Chapter 13 MANAGING CHANGE AND INNOVATION Prentice Hall

Chapter 13 MANAGING CHANGE AND INNOVATION © Prentice Hall, 2002 13 -1 1

Learning Objectives You should learn to: – Contrast the calm waters and white-water rapids metaphors of change – Describe what managers can change in organizations – Explain why people are likely to resist change – List techniques for reducing resistance to change – Describe the situational factors that facilitate cultural change © Prentice Hall, 2002 13 -2 2

Learning Objectives (cont. ) You should learn to: – Explain how process reengineering is related to change – Describe techniques for reducing employee stress – Differentiate between creativity and innovation – Explain how organizations can stimulate and nurture innovation © Prentice Hall, 2002 13 -3 3

What Is Change? Change – alterations in people, structure, or technology – change is an organizational reality – managing change is an integral part of every manager’s job • complicates the jobs of managers © Prentice Hall, 2002 13 -4 4

Forces For Change External Forces – marketplace - adapt to changing consumer desires – governmental laws and regulations - frequent impetus for change – technology - source of change in almost all industries – labor markets - HRM activities must change to attract and retain skilled employees in the areas of greatest need – economic - uncertainties about interest rates, budget deficits, and currency exchange rates © Prentice Hall, 2002 13 -5 5

Forces For Change (cont. ) Internal Forces – originate from the operations of the organization – forces may include strategy, workforce, new equipment, or employee attitudes Manager as Change Agent – change agents - act as catalysts and assume responsibility for change • manager may serve as change agent – may be more thoughtful, overcautious • outside consultant - used for systemwide changes – produce more drastic changes than insiders © Prentice Hall, 2002 13 -6 6

Two Views Of The Change Process The Calm Waters Metaphor – Lewin’s three-step model • unfreezing - preparing for the needed change by: – increasing the driving forces that direct behavior away from the status quo – decreasing the restraining forces that push behavior towards the status quo » status quo - conceived to be an equilibrium • changing - move to another equilibrium level • refreezing - make change permanent – objective is to stabilize the new situation – change is a break in the organization’s equilibrium state © Prentice Hall, 2002 13 -7 7

The Change Process © Prentice Hall, 2002 13 -8 8

Two Views Of The Change Process (cont. ) White-Water Rapids Metaphor – consistent with uncertain and dynamic environments – consistent with a world increasingly dominated by information, ideas, and knowledge – managers must continually maneuver in uninterrupted rapids • managers face constant change – today, managers must be ready to efficiently and effectively manage the changes facing their organizations or their work areas © Prentice Hall, 2002 13 -9 9

Three Categories Of Change Structure Work specialization, departmentalization, chain of command, span of control, centralization, formalization, job redesign, or actual design Technology Work processes, methods, and equipment People © Prentice Hall, 2002 Attitudes, expectations, perceptions, and behavior 13 -10 10

Managing Change Initiating Change: – identifying what organizational areas might need to be changed – putting the change process in motion – managing employee resistance to change Types of Change – changing structure - organization’s formal design, centralization, degree of formalization, and work specialization • structural components and structural design © Prentice Hall, 2002 13 -11 11

Managing Change (cont. ) Types of Change (cont. ) – changing technology - modifications in the way work is performed • alterations in the methods and equipment used – consequence of competitive factors or innovations within an industry – automation - replaces tasks done by people with machines – computerization - recent visible changes in information systems © Prentice Hall, 2002 13 -12 12

Managing Change (cont. ) Type of Change (cont. ) – changing people - changes in employee attitudes, expectations, perceptions, and behavior • organizational development (OD) - techniques or programs to change people and the nature and quality of interpersonal work relationships – intended to help individuals and groups work together more effectively © Prentice Hall, 2002 13 -13 13

Organizational Development Techniques Sensitivity Training Survey Feedback More Effective Interpersonal Work Environment Process Consultation © Prentice Hall, 2002 Team Building Intergroup Development 13 -14 14

Managing Change (cont. ) Dealing with Resistance to Change – Why people resist change • change replaces the known with ambiguity and uncertainty • change threatens investments in the status quo • belief that change is incompatible with the goals and interests of the organization – Techniques for reducing resistance • a variety of actions available to managers to deal with dysfunctional resistance © Prentice Hall, 2002 13 -15 15

Managerial Actions to Reduce Resistance to Change © Prentice Hall, 2002 13 -16 16

Contemporary Issues In Managing Change Changing Organizational Culture – culture resistant to change because it is made up of relatively stable and permanent characteristics – strong cultures are particularly resistant to change – Understanding the Situational Factors - makes cultural change more likely • dramatic crisis occurs • leadership changes hands • organization is young and small • culture is weak © Prentice Hall, 2002 13 -17 17

Contemporary Issues (cont. ) Changing Organizational Culture (cont. ) – How Can Cultural Change Be Accomplished? • requires a comprehensive and coordinated strategy – unfreeze the current culture – implement new “ways of doing things” – reinforce those new values • change, if it comes, is likely to be slow • protect against any return to old, familiar practices and traditions © Prentice Hall, 2002 13 -18 18

The Road to Cultural Change © Prentice Hall, 2002 13 -19 19

Contemporary Issues (cont. ) Continuous Quality Improvement Programs – continuous, small, incremental changes – fix and improve current work activities – rely on participative decision making from the bottom levels Process Reengineering – dramatic shift in the way an organization does its work – begins with the redesign of work • define customer needs • design work processes to best meet those needs – requires participation from managers and workers © Prentice Hall, 2002 13 -20 20

Continuous Quality Improvement Versus Reengineering Continuous Quality Improvement • Continuous, incremental change Reengineering • Radical change • Fixing and improving • Redesigning - starting over • Mostly “as is” • Mostly “what can be” • Works from bottom up in organization • Initiated by top management © Prentice Hall, 2002 13 -21 21

Contemporary Issues (cont. ) Handling Employee Stress – What is Stress? • a dynamic condition a person faces when confronted with an opportunity, constraint, or demand related to what s/he desires – outcome is perceived to be both uncertain and important – typically associated with constraints and demands • stress is not necessarily bad • potential stress becomes actual stress when: – outcome is both uncertain – outcome is important © Prentice Hall, 2002 13 -22 22

Contemporary Issues (cont. ) Handling Employee Stress (cont. ) – Causes of Stress • found in organizational and personal factors • change of any kind is potentially stressful • uncertainty around important matters © Prentice Hall, 2002 13 -23 23

Causes Of Stress Personal Factors © Prentice Hall, 2002 STRESS Job-Related 13 -24 24

Symptoms Of Stress Physiological Psychological Symptoms of Stress Behavioral © Prentice Hall, 2002 13 -25 25

Contemporary Issues (cont. ) Handling Employee Stress (cont. ) – Reducing stress • controlling certain organizational factors – employee’s abilities should match job requirements – improve organizational communications » reduce ambiguity – performance planning program » clarify job responsibilities » provide performance feedback – job redesign » reduce boredom or work overload © Prentice Hall, 2002 13 -26 26

Contemporary Issues (cont. ) Handling Employees Stress (cont. ) – Reducing stress (cont. ) • offering help for personal stress – general considerations » difficult for manager to control this source of stress » ethical considerations – available approaches » employee counseling » time management program » sponsored wellness programs © Prentice Hall, 2002 13 -27 27

Stimulating Innovation Creativity versus Innovation – creativity - ability to combine ideas in a unique way or to make unusual associations between ideas – innovation - process of transforming creative ideas into a useful product, service, or method of operation © Prentice Hall, 2002 13 -28 28

Systems View Of Innovation Inputs Creative individuals, groups, organizations © Prentice Hall, 2002 Transformation Outputs Creative process Creative product(s) Creative situation 13 -29 29

Stimulating Innovation (cont. ) Stimulating and Nurturing Innovation – must focus on inputs • creative people and groups within the organization – requires appropriate environment • structural variables – organic design – plentiful resources – frequent inter-unit communication © Prentice Hall, 2002 13 -30 30

Stimulating Innovation (cont. ) Stimulating and Nurturing Innovation (cont. ) – requires appropriate environment (cont. ) • cultural variables – encourage experimentation – reward success and failures – celebrate mistakes • human resource variables – promote training and development of employees – offer high job security – encourage individuals to become idea champions » self-confident, persistent, risk taking » energize others with visions of innovation © Prentice Hall, 2002 13 -31 31

Innovation Variables © Prentice Hall, 2002 13 -32 32