TYPOLOGY OF ORGANIZATIONAL CHANGES Prof Kroly Balaton Institute

TYPOLOGY OF ORGANIZATIONAL CHANGES Prof. Károly Balaton Institute of Management The presentation is based on the book: Farkas Ferenc: A változásmenedzsment elmélete és gyakorlata (in Hungarian)

GROUPING OF ORGANIZATIONAL CHANGES Typology Organizational Strategic changes Mainly Culture Vision theoretical Structure Positions ------------------------------------------Mainly in Systems Programmes activities People Means -------------------------------------------

RADICAL VERSUS INCREMENTAL CHANGES Incremental Characteristic Radical Change change ------------------------------------------Changes in one or The scope of change Many or all org. a few characteristics change ------------------------------------------Moderate changes The size of change Important changes In organizational org. Characteristics characteristics

RACICAL VERSUS INCREMENTAL CHANGES - continued Incremental Characteristic Radical Change change -------------------------------------------Changes at one or Level of changes Changes at all levels a few hierarchical of the hierarchy levels -------------------------------------------Step-by-step less Mode of changes Larger „jumpings” less visible changes during the changes -------------------------------------------Relatively slow Speed of changes Changes at fast speed changes

RADICAL VERSUS INCREMENTAL CHANGES - continued Incremental Characteristic Radical Change change ------------------------------------------Improving external The major aim of Improving external adaptation or adjust- change adaptation or ment of subsystems creating new configuration ------------------------------------------Lower of middle Management of Top management levels managers changes is responsible are responsible

FAST OR SLOW CHANGES IN IMPLEMENTATION Factors to be taken into account when deciding on timing of changes: • Possible extent and forms of resistance to change. • Positions of change promoters and of those behind the resistance. • Who ownes the most important information for the changes. • What type of risk is involved in the changes. The larger the possible danger of short term survival, the more arguments are for fast changes.

PROACTIVE VERSUS REACTIVE CHANGES Types of changes Incremental Radical ------------------------------------------Proactive Fine tuning Change in direction ------------------------------------------Reactive Adaptation Reestablishment

CHANGES BASED ON E-THEORY OR O-THEORY Dimensions of E-theory O-theory Changes ------------------------------------------Aims To maximize Development of share-holder value org. capabilities ------------------------------------------Management Top-down Bottom-up ------------------------------------------Focus Structure and Organizational systems culture

CHANGES BASED ON E-THEORY OR O-THEORY - continued Dimensions of E-theory O-theory Changes ------------------------------------------Process Emphasizing structure Formulation of and systems corporate culture ------------------------------------------Reward systems Motivation by financial Motivation by means appreciation ------------------------------------------Role of consultants To analyse the problem Resources to and suggest solutions develop the capabilities of members

CHANGES AT STRATEGIC LEVEL • It is the authority of management to direct changes – When using this approach the top managers take direct responsibility for implementing the changes. The change process is going through the formal channels of management, lower levels are not involved. – The advantage of this approach is that the change can be implemented within a relatively short period of time. – The disadvantage is that it does not take into account any viewpoints or opinions and reactions. – The possibility of resistance is high. – This approach may be advantageous in crisis situations.

CHANGES AT STRATEGIC LEVEL - continued • Change management as a problem-solving process – This approach is used when change is perceived as a consequence of a technical problem, which requires the recommendations from experts. – Change recommendations are accepted as they are seen as recommendations for decisions serving the interest of the organization. – The advantage of this approach is the suggestions from outside are often more accepted as internal recommendations. – Possible disadvantage is that the foreign expert do not have enough information on the organization where the change is taking place.

CHANGES AT STRATEGIC LEVEL - continued • Bargaining about change – This approach accepts the right of those influenced by the change to participate at the change process. – The managers are ready to discuss the change with the groups involved and are ready to accept ideas for modifications. – The disadvantage of this approach is that the change process may take longer time. – The advantage is that employees influenced by the changes may provide support for the changes.

CHANGES AT STRATEGIC LEVEL - continued • In the change process we have to influence both the hart and the brain of people. – This approach is based on the perception that the behaviour of people is influence by their values and beliefs. – If we want to successfully implement the changes than we have to change their values and beliefs. – External expert may help in this change process, but is may take longer time to change the cultural characteristics of people.

CHANGES AT STRATEGIC LEVEL - continued • We are all interested in the implementation of changes – Members of the organization have to be involved in the change process in order to have their support for the changes. – External expert may be involved in the change process to help to convince the members of the organization for the need of changes.