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9 Leading Change

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Learning Objectives

After reading this chapter, you should be able to:

• Understand the nature of organizational change. • Apply aspects of the change models to specific organizational circumstances. • Lead and manage the change process effectively. • Recognize additional complications that can occur as organizations make changes.

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Introduction

Tasty Catering, a large full-service catering company in Chicago, is owned by three broth- ers: Tom, Larry, and Kevin Walter. In 2005, CEO Tom Walter was approached by his son and another Tasty employee. They told Tom that if things didn’t change they were going to look for work elsewhere. The conversation opened Tom’s eyes to a multitude of problems that further investigation proved to be true but that others were afraid to share. It also became the catalyst for a transformational change process that not only saved the company from closing its doors but also turned it into an award-winning company that served as an incubator for other entrepreneurial activities and the subject of a book about how to build organizations for success (Thompson, Benedetto, Ramon, Walter, & Meyer, 2013).

The change process began with the brothers taking the book Good to Great by Jim Collins and using it to transform the company step by step. The leaders learned to operate in a more collaborative way and committed to building a highly ethical, employee-centered, customer- friendly organization that performed far above the norm. They established a set of core values to be featured on a daily basis when making decisions. They also created two employee-run councils to give input regarding top-level decisions, including everything from how things are done, to new strategies, to acquisitions. Everyone, from the executives to the dishwashers, was involved in working together and sharing ideas. Culture became critical to the success of the organization to the point that the CEO’s title was changed to chief culture officer. The result has been that the company transformed into a vital, growing, successful business that became a magnet for attracting talented people, a training ground for future entrepreneurs, and the source of a multitude of awards including being one of the Top 100 Best Places to Work in the United States, the Caterer of the Year, the Number One Best Place to Work in Illi- nois, and many others. The willingness of leaders like those at Tasty Catering to undertake needed changes made the difference.

Effectively managing the change process is vitally important in today’s times. Leaders need to make learning to manage change a top priority. Today’s leaders are immersed in nonstop change. In efforts to succeed in an increasingly competitive and global marketplace, organi- zations are involved in a wide variety of change efforts. Some are involved in changing their mission, strategies, goals, cultures, processes, systems, practices, and technologies. Others are involved in restructuring, flattening, and possibly downsizing the organization and in cost- cutting efforts. Many organizational leaders experience a reshuffling of people from top to bottom and having to adapt to mergers and acquisitions that result in major changes. All of these efforts involve change and the need for a high level of skills in managing change. Some authors even believe that the very futures of organizations will depend on the ability to mas- ter managing change (Hayes, 2003).

This chapter considers four items. First, we will examine the basic nature of organizational change. Next, we’ll look at various models of change. Then, leadership strategies and skills are outlined. Finally, the chapter closes with an examination of the additional challenges associ- ated with change.

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Section 9.1 The Nature of Organizational Change

9.1 The Nature of Organizational Change

The world of business is experiencing an increasing rate of change, a trend that Alvin Toffler (1970) predicted nearly half a century ago. Changes can come in many forms. Some are small alterations to minor processes. Others are major changes, such as restructuring an organiza- tion or appointing a new leader. Large or small, they need to be effectively managed as they may affect behavior, performance, and morale and may cause other outcomes. Table 9.1 dis- plays types of change to consider.

Table 9.1: Types of changes

Planned

Unplanned

Evolutionary

Incremental

Transformational

Planned changes are those made intentionally that require a purpose and a plan to execute. Planned changes can be large or small and require minimal or in-depth planning. They include, for example, changes in products, services, processes, systems, structures, personnel, or tech- nology or reorganizations, mergers, or acquisitions. The greater the impact of the change and the more complex the change, the greater the need for planning and involvement in design- ing and implementing the change and expertise in effective change management becomes. Planned changes that are not carefully designed and implemented have a lower probability of success. In contrast, consider the addition of the Kindle to Amazon’s operations in 2007. This well-planned launch led to a greater expansion of product line offerings over time.

Unplanned changes naturally evolve or occur in response to internal or external events, or are made with little if any consideration given to planning the change. Unplanned changes could be slow and unnoticeable such as changes in societal values and the diversity or inter- nationalization of the workforce. They also result from unanticipated events such as natural disasters, significant domestic or global economic or market changes, or new government regulations. Unfortunately, the major source of unplanned change is leaders who approach change without a strategy for planning and implementing changes.

Evolutionary changes are slow-developing unplanned changes that occur with little action by leaders. Leaders should pay attention to possible slow-moving trends such as societal, technological, or generational changes so they will not be caught off guard when they sud- denly begin to have an impact. Many companies including Borders bookstores are no longer around because top managers did not anticipate the changes taking place in the industry.

Incremental changes are the most common form of change. These are planned changes designed to result in improvements in an organization or to respond to internal or external events. They could involve any of the previously mentioned changes. They are incremental in that they are a planned response and are likely to result in a small to medium degree of change. One analogy suggests that incremental change represents a nibble on an apple rather

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Section 9.1 The Nature of Organizational Change

than taking a “big bite.” Doing so represents a safe approach for a leader, who can watch to see if the moves help or hurt the company without causing major upheaval. Over time this can lead to a productive new course of action for the company. As an example, Zappos.com began selling only shoes in its online operations, but over time has evolved into a variety of product offerings.

Transformational changes are the planned events that result in major differences in the way things are done. The term “transformation” signifies something significant or dramatic. Transformational changes could involve a noticeable change in the vision, mission, core val- ues, or culture of an organization or the strategies, processes, systems, or structures of an organization (Porras & Silvers, 1991; Tichy, 1993). IBM, Ford, and Xerox, for example, basi- cally had to undertake transformational changes in order to remain vital and competitive.

Unfortunately, many of the failures in managing all of these types of change can be attributed to leaders who do not approach it from the proper perspective. Change is often a top-down process. Leaders frequently announce changes that are not based on a clear understanding of the situation with minimal or no involvement of those most impacted by what is about to take place. Consequently, changes often have little to do with the realities facing those required to implement them. Further, when key stakeholders are not involved in planning and imple- menting the changes, they are likely to be unwilling or unmotivated about making the change successful. Other change failures result when leaders do not take into account the impact of change on the health, effectiveness, and self-renewing capabilities of an organization.

Another problem is that few leaders are knowledgeable about how to manage change and consequently most changes fail. Extensive change research indicates that 70% or more of organizational changes fail to achieve the desired results or fail altogether with the “cure” sometimes being worse than the “disease” (Kotter, 2007; Burke, 2011; Miller, 2002; The Con- ference Board, 1994; Senge, 1999). Imagine the far-reaching consequences of a high failure rate at implementing changes. Some of the failures associated with attempts to make neces- sary changes can be attributed to employee resistance.

The purpose of this chapter is to prepare managers and leaders to be in better positions to anticipate and make changes. Doing so requires an understanding of many factors, includ- ing things that cause companies to need to change along with methods used to implement changes.

Change Factors

What causes a company to need to change? Any number of forces can lead to the decision to make changes in an organization. Factors that lead to change may be found inside a company and can also be dictated by external events (see Table 9.2). Leaders should identify items that lead to change and then propose the types of responses that best fit the situation.

Table 9.2: Change factors

Internal Factors

Growth

Crisis

Opportunity

External Factors

Political forces

Social forces

Economic forces

Competition

Technological Factors

Internal

External

Internationalization

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Section 9.1 The Nature of Organizational Change

Change Factors

Table 9.2: Change factors

Internal Factors

Growth

Crisis

Opportunity

External Factors

Political forces

Social forces

Economic forces

Competition

Technological Factors

Internal

External

Internationalization

Internal Factors The first set of items that can inspire change comes from within the company. Three primary forces include company growth, a crisis, or an opportunity. In terms of growth, a variety of theories have been proposed suggesting that as an organization increases in size, many pres- sures to make change emerge. Growth leads to greater numbers of employees, expansion in terms of building space and operating locations, the delivery of new products and prod- uct improvements, and increases in the number of specialties or specialists. In essence, one change (growth) leads to other changes (methods of operation).

Blau and Schoenherr (1971) and Chandler (1962) note that many companies tend to form with a centralized, functional form of organizational structure. In other words, one key indi- vidual, often the entrepreneur who founds the company, directs all activities and makes all key decisions. The structure of the company features basic functions, such as accounting, sales, and production. With growth, the top manager becomes less able to be involved in every single activity, which leads to delegation and decentralization of authority. Growth has led to a change in the way the company is managed.

An organizational crisis will also drive change. When a firm is threatened, two changes become more likely. First is recentralization, or a process by which a manager seizes control and becomes more authoritative and directive in response to a challenge to the organization. Second, firms threatened by various forces also tend to create departments or organizational subunits (task forces, committees) to respond to the crisis (Thompson, 1967). The company deploys a new structure in response to the crisis. In both instances, a leader will be primarily in charge of the changes.

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Section 9.1 The Nature of Organizational Change

The third internal factor that leads to change is an opportunity. Netflix and other providers have discovered that it is possible to deliver content prepared by others but also to develop original programming to be sent out using the same venue. The result has been expansion of these companies and dramatic changes to their managerial structures. The opportunity presented by Internet streaming of video content led to these changes. Such changes affect Netflix and all other competitors, including the major television networks.

External Factors Many times, factors outside of the organization dictate what happens inside. The external environment often shapes the responses company leaders must make in order to remain competitive. Leaders constantly monitor political, social, economic, and competitive elements in the environment in order to keep the company responsive to trends and changes.

Political forces are often expressed through laws, regulations, and regulatory agencies. Each election cycle creates the potential for new laws that will affect a specific business, such as the credit industry and Internet commerce. The same holds true for taxation and tax policies. The manner in which a company or industry is taxed affects the operation of that firm or industry. Court decisions also lead to changes. In 2015, the Supreme Court changed laws regarding same sex couples, which meant that companies across the country were expected to respond. Many firms, such as airlines and food production, are affected by the nature of governmental subsidies and loans. Company leaders monitor political activities that might affect a firm’s status.

Social trends also generate change. The social environment in the United States has shifted dramatically over the past half century. Demographic shifts, such as the composition of family units (single-parent households, mixed families), have altered the manner in which consum- ers make purchases and carry out other activities associated with business organizations (day care, insurance). Currently, many leaders have encountered a changing workforce, largely affected by the nature of education. Specifically, at one extreme there is a highly educated population of college graduates and others with training beyond high school. At the other, a growing number of individuals do not complete high school before entering the workforce. This bifurcation in educational attainment may have dramatic effects on the workplace of the future, and leaders will be expected to cope with the situation.

Economic shifts have had a dramatic impact on companies over the past two decades. The 2008 recession changed many companies in a long-lasting fashion. Company leaders were challenged to respond to the crisis of unemployment along with many economic side effects, including low interest rates, higher rates of default on loans, and shifting purchase patterns in which wary consumers became less willing to part with disposable dollars. The move from a production-based to a service-based economy has changed business dramatically over the past half century, and leaders have been assigned to cope with the new economy.

Competitive forces often drive companies to change. Consider the delivery of music to con- sumers. Dominant record companies at first would not even allow the music to be played on radio stations. When some artists demanded the change, it eventually took place and radio- delivered music became the norm. Then, record producers were challenged by new technolo- gies such as audio and cassette tapes. Not long after, music via CDs became the standard. Now,

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Section 9.1 The Nature of Organizational Change

independent artists can create music and load it to sites on the Internet, thereby creating an entire new delivery of music in which consumers have a greater impact on the success levels of individual musicians, just as devices such as iPhones replace CDs. Managers and leaders in many music-related companies must now cope with these changes in the environment.

Technological Forces Technology changes companies in internal and external ways. At times, technology is essen- tially forced on the company and leaders must respond. For example, the ability to purchase stock online changed the nature of the financial markets just as travel sites on the Internet changed the manner in which consumers buy airline tickets and book hotels. In both instances, the companies that formerly served consumers in one way (booking hotels by phone) were forced to meet the new standards set by changing technology.

Technology can also represent an internal force that drives changes. When a firm develops a new device or method that creates a competitive advantage, it must change in order to respond. Leaders are in charge of implementing such changes.

In summary, numerous forces lead to the planned, unplanned, evolutionary, incremental, and transformational (revolutionary) changes companies undergo. Leadership will always be at the forefront of identifying things that need to be changed and then implementing specific activities and operations within those companies.

Internationalization For many years, the impact of internationalization on the operations of various companies has risen dramatically. Global forces become causes of change in many ways, including the effects related to:

• increasing competition; • impact on the workforce; and • impact on operational methods.

In terms of competition, many firms now encounter circumstances in which competition may be found not only down the street or in the same city, but from companies around the world. Everyday items such as clothing and food are produced and shipped from faraway places, forc- ing managers to adapt to numerous changes in terms of the tactics used to respond to them. Further, some items that were relatively unique a half century ago have been adopted and are now frequently used in new settings. Condiments such as salsa and soy sauce are examples. Manufacturers of bigger-ticket items including durable goods (washers, microwave ovens), automobiles, and electronics (mobile phones, laptops) now encounter and must respond to worldwide competition, which forces dramatic changes. Service providers including telemar- keting, financial items, and others face the same new dynamic, competitive environment and must change in response.

Globalization has also changed the workforce. In some companies, the ability to offshore and outsource has driven down wages or eliminated jobs in one economy while providing jobs in another. Also, managers in multinational forces find that they must adapt to multicultural

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Section 9.1 The Nature of Organizational Change

diversity, including differences in language, religion, social mores, and methods of conduct- ing business. Training programs must be adapted to account for differences in these factors when working with others within the same company or with members of other companies in foreign countries.

Globalization also affects operational methods. Use of the metric system rather than the tradi- tional U.S. standards of weights and measures offers a small, simple example. When working with foreign countries, managers need to understand differences in human resources prac- tices, advertising and marketing programs, methods of manufacturing, and many other ele- ments of business practice. For example, did you know that the use of coupons, while widely accepted as being “frugal” in the United States, may indicate lower class and status and there- fore consumers in some other countries may not redeem them, even when doing so would be helpful?

Clearly globalization and the fast pace of business have forced changes in many companies. Even a factor such as shipping cost and speed now influences the practice of business in many companies. Leaders need to understand and account for these factors.

What Do Companies Change?

It is one thing to say that companies make changes. It is another to describe what actually gets changed. Leaders of all types will be expected to understand the kinds of changes that com- panies make along with methods for making those changes. In general, the nature of change in a company takes the forms of the items noted in Table 9.3, and can range from incremental to transformational improvements.

Table 9.3: Company changes

Strategies, tactics, and plans

Processes

Culture

Organizational structure

Company technology

Jobs

Employees

Most notably, company leaders are expected to design and implement changes at the strate- gic, tactical, and operational levels. Many of the more unplanned, revolutionary, and trans- formational changes take place at the strategic level. Changes such as product diversification (new products and services); mergers, acquisitions, and takeovers; vertical integration (tak- ing over a new part of the marketing channel); and joint ventures are strategies that involve dramatic changes within the organization that leaders devise and put in place. At the other extreme, decisions to cut back, downsize, divest, or liquidate part of a company’s operations are also strategic changes that leaders must undertake.

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Section 9.1 The Nature of Organizational Change

Tactics are efforts designed to support strategies. In 2015, McDonald’s began selling breakfast items throughout the day, a tactical decision designed to bolster sales without changing the company’s overall operations. Many changes with regard to product improvements, advertis- ing/marketing programs, and accounting practices are implemented at the tactical level.

Company plans include changes such as alterations to a budget or single-use plans, such as remodeling a store or creating a different company name (Domino’s instead of Domino’s Pizza). Operational leaders often are in charge of changes that affect lower-level employees. In the case of Domino’s, someone was in charge of changing the store’s internal and external signage at each location while educating employees about what to call the company when dealing with customers.

Companies must also change organizational processes. The decision-making process of the organization, as well as how it solves problems, handles conflicts, communicates with and motivates its employees, and executes decisions may all undergo alterations during the change process. This, in turn, can transform organizational culture by way of the values, prac- tices, and general environment that is fostered by these procedural changes.

Many corporations have undergone changes in organizational structure over the past few decades. The term “re-engineering” applies to structural modifications that change the authority/responsibility relationships present in companies. Many strategies, such as adding new products or entering international markets also dictate changes in organizational struc- ture (Chandler, 1962; Rumelt, 1974). Leaders provide the guidance to these activities.

Technology can be a cause or an effect. A change in technology, when dictated by outside forces, becomes an effect. When a company develops, modifies, or creates a new technology, it will be the cause of change. Either way, leaders are at the forefront. As an example, the influence of technology on television programming has reshaped professional sports. Now, for instance, a person can order an NBA League pass through a cable TV or satellite system, which allows the individual to watch any game in any market every night. Additional reve- nues created by such technologies have raised funds, which means teams can now pay players greater sums of money and many players have chosen to relocate to new employers (teams) as a result. The influence of technology has generated a dramatic effect on the entire opera- tions of every team in the league.

Company leaders often dictate changes in the ways jobs are performed. Job “redefinition” is one example. A job, such as that of salesperson, may have always been focused on “pioneering” or finding new customers. At some point in time, when a solid client list has been established, the same job of salesperson becomes a “missionary” occupation designed to maintain solid relationships with customers rather than finding new buyers. Many jobs have been changed by new technologies. Think of an entry-level position, such as secretary or administrative assistant, and how much that job has changed due to new technologies. Lower-level leaders often direct such changes.

Employees are changed when someone is fired and someone else is hired. A leader will be responsible for such an action. Also, however, employees may change when people are simply moved around or reassigned. A quality leader may spot an individual who is best suited to fin- ish a certain task or solve a problem and may consequently reassign people in order to serve the needs of the company.

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Section 9.1 The Nature of Organizational Change

In summary, leaders are required to make many types of changes. The manner in which those changes are made may vary, depending on the nature of the situation. Part of the success of a leader’s tenure will be determined by his or her ability to inspire and produce changes at all levels of the organization.

Self-Reflection Questions

1. Rate the five types of change in terms of their level of “upheaval” as it impacts low-ranking employees. Explain your ratings.

2. Identify the relationships between the factors that cause companies to change, as summarized by Table 9.3.

3. Describe how making changes to jobs and employees can be a strategic, tacti- cal, or operational change. Defend your answer.

Howard Schultz: A Return to Starbucks

In 1993, CNN published an article asking if Howard Schultz, founder and CEO of Starbucks, has been the best CEO ever (LaMonica, 2013). Indeed, his distinguished career as an entrepreneur, leader, and activist would at least deserve some consideration. It all began in 1981, when Schultz first visited a Starbucks store. From his first cup of Sumatra, he was drawn in and joined a year later. As noted on the Starbucks website:

In 1983, Howard traveled to Italy and became captivated with Italian coffee bars and the romance of the coffee experience. He had a vision to bring the Italian coffeehouse tradition back to the United States—a place for conversation and a sense of community. A third place between work and home. He left Starbucks for a short period of time to start his own Il Giornale coffeehouses and returned in August 1987 to purchase Starbucks with the help of local investors. From the beginning, Starbucks set out to be a different kind of company. One that not only celebrated coffee and the rich tradition, but that also brought a feeling of connection. (Starbucks, 2016, para. 4–5)

His dream was recognized and the company grew to epic proportions. After leaving for a time in 2000, Schultz concluded that the organization had drifted off course through overexpansion, a loss of the Starbucks experience in some locations, the 2008 U.S. financial crisis, and new competitors. Consequently, he returned to the organization in 2008, directing a series of major changes to renew the company, including closing some area stores for 3 1/2 hours for employee retraining.

The emphasis on change worked. Starbucks has regained a strong share of the market and continues to grow. Its name remains part of the national conversation. Schultz’s leadership clearly opened the path to revitalization of the company.

Andrew Burton/Getty Images

Howard Schultz announced a free college tuition program for Starbucks employees in 2014.

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Changing organization

begins implementing

change

Refreezing organization makes the changes

permanent

Unfreezing organization becomes motivated to change

Section 9.2 Models of Change Processes

9.2 Models of Change Processes

Process is a term used to describe how you do things, and content is a term used to describe what you do. The very important point to be made is that how you do things is as important as what you do. With regard to change, it means that leaders need to be discerning both in terms of what they change and how they change things. Even if you change the right things, the change is not likely to be successful if made the wrong way. This section presents various models of change processes including the approach developed by Kurt Lewin, the Cummings and Worley general model, the Kotter model, and appreciative inquiry.

The Lewin Model for Change

More than 50 years ago social psychologist Kurt Lewin (1951) developed what many con- sider to be the first formal organization change model. To this day, it remains the most written about model on change and has become the prototype for many other change models. Lewin proposed a three-phase model of change, as you can see in Figure 9.1.

Figure 9.1: The Lewin change model

Adapted from Lewin, K. (1951). Field theory in social science. New York: Harper and Row.

Changing organization

begins implementing

change

Refreezing organization makes the changes

permanent

Unfreezing organization becomes motivated to change

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Step 1 Step 2 Step 3 Step 4

Entering and Contracting

Diagnosing Planning and implementing

Evaluating and Institutionalizing

Section 9.2 Models of Change Processes

Unfreezing is the process of letting go of old ways of thinking and doing things while creating the motivation to change. Change usually involves altering or radically adjusting currently held behaviors, attitudes, perspectives, and practices. There are many ways to do this such as diagnosing the situation, presenting convincing data, educating people, providing compelling reasons for change, and developing a change team to guide the change process.

Change or movement is the process of taking specific actions to make needed changes. In this phase, leaders show support for the changes, changes are planned and implemented, and people are empowered to get things done.

Refreezing is the process of following through on changes, reinforcing and aligning everything needed to support the desired changes, sustaining the changes, and evaluating and learning from the change process.

The Lewin model has been criticized for being a phased rather than a dynamic model and for being too simplistic for a world of complex change. However, it provides an excellent concep- tual model for understanding the change process.

The Cummings and Worley General Model of Planned Change

In the book Organization Development & Change Cummings and Worley offer a four-step approach to planned change (2015). The authors emphasize in describing their model that planned change is a joint process carried out by professionals and organization members and that the process is a dynamic rather than a linear process that involves overlapping activities. Figure 9.2 displays the four steps.

Figure 9.2: The Cummings and Worley general model of planned change

Cummings, T. G., & Worley, C. G. (2015). Organization development & change. Samford, CT: South-Western College Publishing, a division of Cengage Learning.

Step 1 Step 2 Step 3 Step 4

Entering and Contracting

Diagnosing Planning and implementing

Evaluating and Institutionalizing

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Section 9.2 Models of Change Processes

In Step 1, someone has identified an issue or opportunity. Initial data is gathered to explore or understand the issue or opportunity further, and who would be involved in the change pro- cess is identified. Internal and/or external professionals would likely be considered in Step 1, and whether the organization decides to engage in a change process, a contract or agreement is made to engage in planned change.

Step 2 involves doing a thorough diagnosis of issues, or with a positive change approach, col- lecting stories about positive attributes in the organization. Gathering, analyzing, and feeding back data are the primary activities involved in this step. Typically, information is gathered regarding three levels of activity including individual, group, and organizational issues. A variety of diagnostic methods can be used, like surveys, interviews, observations, and inter- nal information that is available such as the organization’s vision, mission, core values, and goals or information on turnover and growth.

In Step 3, organizational members and practitioners jointly plan and implement interven- tions to make needed or useful improvements. Interventions should be designed with the vision and goals of an organization in mind. A skilled practitioner considers several criteria in helping design interventions such as the organization’s readiness for change, the capabilities for making desired changes, the alignment of the culture with the desired changes, and the level of change agent skills available. The practitioner will also be aware of the need to build support for change, keep those involved in the change engaged and motivated, and sustain the momentum for change.

Finally, in Step 4, sustaining changes becomes another critical part of the change process. Neglect in this important area will typically result in changes underachieving the desired results or regressing back to former behaviors and practices. Consequently, changes need to be evaluated so organization members can decide whether the changes should be continued, modified, sustained, or suspended. The term “institutionalizing change” is used to describe finding ways to support and reinforce the change and make sure that it lasts as long as needed.

Kotter’s Eight-Step Process

Kotter’s model, which we discussed earlier in this text, was presented in his book Leading Change (1996). He later expanded his thoughts on the model in his book co-authored with Dan Cohen titled The Heart of Change (2002) in which he introduced the idea of engaging hearts as well as minds in the change process. In these works change involves:

1. establishing a sense of urgency and a compelling reason to make the change; 2. forming a power coalition to lead the change; 3. creating a new vision with supporting strategies; 4. communicating the vision to all employees; 5. empowering others to act on the vision, including encouraging risk taking and

creativity; 6. planning for and rewarding short-term “wins” that move toward the new vision; 7. consolidating improvements, reassessing changes, and making adjustments; and 8. reinforcing the changes by showing the relationship to organization success.

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Identify and appreciate the best

What will be

What might be?

Visioning

What could be? The Ideal

Appreciative Topic

2. Dreaming

4. Delivering

3. Designing

1. Discovery

Section 9.2 Models of Change Processes

No matter which approach is used, managers should remember that change is often an unset- tling process. Expect individual employees to be uncomfortable for a time.

Kotter’s model differs from the others in several ways. First, it is primarily a model for chang- ing whole organizations, although many of the steps would apply to making changes of any type and for any size group. It is also a model for making transformational changes and not smaller changes or improvements. The model offers a number of unique approaches. It recog- nizes the need to establish a sense of urgency for change and compelling reasons for change. Another unique step is creating a guiding coalition to manage the change process. A guiding coalition or change team may be implied in other models but would be considered an option rather than automatic step in the change process. Other unique ideas include the importance of seeking short-term wins and anchoring new approaches in the culture.

Appreciative Inquiry

One newer approach to change management is appreciative inquiry. Its roots began in the early 1980s when David Cooperrider was a doctoral student under the guidance of Suresh Srivastva at Case Western Reserve University. In 1990, Srivastva and Cooperrider edited a book on the subject, and since that time others have followed, one of which is a book edited by Cooperrider, Sorensen, Yaeger, and Whitney entitled Appreciative Inquiry: An Emerging Direction for Organization Development (2001).

Appreciative inquiry focuses on what an organization is doing right, on creating images of what is possible, and on finding inno- vative ways to create the future. While traditional change models often focus on what is not work- ing and how to make improve- ments, AI chooses the positive as the focus of inquiry. The assump- tion is that inquiring into the true, the good, the better, and the possible will energize change faster and better than discov- ering and fixing what is not working. The positive approach to change is part of a growing movement in the social sciences called “positive organizational scholarship,” which focuses on positive dynamics in organiza- tions that produce extraordinary outcomes (Cameron, Dutton, & Quinn, 2003). Appreciative inquiry concentrates on four steps, as displayed in Figure 9.3.

Figure 9.3: Four steps of appreciative inquiry

Identify and appreciate the best

What will be

What might be?

Visioning

What could be? The Ideal

Appreciative Topic

2. Dreaming

4. Delivering

3. Designing

1. Discovery

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Section 9.2 Models of Change Processes

In the discovery phase, individuals are interviewed to discover positive elements of the orga- nization or target of inquiry. An AI specialist or preferably organizational members develop an interview protocol to interview people about strengths, best practices, accomplishments, rewarding experiences, and what individuals or a group would like to see happen more often. The interviews are evaluated to determine common themes.

The dreaming phase shifts to dialogues about the future and envisioning what the ideal could be. Those involved develop “possibility propositions” that present a truly exciting, provoca- tive, and possible picture of the future. This phase is designed to energize participants as they are encouraged to dream big and new ideas begin to emerge.

In the designing phase, participants consider ideas for an envisioned future and eventually form a collective model of what the ideal for the future should look like. They also consider the actions it would take to get to the future.

In the delivering phase, a plan, execution strategy, and set of goals is established to move the organization to the envisioned future. The process then moves to action and assessment with the members making changes, assessing the results, and making needed adjustments.

Successes using appreciative inquiry have been reported at the individual, group, commu- nity, organizational, and national levels (Browne & Jain, 2002; Cooperrider, Whitney, & Stav- ros, 2008; Kelm, 2005). Some of the companies that have reportedly experienced successes in using the approach include the British Broadcasting Corporation, Canadian Tire, AVON Mexico, and American Express (McShane & Von Glinow, 2015). Perhaps the most significant accomplishment has been in influencing a greater emphasis on the positive in planned change efforts.

There have been, however, concerns expressed about this approach. The method advocates that portray “traditional planned change processes” as taking a “deficit” approach that focuses on problems and how to overcome them would be correct in pointing out that this would be a limited approach to change that overlooks the positive and opportunities. Although most approaches focus on strengths and weaknesses, current realities, and future ideals, apprecia- tive inquiry narrows in on the energizing effect of focusing on the positive, and those who prefer a more traditional approach would likely say that overlooking realities and only focus- ing on the positive could also be limiting.

Another concern focuses on the complexity of the approach and the lack of agreement about what is to occur in each step of the process. While leaders can learn and practice the funda- mentals of traditional change principles, it requires a trained professional to guide the pro- cess. An additional concern is identifying the conditions, cultures, and leadership styles in which the method would be a fit (Yaeger, Sorensen, & Bengtsson, 2004; Bushe, 2011).

At the most general level, this positive approach has been generally well received, although there is not always agreement on some of the philosophical assumptions. As with any approach, appreciative inquiry is not always successful and there are scholars who argue for more empirical and longitudinal research of this method.

In summary, these four approaches to instituting change offer value to leaders at every level in an organization. They all focus on the future while seeking to find ways to incorporate

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Section 9.2 Models of Change Processes

followers into the change process. Without follower involvement, any change becomes much more likely to fail. Table 9.4 summarizes the four models discussed here.

Table 9.4: Comparison of steps in the planned change process

Action Research Cummings and Worley Kotter Appreciative Inquiry

1. Identifying issues or opportunities

1. Entering and contracting

1. Establishing a sense of urgency

1. Discovery (dialogu- ing about strengths, best practices, accom- plishments, rewarding experiences, the best of what is)

2. Engaging a change agent

2. Diagnosing 2. Creating the guiding coalition

2. Dreaming (envision- ing what might be)

3. Assessing present realities and future ideals

3. Planning and imple- menting change

3. Developing a vision and strategy

3. Designing (develop- ing a collective image of what should be and exploring actions for getting there)

4. Involving the appro- priate people in evalu- ating data and planning changes

4. Evaluating and insti- tutionalizing change

4. Communicating the change vision

4. Delivering (plan- ning and implementing changes to accomplish what will be, assess results, make adjust- ments, sustain changes)

5. Implementing the desired changes

5. Empowering broad- based action

6. Evaluating progress, making needed adjust- ments, and learning from the process

6. Generating short- term wins

7. Consolidating gains and producing more change

8. Anchoring new approaches in the culture

Self-Reflection Questions

1. Do you think the three-step model of unfreezing, change, and refreezing is as simple as it sounds? Explain your answer.

2. Does the term “unfreezing” apply to the other three models of change described in this section? If so, how? If not, why not?

3. Compare the eight steps in the Kotter approach to change with the four steps of appreciative inquiry, explaining similarities and differences.

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Change Agent

A person who is a specialist in managing change and developing

high-performance organizations, teams, and

individuals.

Change Leader

A person in a leadership position who can

significantly influence the success or failure of

a change effort and provide the support and the leadership

necessary for change to succeed.

Change Champion

A person who initiates and champions needed changes. An organization needs to develop change champions at all levels of the

organization. However, it is particularly important to have change champions at the top.

Change Team

A team that is responsible for planning, managing,

monitoring, and championing a change

effort.

Change Supporter

A person who supports needed changes in

attitude and actions, offers valuable assistance in

accomplishing change, and encourages the

change agents, leaders, and change champions.

Section 9.3 Leadership and the Management of Change

9.3 Leadership and the Management of Change

Planned change is the process of using sound change principles and knowledge to plan and implement changes. A quality program significantly increases the probability of successful change. Planned change should be a dynamic process of planning, implementing, adapting to changing conditions, and making needed adjustments. Leadership plays a key role in the planned change process. This section presents some of the primary concepts associated with planned change. First, we examine the various roles associated with managing change. Next, the nature of action research is described.

Roles in Managing Change

Five key roles become part of managing change (see Figure 9.4). The change leader is the person who provides the support and direction necessary for change to succeed. Change leaders are a major key to success. When they clearly advocate for the change and assure that a sound process will be used to make it, the probability of success rises. Conversely, when they are not clearly supportive of the change or do not understand what it takes for the new course of action to be carried out, there is a much lower probability of success.

Figure 9.4: Five key roles in managing change

Change Agent

A person who is a specialist in managing change and developing

high-performance organizations, teams, and

individuals.

Change Leader

A person in a leadership position who can

significantly influence the success or failure of

a change effort and provide the support and the leadership

necessary for change to succeed.

Change Champion

A person who initiates and champions needed changes. An organization needs to develop change champions at all levels of the

organization. However, it is particularly important to have change champions at the top.

Change Team

A team that is responsible for planning, managing,

monitoring, and championing a change

effort.

Change Supporter

A person who supports needed changes in

attitude and actions, offers valuable assistance in

accomplishing change, and encourages the

change agents, leaders, and change champions.

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Section 9.3 Leadership and the Management of Change

The change agent is a specialist in managing change and developing healthy, high- performance organizations. In a broad sense, a change agent could be any person in any type of endeavor who causes major changes. In the context of change management, change agents are internal or external professionals who provide special expertise in building healthy, high-performance organizations and in managing the change process. They may be responsible for planning and implementing changes or for helping others plan and implement changes. They are used pri- marily for major changes but are not needed for all changes. Many midsize to large organiza- tions have internal change agents in a human resources department or have access to one or more outside consultants who specialize in organization development. In today’s times of dynamic change, having or having access to a skilled organization development and change specialist can be invaluable to the success of an organization. Some of the larger organizations that have used organization development change professionals include General Electric, Kai- ser Permanente, DuPont, Intel, Boeing, Procter & Gamble, Microsoft, and IBM.

The change champion is a person at any level of an organization who champions the process (Warrick, 2009). Change champions come from leadership or nonleadership roles. The indi- vidual could be the person who initiates a change, makes sure a change gets accomplished, or both. Every change needs a change champion. Without someone responsible for accomplish- ing a change, it will often not survive or will result in undesirable outcomes. Depending on the change involved, change champions may work with or without a team in accomplishing changes.

Change team members work with change agents or change champions to help plan, manage (implement), and monitor changes. Change teams are also sometimes called a “guiding coali- tion.” If the members are carefully chosen, change teams can be a powerful force in making changes successful. The members should ideally be respected and influential people who are in the best position to plan and manage the change. They may have expertise or ideas needed by the team, or they may represent parts of the organization that the change will impact. As much as possible, it can also be helpful to have at least one member on the team who is at a senior level or has influence at a senior level so the team will be taken seriously and can make decisions without the constant approval and second guessing of others above the team.

A change supporter is any person who clearly endorses a change and offers assistance or influence in accomplishing it. Building support for change, especially from people who can influence the success or failure of change, is a critical part of the change process, as support creates momentum for change and a lack of support can slow down or kill change.

Action Research

Action research is the fundamental model used in almost all planned change processes. In addition to developing the three-stage change process, Kurt Lewin also created the action research concept. The basic concept involves identifying issues or changes, gathering data regarding issues or changes, feeding the data back to the appropriate people, and involving those people in evaluating the data and planning actions. It includes engaging a change agent or change champion to guide the process along with evaluating the progress, making needed adjustments, and learning from the process.

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Section 9.3 Leadership and the Management of Change

Action research makes a number of unique contributions regarding how change should be managed. First, it is a data-driven process. Changes are typically made by a person or team based on what is assumed to be the real issues or opportunities. Action research is based on gathering data to identify reality before treating what is assumed to be reality. This sends a powerful message to leaders to learn to check out reality before jumping to conclusions and launching changes that are at best addressing symptoms and at worst addressing the wrong issues or opportunities altogether.

A second unique contribution is having a person knowledgeable about change lead, guide, or facilitate the change process. This could be a change agent who is trained in change manage- ment or a change champion who is knowledgeable of at least the fundamentals of managing change.

A third feature is involving the appropriate people in the change process. This is a departure from how typical change decisions are made with a leader or small group of people such as an executive team making most of the change decisions with little or no input from those closest to the change, most knowledgeable about the changes needed, most impacted by the change, or assigned to implement the change. In action research, the appropriate people are involved in evaluating rel- evant data and helping plan and implement changes.

A fourth feature is learning from the change process. Seldom is time taken to evaluate whether changes resulted in the desired outcomes nor is time taken to learn from the change process and to pass on what was learned to others.

The action research approach to change is always evolving into new applications and adapt- ing to changing times. For example, in a fast-moving environment with greater time pressures and demands for results, action research needs to develop faster methods and focus more on visible and measurable results. Some of the more recent applications include using action research on a global basis; adapting methods to different cultures; using action research to address large-scale changes and social, political, and community issues; and an even greater emphasis on the involvement of organization members in all phases of the change process rather than relying predominantly on professional change agents (Shani, Mohrman, Pasmore, Stymne, & Adler, 2007).

Purestock/Thinkstock

A key feature of action research is involving the appro- priate people in the change process.

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Section 9.3 Leadership and the Management of Change

Systems Thinking

Leaders are not typically trained to look at the implications of change before making changes. Systems thinking helps leaders think through change from a big picture perspective. Systems thinking involves looking at the entire organizational system and its interacting parts when considering changes. It recognizes that a change in one part may have intended or unintended consequences in other parts.

An example of systems thinking would occur as a company considers making changes in its primary technology. When company leaders view such a change from a systems perspective, they may discover how the change will affect the manner in which employees relate to one another and get things done.

Another example takes place when changing a reward system to encourage the sales force to increase business through individual incentives. The new reward system may yield an unin- tended consequence that could be simultaneously discouraging teamwork.

Systems thinking assists leaders as they think through the impact of a change on the organi- zation and the impact of the organization on the change. For example, it may be desirable to encourage more teamwork only to discover from a systems perspective that the organization is not presently designed to value and reward teamwork. Leaders may need to make changes in the system to align the system with the desired new approach or method of operation.

An Integrated Change Model

Based on the extensive knowledge available regarding planned change, the question is: What are the basic fundamentals that leaders (and change champions as well) need to know about planned change? Most of the fundamentals can be understood by: (1) adopting a sound change model that includes the stages of change and steps in the change process that are part of each stage; (2) providing a change checklist that guides leaders in thinking through the stages of change and steps in the change process; and (3) creating an action planning form that lead- ers can use in planning changes. Figure 9.5 provides an example of a change model, and a checklist is located in the Leadership Applications and Tools section at the end of this chapter.

Ideally an existing or developed planned change model should include the big picture three stages of change and the steps in the change process. Lewin’s three-stage model of unfreez- ing, changing, and refreezing is a good place to start in considering models. The model pro- vided in Figure 9.5 builds on the Lewin model but uses different terms to be more reflective of today’s times of dynamic change. For example, in Stage 1, change is not just about unfreez- ing old behaviors. It can also involve making improvements, learning from the best practices of others, and envisioning new and better ways of doing things that may or may not require unfreezing old behaviors. The three stages of change are preparation, implementation, and transition. Arrows flow back and forth between stages to reflect the dynamic nature of change.

Figure 9.5: A planned change model

Adapted from Warrick, D.D. “Launch, Assessment, Action Planning, and Implementation.” From (Ed.) Rothwell, W.J., Stavros, J.M., Sullivan, R.L., Sullivan, A. Practicing Organization Development, 3rd edition. Published by Pfeiffer. © 2009 John Wiley & Sons.

Stage I Preparation

Stage II Implementation

Stage III Transition

Step1 Exploring

Step 2 Diagnosing

and Planning

Step 3 Building

Commitment

Step 4 Managing Change

Step 5 Sustaining

Step 6 Evaluating

and Planning

Step 7 Learning

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Stage I Preparation

Stage II Implementation

Stage III Transition

Step1 Exploring

Step 2 Diagnosing

and Planning

Step 3 Building

Commitment

Step 4 Managing Change

Step 5 Sustaining

Step 6 Evaluating

and Planning

Step 7 Learning

Section 9.3 Leadership and the Management of Change

Systems Thinking

An Integrated Change Model

Figure 9.5: A planned change model

Stage I Preparation

Stage II Implementation

Stage III Transition

Step1 Exploring

Step 2 Diagnosing

and Planning

Step 3 Building

Commitment

Step 4 Managing Change

Step 5 Sustaining

Step 6 Evaluating

and Planning

Step 7 Learning

Preparation In the preparation stage, leaders take specific steps to prepare the organization for change. Unfortunately, some leaders overlook this stage because they are eager to start and get things done. Effective leaders note that time that is invested wisely in preparing the organization for change will accelerate the process and will often make the difference in success or failure.

The first two steps in the preparing stage, exploring along with diagnosing and planning, are similar to most planned change models. Efforts are made to identify possibilities for change, the appropriate people are involved in leading and managing the change, and a commit- ment is made to proceed with the change process. The third step, building commitment, is an important addition to traditional models. When key people are committed to the change and the change process, the probability for successful change will be high. When efforts are not made to build commitment, changes are likely to meet resistance and obstacles that will slow down or undermine changes.

Implementation The implementation stage involves effectively managing the change process. Typically, a change agent or change champion will oversee the implementation stage, often with the help of a change team. This includes involving the appropriate people in planning and implement- ing changes; arranging for any education and training needed to successfully implement the changes; keeping people informed, focused, and engaged in the change process; and building in reliable feedback mechanisms to monitor and manage the change process. This last activ- ity of building in reliable feedback mechanisms is particularly important to successful change efforts. When a leader does not receive effective feedback during the process, the change can be ineffective or even counterproductive. Obtaining regular honest information during prog- ress makes it possible to make timely and needed adjustments.

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Section 9.3 Leadership and the Management of Change

Transition The transition stage is critical. Without it, changes are not likely to be sustained. Leaders may waste considerable time, effort, and resources by not investing in Stage 3 of the change process. The first step in the transition stage is to make provisions for sustaining changes. Leaders should recognize and, where appropriate, reward those involved in the change pro- cess, as well as inform people about what has been accomplished. The major key to sustain- ing changes is to assure that there is a champion assigned to maintain, modify, or redirect the changes and that any needed adjustments are made to align the organization to support the change.

The second step is evaluating and planning, meaning that depending on what is needed, some level of a diagnosis is made to evaluate progress and the change process and use the informa- tion to make any needed plans for the future. The third step is a learning activity designed to learn from the change process and use the information for planning future changes. Curiously, often leaders do little to evaluate successes and things that could have been done differently or better, and to make sure that what has been learned is used in the future. Organizations that take the time to learn from the change process can become highly skilled at managing change.

Providing a Change Checklist A planned change checklist that describes each step under each stage in the change process makes it possible for leaders and change champions throughout the organization to plan and manage most change processes even though they have not had the specialized training of a change agent. The checklist should be used as a guide in planning and managing change rather than a rigid list of activities.

Creating a Change Action Planning Form The final fundamental item that leaders need to make changes is a change action planning form. Once leaders have a change model and checklist to understand what needs to be done for changes to have a high probability of success, the next step is to plan the change. This approach is based on another concept developed by Kurt Lewin called force field analysis. Finally, leaders develop a plan for each stage of the change process. The appropriate people should be involved in the planning process.

In summary, developing skills in managing change requires far more than learning and apply- ing a little knowledge about change. It requires a sound philosophy about managing change that can be applied to the myriad situations in which change is involved. Leaders are critical to the success or failure of changes. It is important to understand the roles they can play in the change process (Shirey, 2013; Lutz, Smith, & Da Silva, 2013). When leaders understand the change process and provide the leadership and support needed for changes to succeed, the probability of success becomes much higher, the change process will be accelerated, there may not be as much resistance to change, and there will be a stronger incentive to be engaged in the change process.

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Section 9.3 Leadership and the Management of Change

O. P. Bhatt: Committing to Change

The State Bank of India, dating back to 1806, was the largest bank in India in terms of assets. Unfortunately, the aging bank was starting to yield market share to more customer-oriented, sophisticated, tech-savvy private banks. When O. P. Bhatt, a lifetime employee at the bank, was appointed chairman, he was alarmed at the shrinking market share and lack of motivation in the 200,000-plus workforce. He committed to transforming the large bank. He began by talking to senior executives in small groups to get them committed to changing the bank.

Bhatt then invited the top 25 executives to a 5-day concave where they were asked to generate ideas for transforming the bank. They concluded with a 14-point agenda that focused on how to improve the business and how to get people energized and committed to transforming the bank.

Planned change was once the domain of professionals in organization development and change management. It was a process used primarily for major, and often organization-wide, changes. Eventually it became evident that organization development and change methods could be used at all levels of an organization for all types of development and change issues. While some changes clearly need the expertise of internal or external change agents, or a combination of both, many do not. The planned change process can be used for big and small changes and changes of all types, such as changing a whole organization or team or making a technological, process, system, or structural change.

We have now entered a time of dynamic change when it makes sense to train leaders and change champions throughout the organization in the fundamentals of planned change. Lead- ers are in the most strategic position to make and manage or mismanage needed changes. Their skills or lack of skills regarding change efforts could be the difference between the well- documented 70% or more change failure rate or a more likely 70% or more success rate, and they could have a significant impact on the success or failure of organizations. Training change champions throughout the organization in the fundamentals of planned change could also increase the probability of successful change, as skills in planned change are needed at all levels of an organization.

Self-Reflection Questions

1. Rate the degree of leadership involved (from minor to major roles) in each of the five roles played in the change process.

2. How could the concepts present in action research be applied to the systems thinking process? Explain your answer.

3. How do the concepts present in the systems thinking process apply to the integrated change process model presented in this section?

(continued)

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Section 9.4 Additional Challenges

9.4 Additional Challenges

Many factors will affect the future of planned change and the field of organization develop- ment—the primary discipline that studies planned change. Globalization, technology, and the demand for accelerated and documented results will influence the methods that are used, the way planned change is delivered, and how results are measured (Sorenson, Head, Mathys, Preston, & Cooperrider, 1995). For example, technology provides new ways of diagnosing organizations and makes it possible to manage some change processes in cyberspace as well as face to face. The interest in worldwide research on change is growing and change manage- ment is becoming a popular topic at academic and professional conferences. Two additional challenges in the area of change leadership remain: (1) instituting change in cross-cultural, international settings, and (2) overcoming resistance to change.

Cross-Cultural/International Settings

Global and cultural boundaries can make the formulation and implementation of change strategies, tactics, and plans much more difficult. Factors that keep companies from making alterations to any course of action include mistrust, differences in cultural values, and eth- nocentrism. Whenever employees in one country work with those in another, the potential for mistrust evolves. Mistrust can evolve from past disagreements between national leaders or current debates about international policies. Many international trade agreements result in backlash from various groups, and the mistrust can easily become part of the thinking in specific companies.

Differences in cultural values are present due to varying religions and ethical mores among countries. As noted previously, charging interest is considered harmful in some Islamic countries; bribery is an accepted, tax-deductible practice in others (yet illegal in the United States). Language barriers can further inspire distrust and misunderstanding when changes are about to be made.

O. P. Bhatt: Committing to Change (continued)

A plan was developed and the 10,000 branch managers trained on the plan and how to involve and engage people throughout the organization in the change process. The chairman set a target of 100 days to involve all 200,000 employees in the change program, which was named “Parivartan” (meaning transformation).

In workshops, employees were asked to participate in creating a new vision statement for the bank and develop ideas in response to questions such as: What is SBI’s biggest challenge? What can give SBI the winning edge? What should SBI be famous for?

The change process resulted in a remarkable turnaround of the bank in terms of business, customer service, and employee morale and engagement (Gupta, 2012).

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Section 9.4 Additional Challenges

Ethnocentrism is the belief that one’s culture and national practices are superior to others. The pattern of thinking can be extremely disrupted when a company doing business in one country seeks to make changes in subsidiaries in other nations. The question becomes how to respond.

In many ways planned change is ideally suited for worldwide, cross-cultural applications. Change occurs everywhere around the globe and sound change practices are needed no mat- ter what the culture is or what type of changes need to be made. The diagnostic emphasis of planned change is particularly applicable to cross-cultural change, as assessments should reveal any unique issues that need to be taken into account in the change process. The col- laborative nature of planned change is a strength of using the process on a global basis.

Collaboration generates buy-in and commitment, makes it possible for concerns to be addressed, and creates momentum for change. Another cross-cultural strength is the empha- sis on the importance of involving leaders in the process and of keeping leader involvement positive and helpful. This builds trust and confidence in the change process.

Resistance to Change

When a change is announced, some employees are likely to avoid involvement or resist it. Toffler (1970) noted that people exhibit a natural tendency to resist change. Employees resist change for a variety of more or less logical reasons. Among the more common rationales are those you see in Table 9.5 (Kotter & Schlesinger, 1979):

Table 9.5: Reasons employees resist change

Self-interest

Lack of understanding

Lack of trust in management

Differing assessments of the need for change

Low tolerance for change

Organizational inertia

Based on John P. Kotter and Leonard A. Schlesinger (1979). Choosing strategies for change, Harvard Business Review, March-April.

Employees resist change for reasons of self-interest when they realize that levels of power, money, prestige, job security, and personal convenience are at stake. The sunk costs doctrine suggests that over time, a person’s investment in a company escalates, as pension funds accu- mulate and the person’s allowed vacation time rises, along with growth of the chance for being promoted or enjoying the benefits of seniority. These investments may in turn drive resistance to change as the employee seeks to maintain the status quo. (Patti, 1974).

Resistance can also be based on simply not understanding why a change has become neces- sary, such as when an employee who does not use social media does not understand why monitoring comments on its Facebook page would be a good idea for a company.

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Section 9.4 Additional Challenges

At times employees do not trust management’s motives, in essence thinking or asking, “What are they really up to when they asked for this change?” Differing assessments of the need for change occur when employees do not view a change as necessary, as managers and employ- ees do not see eye to eye on the nature of the issue. Those with a low tolerance for change also tend to be resistant.

Organizational inertia is the systematic resistance to change that is present in many com- panies. Various processes and structures, when combined with the efforts of individuals who do not want changes to be made, can prevent a company from creating or implementing a much-needed new course of action. Leadership involves identifying organizational inertia and pushing for ways to overcome it.

Resistance to change can discourage, undermine, or slow down change. Leaders make many assumptions about resistance. Some feel that people just naturally resist change, others label resisters as “trouble makers,” and leaders often view resisters as irrational people who get in the way of needed changes. Still, resistance can indeed undermine the change process. What leaders often do not realize is that by not addressing what most would consider unwarranted resistance, leaders lose the confidence of their followers. Also remember, however, that there are times in which resistance can be warranted. Consequently, leaders should carefully evalu- ate the merits of any resistance.

Overcoming Resistance to Change Some authors have challenged using the term “overcome resistance” because it assumes that the right changes are being made in the right way and resistance needs to be overcome (Dent & Goldberg, 1999). In the context of this chapter, we approach overcoming resistance from the perspective that effectively designing and managing changes minimizes the natural resis- tance that comes from poorly managed change and that resistance should be dealt with con- structively and considered in change decisions. Table 9.6 provides alternatives for overcom- ing resistance to change (Kotter & Schlesinger, 1979).

Table 9.6: Overcoming resistance to change

Strategy Example

Education and communication Explain the necessity for change and answer questions

Participation and involvement Engage workers in making the change

Facilitation and support Carefully plan the change and carry out the plan

Negotiation and agreement A bargaining approach

Manipulation and cooptation A political approach

Explicit and implicit coercion

Adapted from Kotter, J. P., & Schlesinger, L. A. (1979, March–April). Choosing strategies for change. Harvard Business Review, p. 111.

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Chapter Summary

Note that managers choose from these strategies based on the nature of the change. The greater the degree of change, the larger the number of tactics leaders will employ. We should point out that if after listening to resistance, considering legitimate concerns, and creating opportunities for involvement, there is continued resistance that may be undermining the change process, the resistance should be addressed. Even one influential person who strongly resists change can significantly damage the change process and the credibility of those leading change.

In summary, in a world of ever-increasing change, leading with skills in managing change constitutes significant factors in the successes or failures of organizations. Every leader needs to make develop- ing skills in managing change a high priority in his or her skill set. As reported in this chapter, few leaders are trained in managing change and the result has been a high failure rate of changes with far-reaching consequences to organizations, the people in them, and the leaders leading changes.

There is good news, however. Managing change is a learnable skill that leaders can develop, and by doing so, leaders can add considerable value to what they do and to the organizations and people they serve. It should be apparent from the examples presented above and from worldwide research reported on change efforts that planned change principles can be applied to multiple situations and cultures. Planned change is being applied internationally, in busi- nesses and organizations of all types and sizes; in local, state, and federal governments; in communities; in the military; and in schools and many other endeavors.

Self-Reflection Questions

1. How would you respond to a subordinate who clearly exhibited ethnocen- trism and was resistant to a change you had been asked to implement in an international setting?

2. As a manager/leader, which of the five reasons employees give for resisting change, as shown in Table 9.5, would be the easiest to fix? Which would be the hardest? Explain your response.

3. A manager without power loses three of the options for overcoming resis- tance to change, as shown in Table 9.6. Which three? Explain your answer.

Chapter Summary

The Nature of Organizational Change Changes can come in many forms. The major types of changes made in companies are:

• planned;

• unplanned;

• evolutionary;

• incremental; and

• transformational.

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Chapter Summary

Forces that cause organizations to change include internal factors (growth, crisis, oppor- tunity), external factors (political forces, social forces, economic forces, competition), and technological factors that are both internally and externally generated. Company leaders institute changes in the areas of:

• strategies, tactics, and plans;

• organizational structure;

• company technology;

• jobs; and

• employees.

Models of Change Process Four models of change processes include the approach developed by Kurt Lewin, the Cum- mings and Worley general model, the Kotter model, and appreciative inquiry. The Lewin model describes unfreezing, change or movement, and refreezing. The Cummings and Wor- ley model consists of four steps: entering and contracting, diagnosing, planning and imple- menting, and evaluating and institutionalizing. The Kotter model is an eight-step process that builds on the Lewin model. Appreciative inquiry involves the steps of discovery, dream- ing, designing, and delivering by focusing on what the organization does well.

Leadership and the Management of Change Five key roles become part of managing change:

• change agent;

• change leader;

• change champion;

• change team; and

• change supporter.

Action research involves identifying issues or changes, gathering data regarding issues or changes, feeding the data back to the appropriate people, and involving those people in evaluating the data and planning actions. Systems thinking means looking at the entire orga- nizational system and its interacting parts when considering changes.

The three stages of an integrated change process are preparation, implementation, and transition. This process includes providing a change checklist and creating a change action planning form.

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Key Terms

Additional Challenges Factors that keep companies from making alterations to any course of action include mis- trust, differences in cultural values, and ethnocentrism. Individuals resist change for many reasons, including self-interest, lack of understanding, lack of trust in management, differing assessments of the need for change, low tolerance for change, and organizational inertia. Managers seek to overcome resistance through:

• education and communication;

• participation and involvement;

• facilitation and support;

• bargaining;

• manipulation and cooptation; and

• explicit and implicit coercion.

Leadership involves making changes. Effective leaders diagnose problems, situations, opportunities, and trends and then respond accordingly.

Key Terms action research The fundamental model used in almost all planned change processes; involves identifying issues or changes, gath- ering data regarding issues or changes, feed- ing the data back to the appropriate people, and involving those people in evaluating the data and planning actions.

appreciative inquiry Focuses on what an organization is doing right, on creating images of what is possible, and on finding innovative ways to create the future.

ethnocentrism The belief that one’s cul- ture and national practices are superior to others.

evolutionary change Slow-developing unplanned changes that occur with little action by leaders.

incremental change Planned changes designed to result in improvements in an organization or to respond to internal or external events.

organizational inertia The systematic resistance to change that is present in many companies.

planned change Those changes made intentionally that require a purpose and a plan to execute.

systems thinking Involves looking at the entire organizational system and its interact- ing parts when considering changes.

transformational change The planned events that result in major differences in the way things are done.

unplanned change A change that naturally evolves or occurs in response to internal or external events, or that is made with little if any consideration given to planning the change.

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Leadership Applications and Tools

Leadership Exercises

1. The 2008 recession forced many companies to quickly adapt to entirely new economic circumstances. What type of change—planned, unplanned, evolutionary, incremental, or transformation—do you believe would offer the most value to leaders in a situation such as that?

2. The shaving industry has encountered a change in the landscape. Dominant firms including Gillette and Schick have witnessed new, smaller companies chipping away at markets. One firm sells the Head Blade, which is a curved razor specifically designed for men who enjoy the bald look. Another sells a blade designed to last for an entire year. Another company offers razors and blades at substantially lower prices via the Internet. If you were the manager of Gillette or Schick, which of the five types of change explained in this chapter would you implement to respond to these new forces? Explain your answer in detail.

3. The U.S. military has been considering changes to the roles women play as part of the armed forces, including serving in combat roles. Use the Lewin model of change to explain how a new policy to allow women to serve in direct combat would be imple- mented, noting the resistance doing so might encounter in the ranks of officers and enlisted personnel.

4. Willis is the manager who oversees the human resources department in a major retail store. The recent Supreme Court decision regarding same sex marriage influences several activities in his department, including methods of setting up health insurance, notifications of whom to contact in case of emergency, and even questions that might be asked as part of the selection and promotion process. He decides to establish a task force in charge of implementing all changes and new policies or practices related to same sex marriages by employees. Use the five roles played as part of the change pro- cess to explain how the task force would proceed.

5. Many firms that conduct business in other countries encounter ethnocentrism in both the home country and the host country. In other words, people in the home company believe their methods and culture are better; people in the nation where the company has expanded believe their methods and culture are better. Use the principles for insti- tuting change in a planned fashion to explain how you intend to reduce ethnocentrism and make people on both sides of the border more open to ideas and practices used on the other side.

6. Marjorie is the manager of a chain of five restaurants operating in the city of Seattle. Four of the five locations are doing exceptionally well. The fifth, however, suffers from a poor reputation based on lax employee attitudes, leading to a less-than-clean facil- ity (especially in the bathrooms), poor customer service, complaints about food qual- ity, and problems with workers arriving on time for shifts. She has decided to fire the entire staff, including the restaurant manager, and then give every employee an appli- cation form. Which of the methods available to overcome resistance to change do you believe Marjorie should incorporate into her actions?

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Leadership Applications and Tools

Applications and Tools

1. Tips for change leader’s role

Help Prepare Changes for Success

• Encourage and support needed change

• Make clear who is responsible for championing the change

• Involve the right people in planning and implementing the change

• Assure that there is a compelling vision and sound change process

• Agree on goals, time frames, expectations, and roles of key players

• Clarify the leader’s role and level and type of involvement

• Create an open and supportive environment for change

• Provide oversight on changes to assure that change efforts are coordinated and are consistent with existing goals and values

Keep Change Energized

• Be a cheerleader and encourager and help build support for change

• Keep people focused and energized

• Monitor progress and hold people accountable for commitments

• Communicate progress and recognize successes

• Build in feedback mechanisms and listen so issues will be quickly surfaced and dealt with

Pave the Way for Change to Succeed

• Provide the necessary resources

• Remove obstacles and barriers

• Make necessary contacts

• Help manage resistance to change

• Assure that existing systems and structures are aligned to support and rein- force the desired changes

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Leadership Applications and Tools

Keep Open to Needed Adjustments

• Build trust by being open, transparent, straightforward, and by keeping your commitments

• Stay engaged and help overcome challenges

• Listen to feedback and be willing to make adjustments

2. The following checklist helps identify the steps in leading change.

Change Planning Checklist

Stage I: Preparing for Change

Exploring

1. Identification of a need or opportunity for improvement or change. 2. Involvement of one or more change champions, change agents, a change team, or

some combination of each in a preliminary needs assessment and consideration of alternatives for change.

3. Commit to change, organize for the change process by appointing a champion, one or more change agents if needed, and a change team (guiding coalition) if needed, and have those guiding the change, and others if appropriate, develop a prelimi- nary compelling change vision, change goals, and change process.

4. Clearly identify the key stakeholders and explore ways to involve them in plan- ning and implementing the change process.

Diagnosing and Planning

5. Develop a plan for gathering the necessary data and information needed to clarify present realities, future possibilities, strengths, opportunities for improvement, and best practices.

6. Implement the diagnosis. 7. Utilize the results of the diagnosis to involve the appropriate people in evaluating

the data, action planning, and modifying the change vision, goals, and process if needed.

Building Commitment

8. Communicate the change vision to the appropriate people who can impact or will be impacted by the changes, educate them on the change process, involve them when appropriate in the change process, and address their concerns and suggestions.

Stage II: Implementing Change

Managing Change

9. Plan and implement changes and generate short-term wins. 10. Provide any education and training needed to successfully implement the

changes.

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Leadership Applications and Tools

11. Communicate, listen, and keep people focused, engaged, and energized. 12. Build in reliable feedback mechanisms to monitor and manage the change process

and make needed adjustments.

Stage III: Transitioning Change

Sustaining

13. Reinforce, reward, and communicate successes; make needed adjustments; and assure that the organization is aligned to support the changes and that the core values and culture are strengthened and not compromised by the change process. Most importantly, assign a champion to sustain or modify the changes.

Evaluating and Planning

14. Conduct a follow-up diagnosis and use the results to evaluate progress, the change process, and plan for future actions.

Learning

15. Learn from successes, mistakes, or failures, and apply what has been learned to future changes.

3. Complete the following change planning form to prepare for a change.

Change Planning Form

Present Situation and Reasons for Changing:

Desired Change and Who Would Be the Best Person to Champion the Change:

Change Goals What goals or outcomes would you ideally like to accomplish with the changes?

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Leadership Applications and Tools

Reality Check What forces would be working for and against the desired change?

Forces Working for Change

(advocates, compelling reasons to change, timing, etc.)

Forces Working Against Change

(opponents, reasons for resistance, obstacles, etc.)

Stage I: Preparation What needs to be done to prepare the organization for change such as building sup- port, assessing reality, educating and training people, planning, etc.?

Stage II: Implementation What needs to be done to successfully lead and manage the implementation of the desired change?

Stage III: Transition What needs to be done to ensure that the changes last and are working successfully, to evaluate and learn from the process, and to plan for the future?

Rothwell, W. J., & Sullivan, R. L. (Eds.). (2005). Practicing organization development: A guide for consultants, Second edition (Vol. 27). John Wiley & Sons.

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