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					Change Management




 Prof. Rushen Chahal
Principles of Change Management
Why Change Management?

The basic goal of strategic management
process is to make fundamental changes
in how business is conducted in order to
help cope with a new, more challenging
market environment.


The only certainty in business today is change
  Why Change Management?



 A company’s management must be
ready to push for change in the
strategy and organization architecture
so that it can adapt, survive, and
prosper when facing a new competitive
reality.
  What is the nature of organizational
               change?

Planned change …
      • Occurs as a result of specific efforts of a
       change agent.
      • Direct response to perception of a
       performance gap.

   Unplanned change …
     • Occurs spontaneously or randomly and
      without benefit of a change agent’s attention.
     • Acting immediately is the appropriate response
      goal
  What is the nature of organizational
               change?
External forces for change:

 Global economy and market competition

    Local economic conditions

    Government laws and regulations

    Technological developments

    Market trends

    Social forces
  What is the nature of organizational
               change?

Internal forces for change:

 • Arise when change in one part of the organizational
   system creates the need for change in another part
   of the system.

 • May be in response to one or more external forces.
  What is the nature of organizational
               change?
Organizational targets for change:

           Tasks

           People

           Culture

           Technology

           Structure
Change Management Process
Key issues:

         • The change process goes through a series
         of phases that, in total, usually require a
         considerable length of time.

         • Skipping steps creates only the illusion of
         speed and never produces a satisfying result.

         • The critical mistakes in any of the phases
         can have a devastating impact, slowing
         momentum and negating hard-won gains.
Criteria for Successful Change Process                  (Richard
Beckhard and Reuben Harris)

                        Transition State
                              (C)
   Current State                              Future State
        (A)                                       (B)


The organization is moved from the current state to the
future state – in which the design is actually installed or
implemented.
The functioning of the organization design in the future
state meets expectations, or works as planed.
The transition is accomplished without undue cost to the
organization.
The transition is accomplished without undue cost to
individual organization members.
Change Management Process
by Christensen, Marx and Stevenson
The first step of any change must be to assess the level
of agreement in the organization along two critical
dimensions:

       1. The extent to which people agree on what they
          want – results, values and priorities, and which
          trade-offs they are willing to make in order to
          achieve those results.

       2. The extent to which people agree on cause and
          effect - which actions will lead to the desired
          outcome?
Change Management Process
by Christensen, Marx and Stevenson
Four potential scenarios:


        1. Organizations in which the employees share
           hopes for what they will gain from being part of
           the organization even though each might have a
           different view of what actions will be required to
           fulfill those hopes.

        2. Employees with little passion for the goals of the
           organization but are willing to follow the
           procedures if they agree that those actions will
           produce the needed results.
Change Management Process

Four potential scenarios:



          3. Organizations in which the employees agree
             on what they want and how to get there –
             these organizations cultures are highly
             resistant to change.

          4.The employees do not agree either on what
            they want or on how the world works.
Change Management Process
by Christensen, Marx and Stevenson

In order to choose the right tools to foster
cooperation, managers must assess where
their organization lies.

The authors group the tools of cooperation into
four major categories: power, management,
leadership and culture
Change Management Process: tools
for cooperation

Power tools:
Force, coercion and threats.

These are the only tools that will elicit cooperation when
members of an organization share little consensus on
either dimension of the agreement.

These may include: negotiation, strategic planning &
financial incentives.
Change Management Process: tools
for cooperation
Management tools:

Coordination and processes including training,
standard operating procedures and measurement
systems.

For these work group members who agree on
cause and effect but not necessarily on what they want
from their participation in the organization
Change Management Process: tools
for cooperation
Leadership tools:

These are results orientated rather than process
orientated and can elicit cooperation as long as there
is a high level of consensus that a change is
consistent with the reason employees have chosen to
work in the enterprise, even if consensus is low on
how to achieve change want from their participation in
the organization
Change Management Process: tools
for cooperation
Culture tools:
In organizations with a deep consensus on priorities
etc, employees will cooperate almost automatically to
continue in the same direction.

In organizations with strong cultures, people
instinctively prioritize similar options. Organizations
with strong cultures can in many ways be self
managing. However, this strength may make them
highly resistant to change.
 Change Management Process
 Procter & Gamble case:
In 1999 Procter & Gamble’s Durk Jager, a highly regarded
insider who had recently been promoted to CEO, announced
Organization 2005, a restructuring program that promised to
change P&G’s culture.

However, not everyone at P&G agreed that such sweeping
change was necessary or that the way to achieve it was to
reduce investments in the company’s core brands in order to
fund radical, new products. The organization rebelled, and
Jager was forced to resign only 17 months after taking the helm.

The reason of failure was that Jager didn’t induce P&G
employees to cooperate—a requirement of all change
campaigns.
   Eight Steps to Transforming Your
    Organization by John P. Kotter


1. Establishing a Sense of Urgency:

          •    Examining market and competitive
              realities

          • Identifying and discussing crises,
            potential crises, or major
            opportunities
 1. Establishing a Sense of Urgency:
The reasons for the failure:
  •    Executives underestimate how hard it can be to
      drive people out of their comfort zones.
  •   Executives grossly overestimate how successful
      they have already been in increasing urgency.
  •    Executives lack patience: "Enough with the
      preliminaries; let's get on with it.“
  •    Executives become paralyzed by the downside
      possibilities.
  •    A paralyzed senior management often comes
      from having too many managers and not enough
      leaders.
   Eight Steps to Transforming Your
             Organization


2. Forming a Powerful Guiding Coalition:


           •   Assembling a group with enough
               power to lead the change effort

           • Encouraging the group to work
             together as a team
2. Forming a Powerful Guiding Coalition:
The reasons for the failure:
 • Executives underestimate the difficulties of
   producing change and thus the importance of a
   powerful guiding coalition.
 • Executives have no history of teamwork at the top
   and therefore undervalue the importance of this type
   of coalition.
 • Executives expect the team to be led by a staff
   executive instead of a key line manager. The groups
   without strong line leadership never achieve the
   power that is required.
   Eight Steps to Transforming Your
             Organization


3. Creating a Vision:


            • Creating a vision to help direct the
              change effort

            • Developing strategies for achieving
              that vision
 3. Creating a Vision:
The reasons for the failure:

 • Without a sensible vision, a transformation effort can
   easily dissolve into a list of confusing and incompatible
   projects that can take the organization in the wrong
   direction or nowhere at all.

 • Without a sound vision, the reengineering projects in the
   departments, the cultural change project in the sales
   force will not add up in a meaningful way.
3. Creating a Vision:

      A useful rule:

  If you can't communicate the vision to
  someone in five minutes or less and get a
  reaction that signifies both understanding
  and interest, you are not yet done with this
  phase of the transformation process.
   Eight Steps to Transforming Your
             Organization

4. Communicating the Vision:


           • Using every vehicle possible to
             communicate the new vision and
             strategies

           • Teaching new behaviors by the
             example of the guiding coalition
 4. Communicating the Vision:
The reasons for the failure:
 • Without credible communication, and a lot of it,
   the hearts and minds of the troops are never
   captured.

 • Without gaining understanding and support
   transformation will fall, especially when
   downsizing is a part of the vision. For this
   reason, successful visions usually include new
   growth possibilities and the commitment to treat
   fairly anyone who is laid off.
4. Communicating the Vision:


• In 1993 The Wyatt Company conducted
  research on 531 United States organizations
  undergoing major restructuring. In answer to the
  question "If you could go back and change one
  thing, what would it be?" the most frequent
  answer was
   "The way I communicated with my employees".
4. Communicating the Vision:
Recommendations by Larkin TJ, Larkin S.:
 • Communicate only facts, stop trying to communicate
   values (the only effective way to communicate a
   value is to act in accordance with it and give others
   the incentive to do the same).
 • Do not rely on videos, publications, or large
   meetings.
 • Do not let very senior managers introduce the
   change to frontline employees-use frontline
   supervisors.
 • Acknowledge the critical importance of face to face
   communications.
   Eight Steps to Transforming Your
             Organization

5. Removing Obstacles to the New Vision:



  • Changing systems or structures that
    seriously undermine the vision

  • Encouraging risk taking and nontraditional
    ideas, activities, and actions
5. Removing Obstacles to the New Vision
The reasons for the failure:
 •    Sometimes the obstacle is the organizational structure:
     narrow job categories can seriously undermine efforts to
     increase productivity or make it very difficult, even to
     think about customers.

 • Sometimes compensation or performance-appraisal
   systems make people choose between the new vision
   and their own self-interest.

 •   Worst of all are bosses who refuse to change and who
     make demands that are inconsistent with the overall
     effort.
   Eight Steps to Transforming Your
             Organization

6. Planning for and Creating Short-Term Wins :

  • Planning for visible performance
    improvements

  • Creating those improvements

  • Recognizing and rewarding employees
    involved in the improvements
 6. Planning for and Creating Short-
 Term Wins :

The reasons for the failure:
   • Most people won't go on the long march unless
     they see compelling evidence within 12 to 24
     months that the journey is producing expected
     results.

   • Without short-term wins, too many people give
     up or actively join the ranks of those people who
     have been resisting change.
    Eight Steps to Transforming Your
              Organization
7. Consolidating Improvements and Producing
Still More Change:

• Using increased credibility to change systems,
  structures, and policies that don't fit the vision.

• Hiring, promoting, and developing employees
  who can implement the vision

• Reinvigorating the process with new projects,
  themes, and change agents
 7. Consolidating Improvements and
 Producing Still More Change:

The reasons for the failure:

• After a few years of hard work, managers may be
  tempted to declare victory with the first clear
  performance improvement.

• Until changes sink deeply into a company's culture,
  a process that can take five to ten years, new
  approaches are fragile and subject to regression.
7. Consolidating Improvements and
Producing Still More Change:
In one of the most successful transformations that
J.P.Kotter ever seen, he quantified the amount of
change that occurred each year over a seven-year
period.

On a scale of one (low) to ten (high), year one received
a two, year two a four, year three a three, year four a
seven, year five an eight, year six a four, and year seven
a two.

The peak came in year five, fully 36 months after the
first set of visible wins.
   Eight Steps to Transforming Your
             Organization


8. Institutionalizing change in corporate culture:


 • Articulating the connections between the new
   behaviors and corporate success

 • Developing the means to ensure leadership
   development and succession
    8. Institutionalizing change in corporate
                       culture:
Factors are particularly important in institutionalizing
change in corporate culture:
• A conscious attempt to show people how the new
  approaches, behaviors, and attitudes have helped
  improve performance. Helping people see the right
  connections requires communication.

•     It is taking sufficient time to make sure that the next
     generation of top management really does personify
     the new approach. If the requirements for promotion
     don't change, renewal rarely lasts.
 Why Do Employees Resist Change?

Managers and employees view change differently:

• Both groups know that vision and leadership drive
  successful change.
• Top-level managers see change as an opportunity to
  strengthen the business by aligning operations with
  strategy, to take on new professional challenges and
  risks, and to advance their careers.
• For many employees, however, including middle
  managers, change is neither sought after nor welcomed.
  It is disruptive and intrusive. It upsets the balance.
 Why Do Employees Resist Change?

Paradox of change is that during a time of change trust is
the most difficult to establish.

• If the organization is in the middle of change effort, lack
  of trust automatically emerges as a serious barrier.
• Trust in time of change is based on two things:
  predictability and capability.
• Staff want to know that a process which is about to
  begin has a predictable, known route, and that they will
  be treated fairly.
• They also want to think that those in charge are capable
  of delivering what they promise.
Methods for dealing with resistance
to change:
      Education and communication

      Participation and involvement

      Facilitation and support

      Facilitation and agreement

      Manipulation and co-optation

      Explicit and implicit coercion
Why Change?



• It is better to be
  80% correct and
  make change
  happen than to be
  100% correct
  after opportunity
  has passed.

				
DOCUMENT INFO
Description: Prof. Rushen's Notes for MBA and BBA students