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Managing Organizational Change

Managing Organizational Change. Why do most organizational change attempts fail and what can managers do about it?. Program Structure. Session I: Organizational Change – Concepts and Problems What is organizational change? Why do managers fail in organizational change?

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Managing Organizational Change

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  1. Managing Organizational Change Why do most organizational change attempts fail and what can managers do about it?

  2. Program Structure Session I: Organizational Change – Concepts and Problems • What is organizational change? • Why do managers fail in organizational change? Session II: Executing Organizational Change • What are the critical elements of executing change? • What are some of the practical aspects of implementing change?

  3. What is Organizational Change? • ERP and IT Changes • Visioning • Strategic Plans • Portfolio Consolidation/Diversification • New Business Models • M&As / Alliances • Restructuring • High Performance Work Systems

  4. Scale of Organizational Change Large-Scale Organizations generally underestimate the scale of change. Incremental (Greenwood & Hinings, 1996)

  5. Pace of Organizational Change Gradual Rapid Organizations generally overestimate how quickly they can make change happen.

  6. Types of Change Scale Incremental Large-Scale Gradual Rapid Pace

  7. Academic-Oriented Literature on Organizational Change • Rational Adaptation Models in the 1970sOrganizations respond (change) readily to contingencies • Limits to Organizational Change in the 1980s • Isomorphism – Change largely limited to conforming to what other organizations do • Strong inertial tendencies of organizations “The probability that organizations will be able to succeed at core change is very low.” • TODAY: Focus on understanding limits and how to counter them

  8. Common Organizational Change Failures • Innovative HRM programs are not fully adopted and implemented • ERP and IT initiatives regress backwards • Visions don’t stick • Strategic plans remain as plans • Restructuring leads to restructuring…. • Change programs don’t generate benefits • M&As don’t add value for acquiring firms

  9. Organizational ChangeFailure Rates • Between 60-90% organizational change plans don’t succeed • “In a recent Bain survey, 70% of the companies said their change management initiatives did not deliver the expected results.” (www.bain.com; Dec. 2010)

  10. Academic Research: Understanding Limits to Change • Large, longitudinal analyses of innovation and change across organizations • Case studies and process tracing looking at internal dynamics of change in organizations

  11. Making Change Happen: A Leadership View John Kotter (1996) – Leading Change • Process View • Trace missteps leaders make • Prescriptive • Emphasize key steps leaders need to make change happen

  12. Missteps Error 1: Leaders don’t sufficiently address complacency [to get urgency] • Assume people are on board • Believe facts are enough • Rely on anxiety and fear • Don’t appeal to heart - “See-Feel-Change”

  13. Error 2: Leaders fail to get key influencers on board • Diversity matters: People with title, opinion leaders, needed expertise, etc.

  14. Error 3: Leaders underestimate the power of Vision • Simple • Sensible • Provides imagery • See benefits • Passes the test of Elevator Ride

  15. Error 4: Leaders under-communicate the vision • GEs Jack Welch: “Real communication takes countless hours of eyeball to eyeball, back and forth….And, it must be absolutely relentless.”* *Tichy, N. & R. Charan. 1989. “Speed, simplicity, self-confidence: An interview with Jack Welch, Harvard Business Review, Sept-Oct: pp. 113.

  16. Error 5: Allowing obstacles to block the new vision • Identifying, isolating, and silencing resistors • Removing or modifying organizational practices that act as barriers

  17. Error 6: Failing to build in short-term wins • Not just hoping, actually building in wins Error 7: Failing to institutionalize organizational change • Making the meaning and value of change part of fabric of organization Error 8: Declaring victory too soon

  18. Basic Hurdles to overcome Cognitive Hurdle Putting managers face-to-face with problems and customers; Finding new ways to communicate Political Hurdle Identifying and silencing internal opponents; isolating external ones Resource Hurdle Focusing on the hot spots and bargain with other critical parties Motivational Hurdle Putting the stage lights on and frame the challenges to get engagement

  19. Contrasting Assumptions About Change

  20. How do we accomplish change?

  21. But how do we do the change?Are there any practical strategies?

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