Managing Organizational Change

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Managing Organizational Change
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Achieving Sustained Competitive Advantage

• 1. Adapting to change in external trends,
  internal capabilities and resources

2. Effectively formulating, implementing
evaluating strategies
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Adapting to Change Key Strategic Management
Questions

• What kind of business should we become?
• Are we in the right fields
• Are there new competitors
• What strategies should we pursue?
• How are our customers changing?

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Contingency Approaches

• Huys Contingency Approach categorizes change
  into 4 ideal types
• The commanding intervention
• Short-term and rapid
• senior executives
• Downsizing, outsourcing, divesting
• The engineering intervention
• Medium-term and relatively fast
• Analysts
• Changing work design and operational systems
• The teaching intervention
• Long-term and gradual
• Consultants
• Work practices and behaviours
• The socializing intervention
• Long-term and gradual
• Participative experiential learning,
  self-monitoring
• Democratic organizational practices

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Contingency Approaches

• Contingency approaches remain less common than
  change management approaches. Suggested reasons
  include
• Achieving fit may be difficult due to differing
  perceptions of the conditions in which the fit is
  sought
• Contingency approaches require greater analysis
  and decisions by managers the prescriptiveness
  of change management models may be attractive to
  managers
• Contingency approaches focus on leadership style
  rather than a specific set of actions
• The use of different change styles at different
  times may raises questions in the minds of staff
  as to the credibility of senior management.
• There is a question about what is contingent to
  managing change

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Why Organizations Change

• External forces for change
• e.g. new technology
• e.g. geopolitical environment
• Internal Forces for change
• e.g. a new CEO
• e.g. growth cycle
• Forces for stability
• Think Do we really need this change? what are
  the likely returns (economic, other) of this
  change?

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What Changes in Organizations

• Common types of changes
• Mergers and acquisitions
• Downsizing
• Technological changes
• Proactive Vs. reactive changes
• Scale of change
• Incremental
• transformational

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Diagnosis for Change

• Organization models to assess where changes are
  needed in an organization
• Strategy
• Structure
• Operations
• Culture
• Management behaviours and mindsets
• Employee behaviours and mindsets
• Communication
• Reward mechanisms
• Modes of interaction
• Component analysis tools to assess the changes
  needed in each part of the organization
• E.g. force-field (strategy), PESTEL
  (environment), cultural web (culture)
• Assessing readiness to change

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Resistance to Change

• Why do people resist to change
• Experiences with past change
• Discomfort with uncertainty
• Lack of conviction that change is needed
• Perceived negative effect on interests
• Lack of clarity as to what is expected
• Belief that the timing is wrong
• Managing resistance
• The resistance cycle
• The power of resistance

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Implementing Change

• Implementation method is important A good idea
  for change may be badly managed and fail.
• How much do we involve people
• When things will be done
• Two main approaches
• Organization development (OD)
• Appreciative Inquiry
• Change Management
• Contingency approaches

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Linking Vision and Change

• Content of meaningful visions
• Process by which visions are emerged
• Three dilemmas
• Does vision drive change or emerge during change?
• Visions help or hinder change?
• Vision belongs to organizations or to leaders?

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Sustaining Change

• Actions to sustain change
• Redesign roles and reward systems
• Measure progress
• Celebrate
• Fine-tune

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MCKINSEYS 7S FRAMEWORK
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McKinsey 7-S Model

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

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McKinsey 7-S Model

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

The Hard Ss
The hard elements are factual and easy to
identify. They can be found in strategy
statements, corporate plans, organization charts,
and other documentation
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McKinsey 7-S Model

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

The Soft Ss
The soft elements are difficult to describe since
they are continuously developing and changing.
They are highly determined by the people at work
in the organization.
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7-S Model The Hard Ss

• Strategy
• Actions a company plans in response to or in
  anticipation of changes in its external
  environment
• Structure
• Basis for specialization and coordination,
  influenced primarily by strategy and by
  organization size and diversity
• Systems
• Formal and informal procedures that support the
  strategy and structure (Systems are more powerful
  than they are given credit)

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Strategy Formulation

Vision Mission
External Opportunities Threats
Internal Strengths Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
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Organizational Structure

• Organization Chart
• formal reporting relationships
• levels in hierarchy
• spans of control
• departmentalization
• Systems to facilitate
• coordination
• communication
• integration

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Structural Designs

• Functional Structure
• Can adapt functional structure with horizontal
  linkages
• Divisional Structure
• Geographical Structure
• Matrix Structure
• Horizontal Structure /Product Line Structure
• Hybrid Structure

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Other Organizational Forms

• Joint Ventures
• Licensing agreements
• Strategic Alliances
• Consortia
• Virtual organizations
• Global (transnational) Work Teams

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Virtual Teams

• Virtual Teams are characterized by
• Distributed locations of team members
• Use of information technology to accomplish tasks
• Effective when
• Communication collaboration skills are high.
• Trust among team members is high
• Organizations are increasing their use of virtual
  teams
• Potential for improvement in virtual team
  management is huge

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Information Linkages

• Vertical Information Linkages
• Hierarchy
• Rules and plans (i.e. budget)
• Horizontal Information Linkages
• Information systems
• Liaison role
• Task force
• Integrator role (i.e. Project manager)
• Cross-functional teams

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Systems various elements

• Communications practice and system
• Management reporting system
• Approval process
• Planning/budgeting system
• Rewards system including appraisal
• Rules

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From Tasks to Structure

• Tasks define jobs
• Jobs define skills required
• Skills (and other considerations) define staff
• Over time skills change as staff gains knowledge
  and experience, and as technology and corporate
  infrastructure mature
• Collection of jobs basis for structure

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Job design considerations

• Do they have the necessary skills and knowledge
  to fulfill proposed / expanded job requirements?
• What are the needs of the incumbent or the rest
  of your workforce in general?
• Monetary
• Growth
• Socialization

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THE SOFT Ss
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7-S Model The Soft Ss - 1

• Style / Culture The culture of the
  organization, consisting of
• Organizational culture the dominant values,
  beliefs and norms which develop over time and
  become relatively enduring features of
  organization life
• Management style what managers do rather than
  what they say (where they spend their time and
  attention, what they allow, what they reward,
  etc)
• Staff
• Skills
• Shared values / Superordinate goals

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7-S Model The Soft Ss - 2

• Style / Culture
• Staff
• The people/human resource management ways of
  shaping basic management values, processes used
  to develop managers, ways of introducing new
  employees and managing careers, socialization
  processes
• Skills
• Distinctive competencies what the company does
  best, ways of developing or shifting competencies
• Shared values / Superordinate goals
• Guiding concepts, fundamental ideas around which
  a business is built simple, usually stated at
  abstract level, have great meaning inside the
  organization, although outsiders may not see or
  understand them

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Organizational Culture

• Culture is to organizations what personality is
  to individuals
• All companies have cultures
• Culture by default
• Culture by design thoughtful choices based on
  values and core beliefs
• How does a company consciously create its culture?

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From Gray Larson Project Management The
Managerial Process
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Types of Organizational Cultures

• Control cultures Drive for predictability
  and order
• Collaboration cultures Pursue close
  relationship with customers
• Competence cultures Pursue excellence and
  innovation
• Cultivation cultures Pursue life enrichment
  for customers and employees

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Organizational Culture

• Observable Evidence
• Symbols
• Ceremonies
• Stories
• Behaviors
• Language
• Dress
• Underlying Roots
• Values, Assumptions, Beliefs, Attitudes, Feelings

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Culture in practice

• Conflict management
• Relationship or interpersonal conflict
• Task / process conflict
• Functional vs. dysfunctional conflict
• Factors goal incompatibility, limited resources,
  differences
• Power the capacity to influence behavior
• Positional power rewards/consequences, control
  of resources, information and decision control
• Personal power expert, referent (based on
  identification and admiration)
• Politics the use of power to influence decisions

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Management vs. Leadership

• Planning vs. Setting the
  budgeting direction
  
• Organizing vs. Aligning
  people staffing
• Controlling vs. Motivating
  people problem solving

Management is about coping with complexity
Leadership is about coping with change
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McKinsey 7-S Model

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

• Effective organizations achieve a harmony
  between these seven elements if one element
  changes, then this will affect all the others

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McKinsey 7-S Model

• The 7-S Model can be a valuable tool to
  initiate change processes and to give them
  direction i.e. determine current state and ideal
  state of each element, and develop action plans
  to close the gaps

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

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McKinsey 7-S Model

• In change processes, many organizations focus
  their efforts on the hard Ss however, the soft
  factors can make or break a successful change
  process. All factors must be accounted for.

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

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McKinsey 7-S Model

• Strategy
• Structure
• Systems
• Style
• Staff
• Skills
• Superordinate goals

• Interrelated
• Equilibrium
• Foundation of corporate culture
• Levers available to management

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Executing Change Seven Key Considerations

• Strategic Intent
• Substance
• Scale
• Scope/Breadth
• Speed
• Sequence
• Style

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• Strategic Intent
• Substance
• Scale
• Scope/Breadth
• Speed
• Sequence
• Style

Precise Broad
Soft Ss Hard Ss
Small Large
Isolated
Organization-wide
Slow Fast
Hard Soft Soft Hard
Top Down Bottom Up