be borne in mind
that as people are different, their response to change would also be different which
may range from moderate support to weak support or even opposition to change. The
managers responsible for change need to develop a climate oftrust with positive
feelings towards most changes. It is observed that when management is not able to win
support of employees they use authority but if it is over used it will defeat the pur-
pose. Therefore, authority needs to be used only sparingly and the other methods
handling resistance to change can be tried out.

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.

METHODS OF HANDLING RESISTANCE

Researches have come up with established ways of handling change. These have been
discussed in the following paragraphs.

16.8.1 Communicate Effectively

One ofthe most effective ways to reduce resistance is to communicate with the
employees and help them see the logic behind introducing achange. It is often ob-
served that lack of knowledge and ignorance is cause of individual resistance and this
can be taken care of through communication on one-on-one basis or through group
presentations, circulars or reports. This strategy would work where source of resis-
tances is lack of knowledge and inadequate management employee relations and
communications.
Role of Change Agent 16.8.2 Par4icipative Decision-making
Since security and self-esteem are the underlying fears for resistance to change,
invohleme~it of employees in decision-making will bring down resistance and they will
get an oppcrtunity to express their opinion and views.
Such an approach will work when the employee sees that the management has em-
ployee interest in mind. However, the flip side ofthis strategy is it is time-consuming
and may sometime lead to a poor quality decision.

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.

16.8.4 Co-optation and Manipulation

Co-,optationinvolves manipulat;ionor participation. Essentially it offers key role to
the 'leadersof a group resisting change in the decision-making process. In this method
leader's opinion is invited largely for endorsement of the change agent's views.
Manipuli~tioninvolves dist0rtin.gfacts or withholding unacceptable information and
malting LIPfacts in a way to look attractive and acceptable. Jn such situation the
change agent will loose its faith before the group.
Both cooperation and manipulation are inexpensive method to win over resistance.
This w o ~ ~work
l d so long as the affected party is not aware that they are being ex-
ploited or cheated.

16.8.5 l'roviding Support

Resistar~ceto change can be minimised by providing support to employees to alleviate
their anxiety and fear. Organisations use employee counseling or mentoring and
therapy to take care of negative effects of change. Organisation like TISCO have
provided training in new skills, short paid leaves of absence and absorption in other
concerns. The shortcomings of this tactic are that it is expensive and there is no
guarantee of success in adopting this tactic.

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.

16.9.3 Commitment Charting

In any change there will be people who gain and others who loose. Therefore, in order
to get the commitment of people who are likely to loose, it is important to handle them
with care, as they will be sensitive to any action. For a change to succeed it is impor-
tant to have a critical mass and also to minimise the pain it causes to the affected. In
order to do that a chart can be prepared listing the names of key players and their
commitment level to the change. The chart will indicate the status of people who have
commitment at present and whose commitment needs to be ensured for the change to
be successfuI. Also the people who have no commitment need to be focussed for
gaining commitment.
Watson (1 969) has suggested some ways of reducing or preventing resistance. These
relate to ownership of change, nature of change, and the process of changing.
Ownership: Resistance is likely to be low ifthe change is perceived as being the need
of and suggested (owned) by those affected by it, and when it has the top management
support.
Nature of change: Resistance is likely to be less if change is seen as reducing prob-
lems and burdens, conforming to the core values of the group, offering new and
interesting experience to the group, and does not threaten autonomy and security.
Change Process: Resistance can be reduced by joint and agreed diagnosis of the
problem, consensus on the broad design of change, listening to "objections" (and
lear~iingfrom them), periodical review and feedback, development of high interper-
sonal trust and cohesive teams, and openness to revision.
Various sources of resistance and the possible coping mechanisms are sumrnarised in
Table 16.4. These are briefly discussed below:
Table 16.4: Sources of Resistance and Coping Mechanisms

Sources of Resistance Coping Mechanisms

I. Perceived peripherality of change Participation in diagnosis
2. Perception of imposition Participation and involvement
3. Indifference of the top management Active support from the top
4. Vested interests Fait accompli
5. Complacency and inertia Fait accompli
6. Fear of large scale disturbance Phasing of change
7. Fear of inadequate resource Support of resources
8. Fear of obsolescence Development of skills
9. Fear of loss of power Role of redifinition and reoeientation
10. Fear of overload Role clarity and definition

I) Perceived peripherality of change: If the executives perceive that the change

being introduced in the organisation is not critical for them or their units, they
are likely to resist such a change. Implementation of change can be effective if
the change introduced is seen as critical and useful. This can be achieved by
Role o f Change Agent involving the concerned managers in the diagnosis of the issues or problems, so
that they can appreciate the need for change. Their attitude to the innovation
introduced will then be positive.
2) Perception of imposition: Similarly, if the managers in an organisation see the
change as being imposed by the corporate or the head office, they are likely to
resist the change. Such resistance can be reduced by involving them in the
introduction of change at several stages. This can be done through seminars,
work groups to evolve the various parts of the change programme, and task
forces to work out details of implementation. Participation of the managers at
various stages of the change increases the commitment to change.
3) Indifferenceof the top management: The behaviour and attitudes of the top
management are critical in the implementation of change. If the top management
do not show much enthusiasm or interest in the change, the people at the lower
level will put up increased resistance to it. The top management can show their
interest by frequently getting information and feedback on the progress of the
change, participating in some seminarsorganised to discuss the experiences,
meeting new occupants of new roles created as a part of the change, providing
positive strokes (encouragement and appreciation) on the success experiences,
and mentioning the experiment in the significant documents such as the annual
report, etc.
4) Vested interest: Change produces some disturbance, and sometimes some
dislocation. For example, if an organisation creates new units, which are located
in the smaller towns, people moving to the smaller.towns from capital cities will
face problems and experience inconvenience. As a resuslt of this they are likely
to resist the change. They may, of course, give different reasons, which may
appear logical. However, once they go and work in the smaller towns, they may
enjoy the change a ~ may
d see its positive aspects.
5) Cornplacency and intertia: As a general rule change produces discomfort.
People develop complacency while being in one state. The change of state is
somewhat painful. The solution ofthe problem is to introduce c h e g e and help
people experience new conditions. Then the resistance usually goes down.
6) Fear of large scale disturbance: In a large organisation there may be a genuine
fear that proposed change is likely to lead to some changes with unpredictable
consequences. This is particularly true if the proposed change is a sensistive
area, and requires special skills. As already discussed, phasing ofthe change
programme may reduce resistancearising out of this dimension. Resistance to
change is not always bad. It plays a positive role in indicating the areas of
potential failure or problems, which may come in the way of the effectiveness of
the change or system. Preventive sanction such as experimentation,adjustment,
phasing, etc., may be helpful.
7) Fear of inadequate resources: Resistance may also increase if the
implementation of change requires additional resources in the form of new skills,
add ~tionalmanpower, or budget. Provision of such resources support may
reduce resistance. It may, however, be examined whether there is genuine need
for fhe resources. For example, if a new unit is created with greater autonomy
the :;upport of planning, pr:rsonnel and technology may be provided to help the
units to succeed in meeting their objectives.
8) Fear of obsolescence: Resistance to change may also be high if the change
requires new skills and the existing people may feel that because of lack ofthose
skills they may become obsolete. This may be a real threat. Resistance can be
partly reduced if the concerned people are given orientation and are trained in
the new skills needed. For example, introduction of the HRD may succeed if the
 existing functionaries in the personnel or organisational planning departmentsare Managing Resistance
to Change
given enough training in the new function so that they feel confident in carrying
out tliese effectively.
9) Fear of loss of power: Sometimes resistance to a change is high if there is a
feeling that as a result ofthe change some roles will lose power. For example,
creation of new planning roles may raise such a fear, as the planning functionar-
ies may not get tlie operational powers. Or creating of a new unit may "deprive"
tlie existing top managers oftlie operational powers being delegated to the units.
Such resistace can be reduced if tlie roles are redefined and redesigtnated so that
the concerned role occupants can perceive that they may have different kinds of
power which may be of a higher order, although different in nature. The involved
roles may be helped to realise the power.
10) Fear of overload: If some people feel that the change will increase their work
load, tliey are likely to resist change. This may happen if they perceive new
filnctions being assigned to their roles. However, iftheir roles are defined, and
tliey are able to prioritize the functions, and decide which functions can be
delgate to their subordinates, tlie resistance can be reduced. This would require
se~ninarson role definition and clarity, and negotiation for delegation of some
functions.
Coping strategy to be adopted may also depend on the situations. Malieshwari (1991)
has suggested overall six strategies each of which would work in a special situation:
education and com~nunicationparticipation and involvement, facilitation and support
(e.g. training in new skills), negotiation and agreement (e.g. modify details),
manipulation and cooperation, explicit or implicit coersion.

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.

16.11 SELF-ASSESSMENT QUESTIONS

I) Wliy do people, in organisations, tend to resist change? Explain instances of
resistance to change in your own organisation and the effectiveness of
I IManagement strategies to overcolne the resistance.
2) Wliy do individuals and organisationsresist change?
3) What are tlie sources of resistance? Explain coping mechanisms to resist the
cliange.
4) Discuss how it is possible to manage resistance.

16.12 FURTHER READINGS

There is excellent material on resistance to change in chapter 9 of W.G. Bennis, K.D.
Benne and R. Chain (eds.) The Planning of Change (Holt, 1969,2nd edition), includ-
ing positive aspects of resistance. G. Watson's reading in that section is still a classic.
Role of Change Agent H.B. Karp in "A positive approach to resistance" in 1988 Annual: Developing
Human Resources (pp. 143-146) edited by J.W. Pfeiffer (University Associates
1968), Karp has discussed positive aspects of resistance to change and the strategy of
using resistance to make change effective.
Chapter 22 in Udai Pareek's Orqanisational Behaviour Process (Rawat, 1988)
discilsses various coping mechanisms for resistance to change.
Rogar Plant's Managing Change and Making sit Stick (Grower, 1967) is a good
source for dealing with resistance.
Some recc:nt experience of management of change in India have been reported in
Management ojChange through HRD edited by B.L. Maheshwari and D.P. Sinha
(Tat,aMcGraw Hill, 1991). Chapter 1 by Maheshwari also deals with the manage-
ment of resistance.
P.V.R. Murthy in "Management of Change"(unpublished) has given a list of some
generally expressed excuses for the change not accepted. These have been cited in this
unit.
Argyris, Chris, 1973, The CEO's Behaviour: Key to Organisational Development,
Hanlard Elusiness Review, March-April, pp. 153-162. .
UNIT 17 ROLE OF LEADERSHIP IN
MANAGING CHANGE
Objectives
After reading this unit you should be able to:
a appreciate various roles of a leader in managing change;
a familiarise with transactional leadership skills;
a differentiate between transactional leadership and transformational leadership;
a appreciate key competencies in change agents;
a understand the processes for leading change.

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

17.5 Leading Change: Process

17.5.1 Establish~ngRelevance
17.5.2 Asking Right Questions
17.5.3 Changing the Mindset
17.5.4 Declaring Early Victory
17.5.5 Becoming Your Own Competitor
17.5.6 Leading Change Involves Coalition

17.6 Understanding that Success can be a Paradox

17.7 Creating a Learning Organisation
17.8 How to Make an Organisation a Continual Learner
17.9 Every Manager an Agent of Change
17.10 Summary
17.1 1 Self Assessment questions
17.12 Further Readings

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.

--
-
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.

--
17.3
DIFFERENCES BETWEEN TRANSACTIONAL
APJD TRANSFORMATIONAL LEADERSHIP
--
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

An effective change leader requires clarity of vision, knowledge of what is to be

changed and skills to implement change. The skills needed by the change leader is as
follows.

17.4.1 Clarity of Goals

By goal clarity implies tlie strategic intent. A direction and intense intuitive response
to tlie organisation situation and to drive the organisation to the ideal of sustainability.
As change agent the role of a leader is to be a part of the process by which the impli-
cate order i~nfolds.
I

17.4.2 Clarity about Role

It is important for a leader as a change agent to identify a viable an effective role in
nurturing the future where everything appears to be a roadblock. It is to be under-
stood by the leader that tlie course of change directly cannot be affected by the leader
r himself but at times it may be desirable to wait and watch to mentally reflect on the
process of change. Therefore, an assessment oftiming and the skill becomes an
important issue skill.
It rnay be desirable to have a disciplined in action to consolidate inner feelings.

17.4.3 Professionalism and Knowledge of Subject

The leader is required to have personal and professional competence. Thorough
! understandi~igabout various dimensions of change- the nature ofchange, its impact on
I various elements ofthe organisation will facilitate execution ofchange. Without
I thorough knowledge of tlie subject, he is likely to be mislead; besides he would be in a
better positio~ito handle resistarice if he understands the technicallfunctional aspects.

17.4.4 Creativity and Innovativeness

For leading change it is important for tlie leader to help develop new ideas, models,
application oftechnology that differentiate the organisation from the run of the mil1
and help it stand apart.

17.4.5 Collaborative and Networking Skills

Change requires collaborativeefforts, therefore skills to work with people, making
connections within arid outside tlie organisation are important to extend organisation's
reach, proriiote its offerings and energizing people.

17.5 LEADING CHANGE: PROCESS

One of the most quoted examples of bringing about transformation in an organisation
is that of Lee laococca, Chairman of Chrysler Corporation who brought a turnaround
in his company from bankruptcy to profitability. Apart from 'trimming the fat' among
the managerial staff, he changed tlie company's cultural values from that of feeling
losers to feeling winners. He used internal communication system and advertisements
to reinforce these changes.
The role of a leader is to facilitate cliaiige that helps in improving organisational
perforniance. But the challenge before a leader is how to be effective in the face of
dissatisfaction, disco~nfort,dislocation and increased stress among people. Various
Role of Change Agent organisation adopt various strategies. One ofthe well known model of change has
been giver1 by Kurt Lewin. The model advocates that change goes through three
processes:
Unfreezing dmovement to a new state d Refreezing
Eac!n ofthese phases is extremely important and requires the leader to take concrete
steps. Unfreezing involves breaking away from the way things have been done in the
past. Movement to the new stage involves identifying and trying innovative ways to do
things or doing new things. Refreezing involves stabilising and reinforcing the new
ways or riew things to do.
Kurt Lewin's second change model provides an interesting framework for expediting
the acceptance of the change process. His force-field model describes that majority of
the situations exist in the form of dynamic equilibrium. He believes that the balance
would exist only when forces driving change are counterbalanced by the forces
restraining change. This model also acts as a reality check.

rE - Present Balance Restraining Forces

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.

17.5.1 Establishing Relevance

I t is not enough for the management to create a sense of urgency but in order to get
trig11 It:vel of commitment from employees they need to see the relevance of change. In
other words managers need to get into the shoes of employees and see from the
elnplclyees perspective about the impact of change.
.lack \Nelch in his efforts to bring about change at General Electric (GE) put forth
I2efon: the workers the view point that employees needed to learn new skills not for life
time t:mployment at GE butto acquire employable skills with which they could find
.job as well when the skills were not required at GE. In other words he presented the
concept of change as an investment by the employees in their future employability and
not merely a means of improving GE's performance.

17.5..2 Asking Right Questions

The starting point ofany change process is inquiry, which means asking relevant and
strategic questions. People are also required to visualise the future and identify
various possible scenarios. One of the methods to take initiative could be
benchmarking against the best practices or the set up internal benchmark to improve
perfi~rmance.The people are more likely to commit themselves to the new realities
when they realize that the changes are inevitable or certain changes are possible.

17.5.3 Changing the Mindset

Trainsforming individuals can bring about organisational transformation. The process
starts with the changing oneself. The change master requires candid self appraisal and
see if he has the qualities- the flexibility and understanding. It is important because
I every word spoken or every action taken by the change leader either reinforces or Role o f Leadership in
under~ninesthe change efforts. Havingdone that he needs to create an environment, Managing Change

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.

17.5.5 Becoming Your Own Competitor

Leadership results from competing against once own achievement than against
conlpetitors only. This spirit pro~rioteslearning, experimentingand evolving. By
doing so one can avoid corporate arrogance which may cause complacency.

17.5.6 Leading Change Involves Coalition

Coalitions are higlily beneficial in bringing about change. Firstly, they help in having
a broad base of ideas and a broader perspective. Secondly, by involving a large
number of people the Iikeliliood of support for change increases.
- -- - - - --- - - - -

17.6 UNDERSTANDING THAT SUCCESS CAN BE A

PARADOX
Executives need to be conscious that the change is not an end itself and is acontinu-
ous process even though one may refreeze the change behaviour. There is need for
continued movement forward otlienvise there is risk of falling back into the traditional
processes. It is interesting to note "in an environment of unceasing change, few
business ideals remain useful for long after while, even successful concepts must be
abundoned "(Noel Tichy and Stratford Sherman).

17.7 CREATING A LEARNING ORGANISATION - - - - - - - -- - - -

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.

1'7.8 HOW TO MAKE AN ORGANISATION A

CONTINUAL LEARNER
In order to make an organisation learning organisation the most important tasks
managers are required to perfbrm is to formulate a strategy. The strategy issued
clearly gives commitment ofthe organisation to change innovation and continual
irnpro\.ement. Having done that the next step to be adopted is to redesign the
organisational structure. This may involve reducing the layer, merging departments,
forming corss-functional teatns by blurring the boundaries between departments and
encouraging interdependence among them.
The 1a:;t but the least measure to get adopted is to change the organisational culture.
This h,asto be done with a two pronged approach - through strategy and through
b~ehavi,our.This involves management support for taking risk and tolerating failure
vvhen they occur. Alongwith people who take risk need to be rewarded and openness
is to bl: encouraged at work place. When the organisation in the learning phase there
will be inter-functional conflicts and disagreements. By openly discussing the conflicts
and ambiguities the organisations collectively becomes more intelligent than when
j~eoplehave been working individually.
,4 question often asks whether change is possible and whether resistance to change its
culture bound. Also a debate is found ifthe change champions adopt different mea-
lsures in different cultures.
Cultures are different in terms oftheir beliefs and their ability to influence their
environment. The culture which are open and where people feel that they can domi-
nate the environment, there will be favourable or proactive view of change. However,
in countries which are under rulers and feel subjugated to their surroundings will have
lukewarm approach to change. Culture variations are also observed in the countries
focussed on long term or short term change. Countries like Japan and India have
considerable patience for positive outcomes from change efforts. However, countries
in tht: west in particular USA and Canada seek faster change results. Also power
distance can influence implementation of change. In high power- distance culture
there will be autocratic approach to implementation whereas in low power distance
culture democratic methods will be used.
Change champions prefer 1.0 work closely with top management to get support for
innovative activities in high power distance cultures. It may be concluded that the
change champions will a1tc:r organisational strategies to be affected to reflect cultural
values.
 Role o f Leadership in
17.9 EVERY MANAGER AN AGENT OF CHANGE Managing Change

While creation of a learning organisation is a top management task, the onus of

co~itiriuouslearning, changing behaviour and bringing about improve~nentsmust
devolve down to each manager. An important aspect ofthe functioning of every
manager will be his or her ability to continuously contribute to change. As distinct ,
from tlie concept of Internal Change Agent in OD theory where specific individuals
are identified as internal change agents to work with external consultants in a one time
change effort spearlieaded by top management, it is important for every manager to
assilnie tlie responsibility forcontinuouschange in a continuously changing environment.
The si~ccessfi~l
manager wlio is oriented to continuouschange and improvement will need to:
1) Be a good learner: The manager must continuously keep in touch with the
relevant environment including competition, other business organisation, and
ci~stornersin order to be alive to the need for improvement and the possible ways
of improving. Tlie manager must also learn from peers within the organisations
as well as from hislher own past experiences.
2) Be open to changing own behaviour and practices: The successful manager in
today's enviro~i~nent is not necessarily the one who has all the answers, or who has
done all the riglit things in the past; he or she is the one who is willing to ask 'Five
Why's' about everything including own behaviour and work practices in order to get
to the root of tlie problem and fixing it so the problem does not arise again.
3) Be a good teacher: Bringing about changed behaviour ofteam members is the
responsibility of every manager. He or she must coach, teach and help subordi-
nates to illiderstand tlie changes in the operating environment, to appreciate the
corresponding need for changed organisational response, to experiment with
cliange in their own behaviours and practices and then to systematise and
i~istiti~tional
ise tlie changed practices and systems.

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.

17.1 1 SELF-ASSESSMENT QUESTIONS

1. I n the present business environment describe the role ofa leader in manging
organisation wide change.
2. What people competencies are needed for a leader to be effective?

17.12 . FURTHER READINGS

Kotter, John, Leading Change, Harvard Busi~iessPress, 2002.
Grei ner, L. Evolutions and Revolutions as Organisations Grow, Harvard
Business Review, July-Aug. 1972,37-46.
Nadler, David A. and Tushman, Michael L. Beyondthe Charismatic Leader:
Leadershil).for Organisationul Change, California Management Review,
Winter, 77-97.
UNIT 18 MANAGING TRANSITION
Objlecti~~es
After reading this unit you should be able to:
Understand the concept of transition
Understand various stages of transition
r Appreciate the role of a leader in managing transition
Coml>rehendthe process of managing transition

Structure

18.2 Transition as a Concept

18.3 Rules of Managing Transition
1 8.4 Sta:,;es in Transition
18.5 Process of Managing Trar~sition
18.6 Role of a Leader in Managing Transition
18.7 Sunimary
1 8.8 Sell'Assessment Questions
18.9 Further Readings

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.")

--
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.
........................................................................................................................
........................................................................................................................
........................................................................................................................
........................................................................................................................
b) List any three examples where transition phase is followed by a bigchange.
........................................................................................................................
........................................................................................................................
........................................................................................................................
...................................................

18.3 RULES OF MANAGING TRANSITION

Tra~isitionis different from change and it is basically a psychological reorientation to
effectively deal with change. To manage transition successfully, it is essential to
define certain set of rules. he number of rules may vary from organization to
organization. 'These rules [nay inturn form the stages to:
 Role o f Change Agent
1. End before you begin: For anything new to begin, it is essential that the
old one be ended first. For example, an individual wants to buy a set of new
clotlles according to the latest fashion, he/she has to give up the old ones first
and then go for the new ones. But the old ones cannot be thrown just for the
sake of ending, they must be discarded in such a manner so as to not form a
junk yard. This means that the old ones should be managed properly to get the
new ones. Same rule applies in managing organisations.

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

5. Transiition as a source of renewal: If managed effectively the development

in the transition phase can leati to new ideas, innovativeness, zeal to work and
a will to al~ceptchange easily. This intum will decrease the stress and thereby
;\ increase tlie efficiency. In this case if the energies of the employees are di-
rected positively, work efficiency of the employees improve.
i

6. Transi1:ion period varies: It is normal for an individual to go there the

same these stages of transition but the few of transition varies from individual
to individual. Some may accept the change easily while others may stick to
there old system.
--
18.4 STAGES IN TRANSITION
--
Transition is said to be a slow process which ultimately leads to change. The reason
to this can be attributed to the following three stages, the individuals involved need to
undergo. These stages are emotionally demanding and are a follow up to the rules for
managing transition.
The three stages are as follows:

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:

18.5 PROCESS OF MANAGING TRANSITION

It is very difficult to develop a set pattern for managing transition. As discussed
earlier, the different set of rules are applicable to the organisation/individualsat
different periods. If the organisation is going through a transition phase, first of all it
becomes essential for the manager to prepare a checklist of all the dos. It is seen that
many organisation going in for mergers, acquisitions or any other significant
organizational restructuring fail to meet their objectives just because they do not pay
attention to the need ofemployees. Therefore, the checklist, which follows becomes
important in the future of the organisation. The checklist may consists of the
followi~~g questions to be answered.
Whether the organisation is ready for change or not?
Whether staff of the organisation are ready for change or not?
Whether the public is ready or not?
Whether the guarantors of the organization are ready or not?
Many lnore questions come up when the organisation gears up for change.
The process of ~nanagingtransition includes a detailed transition plan and all the pros
and cons must be discussed. The following phases usually occur in the organisation,
which is trying to manage transition:
Role of Change Agent 1. Accelptance: This phase is said to be a crucial phase where organization tries to
test the acceptance of the change within a set sample.
2. Outsourcing: In this case the company has to demonstrate their readiness to go for
change before the full-fledged operations start. At times this testing plan may create
prohlorr~s,as it may not give the desired results. Therefore acceptance phase is said to
the most relevant phase to a new service.
3. Decision Making: This is said to be the final phase for the implementation of the
plzu11. If the acceptance phase works well, the company can go for change and manage
the transition.
The process of managing transition is unique not only to an organisation but also to
each situation. However, the following suggestions can be kept in view:
1. There is need to describe the nature of change and the need for such change
2. Carehl planning of the details of change needs to be carried out with proper
schedule and communication plan.
3. A person may be earmarked for this work.
4. There is need to understand who is required to give up what and how it is
affecting their career and life
5. Whilegiving up the past a decorum has to be maintained and due regard is to be
given to people's feelings while undergoing transition
6. The~eis need to have constant communication with people which emphasises
relationships and concern
7. It is important to have temporary teams to monitor transition that can alert the.
lcader to unexpected problems.
Fillally, the manager needs to articulate the new behaviour and attitudes needed for
change !situationand encourage modeling, provide practice and rewards for desired
attitudes and behaviour adopted by them. Providing coaching for change can help
leaders to be honest and confront hisfher fears and concerns with the coach and gain
personal insights and awareness of the transition process. The dynamics of transition
requires a personal coach and is generally not covered under the traditional leadership
training programmes.
~ a n a ~ i n ~ t r a n s successfully
itio needs providing the space to get used to
leilving one situation and arriving at another. Leader needs to create a leading
sp,ace,which allows people to plan and prepare, review where they have been
and take stock of the future. Givsn the fact that human being is highly adaptable, the
job of the management is to create a forum within which people are protected
from the weight of the organization. Demand for too much of productivity too early
will stifle change.
It is said that for change to be managed it has to be manageable. The change
has to be broken down into small parts for people to understand and adapt. These
parts need to be realistic and achievable. The participants need to be encouraged for
their self-confidence and confidence in their abilities. The most difficult part of "
change is to have it started but once having started it can be continued step-by-step.
It needs to be monitored and the momentum has to be maintained. The momentum
can be maintained by creating small wins and by rewarding and creating role models
of the p:ople who were trying to promote the change behaviour. Such change
agents need to be singled out by the organsiation, made visible and rewarded
for the~rperformance. The above will go a long way in making change
in!;titutionalised.
 Managing Transition
18.6 ROLE OF A LEADER IN MANAGING TRANSITION
Leading change will succeed only when the leaders understand the art of handling the
tra~isitio~iprocess. Tliey have to bear in their mind that it takes time to come to terms
witli necessary change. Tliey also need to understand what are the reasons behind
people not embracing change-is it their rigidity, ignorance, rejection or
hostility to tlie new initiative. It has fo be clearly understood by them that transitions
are not tlie change themselves but these are the conditions that are holding people back
and are likely to obstruct cliange becoming a reality. Organisations involve people
mostly witli technical, operational or financial skills in bringing about change.
But the most important aspect is leading people to transition. Such people need to
have a good understanding of human behaviour or should involve acolleague,
confidant, coach or cblisu~tantto help him and help his people through transition.No
leader can effectively handle change unless he is prepared for managing a
transition. Some organizations involve transition adviser who works collaboratively
with each leader to assess the leader's place in the three-stage transition. Helshe
then lielps leader to leverage ability to handling the current situation in a
customize way.
Normally the people in transition expect the following from the leaders.
A description of tlie part of tlie old system that is over and the part, which is not,
and what is tlie appropriate time to say goodbye to it.
Help during tlie neutral stage, which is said to be the most confirming stage of all
so they are able to adjust to it without much stress.
Guidance as to how to capitalize on their time in the neutral zone.
Help in refocusing their changes for making an effective new beginning.
The tinie and adequate resources to review the transition phase, in turn planning
to make the next one easier.
Going tliougli tlie discussion, we can say that there is no set answer to the question
related to managing transition but by and large, it is the role ofthe leaders to develop 3
effective coiiimunication with Iiis/her employee to manage the transition.

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