Week 8 Discussion and Responses

Chapter Fifteen Organizational Change 429 Percentage of employees, by selected countries, who agree or strongly agree that “change is handled effectively in my organization.” Not all 28,810 employees across the 15 countries surveyed are shown here, but all are included in the “total sample” figure. India United StatesChina United KingdomTotal SampleGermany France South KoreaJapan 63% 49% 47% 43% 43% 42% 34% 31% 24% 0% 10 %20% 30% 40% 50% 60% 70% 80% How Effectively Do Organizations around the World Handle Change? 8 Negative Valence of Change Employees apply a cost–benefit analysis to deter- mine if the change will make them better or worse off. 19 This analysis consists of the cal- culation described in the expectancy theory of motivation (Chapter 5) and subjective expected utility (Chapter 7). Specifically, resistance to change is higher when employees believe that: (a) the change will have more negative than positive outcomes (e.g., lost status, lower pay, poorer working conditions), and (b) the negative outcomes have a high probability of occurring and the positive outcomes have a low probability of occurring.

Although employees consider their personal costs and benefits from the change, their re- sistance or commitment also depends on their belief that the change will benefit or harm the team and company. Even if they personally benefit, to some degree employees may oppose the change if they believe others will suffer or the initiative will be ineffective for the organization. 20 Fear of the Unknown All change includes some degree of uncertainty; people lack the ability to accurately predict or visualize the future situation. When employees do not know the probability of good or bad outcomes from the change, they tend to anticipate worse rather than better outcomes. Only when the present conditions are very bad do most people welcome an Are you ready for change? Visit connect.mcgrawhill.com to identify conditions that are holding back your readiness for a specific change initiative. lack sufficient motivation, ability, role clarity, or situational support to change their attitudes, decisions, and behavior. 17 In other words, an employee’s readiness for change depends on all four elements of the MARS model. These four factors are the foundations of the six most commonly cited reasons people resist change, which are summarized here: 18 mcs62589_ch15_424-451.indd Page 429 04/12/13 7:41 AM user /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles 430 Part Four Organizational Processes uncertain future. Uncertainty is also associated with lack of personal control. 21 This lack of control generates negative emotions, particularly when the change potentially affects things of importance, such as our jobs, careers, or self-concepts. Overall, the uncertainty built into most organizational change is considered less desirable than the relative certainty of the status quo. Not-Invented-Here Syndrome Some employees oppose or even discreetly undermine a change initiative because its success threatens their self-worth. This resistance occurs when the change was developed by others, even though the practice is within the individual’s job duties or mandate. Due to this “not-invented-here” syndrome, staff sometimes deliberately inflate problems with changes that they did not initiate, just to “prove” that those ideas were not superior to their own. As one consultant warned: “Unless they’re scared enough to listen, they’ll never forgive you for being right and for knowing something they don’t.” 22 An example of the not-invented-here syndrome occurred several years ago when Gold- corp CEO Rob McEwan decided to post the mining company’s confidential geological data online and offer a handsome reward to anyone who could help find more gold on the property. The Goldcorp Challenge was a huge success, but the firm’s geological staff com- plained just before the event was launched. “We have real concerns,” they told McEwen.

“You’re going to ask the rest of the world to tell you where we’re going to find gold in our mine, and we think they’re going to think we’re really dumb and that you don’t have any confidence in us.” 23 Breaking Routines People typically resist initiatives that force them out of their com- fort zones and require them to invest time and energy in learning new role patterns. Indeed, most employees in one survey admitted they don’t follow through with organizational changes because they “like to keep things the way they are” or the changes seem too compli- cated or time consuming.

24 Incongruent Team Dynamics Teams develop and enforce conformity to a set of norms that guide behavior. However, conformity to existing team norms may discourage employees from accepting organizational change. For instance, organizational initiatives to improve customer service may be thwarted by team norms that discourage the extra effort expected to serve customers at this higher standard. Ray Davis, CEO of Umpqua Bank, warns that employees tend to revert to their past routines and habits unless the change is reinforced through systems and structures. “When you are leading for growth, you know you are going to disrupt comfortable routines and ask for new behavior, new priorities, new skills,” says Davis, whose Oregon-based bank is regarded as one of America’s most innovative financial institutions. “Even when we want to change, and do change, we tend to relax and the rubber band snaps us back into our comfort zones.” 25 mcs62589_ch15_424-451.indd Page 430 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles Chapter Fifteen Organizational Change 431 Incongruent Organizational Systems Rewards, information systems, patterns of authority, career paths, selection criteria, and other systems and structures are both friends and foes of organizational change. When properly aligned, they reinforce desired behaviors. When misaligned, they pull people back into their old attitudes and behavior.

Even enthusiastic employees lose momentum after failing to overcome the structural con- fines of the past. Unfreezing, Changing, and Refreezing According to Lewin’s force field analysis model, effective change occurs by unfreezing the current situation, moving to a desired condition, and then refreezing the system so it re- mains in this desired state. Unfreezing occurs when the driving forces are stronger than the restraining forces. This happens by making the driving forces stronger, weakening or remov- ing the restraining forces, or both.

The first option is to increase the driving forces, motivating employees to change through fear or threats (real or contrived). This strategy rarely works, however, because the action of increasing the driving forces alone is usually met with an equal and opposing increase in the restraining forces. A useful metaphor is pushing against the coils of a mattress. The harder corporate leaders push for change, the stronger the restraining forces push back. This antago- nism threatens the change effort by producing tension and conflict within the organization.

The second option is to weaken or remove the restraining forces. The problem with this change strategy is that it provides no motivation for change. To some extent, weakening the restraining forces is like clearing a pathway for change. An unobstructed road makes it easier to travel to the destination but does not motivate anyone to go there. The preferred option, therefore, is to both increase the driving forces and reduce or remove the restraining forces.

Increasing the driving forces creates an urgency for change, while reducing the restraining forces lessens motivation to oppose the change and removes obstacles such as lack of ability and situational constraints.

CREATING AN URGENCY FOR CHANGE A few months after he became CEO of Nokia Corp, Stephen Elop sent employees a scorch- ing e-mail, warning them about the urgency for change. “I have learned that we are standing on a burning platform,” wrote Elop. “And, we have more than one explosion—we have multiple points of scorching heat that are fueling a blazing fire around us.” Elop described strong competition from Apple and Google, Nokia’s falling brand preference, and its declin- ing credit rating. “We poured gasoline on our own burning platform,” he warned, pointing to the company’s poor accountability and leadership. 26 Nokia recently sold its mobile phone division to Microsoft and Elop has become Micro- soft’s executive vice-president. But this incident illustrates Elop’s strong belief that Nokia’s future depended on its employees developing a stronger urgency for change. 27 This urgency for change typically occurs by informing employees about competitors, changing consumer trends, impending government regulations, and other forms of turbulence in the external environment. These are the main driving forces in Lewin’s model. They push people out of their comfort zones, energizing them to face the risks that change creates. In many organiza- tions, however, leaders buffer employees from the external environment to such an extent that these driving forces are hardly felt by anyone below the top executive level. The result is that employees don’t understand why they need to change, and leaders are surprised when their change initiatives do not have much effect. Customer-Driven Change Some companies fuel the urgency to change by putting employees in direct contact with customers. Dissatisfied customers represent a compelling driving force for change because the organization’s survival typically depends on having LO 15-3 mcs62589_ch15_424-451.indd Page 431 28/11/13 3:41 PM f-500 /204/MH02010/mcs62589_disk1of1/0077862589/mcs62589_pagefiles