Introduction

Ongoing change is a notable characteristic of many successful organisations. Some organisations change when responding to sudden and unexpected alterations in market conditions, while others anticipate the need for change and undertake it in a proactive manner. In either case, the introduction of change offers both considerable opportunity and risk.

In this topic we look closely at the forces that influence organisational change and consider various managerial strategies for successfully dealing with the change process. As part of this discussion we give careful consideration to the key question of ‘why workers might resist change?’ We also review the nature of organisational development and how it is often used by companies to improve their effectiveness. The topic concludes with a brief overview of stress, its consequence on individual and organisational performance, and several approaches management can adopt to control stress levels in the workplace.

Objectives

On completion of this topic, you should be able to:

• identify the forces that influence change
• distinguish between planned and unplanned change efforts
• explain the use of the force field analysis in planning change
• identify the major forces for resistance to change
• discuss four differing approaches to managing organisational change
• recognise the underlying values and typical steps taken in an organisational development (OD) workshop
• discuss the concept of ‘stress’, its potential sources and consequences.

Approximate study time required

Actively engaging with the lecture content	2 hrs
Topic readings	3 hrs
Undertake the prescribed learning activities	1 hrs
Self-directed topic review	1 hrs
Total	7 hrs

Forces for change

Organisations exist within very dynamic environments and at any one time there are multiple forces that impact upon current and future operations. The unit text refers to eight specific forces that have an influence on organisational change. The first two are internal forces while the rest are external:

1. Nature of the workforce – multicultural, demographic trends, generational issues
2. Organisational performance – comparison against key indicators
3. Technology – faster, cheaper and more mobile use of ICTs
4. Economic shocks – corporate collapses, rise and fall of interest rates
5. Environmental – protection of the environment (flora and fauna) and development of renewable energies
6. Social trends – demographic trends, information sharing through the Internet, large discount retailers
7. World politics – opening markets in China, Iraq-US War, attacks on New York 11/9/01.
8. Regulatory – compliance with government regulations.

Planned and unplanned change

Organisational change can be classified as two main types of change: unplanned change and planned change. Unplanned change can also be described as reactive change while planned change can be described as proactive change. The distinction is easy to make conceptually, but in reality it is not always clear which form of organisational change was planned and which was unplanned, and often many changes have elements of both types.

Based on his historical research in over 50 major US companies, Chandler (1962) concluded that there was a major shift from functional to divisional structures in most of the organisations he studied. This process usually took 25 years or more in these companies, and none of them started out with a clear plan to move to a divisional structure. This was due, in large part, to the fact that the concept of a divisional structure had not yet been created when these organisations began their search for a solution to the problems they were experiencing. It was only much later, when the divisional structure had emerged in many companies, that the concept became clear. This example suggests that many organisational changes take place the way Columbus discovered America – by accident, while he was looking for India!

The types of changes studied by Chandler (1962) were structural. Organisational change in other areas, such as product design, can also come about by a combination of planned search and unplanned accident. Let us consider some developments in Honda Motor Company as an example of this phenomenon. (The following summary about Honda’s entry in the US market is based on Pascale, RT 1984, ‘Perspective on strategy: The real story behind Honda’s success’, California Management Review, May–June, p. 47.)

In the 1960s Honda had begun trying to export its motorcycles to the United States. Since the US was known for its wide open spaces as well as its high standard of living, Honda’s management had decided that it should produce large motorcycles for the US market, similar to the Harley-Davidsons already on sale there. These Honda motorcycles were not, however, achieving many sales in the US.

Since the Japanese economy at this time was still recovering from its destruction in the Second World War, and since foreign exchange was scarce, the small team of Honda managers sent to the US had to live very frugally. These managers shared an apartment and rode their little Honda motorcycles to work. Americans would stop them on the street to enquire about their tiny motorcycles. But the managers couldn’t imagine Americans actually wanting to buy these small machines.

It took a long time and persistent inquiries from the Americans before Honda realised that it was trying to sell the wrong product in the US market. When it began to export the same small motorcycles which it had made for the domestic Japanese market, they became extremely popular. This was the beginning of Honda’s accidental ‘discovery of America’, and its eventual success not only in motorcycles but also later in cars. (It is interesting to note that the US car manufacturers did not learn much from the discovery made by Honda and continued for many years to produce large cars which were beginning to lose market share to the smaller Japanese cars. The change in their production again came not because it was planned but because it was forced on them by the changing demand of the market.)

Another reason that organisational changes are often unplanned was suggested by Niccolo Machiavelli (1469–1520) in his classic book The Prince. Machiavelli noted that introducing a change is very difficult and dangerous because the status quo benefits many people and they resist a change to it. At the same time, any benefits which might result from the proposed changes are uncertain, and it is also difficult to identify just who will benefit from the change. It is thus difficult to find supporters for the change who will overcome the resisters to change.

An organisation’s life cycle also plays an important role in determining various changes which are likely to take place. The first stage of the organisation’s life cycle is its birth. Organisations are typically started by an entrepreneur who has a passionate desire to create a new business, often based on a new technology or product. Steven Jobs, who started the Apple computer company to produce personal computers, is an example of such an entrepreneur, as is Mitch Kapor, the founder of Lotus, the software company bought out by IBM in 1995. Such entrepreneurs are deaf and blind to all kinds of objections which friends and colleagues raise. This is probably just as well, because otherwise the entrepreneur’s venture would never get off the ground. Since the entrepreneur and the product are both untested, the traditional sources of finance, such as bank loans or share sales, are not open to them, and they often back their passionate belief by mortgaging their house.

If the business survives the first stage of its life cycle and prospers, it needs a different structure and management style. But the founding entrepreneur is seldom able to change their style. They continue to run the business out of their own head, and ignore any warnings of dangers. These were the characteristics which made them successful in the first place. But the growing organisation needs a certain degree of caution and predictability based on rules.

Some entrepreneurs realise that the business needs a change of style and structure. They usually bring in a ‘professional’ manager to balance their own intuitive and entrepreneurial style. It is difficult, however, for these two persons with opposite styles to work together. In the case of Apple as well as Lotus, the founders brought in professional managers but could not work with them. In both cases, the founders were eventually pushed aside by the managers they had brought in. Alternatively, the professional manager gets tired of being ignored or overruled by the founder and quits. This happened to several presidents of Ford Motor Company who had to work for Henry Ford.

The process of planned change

Your textbook defines planned change as ‘Change activities that are intentional and goal-oriented’. While planned change is difficult for many organisations to bring about, it can and does happen. The ability to plan and implement change is what differentiates superb managers from merely competent ones. In the computer industry, Microsoft Corporation under Bill Gates managed to grow and change while Apple and Lotus became victims of the unfulfilled need for change. (Other companies in the computer industry such as IBM, Digital, Wang, and Osborne, have also had difficulty in managing change and many of them have gone out of business.)

As Wood et al. (2006, pp. 641–644) note, many studies have shown that attempts to implement changes are often unsuccessful, and may even create new problems rather than eliminating old ones. Wood et al. (2006) also mention a study which concluded that company-wide changes, introduced by a corporate executive group, often fail. On the other hand, the same study found that changes which are created and implemented by small units, such as a plant or a department, and aimed at solving a concrete business problem, are more likely to be successful.

Force field analysis

A particularly important model of change is one which was proposed by Kurt Lewin. There are two parts to Lewin’s change model. One part of the model suggests that there are three phases to any change – unfreezing, changing and refreezing. This part of the model is described in the text on pages 455–466. In the second part, Lewin brings in the notion of an equilibrium among forces favouring and opposing change. Lewin suggests that before we can understand change, we need to understand lack of change or equilibrium. For example, suppose that a company has a productivity level which averages ten units per person per day, and that this level has remained unchanged for a considerable period of time. In Lewin’s terms the productivity level is in a state of equilibrium.

Although the equilibrium level seems to be static or stable, it can also be seen as the result of an underlying dynamic process. There are certain forces (called the driving forces) which are attempting to push the level up, while other forces (called the restraining forces) are attempting to keep the level down. When these opposing forces are equal and opposite in strength, the overall situation is in a state of equilibrium, just as the centre in a tug of war remains constant when the two sides are equally matched.

Just as it is possible to identify the individual members on each side in a tug of war, it is possible to identify the forces pushing the productivity level upwards or downwards. Lewin calls this process ‘force field analysis’. The important finding from the research by Lewin and his associates is this: given a choice between attempting to increase the driving forces and to decrease the restraining forces in a force field, it is more effective and less costly to try to decrease the restraining forces (when trying to increase a variable such as productivity).

As an example, suppose that management is interested in increasing the productivity level from ten units per person to twelve units. Its first inclination is likely to be to increase the pressure on the workers to be more productive, either by offering them an incentive bonus for increasing productivity or by threatening to fire them unless the productivity goes up. According to Lewin’s theory, this type of management response is not likely to be very effective.

A better response would be to ask: ‘what are the forces which press the workers to restrain their productivity?’, and then to attempt to remove or weaken these forces. For example, the workers may fear that if they produce more, some of their fellow workers would become redundant and lose their jobs. Or if the workers are paid on a piece rate, they may fear that the increased productivity would lead to a reduction in their piece rate.

If such fears are acting as forces pushing the productivity level down, and if management can remove these fears, then productivity will increase. Lewin’s theory can be illustrated with an analogy: if you wish to increase the water temperature in a shower, it is more economical to turn down the cold water than to turn up the hot water. Or to use another analogy, the presence of positive and negative forces in an organisation is like driving a car with one foot on the brake and the other on the accelerator. If you wish to increase the car speed, it would be better to take the foot off the brake than to increase the pressure on the accelerator.

Lewin and his associates also carried out research on the role which participation in decision making can play in reducing resistance to change. Their main finding is that people who are given an opportunity to participate in the change process are less likely to resist its implementation, especially if their participation takes place in a group. An experiment supporting this finding was carried out by Coch and French (1948) in an American textile factory called Harwood Manufacturing Corporation.

Harwood management had observed that when workers were told to make any change in their production method, their productivity dropped and the number of grievances and turnover rate increased. The management invited Coch and French, two colleagues of Lewin, to investigate ways in which change could be introduced more effectively.

Coch and French chose 46 women employees who worked in the pyjama manufacturing section. They divided these women into four groups. Each group was to carry out a simple change in the way the pyjamas were made. Three of the groups, consisting of 13, 8, and 7 women respectively, were given an opportunity to discuss the purpose of the change and their ideas were sought as to how to implement it. (The group of 13, due to their larger size, were asked to appoint two representatives on their behalf to discuss the change. The representatives then acted as trainers for the remaining 11 women.) The fourth group, with 18 women, followed the normal change procedure, which was for the supervisor to tell the group that a change was going to be made in the production processes and how it was going to be implemented. This fourth group was the control group in the experiment. Observations of each group were made for 40 days.

Coch and French found that there was a great deal of difference in the behaviour of the three experimental groups compared to the control group. The productivity in the experimental groups rose to 61 units whereas it had been 50 units before the experiment started; nobody quit; and the relations within the groups and with the supervisors were cordial and cooperative. By contrast, three of the 18 women in the control group had quit in the 40 days; productivity remained at about 50 units; and there was considerable friction between the group and members of management, including numerous formal grievances.

To confirm that the differences between the groups were caused by the opportunity to participate, and not by personality differences, the researchers broke up the control group and dispersed them in various parts of the factory for about two months. At the end of this period, the remaining 13 women were again brought together. (Two more women had quit in the two month period.) Here they were given an opportunity to participate in a change process as the three experimental groups had been earlier. This new group was observed for 19 days. During this period productivity increased significantly, and the relations with management remained cordial.

The results of the Coch and French experiment have continued to be used in various companies. Their latest manifestation, inspired to some extent by Japanese management practices, is in Quality Circles (and the Total Quality Movement in general). In quality circles employees are consulted for their ideas on how to improve quality, and these ideas are utilised in the change process as far as possible. Quality circles is an example of a technique which can be used to improve the effectiveness of an organisation and its ability to implement change as and when it is needed. There are many other similar techniques which researchers have discovered in the last fifty years or so. These techniques represent an approach to improving organisational effectiveness which is called Organisational Development.

Resistance to change

Attempts to introduce change often fails, as we have noted. This failure can be explained, in part, by realising that any change threatens the status quo, and the status quo generally serves the interests of at least some members of the organisation.

The resistance to change can come from individuals as well as from the organisation as a whole. The following diagram, sourced from McShane & Travaglione, 2007, p. 504, provides a visual depiction of several key forces that resist change.

Approaches to managing organisational change

The text refers to three effective approaches used to manage organisational change:

1. Lewin’s three-step model
2. The positive model
3. Organisational development.

Organisational development (OD)

The Coch and French experiment suggests that to successfully introduce an innovation, an organisation needs to empower its employees. As the rate of change and global competitiveness increases, organisations need to be increasingly innovation-minded, and this is facilitated by an organic structure, as we discussed in Topic 8. The process of innovation is closely related to an approach called Organisational Development.

According to Wood et al. (2006, p. 673), Organisational Development (OD for short) can be defined as:

the application of behavioral science knowledge in a long-range effort to improve an organization’s ability to cope with change in its external environment and increase its problem-solving capabilities.

This process is similar in spirit to an individual who might engage in physical exercise, use stress reduction techniques and improve nutrition to enhance his or her physical fitness.

Organisational development has had a history of almost half a century. It began in the 1940s under the name of sensitivity training. It was originated in the National Training Laboratory in Bethel, Maine, in the US. Sensitivity training’s focus was on the individual members of organisations. Its assumption was that people are not aware of how they relate to other people, and how their personality affects their relationships with other people with whom they work.

In order to increase the participant’s ‘sensitivity’ to their own interpersonal behaviour, they were placed in a group of a dozen or so people. The group had a leader, usually an experienced psychologist, but the leader refused to play a leadership role. Instead, he encouraged the group members to say whatever they wished to say.

In such a situation participants usually feel uncomfortable because of the vacuum left by the formal leader. Some members begin to fill the vacuum by saying such things as ‘Let’s create an agenda for our group discussion’. At this point someone else is likely to speak up and ask ‘Who appointed you a leader?’. Pretty soon, several members will find themselves in heated arguments while others remain silent or feel bewildered.

At this point the leader comes back in the discussion and asks the participants to examine what has been happening in the group: who spoke, their approach to the group as reflected by their comments, and what impact their speaking had on the others. The focus of the discussion is thus shifted to the ‘here and now’ of what is happening in the group, rather than some abstract theory or agenda, or a discussion of what happened in the company at various points in the past. The groups meet for two to four days, with frequent breaks, and participants learn to give each other honest feedback on how their personal style affects the others. Many emotions come to the surface, and many insights are learned, although there have been occasional cases of some people who had traumatic experiences or nervous breakdowns in the groups.

While the sensitivity training (which was also known as the T-group or the Training group) seemed to benefit many people at the individual level, and gave them important insights, it was criticised for not having much impact on the organisation’s functioning. Once the members left the sensitivity group laboratory and returned home to their workplace, their behaviour returned to their previous style. As a result, sensitivity training gradually went out of fashion by the 1970s as a tool for organisational (as against personal) development.

The newer OD techniques are oriented towards producing change and measurable results for the organisation as a whole, rather than producing changes in awareness among individual members. They take on a more macro view of organisations, being concerned with issues of team building, and organisational communication and restructuring. They frequently use an approach called action learning or action research in which participants improve their functioning as a group and as an organisation by tackling some real problems and, in so doing, learn to utilise each other’s strengths in a cooperative way.

An example of a typical OD workshop

Here’s an example of an organisational development workshop designed for the senior management of a major national bank. It took place over three days and was directed by three external consultants. There were approximately 20 participants who were either chief managers of various regional offices of the bank or heads of the major departments in the bank’s head office. The workshop took place at a resort-type facility some distance from the Bank’s head office, in order to ensure that the flow of the workshop was not interrupted by the day-to-day work demands on the participants.

The external consultants had carried out an attitude survey in the bank prior to the OD workshop. It involved some 200 employees of the bank at various levels, chosen to represent different types of branches and administrative offices of the bank. The attitude survey had questions about any problems the employees had to deal with in their work and their opinions about the managers they had to deal with in solving the problems.

The consultants divided the workshop participants into groups of five people, assigned at random, and gave them summaries of the answers to the survey given by the 200 employees. Each group was asked to consider the following questions: ‘Are there any interesting patterns which emerge from the survey data given to you? What implications, if any, do these patterns have for the effective functioning of the Bank?’. The groups were given about an hour to discuss these questions.

Since the groups were created by random assignment, each group had members from the regions as well as the head office. Since the survey revealed certain problems as perceived by the respondents, the groups felt free to talk about these problems, rather than to be polite and pretend that there were no problems. With the mixed background of the members in each group they discovered that they often had personal experiences and opinions about many of the problems revealed in the survey data, and that their perceptions were often varied.

The first session thus encouraged honest dialogue within the groups. The groups were then asked in the second session to come together and present their group reports. (Most sessions typically were between one and two hours in duration and participants had numerous tea and meal breaks between sessions. The breaks not only gave some time for relaxation but also allowed the participants to discuss their thoughts on the previous sessions with their friends in an informal way.)

After the group reports had been presented, the groups were then re-formed, this time on the basis of where each person worked. In this third session they were given the following assignment: Put yourself in the shoes of the other group (regions versus head office). What problems would the other group complain about? Which of them are caused by your group? The technique of asking groups to put themselves in the other group’s shoes is also called the Organisational Mirror technique.

This exercise created both laughter and empathy. When the groups returned from their discussions, each group gave reports about the problems they believed the other groups would complain about. To most people’s amazement, their predictions about the complaints from the other group were quite accurate.

In further sessions, groups were asked to list, and then rank in order, the problems their group caused for the others and experienced from the others; to list the steps each group would be willing to take to solve a problem for the other groups, provided the other groups did the same things; to make a list of problems which could be solved in the short term versus medium or long term; and methods for quantifying and determining whether the promised steps were actually taken by different groups to solve certain problems. In the final session the groups created a timetable for another OD workshop in six months in which the progress made, if any, would be measured.

The above sequence of steps is not uniformly followed in all OD projects, but is a typical example. Hopefully, some progress towards resolving problems would have been made when the six months had passed and the groups meet again. If so, the momentum for further progress will continue.

The unit textbook identifies several OD interventions such as sensitivity training, survey feedback, process consultation, team building, intergroup development and appreciative inquiry. As seen in the previous example of an OD workshop, many of these interventions can be combined in one workshop, depending on the needs of a specific organisation.

As mentioned earlier, the more recent OD approach is aimed at achieving organisational results. It starts from a database (such as the attitude survey), encourages team building in the task of interpreting the data and agreeing to take cooperative actions flowing from the interpretation. It then encourages the groups to create benchmarks to observe and quantify progress made in achieving results. The solutions come from an eclectic mix of techniques: changing technology, changing organisational structure, changing the production process, and so on. The actual mix of techniques is guided by the pragmatic criterion of achieving results, and chosen on the basis of the collective experience of the participants.

Work stress and its management

Work stress is an increasingly common outcome of organisational change. Besides the fear of job loss, organisational restructuring can also result in greater workload demands. Therefore while the end of a restructuring program may be viewed as a sign of relief, for many workers the real pressure is only just beginning. Managers must be able to identify the sources and symptoms of stress if they are to implement an effective stress-management system.

Summary

Organisations must continuously change and adapt to their changing circumstances if they are to survive and thrive in today’s challenging business environment. Making a change is, however, not easy. People resist change for a number of reasons and the nature of the required change is often not clear. As a result, organisations often put off change as long as they can. The change, when it comes, is thus often a result of environmental (market) forces pushing the organisation into making an unplanned change. Some organisations do, however, engage in a planned change effort. The research by Lewin and his associates is very useful in suggesting techniques which are more likely to lead to a successful planned change. Two of the most important techniques discussed in the topic are to focus on the restraining forces and to encourage employee participation when determining what changes are needed and how to implement them.

Based on the work of researchers such as Lewin, organisational researchers have created an approach to organisational change called Organisational Development. OD emphasises individual development in its early stages, when ‘sensitivity training’ was first created about fifty years ago. In recent years, however, OD has emphasised organisational effectiveness more than individual development. There are several specific techniques that fall under the general label of OD, and many of these techniques are used in combination in an OD workshop. Organisational development does not always succeed in producing the desired change but the available evidence suggests that it works in about half of the organisations that try it.

Recognising that any planned program of change can have a detrimental impact on the psychological well-being of workers, the topic concluded with a brief overview of ‘stress’ and its major sources. Within this discussion it was also recognised that stress can have a positive influence on performance. As professional managers, students should recognise that they have a moral obligation to try and balance the level of stress incurred by their colleagues.