Checklist for organizational change
One of the most famous theorists of organizational change is John Kotter, of Harvard University. Last year he published “A Sense of Urgency”, which is reviewed here in the Financial Times.The review quotes from this new book:
“Change is shifting from episodic to continuous. With episodic change, the challenge of creating a sufficient sense of urgency comes in occasional spurts. With continuous change, creating and sustaining a sufficient sense of urgency are always a necessity.”
This is true. But the key word is sufficient. What does that mean? How can you be sure that you don’t create an organizational climate where people run around like headless chickens? When do you need urgency and when do you not need urgency? How long can something be said to be urgent before people become indifferent? Are there degrees of urgency?
Managers always need to think carefully before applying gurus’ ideas to their own organization. Urgency in one department is not the same as urgency in another department. This week’s urgency is not the same as last week’s. The urgency for a particular organizational change can itself change, and so on ……
Organizational change – where is it from?
The organizational change management field is comparatively new. It has really only been in existence for the last 50 years or so. This excerpt from an academic article I wrote discusses the origins of the field.
There is an enormous amount of academic literature and an enormous amount of practitioner literature on the topic of change, where the most popular books sell in millions (over six million copies of In Search of Excellence; two million copies of Reengineering the Corporation), which indicates the widespread acceptance of the need for change. This orthodoxy has roots in the social developments of the last forty years.
The post-war era was one of relative stability until the 1960s, when there was social upheaval (protests against the Vietnam war, the student revolts of May 1968, the women’s movement), technological upheaval (the development of computers and transistors, the space race), and economic upheaval (the oil embargo of 1973, the “Japanese juggernaut” built on high quality products and high productivity). The scale of the resulting changes may or may not be fundamentally different to anything that had happened before, but they were important, and they created an impression that major change was happening and needed to be addressed.
The growing importance and economic power of Germany and Japan, together with the (relative) decline in the US and British economies seemed to indicate that there was a need to overhaul radically the traditional American and British ways of doing business. The emergence of Thatcherism and Reaganism, which called for a new enterprise culture and a much-reduced role for the state, was also a significant factor in creating a climate where change was seen as a sine qua non of future prosperity. The attrition rate of companies is huge; only 16 of the largest 100 US companies at the beginning of the 1900s still survived at the end of the 20th century, a fact which certainly implies that change is crucial to survival.
Mergers are organizational change
One of the most fundamental reasons for starting change initiatives in an organization is a merger.
Amazing but true: 50% of mergers fail – just ask Daimler about their adventures with Chrysler if you want to get confirmation.
In a merger, one set of staff has to change the way they work to match that of the other organization. It’s not enough to simply send out a few Powerpoint slides – people want an answer to the questions ‘What does this mean for me?’
And this needs to take place not only in the ‘losing’ firm, because the kind of change that a merger involves also affects staff in the ‘winning’ firm.
So this means that the management of the relevant change processes has
to take account of the fact that when a merger takes place, there are
always (perceived and actual) winners and losers. It means that the
change has to be managed and the level of the individual and the group,
as well as at the the level of the whole organization.
Organizational change outcomes
It is useful for people involved in organizational change to pay attention to the nature of the change outcomes that they wil be dealing with. It’s a bit less straightforward than it might appear to be at first sight. My research and experience have shown that there are three aspects to the concept change outcome.
First, there is the issue of intentionality. Any planned change has objectives – these are shown in Powerpoint presentations. So managers undertake planned change initiatives with certain outcomes in mind – these are intended outcomes. However, the unpredictable nature of change processes means that there will be unexpected outcomes which were not predicted. These develop as the change initiative progresses.
Next, when a change outcome is classified as intended, there is the issue of how well it meets its goals, i.e. whether its intended results have been achieved fully, or not achieved at all – or something in between. In fact, there can be different views within the same organization about the extent to which an intended change outcome has been achieved. Read more
Negotiation and Organizational Change
When things are changing at work, everyone involved in the change needs to be able to deal with a new situation.
During a change process, it’s important that employees do not simply accept what they are told, but question the change. A good change manager should always be open for suggestions.
Then when the change manager and staff deal with each other and discuss these suggestions, they need to be able to come to an agreement. By doing this, they increase the chances of a successful organizational change.
And this is where negotiation is important. There is no space here for me to go into detail, but here is a link to a test from Edinburgh University Business School that will help you determine your negotiation style.
Good change managers are good negotiators – fact!
Theory and Organizational Change II
It is possible to identify two general conceptualisations of ‘organizational change’ that arise from the vast literature on the subject. First, there is a conceptualisation that emphasises that change is:
“an empirical observation of difference in form, quality, or state over time in an organizational entity. The entity may be an individual’s job, a work group, an organizational strategy, a program, a product, or the overall organization” (Van de Ven and Poole, 1995: 512).
On the other hand, there is a view like that of Francis and Sinclair (2003: 689), who describe organizational change as
“ongoing process of social construction that comprises spiral patterns of discursive change and restructuring of collective meanings”.
There are, then, two different conceptualisations of ‘organizational change’. First, change is viewed in organization theory from two perspectives – as a difference in state, and as a process. Second, organizations are also viewed from two perspectives – as empirical objects, and as sets of relationships. Accordingly, one approach in the change literature emphasises that organizational change is a difference in state of empirical objects and mainly tackles the questions “Why should an organization change?” and “How should an organization change?” The literature that takes this approach may be termed prescriptive in that it provides guidelines for change. A second approach assumes that change is a process inside a set of relationships and is most interested in the questions “Why does an organization change?” and “How does an organization change?” This body of literature may be termed descriptive because it is interested in showing how change happens.
As is so often the case, one needs to be able to combine both views to be able to understand change. To try to manage change, we need to know both why an organization should change and how it should change.
References
Francis, H. & Sinclair, J. 2003. A Processual Analysis of HRM-Based Change. Organization, 10(4): 685-706.
Van de Ven, A. H. & Poole, M. S. 1995. Explaining Development and Change in Organizations. Academy of Management Review, 20(3): 510-540.
Organizational Change and Football
Football is a business, but different from other businesses in that the heart can play more of a role than the head. Mike Ashley, the chairman of Newcastle United is a successful businessman. But he made many mistakes when he bought the club.
Ashley would never have expanded his Sports Direct empire without exerting due diligence on a takeover, yet he bought Newcastle without properly studying it, only to be shocked by the masses of debt. He would never have installed executives that were incompatible, but this is what he did by employing an old-fashioned manager and then grafting on a continental technical structure, with third parties in charge of development and scouting.
The result? Relegation last season.
What we can learn form this is that when there is a takeover, the resulting organizational change must be carefully and thoughtfully planned.
Detroit and its problems
One of the basic points about managing organization change is that organizations must change before it becomes too late to change. A good example of how not to manage change is provided by the car companies of Detroit. They made the wrong products in the wrong way.
This video from the Economist looks at Detroit today – what people are doing for themselves…
