Week 8 Assignment - Org Behavior

440 Part Four Organizational Processes are in a completely different functional area. For instance, accounting department employ- ees won’t easily recognize how they can adopt quality improvement practices developed by employees in the production department. The challenge here is for change agents to provide guidance that is not too specific (not too narrowly defined around the pilot project environ- ment), because it might not seem relevant to other areas of the organization. At the same time, the pilot project intervention should not be described too broadly or abstractly to other employees, because this makes the information and role model too vague. Finally, employees require supportive situational factors, including the resources and time necessary to adopt the practices demonstrated in the pilot project. Four Approaches to Organizational Change So far, this chapter has examined the dynamics of change that occur every day in organiza- tions. However, organizational change agents and consultants also apply various structured approaches to organizational change. This section introduces four of the leading ap- proaches: action research, appreciative inquiry, large group interventions, and parallel learning structures. LO 15-5 Visit connect.mcgrawhill.com for activities and test questions to help you learn about the four main approaches to organizational change. ACTION RESEARCH APPROACH Along with introducing the force field model, Kurt Lewin recommended an action research approach to the change process. The philosophy of action research is that meaningful change is a combination of action orientation (changing attitudes and behavior) and research orien- tation (testing theory). 64 On the one hand, the change process needs to be action-oriented because the ultimate goal is to change the workplace. An action orientation involves diagnosing current problems and applying interventions that resolve those problems. On the other hand, the change process is a research study, because change agents apply a conceptual framework (such as team dynamics or organizational culture) to a real situation.

As with any good research, the change process involves collecting data to diagnose problems more effectively and to systematically evaluate how well the theory works in practice. 65 Within this dual framework of action and research, the action research approach adopts an open-systems view. It recognizes that organizations have many interdependent parts, so change agents need to anticipate both the intended and the unintended consequences of their interventions. Action research is also a highly participative process, because open-systems change requires both the knowledge and the commitment of members within that system.

Indeed, employees are essentially co-researchers as well as participants in the intervention.

Overall, action research is a data-based, problem-oriented process that diagnoses the need for change, introduces the intervention, and then evaluates and stabilizes the desired changes.

The main phases of action research are illustrated in Exhibit 15.4 and described here: 66 1. Form client–consultant relationship. Action research usually assumes that the change agent originates outside the system (such as a consultant), so the process begins by forming the client–consultant relationship. Consultants need to determine the client’s readiness for change, including whether people are motivated to participate in the process, are open to meaningful change, and possess the abilities to complete the process. action research A problem-focused change process that combines action orientation (changing attitudes and behavior) and research orientation (testing theory through data collection and analysis). mcs62589_ch15_424-451.indd Page 440 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles Chapter Fifteen Organizational Change 441 2. Diagnose the need for change. Action research is a problem-oriented activity that carefully diagnoses the problem through systematic analysis of the situation.

Organizational diagnosis identifies the appropriate direction for the change effort by gathering and analyzing data about an ongoing system, such as through inter- views and surveys of employees and other stakeholders. Organizational diagnosis also includes employee involvement in agreeing on the appropriate change method, the schedule for the actions involved, and the expected standards of successful change.

3. Introduce intervention. This stage in the action research model applies one or more actions to correct the problem. It may include any of the prescriptions mentioned in this book, such as building more effective teams, managing conflict, building a bet- ter organizational structure, or changing the corporate culture. An important issue is how quickly the changes should occur. 67 Some experts recommend incremental change, in which the organization fine-tunes the system and takes small steps toward a desired state. Others claim that rapid change is often required, in which the system is overhauled decisively and quickly.

4. Evaluate and stabilize change. Action research recommends evaluating the effec- tiveness of the intervention against the standards established in the diagnostic stage. Unfortunately, even when these standards are clearly stated, the effective- ness of an intervention might not be apparent for several years or might be diffi- cult to separate from other factors. If the activity has the desired effect, the change agent and participants need to stabilize the new conditions. This refers to the refreezing process that was described earlier. Rewards, information systems, team norms, and other conditions are redesigned so they support the new values and behaviors.

The action research approach has dominated organizational change thinking since it was introduced in the 1940s. However, some experts are concerned that the problem-oriented nature of action research—in which something is wrong that must be fixed—focuses on the negative dynamics of the group or system rather than its positive opportunities and poten- tial. This concern with action research has led to the development of a more positive ap- proach to organizational change, called appreciative inquiry. 71 APPRECIATIVE INQUIRY APPROACH Appreciative inquiry tries to break out of the problem-solving mentality of traditional change management practices by reframing relationships around the positive and the possi- ble. It searches for organizational (or team) strengths and capabilities and then applies or adapts that knowledge for further success and well-being. Appreciative inquiry is therefore Diagnose need for changeIntroduce interventionEvaluate and stabilize change Form client– consultant relationshipDisengage consultant’s services • Gather data • Analyze data • Decide objectives• Implement the desired incremental or quantum change• Determine the change effectiveness • Refreeze new conditions EXHIBIT 15.4 The Action Research Process appreciative inquiry An organizational change strategy that directs the group’s attention away from its own problems and focuses participants on the group’s potential and positive elements. mcs62589_ch15_424-451.indd Page 441 28/11/13 7:25 PM user /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles 442 Part Four Organizational Processes deeply grounded in the emerging philosophy of positive organizational behavior, which suggests that focusing on the positive rather than the negative aspects of life will improve organizational success and individual well-being. In other words, this approach emphasizes building on strengths rather than trying to directly correct problems. 72 Appreciative inquiry typically examines successful events, organizations, and work units.

This focus becomes a form of behavioral modeling, but it also increases open dialogue by redirecting the group’s attention away from its own problems. Appreciative inquiry is espe- cially useful when participants are aware of their problems or already suffer from negativity in their relationships. The positive orientation of appreciative inquiry enables groups to overcome these negative tensions and build a more hopeful perspective on their future by focusing on what is possible. 73 Appreciative inquiry’s positive focus is illustrated by the intervention conducted a few years ago at Mittal Steel USA. 74 Although the mill was one of the most productive in the global organization, its safety record was poor. A team of employees was formed to spear- head an appreciative inquiry approach to improved safety. Almost all of the Steel USA’s debating point WHAT’S THE BEST SPEED FOR ORGANIZATIONAL CHANGE? One of the great debates among organizational change experts is how quickly the change should occur. One view is that slow, in- cremental change is better because it gives employees more time to adjust to the new realities, keep up with what needs to be learned, and manage their stress in this process. Incremental change is also preferred because it gives change champions more time to change course if the current direction isn’t working as hoped.

The value of incremental change was recently illustrated at Ergon Energy. Government legislation required companies to upgrade their record keeping system, but the Australian energy provider decided to make the changes incrementally, because employees had already experienced constant change over the previous couple of years. “Even resilient staff such as those em- ployed at Ergon Energy have a change tolerance level,” explains Petá Sweeney, a consultant who worked with Ergon staff during this transition. “Consequently this led deliberately to discounting a revolutionary ’big bang’ approach to record-keeping improve- ments.” Sweeney reports that changing incrementally signifi- cantly improved employee engagement in the process. “Staff are more willing to participate in the change journey as well as offer- ing suggestions for improvements. They do so knowing that changes will take place gradually and allow for time to fully bed down new practices and that effective enterprise-wide changes require their help.” 68 In spite of these apparent virtues of incremental change, some experts claim that rapid change is usually much better. They do not say that change needs to be radical or evenly rapid all of the time. Rather, they suggest that most change initiatives need to be, on average, much quicker than incremental. One argument is that companies operate in such a fast-paced environment that any speed less than “rapid” is risky; an incremental change initiative will put them further behind to the point that any change seems futile.

A second argument is that rapid change creates a collective sense of momentum, whereas inertia eventually catches up with incremental change. 69 In other words, employees feel the sense of progress when change occurs quickly. This forward movement generates its own energy that helps motivate employees toward the vision. Incremental change, by comparison, is sluggish and lethargic. A related argument is that any organizational change requires plenty of energy, particularly from the leaders who must continually communicate, role model, coach, and otherwise sup- port and influence employees toward the new state of affairs. 70 This energy is finite, and it is more likely to run out when the change is spread over a long rather than a short period of time.

Third, incremental change doesn’t necessarily give employees more time to adjust; instead, it typically gives them more time to dig in their heels! Rapid change, on the other hand, happens at such speed that employees don’t have the opportunity to find ways to hold back, retrench, or even think about strategies to op- pose the change effort. Finally, proponents of incremental change point to its benefits for minimizing stress, yet there is reason to believe that it often has the opposite effect. Changing slowly can feel like a slow train wreck—the more you see it coming, the more painful it feels. Quicker change, particularly when there are support systems to help employees through the process, may be less painful than changing incrementally. mcs62589_ch15_424-451.indd Page 442 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles Chapter Fifteen Organizational Change 443 1,400 employees were personally interviewed over several months, to hear their vision and aspirations for safety at the company. Interviewers asked questions such as, “Tell me about a time when you felt most safe and secure working in this mill. What in particular helped make you feel safe?” and “Imagine we are truly injury-free! We are the safest mill in the entire global system. . . . What does the mill look like?” The interview information was collated and became the foundation of an appreciative inquiry summit attended by almost 200 employees and other stakeholders (customers, suppliers, community leaders, and global parent leadership). Out of the summit emerged a dozen specific change initiatives to improve safety at Mittal Steel USA. Within a year, the company experienced a dramatic improvement in safety behaviors and statistics.

Appreciative Inquiry Principles Appreciative inquiry embraces five key princi- ples (see Exhibit 15.5). 75 One of these is the positive principle, which we describe above.

A second principle, called the constructionist principle, takes the position that conversa- tions don’t describe reality; they shape that reality. In other words, how we come to under- stand something depends on the questions we ask and the language we use. Thus, appreciative inquiry requires sensitivity to and proactive management of the words and language used, as well as the thoughts and feelings behind that communication. This re- lates to a third principle, called the simultaneity principle, which states that inquiry and change are simultaneous, not sequential. The moment we ask questions of others, we are changing those people. Furthermore, the questions we ask determine the information we receive, which in turn affects which change intervention we choose. The key learning point from this principle is to be mindful of the effects that the inquiry has on the direc- tion of the change process.

A fourth principle, called the poetic principle, states that organizations are open books, so we have choices in how they may be perceived, framed, and described. The poetic principle is reflected in the notion that a glass of water can be viewed as half full or half empty. Thus, appreciative inquiry actively frames reality in a way that provides construc- tive value for future development. The anticipatory principle, the fifth principle of appre- ciative inquiry, emphasizes the importance of a positive collective vision of the future state. People are motivated and guided by the vision they see and believe in for the fu- ture. Images that are mundane or disempowering will affect current effort and behavior differently than will images that are inspiring and engaging. We noted the importance of visions earlier in this chapter (change agents) and in our discussion of transformational leadership (Chapter 12). APPRECIATIVE INQUIRY PRINCIPLE DESCRIPTION Positive principle Focusing on positive events and potential produces more positive, effective, and enduring change.

Constructionist principle How we perceive and understand the change process depends on the questions we ask and language we use throughout that process.

Simultaneity principle Inquiry and change are simultaneous, not sequential.

Poetic principle Organizations are open books, so we have choices in how they may be perceived, framed, and described.

Anticipatory principle People are motivated and guided by the vision they see and believe in for the future.

EXHIBIT 15.5 Five Principles of Appreciative Inquiry Source: Based on D. L. Cooperrider and D. K. Whitney, Appreciative Inquiry: A Positive Revolution in Change (San Francisco: Berrett-Koehler, 2005), Ch. 7; D. K.

Whitney and A. Trosten-Bloom. The Power of Appreciative Inquiry: A Practical Guide to Positive Change, 2d ed. (San Francisco: Berrett-Koehler, 2010), Ch. 3. mcs62589_ch15_424-451.indd Page 443 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles 444 Part Four Organizational Processes The Four-D Model of Appreciative Inquiry Built on these five principles is appreciative inquiry’s “Four-D” process (named after its four stages) shown in Exhibit 15.6.

Appreciative inquiry begins with discovery—identifying the positive elements of the ob- served events or organization. 76 This might involve documenting positive customer experi- ences elsewhere in the organization. Or it might include interviewing members of another organization to discover its fundamental strengths. As participants discuss their findings, they shift into the dreaming stage by envisioning what might be possible in an ideal organi- zation. By pointing out a hypothetical ideal organization or situation, participants feel safer revealing their hopes and aspirations than they would if they were discussing their own or- ganization or predicament.

As participants make their private thoughts public to the group, the process shifts into the third stage, called designing. Designing involves dialogue in which participants listen with selfless receptivity to each other’s models and assumptions and eventually form a collec- tive model for thinking within the team. In effect, they create a common image of what should be. As this model takes shape, group members shift the focus back to their own situ- ation. In the final stage of appreciative inquiry, called delivering (also known as destiny), participants establish specific objectives and directions for their own organization, on the basis of their model of what will be.

Appreciative inquiry was introduced more than two decades ago, but it really gained popularity only within the past few years. Several success stories of organizational change from appreciative inquiry have emerged in a variety of organizational settings, including the British Broadcasting Corporation, Heidelberg USA, Castrol Marine, Canadian Tire, AVON Mexico, American Express, Green Mountain Coffee Roasters, and Hunter Douglas. 77 Although appreciative inquiry has much to offer, it is not always the best approach to changing teams or organizations, and it has not always been successful. This approach de- pends on participants’ ability to let go of the problem-oriented approach, including the “blame game” of determining who may have been responsible for past failures. It also requires leaders who are willing to accept appreciative inquiry’s less structured process. 79 Another concern is that research has not yet examined the contingencies of this approach.80 In other words, we don’t yet know under what conditions appreciative inquiry is a useful approach to organizational change and under what conditions it is less effective. Overall, appreciative inquiry can be an effective approach to organizational change, but we are just beginning to understand its potential and limitations. 1.

Discovery Identifying the best of “what is” 2.

Dreaming Envisioning “what might be” 3.

Designing Engaging in dialogue about “what should be” 4.

Delivering Developing objectives about “what will be” EXHIBIT 15.6 The Four-D Model of Appreciative Inquiry Sources: Based on F. J. Barrett and D. L. Cooperrider, “Generative Metaphor Intervention: A New Approach for Working with Systems Divided by Conflict and Caught in Defensive Perception,” Journal of Applied Behavioral Science 26 (1990), p. 229; D. Whitney and C. Schau, “Appreciative Inquiry: An Innovative Process for Organization Change,” Employment Relations Today 25 (Spring 1998), pp. 11–21; D. L. Cooperrider and D. K. Whitney, Appreciative Inquiry: A Positive Revolution in Change (San Francisco: Berrett-Koehler, 2005), Ch. 3. mcs62589_ch15_424-451.indd Page 444 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles Chapter Fifteen Organizational Change 445 LARGE GROUP INTERVENTION APPROACH Appreciative inquiry can occur in small teams, but it is often designed to involve a large number of people, such as the hundreds of employees who participated in the process at Heidelberg USA. As such, appreciative inquiry is often identified as one of several large group organizational change interventions. Large group interventions adopt a “whole sys- tems” perspective of the change process. 81 This means that they view organizations as open systems (see Chapter 1) and assume that change will be more successful when as many em- ployees and other stakeholders as possible associated with the organizational system are in- cluded in the process. 82 Large group interventions are highly participative events, because participants discuss their experiences, expectations, and ideas with others, typically in small groups within the large collective setting.

Similar to appreciative inquiry, large group interventions adopt a future-oriented positive focus rather than a past-oriented problem focus. Future search conferences, for instance, are large group interventions typically held over a few days in which participants identify emerging trends and develop strategies for the organization to realize potential under those future conditions. In addition to this strategy development, large group interventions generate a collective vision or sense-making about the organization and its future. This “meaning-making” process is important for the organization’s evolving identity and how participants relate to that identity.

Large group interventions have occurred in a variety of companies and industries.

Emerson & Cuming’s chemical manufacturing facility in Canton, Massachusetts, held a large group summit in which managers, supervisors, and production employees were organized into five stakeholder teams to identify initiatives that would improve the plant’s safety, efficiency, and cooperation. Lawrence Public Schools in Kansas conducted a large group session involving parents, teachers, students, community partners, and other stake- holders to help the board allocate resources more effectively. “The goals that were developed at the future search conference reflect what the community envisioned for its school dis- trict,” says superintendent Randy Weseman. Those goals have since become the foundation of the board’s strategic decision making. 83 Future search meetings and similar large group change events potentially minimize resistance to change and assist the quality of the change process, but they also have limita- tions. 84 One problem is that involving so many people invariably limits the opportunity to A few years ago, Heidelberg USA, the American arm of the world’s largest printing press manufacturer (Heidelberger Druckmaschinen AG), experienced morale-busting product setbacks as well as downsizing due to the economic recession. To rebuild employee morale and engagement, Heidelberg held a two-day appreciative inquiry summit involving one-third of its staff. Organized into diverse groups from across the organization, participants envisioned what Heidelberg would ideally look like in the future. From these sessions emerged a new vision and greater autonomy for employees to serve customers.

“Appreciative inquiry can energize an organization even in tough times because it begins the conversation with possibilities instead of problems,” says a senior executive at Heidelberg USA. 78 large group interventions Highly participative events that view organizations as open systems (i.e., involve as many employees and other stakeholders as possible) and adopt a future and positive focus of change. mcs62589_ch15_424-451.indd Page 445 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles 446 Part Four Organizational Processes contribute and increases the risk that a few people will dominate the process. Another con- cern is that these events focus on finding common ground, which may prevent the partici- pants from discovering substantive differences that interfere with future progress. A third issue is that these events generate high expectations about an ideal future state that are diffi- cult to satisfy in practice. Employees become even more cynical and resistant to change if they do not see meaningful decisions and actions resulting from these meetings.

PARALLEL LEARNING STRUCTURE APPROACH Parallel learning structures are highly participative arrangements composed of people from most levels of the organization who follow the action research model to produce meaningful organizational change. They are social structures developed alongside the formal hierarchy with the purpose of increasing the organization’s learning. 85 Ideally, participants in parallel learning structures are sufficiently free from the constraints of the larger organization that they can effectively solve organizational issues.

Royal Dutch/Shell relied on a parallel learning structure to introduce a more customer- focused organization. 86 Rather than try to change the entire organization at once, executives held weeklong “retail boot camps” with teams from six countries, consisting of frontline people (such as gas station managers, truck drivers, and marketing professionals). Participants learned about competitive trends in their regions and were taught powerful marketing tools to identify new opportunities. The teams then returned home to study their markets and develop propos- als for improvement. Four months later, boot camp teams returned for a second workshop, at which each proposal was critiqued by Royal/Dutch Shell executives. Each team had 60 days to put its ideas into action; then the teams returned for a third workshop to analyze what worked and what didn’t. This parallel learning process did much more than introduce new marketing ideas. It created enthusiasm in participants that spread contagiously to their coworkers, includ- ing managers above them, when they returned to their home countries. Cross-Cultural and Ethical Issues in Organizational Change Throughout this chapter, we have emphasized that change is an inevitable and often contin- uous phenomenon, because organizations need to remain aligned with the dynamic external environment. Yet we also need to be aware of cross-cultural and ethical issues with any change process. Many organizational change practices are built around Western cultural assumptions and values, which may differ from and sometimes conflict with assumptions and values in other cultures. 87 One possible cross-cultural limitation is that Western organi- zational change models, such as Lewin’s force field analysis, assume that change has a beginning and an ending in a logical linear sequence (that is, a straight line from point A to point B). Yet change is viewed more as a cyclical phenomenon in some cultures, such as the Earth’s revolution around the sun or a pendulum swinging back and forth. Other cultures have more of an interconnected view of change, whereby one change leads to another (often unplanned) change, which leads to another change, and so on, until the change objective is ultimately achieved in a more circuitous way.

Another cross-cultural issue with some organizational change interventions is their assumption that effective organizational change is necessarily punctuated by tension and overt conflict. Indeed, some change interventions encourage such conflict. But this direct confrontation view is incompatible with cultures that emphasize harmony and equilibrium.

These cross-cultural differences suggest that a more contingency-oriented perspective is re- quired for organizational change to work effectively in this era of globalization.

Some organizational change practices also face ethical issues. 88 One ethical concern is the risk of violating individual privacy rights. The action research model is built on the idea of collecting information from organizational members, which requires that employees provide personal information and reveal emotions that they may not want to divulge. 89 A second LO 15-6 parallel learning structure A highly participative arrangement composed of people from most levels of the organization who follow the action research model to produce meaningful organizational change. mcs62589_ch15_424-451.indd Page 446 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles Chapter Fifteen Organizational Change 447 ethical concern is that some change activities potentially increase manage- ment’s power by inducing compliance and conformity in organizational members. For instance, action research is a system-wide activity that requires employee participation rather than allowing individuals to get involved vol- untarily. A third concern is that some organizational change interventions undermine the individual’s self-esteem. The unfreezing process requires that participants disconfirm their existing beliefs, sometimes including their own competence at certain tasks or interpersonal relations.

Organizational change is usually more difficult than it initially seems. Yet the dilemma is that most organizations operate in hyperfast environments that demand continuous and rapid adaptation. Organizations survive and gain competitive advantage by mastering the complex dynamics of moving people through the continuous process of change as quickly as the external environment is changing.

Organizational Behavior:

The Journey Continues Nearly 100 years ago, the industrialist Andrew Carnegie said: “Take away my people, but leave my factories, and soon grass will grow on the factory floors.

Take away my factories, but leave my people, and soon we will have a new and better factory.” 90 Carnegie’s statement reflects the message woven throughout this textbook: Organizations are not buildings or machinery or financial assets; rather, they are the people in them. Organizations are human entities—full of life, sometimes fragile, and always exciting. “Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.” —Attributed to Andrew Carnegie 15-1 Describe the elements of Lewin’s force field analysis model.

Lewin’s force field analysis model states that all systems have driving and restraining forces. Change occurs through the pro- cess of unfreezing, changing, and refreezing. Unfreezing pro- duces disequilibrium between the driving and restraining forces.

Refreezing realigns the organization’s systems and structures with the desired behaviors. 15-2 Discuss the reasons people resist organizational change and how change agents should view this resistance.

Restraining forces are manifested as employee resistance to change. The main reasons people resist change are the negative valence of change, fear of the unknown, not-invented-here syn- drome, breaking routines, incongruent team dynamics, and in- congruent organizational systems. Resistance to change should be viewed as a resource, not an inherent obstacle to change.

Change agents need to view resistance as task conflict rather than relationship conflict. Resistance is a signal that the change agent has not sufficiently strengthened employee readiness for change. It is also a form of voice, so discussion potentially im- proves procedural justice. 15-3 Outline six strategies for minimizing resistance to change and debate ways to effectively create an urgency to change.

Organizational change requires employees to have an urgency for change. This typically occurs by informing them about driv- ing forces in the external environment. Urgency to change also develops by putting employees in direct contact with customers.

Leaders often need to create an urgency to change before the external pressures are felt, and this can occur through a vision of a more appealing future.

Resistance to change may be minimized by keeping employ- ees informed about what to expect from the change effort (com- municating); teaching employees valuable skills for the desired future (learning); involving them in the change process; helping employees cope with the stress of change; negotiating trade-offs with those who will clearly lose from the change effort; and us- ing coercion (sparingly and as a last resort). 15-4 Discuss how leadership, coalitions, social networks, and pilot projects assist organizational change.

Every successful change also requires transformational leaders with a clear, well-articulated vision of the desired future state. chapter summary mcs62589_ch15_424-451.indd Page 447 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles critical thinking questions 1. Chances are that the school you are attending is currently undergoing some sort of change to adapt more closely with its environment. Discuss the external forces that are driving the change. What internal drivers for change also exist?

2. Use Lewin’s force field analysis to describe the dynamics of organizational change at Ford Motor Company. The Global Connections 15.2 feature about Ford’s transformation provides some information, but think about other forces for and against change beyond the information provided in this vignette.

3. Employee resistance is a symptom, not a problem, in the change process. What are some of the real problems that may underlie employee resistance?

4. Senior management of a large multinational corporation is planning to restructure the organization. Currently, the or- ganization is decentralized around geographic areas so that the executive responsible for each area has considerable au- tonomy over manufacturing and sales. The new structure will transfer power to the executives responsible for different product groups; the executives responsible for each geo- graphic area will no longer be responsible for manufacturing in their area but will retain control over sales activities.

Describe two types of resistance senior management might encounter from this organizational change.5. Discuss the role of reward systems in organizational change.

Specifically, identify where reward systems relate to Lewin’s force field model and where they undermine the organiza- tional change process.

6. Web Circuits is a Malaysian-based custom manufacturer for high-technology companies. Senior management wants to introduce lean management practices to reduce production costs and remain competitive. A consultant has recom- mended that the company start with a pilot project in one department and, when successful, diffuse these practices to other areas of the organization. Discuss the advantages of this recommendation, and identify three ways (other than the pilot project’s success) to make diffusion of the change effort more successful.

7. What is the role of formal and informal networks in organi- zations interested in undergoing change?

8. Suppose that you are vice president of branch services at the Bank of East Lansing. You notice that several branches have consistently low customer service ratings, even though there are no apparent differences in resources or staff characteris- tics. Describe an appreciative inquiry process in one of these branches that might help overcome this problem.

action research, p. 440 appreciative inquiry, p. 441 force field analysis, p. 426large group interventions, p. 445 parallel learning structure, p. 446refreezing, p. 427 unfreezing, p. 427 key terms They also need the assistance of several people (a guiding coali- tion) who are located throughout the organization. Change also occurs more informally through social networks. Viral change operates through social networks using influencers.

Many organizational change initiatives begin with a pilot proj- ect. The success of the pilot project is then diffused to other parts of the organization. This occurs by applying the MARS model, including motivating employees to adopt the pilot project’s meth- ods, training people to know how to adopt these practices, helping clarify how the pilot can be applied to different areas, and provid- ing time and resources to support this diffusion.

15-5 Describe and compare action research, appreciative inquiry, large group interventions, and parallel learn- ing structures as formal approaches to organizational change.

Action research is a highly participative, open-systems approach to change management that combines an action orientation (changing attitudes and behavior) with research orientation (testing theory). It is a data-based, problem-oriented process that diagnoses the need for change, introduces the intervention, and then evaluates and stabilizes the desired changes.

Appreciative inquiry embraces the positive organizational be- havior philosophy by focusing participants on the positive and possible. Along with this positive principle, this approach to change applies the constructionist, simultaneity, poetic, and anticipatory principles. The four stages of appreciative inquiry include discovery, dreaming, designing, and delivering.

Large group interventions are highly participative events that view organizations as open systems (i.e., involve as many employees and other stakeholders as possible) and adopt a future and positive focus of change. Parallel learning struc- tures rely on social structures developed alongside the formal hierarchy with the purpose of increasing the organization’s learning. They are highly participative arrangements, com- posed of people from most levels of the organization who follow the action research model to produce meaningful orga- nizational change. 15-6 Discuss two cross-cultural and three ethical issues in organizational change.

One significant concern is that organizational change theories developed with a Western cultural orientation potentially con- flict with cultural values in some other countries. Also, organiza- tional change practices can raise one or more ethical concerns, including increasing management’s power over employees, threatening individual privacy rights, and undermining individ- ual self-esteem. 448 mcs62589_ch15_424-451.indd Page 448 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles 449 CASE STUDY: TRANSACT INSURANCE CORPORATION TransAct Insurance Corporation (TIC) provides automobile insurance throughout the Southeastern United States. Last year, a new president was hired by TIC’s Board of Directors to improve the company’s competitiveness and customer ser- vice. After spending several months assessing the situation, the new president introduced a strategic plan to strengthen TIC’s competitive position. He also replaced three vice- presidents. Jim Leon was hired as vice-president of Claims, TIC’s largest division with 1,500 employees, 50 claims center managers, and 5 regional directors.

Jim immediately met with all claims managers and directors and visited employees at TIC’s 50 claims centers. As an out- sider, this was a formidable task, but his strong interpersonal skills and uncanny ability to remember names and ideas helped him through the process. Through these visits and discussions, Jim discovered that the claims division had been managed in a relatively authoritarian, top-down manner. He could also see that morale was very low and employee–management relations were guarded. High workloads and isolation (adjusters work in tiny cubicles) were two other common complaints. Several managers acknowledged that the high turnover among claims adjusters was partly due to these conditions.

Following discussions with TIC’s president, Jim decided to make morale and supervisory leadership his top priority. He initiated a divisional newsletter with a tear-off feedback form for employees to register their comments. He announced an open-door policy in which any claims division employee could speak to him directly and confidentially without going first to the immediate supervisor. Jim also fought organiza- tional barriers to initiate a flex-time program so that employ- ees could design work schedules around their needs. This program later became a model for other areas of TIC.

One of Jim’s most pronounced symbols of change was the “Claims Management Credo” outlining the philosophy that every claims manager would follow. At his first meeting with the complete claims management team, Jim presented a list of what he thought were important philosophies and actions of effective managers. The management group was asked to select and prioritize items from this list. They were told that the resulting list would be the division’s management philos- ophy and all managers would be held accountable for abiding by its principles. Most claims managers were uneasy about this process, but they also understood that the organization was under competitive pressure and that Jim was using this exercise to demonstrate his leadership.

The claims managers developed a list of 10 items, such as encouraging teamwork, fostering a trusting work environment, setting clear and reasonable goals, and so on. The list was circu- lated to senior management in the organization for their com- ment and approval, and sent back to all claims managers for their endorsement. Once this was done, a copy of the final document was sent to every claims division employee. Jim also announced plans to follow up with an annual survey to evalu- ate each claims manager’s performance. This concerned the managers, but most of them believed that the credo exercise was a result of Jim’s initial enthusiasm and that he would be too busy to introduce a survey after settling into the job.

One year after the credo had been distributed, Jim an- nounced that the first annual survey would be conducted. All claims employees would complete the survey and return it confidentially to the human resources department, where the survey results would be compiled for each claims center man- ager. The survey asked about the extent to which the man- ager had lived up to each of the 10 items in the credo. Each form also provided space for comments.

Claims center managers were surprised that a survey would be conducted, but they were even more worried about Jim’s statement that the results would be shared with employ- ees. What “results” would employees see? Who would distrib- ute these results? What happens if a manager gets poor ratings from his or her subordinates? “We’ll work out the details later,” said Jim in response to these questions. “Even if the survey results aren’t great, the information will give us a good baseline for next year’s survey.” The claims division survey had a high response rate. In some centers, every employee completed and returned a form. Each report showed the claim center manager’s average score for each of the 10 items as well as how many employees rated the man- ager at each level of the five-point scale. The reports also in- cluded every comment made by employees at that center.

No one was prepared for the results of the first survey.

Most managers received moderate or poor ratings on the 10 items. Very few managers averaged above 3.0 (out of a 5-point scale) on more than a couple of items. This suggested that, at best, employees were ambivalent about whether their claims center manager had abided by the 10 management philosophy items. The comments were even more devastating than the ratings. Comments ranged from mildly disap- pointed to extremely critical of their claims manager. Em- ployees also described their long-standing frustration with TIC, high workloads, and isolated working conditions. Sev- eral people bluntly stated that they were skeptical about the changes that Jim had promised. “We’ve heard the promises before, but now we’ve lost faith,” wrote one claims adjuster.

The survey results were sent to each claims manager, the regional director, and employees at the claims center. Jim in- structed managers to discuss the survey data and comments with their regional manager and directly with employees. The claims center managers, who thought employees only received average scores, went into shock when they realized that the re- ports included individual comments. Some managers went to their regional director, complaining that revealing the personal comments would ruin their careers. Many directors sympa- thized, but the results were already available to employees.

When Jim heard about these concerns, he agreed that the results were lower than expected and that the comments should not have been shown to employees. After discussing the situation with his directors, he decided that the discus- sion meetings between claims managers and their employees should proceed as planned. To delay or withdraw the reports mcs62589_ch15_424-451.indd Page 449 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles SELF-ASSESSMENT ARE YOU TOLERANT OF CHANGE?

PURPOSE This exercise is designed to help you under- stand how people differ in their tolerance for change.

INSTRUCTIONS Read each of the statements following and circle the response that best fits your personal belief.

Then, use the scoring key in the Appendix at the end of this book to calculate your results. This self-assessment should be completed alone so that you can rate yourself honestly without concerns of social comparison. Class discussion will focus on the meaning of the concept measured by this scale and its implications for managing change in organiza- tional settings.

TEAM EXERCISE: STRATEGIC CHANGE INCIDENTS PURPOSE This exercise is designed to help you identify strategies for facilitating organizational change in various situations.

INSTRUCTIONS 1. The instructor will place students into teams, and each team will be assigned one or both of the scenarios pre- sented next.

2. Each team will diagnose the scenario to determine the most appropriate set of change management practices.

Where appropriate, these practices should (a) create an urgency to change, (b) minimize resistance to change, and (c) refreeze the situation to support the change ini- tiative. Each of these scenarios is based on real events.

3. Each team will present and defend its change manage- ment strategy. Class discussion regarding the appropriate- ness and feasibility of each strategy will occur after all teams assigned the same scenario have presented. The in- structor will then describe what the organizations actually did in these situations.

SCENARIO 1: GREENER TELCO The board of directors at a large telephone company wants its executives to make the organization more environmentally friendly by encouraging employees to reduce waste in the workplace.

Government and other stakeholders expect the company to take this action and be publicly successful. Consequently, the chief executive officer wants to significantly reduce paper us- age, trash, and other waste throughout the company’s many widespread offices. Unfortunately, a survey indicates that em- ployees do not value environmental objectives and do not know how to “reduce, reuse, recycle.” As the executive re- sponsible for this change, you have been asked to develop a strategy that might bring about meaningful behavioral change toward this environmental goal. What would you do?

SCENARIO 2: GO FORWARD AIRLINE A major airline had experienced a decade of rough turbulence, includ- ing two bouts of bankruptcy protection, 10 managing direc- tors, and morale so low that employees had removed the company’s logo from their uniforms out of embarrassment.

Service was terrible, and the airplanes rarely arrived or left the terminal on time. This was costing the airline significant amounts of money in passenger layovers. Managers were par- alyzed by anxiety, and many had been with the firm so long that they didn’t know how to set strategic goals that worked.

One-fifth of all flights were losing money, and the company overall was near financial collapse (just three months to de- faulting on payroll obligations). You and the newly hired CEO must get employees to quickly improve operational ef- ficiency and customer service. What actions would you take to bring about these changes?

450 would undermine the credibility and trust that Jim was try- ing to develop with employees. However, the regional direc- tor attended the meeting in each claims center to minimize direct conflict between the claims center manager and employees.

Although many of these meetings went smoothly, a few created harsh feelings between managers and their employ- ees. The source of some comments were easily identified by their content, and this created a few delicate moments in several sessions. A few months after these meetings, two claims center managers quit and three others asked for transfers back to nonmanagement positions in TIC. Mean- while, Jim wondered how to manage this process more effectively, particularly since employees expected another survey the following year.

Discussion Questions 1. What symptom(s) exist in this case to suggest that something has gone wrong?

2. What are the main causes of these symptoms?

3. What actions should the company take to correct these problems? © 2000, Steven L. McShane and Terrance J. Bogyo. This case is based on actual events, but names, industry, and some characteristics have been changed to maintain anonymity. mcs62589_ch15_424-451.indd Page 450 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles