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8

Managing Change

learning objectives

Understand the five key elements of successful change management.

Explore the processes of change associated with each element.

A fter diagnosing reveals the causes of pro- blems or identifies opportunities for develop- ment, organization members begin planning

and subsequently implementing the changes nec- essary to improve organization effectiveness and performance. A large part of organization devel- opment (OD) is concerned with interventions for improving organizations. The previous chapter discussed the design of interventions and intro- duced the major ones currently used in OD. Chapters 10–20 describe those interventions in detail. This chapter addresses the key activities

associated with successfully managing organiza- tional changes.

Change can vary in complexity from the intro- duction of relatively simple processes into a small work group to transforming the strategies and design features of the whole organization. Although change management differs across situations, in this chapter we discuss activities that must be per- formed in managing any kind of organizational change. (Tasks applicable to specific kinds of chan- ges are examined in the chapters on intervention in Parts 3–6.)

8-1 Overview of Change Activities The OD literature has directed considerable attention at managing change. Much of the material is highly prescriptive, advising managers about how to plan and implement organizational changes. For example, one study suggested that successful managers in continuously changing organizations (1) provide employees with clear responsibility and priorities, including extensive communication and freedom to improvise; (2) explore the future by experimenting with a wide variety of low-cost probes; and (3) link current projects to the future with predictable (time-paced rather than event-paced) intervals and choreographed transition procedures.1 Traditionally, change management has focused on identifying sources of resistance to change and offering ways to overcome them.2 Other contributions have challenged the focus on resistance and have been aimed at creating visions and desired futures, gaining political support for them, and managing the transi- tion of the organization toward them.3 Still others have described the learning practices and leader behaviors that accelerate complex change.4

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The diversity of practical advice for managing change can be organized into five major activities, as shown in Figure 8.1. The activities contribute to effective change management and are listed roughly in the order in which they typically are performed. Each activity represents a key element in change leadership.5 The first activity involves motivating change and includes creating a readiness for change among organization members and helping them address resistance to change. Leadership must create an environment in which people accept the need for change and commit physical and

FIGURE 8.1

Activities Contributing to Effective Change Management

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psychological energy to it. Motivation is a critical issue in starting change because ample evidence indicates that people and organizations seek to preserve the status quo and are willing to change only when there are compelling reasons to do so. The second activity is concerned with creating a vision and is closely aligned with leadership activities. The vision provides a purpose and reason for change and describes the desired future state. Together, they provide the “why” and “what” of planned change. The third activity involves developing political support for change. Organizations are composed of powerful individuals and groups that can either block or promote change, and leaders and change agents need to gain their support to implement changes. The fourth activity is concerned with managing the transition from the current state to the desired future state. It involves creating a plan for managing the change activities as well as planning special manage- ment structures for operating the organization during the transition. The fifth activity involves sustaining momentum for change so that it will be carried to completion. This includes providing resources for implementing the changes, building a support system for change agents, developing new competencies and skills, and reinforcing the new behaviors needed to implement the changes.

Each of the activities shown in Figure 8.1 is important for managing change. Although little research has been conducted on their relative contributions, leaders must give careful attention to each activity when planning and implementing organiza- tional change. Unless individuals are motivated and committed to change, getting move- ment on the desired change will be extremely difficult. In the absence of vision, change is likely to be disorganized and diffuse. Without the support of powerful individuals and groups, change may be blocked and possibly sabotaged. Unless the transition process is managed carefully, the organization will have difficulty functioning while it moves from the current state to the future state. Without efforts to sustain momentum for change, the organization will have problems carrying the changes through to completion. Thus, all five activities must be managed effectively to realize success.

In the following sections of this chapter, we discuss more fully each of these change activities, directing attention to how leaders contribute to planning and implementing organizational change.

8-2 Motivating Change Organizational change involves moving from the known to the unknown. Because the future is uncertain and may adversely affect people’s competencies, worth, and coping abilities, organization members generally do not support change unless compelling rea- sons convince them to do so. Similarly, organizations tend to be heavily invested in the status quo, and they resist changing it in the face of uncertain future benefits. Conse- quently, a key issue in planning for action is how to motivate commitment to organiza- tional change. As shown in Figure 8.1, this requires attention to two related tasks: creating readiness for change and overcoming resistance to change.

8-2a Creating Readiness for Change One of the more fundamental axioms of OD is that people’s readiness for change depends on creating a felt need for change. This involves making people so dissatisfied with the status quo that they are motivated to try new work processes, technologies, or ways of behaving. Creating such dissatisfaction can be difficult, as anyone knows who has tried to lose weight, stop smoking, or change some other habitual behavior.

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Generally, people and organizations need to experience deep levels of hurt before they will seriously undertake meaningful change. For example, IBM, Harley-Davidson, and Sears experienced threats to their very survival before they undertook significant change programs. The following three methods can help generate sufficient dissatisfac- tion to produce change:

1. Sensitize organizations to pressures for change. Innumerable pressures for change operate both externally and internally to organizations. As described in Chapter 1, modern organizations face unprecedented environmental pressures to change them- selves, including heavy foreign competition, rapidly changing technology, and volatile global economies. Internal pressures to change include new leadership, poor product quality, high production costs, and excessive employee absenteeism and turnover. Before these pressures can serve as triggers for change, however, organizations must be sensitive to them. The pressures must pass beyond an organization’s threshold of awareness if managers are to respond to them. Many organizations, such as Kodak, Polaroid, and Northwest Airlines, set their thresholds of awareness too high and neglected pressures for change until those pressures reached disastrous levels.6

Organizations can make themselves more sensitive to pressures for change by encouraging leaders to surround themselves with devil’s advocates; by cultivating external networks that comprise people or organizations with different perspectives and views; by visiting other organizations to gain exposure to new ideas and meth- ods; and by using external standards of performance, such as competitors’ progress or benchmarks, rather than the organization’s own past standards of performance.7

At Wesley Long Community Hospital, in Greensboro, North Carolina, for example, managers visited the Ritz-Carlton Hotel, Marconi Commerce Systems’ high- involvement plant, and other hospitals known for high quality to gain insights about revitalizing their own organization.

2. Reveal discrepancies between current and desired states. In this approach to gener- ating a felt need for change, information about the organization’s current functioning is gathered and compared with desired states of operation. (See Section 8-3 “Creating a Vision,” on page 184, for more information about desired future states.) These desired states may include organizational goals and standards, as well as a vision of a more desirable future state.8 Significant discrepancies between actual and ideal states can motivate organization members to initiate corrective changes, particularly when members are committed to achieving those ideals. A major goal of diagnosing, as described in Chapter 5, is to provide members with feedback about current organiza- tional functioning so that the information can be compared with goals or with desired future states. Such feedback can energize action to improve the organization. At Waste Management, Sunbeam, and Banker’s Trust, for example, financial statements had reached the point at which it was painfully obvious that drastic renewal was needed.9

3. Convey credible positive expectations for the change. Organization members invari- ably have expectations about the results of organizational changes. The positive approaches to planned change described in Chapter 2 suggest that these expectations can play an important role in generating motivation for change.10 Expectations can serve as a self-fulfilling prophecy, leading members to invest energy in change pro- grams that they expect will succeed. When members expect success, they are likely to develop greater commitment to the change process and to direct more energy into the constructive behaviors needed to implement it.11 The key to achieving these posi- tive effects is to communicate realistic, positive expectations about the organizational changes. Research suggests that information about why the change is occurring, how it

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will benefit the organization, and how people will be involved in the design and implementation of the change was most helpful.12 Organization members also can be taught about the benefits of positive expectations and be encouraged to set credible positive expectations for the change program.

8-2b Overcoming Resistance to Change Change can generate deep resistance in people and in organizations, thus making it dif- ficult, if not impossible, to implement organizational improvements.13 At a personal level, change can arouse considerable anxiety about letting go of the known and moving to an uncertain future.14 People may be unsure whether their existing skills and contri- butions will be valued in the future, or may have significant questions about whether they can learn to function effectively and to achieve benefits in the new situation. At the organization level, resistance to change can come from three sources.15 Technical resistance comes from the habit of following common procedures and the consideration of sunk costs invested in the status quo. Political resistance can arise when organizational changes threaten powerful stakeholders, such as top executive or staff personnel, or call into question the past decisions of leaders.16 Organization change often implies a differ- ent allocation of already scarce resources, such as capital, training budgets, and talented people. Finally, cultural resistance takes the form of systems and procedures that rein- force the status quo, promoting conformity to existing values, norms, and assumptions about how things should operate.

There are at least three major strategies for positively dealing with resistance to change:17

1. Empathy and support. A first step in overcoming resistance is learning how people are experiencing change. This strategy can identify people who are having trouble accept- ing the changes, the nature of their resistance, and possible ways to overcome it, but it requires a great deal of empathy and support. It demands a willingness to suspend judgment and to see the situation from another’s perspective, a process called active listening. When people feel that those people who are responsible for managing change are genuinely interested in their feelings and perceptions, they are likely to be less defensive and more willing to share their concerns and fears. This more open relation- ship not only provides useful information about resistance, but also helps establish the basis for the kind of joint problem solving needed to overcome barriers to change.

2. Communication. People resist change when they are uncertain about its conse- quences. Lack of adequate information fuels rumors and gossip and adds to the anx- iety generally associated with change. Effective communication about changes and their likely results can reduce this speculation and allay unfounded fears. It can help members realistically prepare for change. However, communication is also one of the most frustrating aspects of managing change. Organization members con- stantly receive data about current operations and future plans as well as informal rumors about people, changes, and politics. Managers and OD practitioners must think seriously about how to break through this stream of information. One strategy is to make change information more salient by communicating through a new or different channel. If most information is delivered through memos and emails, then change information can be delivered through meetings and presentations. Another method that can be effective during large-scale change is to deliberately substitute change information for normal operating information. This sends a message that changing one’s activities is a critical part of one’s job.

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3. Participation and involvement. One of the oldest and most effective strategies for overcoming resistance is to involve organization members directly in planning and implementing change. Participation can lead both to designing high-quality changes and to overcoming resistance to implementing them.18 Members can provide a diversity of information and ideas, which can contribute to making the innovations effective and appropriate to the situation. They also can identify pitfalls and barriers to implementation. Involvement in planning the changes increases the likelihood that members’ interests and needs will be accounted for during the intervention. Consequently, participants will be committed to implementing the changes because doing so will suit their interests and meet their needs. Moreover, for people having strong needs for involvement, the act of participation itself can be motivating, lead- ing to greater effort to make the changes work.19

Application 8.1 describes how an OD consultant helped the sexual violence preven- tion unit of the Minnesota Department of Health generate commitment to a change process when the unit’s leader left shortly after the change process began.20

8-3 Creating a Vision The second activity in managing change involves creating a vision of what members want the organization to look like or become. It is one of the most popular yet least understood practices in management.21 Generally, a vision describes the core values and purpose that guide the organization as well as an envisioned future toward which change is directed. It provides a valued direction for designing, implementing, and asses- sing organizational changes. The vision also can energize commitment to change by pro- viding members with a common goal and a compelling rationale for why change is necessary and worth the effort. However, if the vision is seen as impossible or promotes changes that the organization cannot implement, it actually can depress member motiva- tion. For example, George H. W. Bush’s unfulfilled “thousand points of light” vision was emotionally appealing, but it was too vague and contained little inherent benefit. In con- trast, John Kennedy’s vision of “putting a man on the moon and returning him safely to the earth” was just beyond engineering and technical feasibility. In the context of the 1960s, it was bold, alluring, and vivid; it provided not only a purpose but a valued direc- tion for the country. Recent research suggests that corporations with carefully crafted visions can significantly outperform the stock market over long periods of time.22

Creating a vision is considered a key element in most leadership frameworks.23

Organization or subunit leaders are responsible for effectiveness, and they must take an active role in describing a desired future and energizing commitment to it. In the best cases, leaders encourage participation in developing the vision to gain wider input and support. For example, they involve subordinates and others who have a stake in the changes. The popular media frequently offer accounts of executives who have helped to mobilize and direct organizational change, including Sergio Marchionne at Fiat and Louis Gerstner at IBM. Describing a desired future is no less important for people lead- ing change in small departments and work groups than for senior executives. At lower organizational levels, there are ample opportunities to involve employees directly in the visioning process.

Developing a vision is heavily driven by people’s values and preferences for what the organization should look like and how it should function. The envisioned future repre- sents people’s ideals or dreams of what they would like the organization to look like or become. Unfortunately, dreaming about the future is discouraged in most organizations

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8 1 MOTIVATING CHANGE IN THE SEXUAL VIOLENCEPREVENTION UNIT OF MINNESOTA’S

HEALTH DEPARTMENT

A ddressing the prevention of sexual vio- lence is a complex challenge. Unlike ciga- rette smoking or automobile accidents, sexual violence is not only a health issue,

but also a social issue connected to people’s attitudes, beliefs, norms, and taboos. The sex- ual violence prevention unit of Minnesota’s health department decided to undertake a five- year strategic planning effort to address the “pri- mary prevention” of sexual violence. Primary prevention is defined as activities that focus on preventing sexual violence before it occurs. While there have been numerous successful programs focused on dealing with victims or addressing what happens after an assault, there was a clear need for primary prevention.

There were two driving forces for the plan. First, the U.S. Centers for Disease Control had identified sexual violence as a key health issue and was providing grants to states for the devel- opment of primary prevention plans. Second, Minnesota was a recognized leader in sexual vio- lence prevention. The health department worked closely with the Minnesota Coalition Against Sexual Violence (MNCASA), a primary recipient of state funding, and other stakeholders who were working on sexual violence prevention. This coalition had been meeting for several years to develop education in primary prevention and to engage in a cross-sector dialogue on the issue.

The two primary objectives of the project were to:

• Create a strategic plan for the primary pre- vention of sexual violence in the state of Minnesota.

• Mobilize a broad range of individuals and organizations to take action in the primary prevention of sexual violence.

This application describes the activities involved with motivating change within the sex- ual violence prevention unit to create the strate- gic planning process. Application 8.3 describes the activities associated with managing the

various stakeholders involved with this change and the large group intervention that kicked off the strategic planning and implementation effort.

BEGINNING THE PROJECT

The sexual violence prevention unit hired a local OD consulting firm to facilitate the strate- gic planning process. Everyone in the unit believed that strategic planning was the next right step. Community members wanted action. In fact, they had stopped meeting in a dialogue forum because they felt they were not making progress in addressing the issue systemically or strategically.

The project got off to a rough start. The day after the OD consultants began working with the unit, the unit director resigned. She had been a major force in bringing the project to fruition, and her departure represented a key challenge for the consultants. In the interim, the unit’s pro- gram director and administrator stepped in to provide content leadership with the help of the director of MNCASA. Her departure also created a strong need to mobilize the members of the unit and to recruit the necessary external stake- holders with content knowledge and community reputation to galvanize action in the community.

To focus the key stakeholders on the change effort, the OD consultants met with the departing director to identify a range of com- munity stakeholders to interview. The inter- views were critical in building the consultants’ knowledge of the issue and quickly establishing relationships with key stakeholders. They also helped identify community members who could provide leadership on the project.

MOTIVATING COMMITMENT

As part of the effort to reinforce commitment to the change process, a steering committee was formed. It consisted of project leaders from the health department, the OD consultants, and six community members. This committee was responsible for identifying and recruiting other

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because it requires creative and intuitive thought processes that tend to conflict with the rational, analytical methods prevalent there.24 Consequently, leaders may need to create special conditions in which to describe a desired future, such as off-site workshops or exercises that stimulate creative thinking.

Research suggests that compelling visions are composed of two parts: (1) a core ideology or relatively stable identity that describes the organization’s core values and purpose and (2) an envisioned future with bold goals and a vivid description of the desired future state that reflects the specific change under consideration.25

8-3a Describing the Core Ideology The fundamental basis of a vision for change is the organization’s core ideology. It describes the organization’s core values and purpose and is relatively stable over time. Core values typically include three to five basic principles or beliefs that have stood the test of time and best represent what the organization stands for. Although the vision ulti- mately describes a desired future, it must acknowledge the organization’s historical roots—the intrinsically meaningful core values and principles that have guided and will guide the organization over time. Core values are not “espoused values”; they are the “values-in-use” that actually inform members what is important in the organization. The retailer Nordstrom, for example, has clear values around the importance of cus- tomer service; toymaker Lego has distinct values around the importance of families; and the Disney companies have explicit values around wholesomeness and imagination. These values define the true nature of these firms and cannot be separated from them. Thus, core values are not determined or designed; they are discovered and described through a process of inquiry.

internal and external stakeholders to participate in the planning process. They also served as advisors to the OD consultants on selecting the best forum to conduct the planning, reviewing draft agendas, and providing feedback on plan drafts. They were asked to convene for two meetings as well as pro- vide input on plans and written reports virtually.

All of the steering committee members were volunteers recruited by the project leaders and OD consultants after the initial interviews. The OD consul- tants were part of the identification and recruitment process because they had formed relationships with several of the members through previous work and had established strong rapport through their inter- views. The community members of the committee were chosen not only because of their expertise and history in the field, locally and nationally, but also because they had good process skills. Another

criterion for participation was diversity. It was impor- tant that this group include members who could speak for underrepresented groups, such as Native American, Hispanic, African American, and youth seg- ments. Everyone who was asked to participate wanted to be part of this effort.

Despite this high level of commitment to the project, time was a big constraint. To use time well, the consultants asked for two meetings. In between meetings, they drafted proposals for the group to react to, rather than asking members to decide on the work to be done by the group. When members could not be at a meeting, the consul- tants got their input individually, both before and after the meeting. Because of their commitment to prevention, all of the steering committee mem- bers stayed in close contact with the consultants and responded promptly to all requests.

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Members can spend considerable time and energy discovering their organization’s core values through long discussions about organizational history, key events, founder’s beliefs, the work people actually do, and the “glue” that holds the organization together.26

In many cases, organizations want the core values to be something they are not. For example, many U.S. firms want “teamwork” to be a core value despite strong cultural norms and organizational practices that promote individuality.

The organization’s core purpose is its reason for being, the idealistic motivation that brings people to work each day and gives work meaning.27 A core purpose is not a strat- egy. Purpose describes why the organization exists and the organization’s understanding of its image, brand, and reputation; strategy describes how an objective will be achieved. Research suggests that organization purposes may fall into one of four categories and that organizations often create a slogan or metaphor that captures the real reason they are in business.28 Heroism refers to a purpose that exhorts members to do great things. Dell Computer, Microsoft, and Ford were all founded to change the world for the better. Henry Ford wanted to “build a machine to improve the world.” Discovery, a core pur- pose for Apple, Sony, and 3M, refers to an innate desire to learn new things. A third purpose, altruism, infers a belief in serving others. Disney’s return to prominence in the late 1980s and 1990s was guided by the essential purpose of “making people happy” and Whole Foods, Ben and Jerry’s, and The Body Shop all take on the responsibility of serv- ing the greater good. Tata Corporation’s purpose of “what India needs next” has sup- ported their growth for over 100 years. Finally, Berkshire Hathaway and Toyota reflect the purpose of excellence.

Hatch’s concept of organization identity is similar to purpose and core ideology.29

Identity—the way core values, purpose, brand, and reputation are integrated—provides guidelines for the strategic choices that will work and can be implemented versus those that will not work because they contradict the true nature of the organization. Lawler and Worley suggested that the real power of an organization’s identity was its ability to consistently support and encourage change even though identity itself remained fairly stable.30 An envisioned future can be compelling and emotionally powerful to members only if it aligns with and supports the organization’s core values, purpose, and identity.31

8-3b Constructing the Envisioned Future The core ideology provides the context for the envisioned future. Unlike core values and purpose, which are stable aspects of the organization and must be discovered, the envisioned future is specific to the change project at hand and must be created. The envisioned future varies in complexity and scope depending on the changes being considered. A relatively simple upgrading of a work group’s word-processing software requires a less complex envisioned future than the transformation of a government bureaucracy.

The envisioned future typically includes the following two elements that can be communicated to organization members:32

1. Bold and valued outcomes. Descriptions of envisioned futures often include specific performance and human outcomes that the organization or unit would like to achieve. These valued outcomes can serve as goals for the change process and stan- dards for assessing progress. For example, BHAGs (Big, Hairy, Audacious Goals) are clear, tangible, energizing targets that serve as rallying points for organization action. They can challenge members to meet clear target levels of sales growth or customer satisfaction, to overcome key competitors, to achieve role-model status in the industry,

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or to transform the organization in some meaningful way. For example, in 1990, Wal-Mart Stores made a statement of intent “to become a $125 billion company by the year 2000.” (Revenue in 2012 exceeded $445 billion.) Following the downsiz- ing of the U.S. military budget, Rockwell proposed the following bold outcome for its change efforts: “Transform this company from a defense contractor into the best diversified high-technology company in the world.”

2. Desired future state. This element of the envisioned future specifies, in vivid detail, what the organization should look like to achieve bold and valued outcomes. It is a passionate and engaging statement intended to draw organization members into the future. The organizational features described in the statement help define a desired future state toward which change activities should move. This aspect of the visioning process is exciting and compelling. It seeks to create a word picture that is emotion- ally powerful to members and motivates them to change.

Application 8.2 describes how Premier recognized the need for change and built a vision of the future for their organization.33

8-4 Developing Political Support From a political perspective, organizations can be seen as loosely structured coalitions of individuals and groups having different preferences and interests.34 For example, shop- floor workers may want secure, high-paying jobs, and top executives may be interested in diversifying the organization into new businesses. The marketing department might be interested in developing new products and markets, and the production department may want to manufacture standard products in the most efficient ways. These different groups or coalitions compete with one another for scarce resources and influence. They act to preserve or enhance their self-interests while managing to arrive at a suffi- cient balance of power to sustain commitment to the organization and achieve overall effectiveness.

Given this political view, attempts to change the organization often threaten the bal- ance of power among groups, thus resulting in political conflicts and struggles.35 Indivi- duals and groups will be concerned with how the changes affect their own power and influence, and they will act accordingly. Some groups will become less powerful; others will gain influence. Those whose power is threatened by the change will act defensively and seek to preserve the status quo. For example, they may try to present compelling evidence that change is unnecessary or that only minor modifications are needed. On the other hand, those participants who will gain power from the changes will push heavily for them, perhaps bringing in seemingly impartial consultants to legitimize the need for change. Consequently, significant organizational changes are frequently accom- panied by conflicting interests, distorted information, and political turmoil.

Methods for managing the political dynamics of organizational change are relatively recent additions to OD. Traditionally, OD has neglected political issues mainly because its humanistic roots promoted collaboration and power sharing among individuals and groups.36 Today, change agents are paying increased attention to power and political activity, particularly as they engage in strategic change involving most parts and features of organizations. Some practitioners are concerned, however, about whether power and OD are compatible.

A growing number of advocates suggest that OD practitioners can use power in pos- itive ways.37 They can build their own power base to gain access to other power holders within the organization. Without such access, those who influence or make decisions

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8 2 CREATING A VISION AT PREMIER

P remier (www.premierinc.com) is a leading health care alliance collectively owned by more than 200 independent hospitals and health care systems in the United States.

Together, the owners operate or are affiliated with nearly 1,500 hospitals and other health care sites. Premier resulted from the 1995 merger of Chicago-based Premier Health Alliance, San Diego-based American Healthcare Systems, and The SunHealth Alliance of Charlotte, North Carolina. Premier offers a comprehensive array of services and products through its companies and business units, including group purchasing, consulting services, technology management services, insurance services, benchmarking and market intelligence services, and legislative advocacy.

Two and a half years after the organiza- tion’s formation, a comprehensive organiza- tional assessment suggested that Premier had not been successful in establishing a com- mon organizational culture. Many of its ser- vices and employees continued to operate in a fractured or isolated fashion relating largely to their prior organization and its geographic location. As a result, Premier’s strategy and business model were poorly understood, and more importantly, not well implemented. The assessment pointed to a growing lack of trust in the organization. Premier executives con- ceded that the organization was culturally adrift and without a well-understood or widely accepted sense of direction.

Another key finding of the assessment concerned the organization’s vision. Shortly after the merger, a new set of values, mission, and vision statements had been developed. The statements themselves were clear and compelling; however, they had been developed by a relatively small group of executives. At best, most employees did not feel much ownership of the values; at worst, they saw the failure of top management to behave consistently with the values as evi- dence that they were not trusted, supported, or important.

In the fall of 1997, Premier hired Richard Norling as COO. Norling had been a chief exec- utive at one of the health care systems that owned Premier, and his arrival signaled the potential for change and new possibilities. At his former organization, Norling had initiated and sustained a comprehensive OD effort, based on identifying core organizational values and the behaviors that supported them. The experience of that health care system had demonstrated that core values shaped and accepted by an organization’s employees could build a deep sense of community in the organization, and lead to greater levels of trust and commitment that could be harnessed to enhance organization performance and effec- tiveness. Given Premier’s emerging problem, a similar approach made sense.

In the spring of 1998, Premier executives determined to address these issues by building on the values and mission statements that had been developed earlier. Their intent was to involve a large number of employees in validating Premier’s values, specifying the behaviors that supported them, and identifying ways in which the values could be integrated into the routines and processes of the organization—all of which would (they hoped) infect the organization with a renewed sense of identity and enthusiasm.

The first step in Premier’s change process was planning and conducting a three-day values conference with over 200 employees. The conference was designed by a team of employees representing a diagonal slice of the organization and assisted by an OD practi- tioner. At the conference, employees exam- ined Premier’s business model and their organizational culture; developed and recom- mended a set of core organizational values for the organization; crafted an envisioned future; and identified and proposed strategies for employee involvement, integration, and organization transformation companywide.

Following the conference, the team of Premier employees who had planned the meeting was asked to become a permanent

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committee, charged with refining and implement- ing plans and recommendations that the confer- ence participants had generated.

Ultimately, input was obtained from over 60% of the workforce and 16 actions were recom- mended and approved by senior management. Some of those actions included:

• Incorporating the values into Premier’s perfor- mance management/performance appraisal system

• Incorporating the values into the recruitment and selection process by developing sample inter- view questions for use by hiring managers

aimed at helping them learn whether prospective employees would be a good match to Premier’s organizational culture

• Instituting an annual meeting of approximately 200 employees from all parts of Premier mod- eled after the 1998 values conference. The agenda would be focused on business issues, strategy, and organizational culture and values. Rotate those invited so that every Premier employee has an opportunity to attend every three to five years.

The outcome of the vision and values effort follows:

FOUNDATION STATEMENTS

Core Ideology

Core Values • Integrity of the individual and the enterprise • A passion for performance and a bias for

action, creating real value for all stakeholders, and leading the pace

• Innovation: seeking breakthrough opportunities, taking risks, and initiating meaningful change

• Focus on people: showing concern and respect for all with whom we work, building collab- orative relationships with the community, our customers, coworkers, and business associates

Core Purpose To improve the health of communities

Core Roles of the Enterprise • Improve quality, reduce costs • Improve financial health • Create value for owners • Improve organizational health • Facilitate knowledge transfer • Grow the enterprise

Envisioned Future 10–30 Year Goal

Premier’s owners will be the leading health care systems in their markets, and, with them, Premier will be the major influence in reshaping health care

Vivid Description

By the year 2020, we will have changed the world’s view of U.S. health care to “the best and most cost- effective” at sustaining the good health of popula- tions. In the United States, the health care industry will be considered the best managed and most innovative of all the economic sectors.

Across the nation, our owners, physicians, and other allies will lead the local transformations that are the building blocks of a reshaped health care system. These transformations will begin to make public health and health services indistinguishable,

engaging citizens and civic resources in endeavors that attack the causes of illness and injury. Through efforts that go far beyond providing treatment, people will have a sense of responsibility for their own personal health and the health of their communities.

Together in Premier, we will invent new and superior models of delivering health services, and we will leverage the size, linkages, and resources of Premier to deliver those services to more people, at a lower cost and higher quality, than any others will. Our owners will operate at costs

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may not have the advantage of an OD perspective. OD practitioners can use power strat- egies that are open and aboveboard to get those in power to consider OD applications. They can facilitate processes for examining the uses of power in organizations and help power holders devise more creative and positive strategies than political bargaining, deceit, and the like. They can help power holders confront the need for change and can help ensure that the interests and concerns of those with less power are considered. Although OD professionals can use power constructively in organizations, they probably will continue to be ambivalent and tense about whether such uses promote OD values and ethics or whether they represent the destructive, negative side of power. That tension seems healthy, and we hope that it will guide the wise use of power in OD.

As shown in Figure 8.2, managing the political dynamics of change includes the fol- lowing activities: assessing the change agent’s power, identifying key stakeholders, and influencing stakeholders.

in the lowest quarter among all similar orga- nizations at quality levels in the highest quarter. We will research and use the most effective and seamless clinical approaches to achieve superior health outcomes and increased values. Our com- petitive edge will be the unmatched ability to transfer and act on our collective experience and innovation.

Our owners will earn recognition as the most valued community resource for health. As a result of

their efforts, “Premier” will be viewed as the hall- mark of quality and value that all others seek to emulate. When people see our emblem, they will associate it with health care improvement and advances in health status.

Demonstrating a better way and supported by our constituencies, we will build consensus for national policy directions that stimulate and reward health and healthy communities.

We will indeed be premier.

FIGURE 8.2

Sources of Power and Power Strategies

SOURCE: Power and Organization Development: Mobilizing Power to Implement Change (Prentice Hall Organizational Development Series), 1st Ed. By Greiner, Larry E.; Schein, Virginia E., ISBN 0201121859. © 1988 Addison-Wesley Publishing Company Inc.

CHAPTER 8 MANAGING CHANGE 191

8-4a Assessing Change Agent Power The first task is to evaluate the change agent’s own sources of power. This agent may be the leader of the organization or department undergoing change, or he or she may be the OD practitioner if professional help is being used. By assessing their own power base, change agents can determine how to use it to influence others to support changes. They also can identify areas in which they need to enhance their sources of power.

Greiner and Schein, in the first OD book written entirely from a power perspec- tive, identified three key sources of personal power in organizations (in addition to one’s formal position): knowledge, personality, and others’ support.38 Knowledge bases of power include having expertise that is valued by others and controlling impor- tant information. OD professionals typically gain power through their expertise in organizational change. Personality sources of power can derive from change agents’ charisma, reputation, and professional credibility. Charismatic leaders can inspire devotion and enthusiasm for change from subordinates. OD consultants with strong reputations and professional credibility can wield considerable power during organiza- tional change. Others’ support can contribute to individual power by providing access to information and resource networks. Others also may use their power on behalf of the change agent. For example, leaders in organizational units undergoing change can call on their informal networks for resources and support, and encourage subordinates to exercise power in support of the change.

8-4b Identifying Key Stakeholders Having assessed their own power bases, change agents should identify powerful indivi- duals and groups with an interest in the changes, such as staff groups, unions, departmental managers, and top-level executives. These key stakeholders can thwart or support change, and it is important to gain broad-based support to minimize the risk that a single interest group will block the changes. As organizations have become more global, networked, and customer-focused, and change has become more strategic, it is also important to identity key external stakeholders. Key customers, regulatory agencies, suppliers, and the local community, for example, can exert considerable influ- ence over change.

Identifying key stakeholders can start with the simple question, “Who stands to gain or to lose from the changes?” Once stakeholders are identified, creating a map of their influence may be useful.39 The map could show relationships among the stakeholders in terms of who influences whom and what the stakes are for each party. This would pro- vide change agents with information about which people and groups need to be influ- enced to accept and support the changes.

8-4c Influencing Stakeholders This activity involves gaining the support of key stakeholders to motivate a critical mass for change. There are at least three major strategies for using power to influence others in OD: playing it straight, using social networks, and going around the formal system.40

Figure 8.2 links these strategies to the individual sources of power discussed above. The strategy of playing it straight is very consistent with an OD perspective, and thus

it is the most widely used power strategy in OD. It involves determining the needs of particular stakeholders and presenting information about how the changes can benefit them. This relatively straightforward approach is based on the premise that information and knowledge can persuade people about the need and direction for change. The success

192 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT

of this strategy relies heavily on the change agent’s knowledge base. He or she must have the expertise and information to persuade stakeholders that the changes are a logical way to meet their needs. For example, a change agent might present diagnostic data, such as company reports on productivity and absenteeism or surveys of members’ percep- tions of problems, to generate a felt need for change among specific stakeholders. Other persuasive evidence might include educational material and expert testimony, such as case studies and research reports, demonstrating how organizational changes can address pertinent issues.

The second power strategy, using social networks, is more foreign to OD and involves forming alliances and coalitions with other powerful individuals and groups, dealing directly with key decision makers, and using formal and informal contacts to gain information. In this strategy, change agents attempt to use their social relationships to gain support for changes. As shown in Figure 8.2, they use the individual power base of others’ support to gain the resources, commitment, and political momentum needed to implement change. This social networking might include, for example, meeting with other powerful groups and forming alliances to support specific changes. This would likely involve ensuring that the interests of the different parties—labor and management, for example—are considered in the change process. Many union and management coop- erative efforts to improve performance and reduce costs involve forming such alliances. This strategy also might include using informal contacts to discover key roadblocks to change and to gain access to major decision makers who need to sanction the changes.

The power strategy of going around the formal system is probably least used in OD and involves purposely circumventing organizational structures and procedures to get the changes made. Existing organizational arrangements can be roadblocks to change, and working around the barriers may be more expedient and effective than taking the time and energy to remove them. As shown in Figure 8.2, this strategy relies on a strong personality base of power. The change agent’s charisma, reputation, or professional cred- ibility lend legitimacy to going around the system and can reduce the likelihood of nega- tive reprisals. For example, managers with reputations as winners often can bend the rules to implement organizational changes. Their judgment is trusted by those whose support they need to enact the changes. This power strategy is relatively easy to abuse, however, and OD practitioners should consider carefully the ethical issues and possible unintended consequences of circumventing formal policies and practices.

Application 8.3 shows how Minnesota’s sexual violence prevention unit recruited external and internal stakeholders into the strategic planning process. They used the social networks of people with clear interests in the subject to support the planning and implementation of change.

8-5 Managing the Transition Implementing organization change involves moving from an existing organization state to a desired future state. Such movement does not occur immediately but, as shown in Figure 8.3, instead requires a transition period during which the organization learns how to implement the conditions needed to reach the desired future. Beckhard and Harris pointed out that the transition may be quite different from the present state of the orga- nization and consequently may require special management structures and activities.41

They identified three major activities and structures to facilitate organizational transition: activity planning, commitment planning, and change-management structures. A fourth set of activities involves managing the learning process during change.

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DEVELOPING POLITICAL SUPPORT FOR THE STRATEGIC PLANNING PROJECT IN THE SEXUAL VIOLENCE

PREVENTION UNIT

A pplication 8.1 described the beginning of the sexual violence prevention unit’s proj- ect to develop a five-year plan for primary prevention. The plan’s unique purpose was

to mobilize statewide efforts to prevent sexual violence before it occurs. In this application, the process that the committee used to identify and manage the political stakeholders—both internal and external—is described.

IDENTIFYING AND RECRUITING STAKEHOLDER PARTICIPATION

The steering committee interviewed representa- tives from various stakeholder groups, coalitions, and state agencies. The results of the interviews suggested (1) a need for broad involvement, espe- cially from underrepresented groups, such as communities of color, immigrant communities, gay and lesbian groups, and youth and (2) a desire among those involved to move from dialogue and education toward taking collective action.

In response to these data, the OD consul- tant proposed a two-day strategic planning retreat for a large group of stakeholders. This format was selected because of the strong desire voiced in the interviews to get to action. The steering committee confirmed that this approach was preferable to stretching the plan- ning over weeks of shorter meetings.

The unit administrator was essential in pull- ing together the list of stakeholders who were invited to participate. The goal was to get as many stakeholders as possible involved, and she knew the majority of people who were active in sexual violence prevention work in Minnesota. The steering committee reviewed and augmented the initial list to create a diverse group of 80 stakeholders to invite to the retreat. This group included people from the many groups, coalitions, state agencies, and under- represented communities across the state.

Invitations to attend the retreat were sent out via email. The OD consultants crafted the invitation and the Health Unit Director sent

them out. The steering committee members also contacted personally any invitees they knew and encouraged them to attend. The Health Unit Administrator was instrumental in communicating with those invited. Follow-up reminders and phone calls were made to ensure that an RSVP was received from every- one invited to attend. In addition, there were regular communications on the progress of the planning effort in newsletters, meetings, and conferences, communication channels that were already in place. An important constraint to this process was the nature of the physical facility that was to hold the meeting (see below). The steering committee had to balance the need for broad participation with the limits of the meeting space. One tool they used was to limit participation to the first 50 people who signed up. This encouraged people to sign up early to secure their space at the retreat.

Because primary sexual violence preven- tion was a central concern to most of these stakeholders, there was little resistance in terms of interest in participating. Other hur- dles, however, had to be addressed, including the costs associated with attending the confer- ence, travel issues, and the time to attend. The health department was able to secure funding to cover participants’ costs. However, the steering committee had to work hard to find a meeting site that was within commuting dis- tance from many cities and able to provide rooms for those traveling from afar. In the end, a Catholic retreat center fit many of the requirements of the conference, but presented another set of challenges. For a few stake- holder groups, there were negative percep- tions about the perceived role of the church in sexual violence; the location lacked air con- ditioning; and there was no handicap access.

The planners of the project were also able to build on several efforts that the health department had previously used to gain stake- holder involvement. For several years, the

194 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT

department hosted a forum called the Sexual Vio- lence Prevention Action Council. This group had been engaged in education and dialogue on the issue. Diverse stakeholders were already coming together around the issues and had adopted a framework developed by the Prevention Institute called the “Spectrum of Prevention.” Without this foundational work, it would have been risky to attempt to get stakeholders aligned around a stra- tegic plan in a two-day meeting.

Finally, another tool the steering committee initiated for gaining involvement was an online sur- vey. This survey was sent to all invitees so that even those who could not attend the retreat would have a voice in the planning. The survey was also sent to others who were not invited to the retreat. They were encouraged to pass the sur- vey on to other stakeholders who might be inter- ested in this plan. Close to 100 people responded to the survey. A majority of respondents provided contact information and volunteered to help with the plan implementation.

CONDUCTING THE MEETING

Fifty invitees were able to attend the planning retreat. Using a large-group OD process over two days, participants worked together to create the framework of a strategic plan. Part of the planned agenda was to have stakeholders sign up for an action team toward the end of the two days. The dilemma faced during the session was in trying to get both focused strategies and a very diverse group of stakeholders to take action. Actions would need to occur both at the state level and within individual communities. Going into the meeting, the steering committee was not sure that the team sign-up

process would work. They agreed to meet during lunch on the second day to review the work and to determine how to move the group toward action.

During the lunch meeting, the steering com- mittee decided that the strategies were not clear enough to create teams at the meeting. While the group was concerned about losing people’s action commitment, they believed it was more important to have teams that made strategic sense and uti- lized limited resources well. After lunch, the strate- gies and success indicators were posted on the wall. Consultants then used a multivoting process to identify six priorities for action.

Following the retreat, the OD consultants developed a proposed structure for action around these six priorities and sent this to the steering committee members for review. Their feedback was incorporated into an action structure that was included in the written strategic plan. Health department staff members then took over the plan- ning and launching of these teams.

SUSTAINING MOMENTUM

When the strategic planning project had begun, the head of the sexual violence prevention unit had left the organization, and the position had gone unfilled throughout the project. Just prior to the retreat, a well-known state leader in sexual violence work, Patty Wetterling, agreed to fill the position. Seven- teen years earlier, Wetterling’s young son had been abducted in their small Minnesota town and was never found. Her work in establishing new laws regarding abductions as an advocate and state leg- islator, as well as a run for the U.S. Senate, made Wetterling a perfect choice to provide statewide leadership in implementing the strategic plan.

FIGURE 8.3

Organization Change as a Transition

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8-5a Activity Planning Activity planning involves making a road map for change, citing specific activities and events that must occur if the transition is to be successful. It should clearly identify, tem- porally orient, and integrate discrete change tasks, and it should explicitly link these tasks to the organization’s change goals and priorities. Activity planning also should gain top- management approval, be cost-effective, and remain adaptable as feedback is received during the change process.

An important feature of activity planning is that visions and desired future states can be quite general when compared with the realities of implementing change. As a result, it may be necessary to supplement them with midpoint goals as part of the activ- ity plan.42 Such goals represent desirable organizational conditions between the current state and the desired future state. For example, if the organization is implementing con- tinuous improvement processes, an important midpoint goal can be the establishment of a certain number of improvement teams focused on understanding and controlling key work processes. Midpoint goals are clearer and more detailed than desired future states, and thus they provide more concrete and manageable steps and benchmarks for change. Activity plans can use midpoint goals to provide members with the direction and secu- rity they need to work toward the desired future.

8-5b Commitment Planning This activity involves identifying key people and groups whose commitment is needed for change to occur and formulating a strategy for gaining their support. Although com- mitment planning is generally a part of developing political support, discussed above, specific plans for identifying key stakeholders and obtaining their commitment to change need to be made early in the change process.

8-5c Change-Management Structures Because organizational transitions tend to be ambiguous and to need direction, special struc- tures for managing the change process need to be created. These management structures should include people who have the power to mobilize resources to promote change, the respect of the existing leadership and change advocates, and the interpersonal and political skills to guide the change process. Alternative management structures include the following:43

• The chief executive or head person manages the change effort. • A project manager temporarily is assigned to coordinate the transition. • A steering committee of representatives from the major constituencies involved in

the change jointly manages the project. • Natural leaders who have the confidence and trust of large numbers of affected

employees are selected to manage the transition. • A cross section of people representing different organizational functions and levels

manages the change. • A “kitchen cabinet” representing people whom the chief executive consults with and

confides in manages the change effort.

8-5d Learning Processes Most organization changes involve the acquisition of new knowledge and skills that support new behaviors. Research at the Center for Effective Organizations suggests that change can

196 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT

be implemented more quickly when leaders consciously design learning processes into the transition.44 Four practices, supported by a continuous dialogue and conversation process, were associated with accelerated transitions. The first learning practice, creating a systems view of the organization, involves creating a model of work and change that allows individ- ual organizational members to see how their efforts contribute to organizational functioning and performance. When people can see how their efforts support change, it is easier for them to pick up new skills and knowledge; there is a context created that demands new behaviors.

The second learning practice, creating shared meaning, describes the use of models, language, tools, and processes that provide people with a way to making sense of the change. Most organization change is accompanied by considerable anxiety as the organi- zation begins moving from the known to the unknown. By creating common ways of viewing the change, work, customers, and the new organization, people develop a shared view of the new reality. This shared view lowers anxiety and allows organization mem- bers to learn new skills and behaviors more quickly.

Engaging in “after-action reviews” or other processes that reflect on change experience is the third learning practice. In this activity, initial attempts to try out new activities, new processes, or new behaviors are assessed and reviewed. Organization members get to ask, “how well did we do?” and “what can we learn from that?” The answers to these questions are then used to redesign or redefine correct behavior. When people get timely and sup- portive feedback on new behaviors, their ability to learn more quickly increases.

The final learning practice involves decentralizing implementation processes and deci- sions to the lowest levels possible in the organization, what the researchers called “local self-design.” Complex organization change contains too many variables, uncertainties, and local contingencies to be completely programmed from the top of the organization. By allowing organizational units in the lower organization levels to be responsible for the implementation of change, the overall change is accelerated. It is important in this process of local self-design to ensure that the organizational units have a clear understanding of their boundaries. That is, senior leaders in the organization need to be clear about what resources are available for change, the timeline within which the change must occur, and the things that cannot be changed in achieving the change goals.

These four learning practices are held together by conversation and dialogue. More than any other single practice, it is the opportunity to discuss the organization change— to create shared meaning, to understand how each individual fits into the change, to reflect on experience, and to discuss the change at local levels—that integrates the prac- tices and accelerates implementation. Leading change, therefore, is largely a function of creating opportunities for organization members to discuss change activities.

Application 8.4 shows how Hewlett-Packard and Compaq used all of these techniques to manage the integration activities associated with this acquisition. Despite research indi- cations of a high proportion of failed acquisition processes, the extraordinary detail used in this process, and the bank of institutionalized knowledge (see Application 9.2), the HP– Compaq integration process received positive reviews.45

8-6 Sustaining Momentum Once organizational changes are under way, explicit attention must be directed to sus- taining energy and commitment for implementing them. The initial excitement and activity of changing often dissipate in the face of practical problems of trying to learn

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TRANSITION MANAGEMENT IN THE HP–COMPAQ ACQUISITION

I n the Fall of 2001, Carly Fiorina announced HP’s intent to acquire Compaq Corporation. Over the next nine months, a proxy fight ensued as many shareholders and employ-

ees challenged the wisdom of the proposed change. Wall Street analysts and organization researchers too debated whether or not the acquisition made sense, especially given the size of the change and the rather dismal history of performance in acquisition cases. Scott McNealy, chief executive of rival Sun Micro- systems Inc., predicted “a slow-motion collision of two garbage trucks.”

Within days of the initial announcement, however, Fiorina and Michael Capellas, then CEO of Compaq, met with Webb McKinney, a 19-year HP veteran, and Jeff Clarke, Compaq’s CFO and survivor of Compaq’s acquisition of Digital Equipment Corporation. These two men were named to lead the transition pro- cess, one that would involve redeploying a combined 145,000 workers in 160 countries including more than 15,000 layoffs, untangling 163 overlapping product lines, and producing $2.5 billion dollars in promised cost reductions.

It was no accident that McKinney and Clarke were asked to lead the integration team. Both were senior managers with substantial follow- ings and excellent reputations. Days after their initial meeting, they began recruiting managers in equal numbers; Clarke rounded up Compaq talent and McKinney lined up their HP matches. Within weeks of the merger’s announcement, the integration group, called the “clean team,” had 500 members; by March 2002, more than 900. Even after the merger closed in May 2002, it kept growing, peaking at more than 1,000 full- time employees. By establishing such a huge body of outstanding managers and reassuring them that their jobs would be safe even if the merger failed, Clarke and McKinney were able to coax them to share in confidence everything they knew. It also kept most of them motivated to stay—another critical benchmark.

In addition to getting the right people on board, McKinney and Clarke set up an assembly

line for decision making. Their research on suc- cessful and unsuccessful acquisitions and Clarke’s experience with the Digital acquisition convinced them that slow decision making and the lack of a clear decision-making process was like a cancer in the transition process. In response, they created the “adopt and go” strategy: Get cross-company pairs of managers to meet daily to determine the best choice or best course of action on any particular issue. Weekly meetings kept the pace fast. If any issues couldn’t be resolved by the teams, McKinney and Clarke would jump in. If those two couldn’t resolve the impasse, they’d pass it to a committee chaired by Fiorina.

In addition to getting the right people on board and setting up a decision process built for speed, the transition team created activity plans for the key issues facing the integration, including people, products, culture, Day-one activities, and day-to-day operations. Excerpts and examples from some of those plans are reviewed below.

• The “adopt and go” process was used to decide which products to keep and which to discontinue. At weekly presentations with McKinney and Clarke, managers had to offer up one for elimination. In contrast to Compaq’s merger with Digital, HP execu- tives made quick product decisions and every week pored over progress charts with red, green, and yellow markers to review how each product exit was proceed- ing. Red and yellow markers indicated a task was troubled; green signaled a task going well. In four months, a road map for product lines emerged and helped to close redundant warehouses and factories, ulti- mately saving $500 million in procurement costs. In the end, while many Compaq pro- ducts beat out HP’s, such as Compaq’s iPac over HP’s Jornada, the HP brand survived.

• The “adopt and go” process also helped HP make the hard decisions about person- nel appointments. HP appointed its top

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new ways of operating. A strong tendency exists among organization members to return to old behaviors and well-known processes unless they receive sustained support and reinforcement for carrying the changes through to completion. In this section, we pres- ent approaches for sustaining momentum for change. The subsequent tasks of assessing and stabilizing changes are discussed in Chapter 9. The following five activities can help

three tiers of executives before the acquisition was finalized and made new levels of appoint- ments every few weeks. While not perfect— rumors that Compaq people were favored in the sales organization—Clarke contends that all decisions were made “by the book.”

• HP created a team to deal specifically with melding the corporate cultures and hired consul- tants to document the differences. To address perceptions that Compaq employees were “shoot from the hip cowboys” and that HP staff members were “bureaucrats,” the team created a series of cultural workshops. They were designed to identify the various cultures and subcultures, and then integrate them. For example, key sales managers and about two dozen salespeople from both HP and Compaq held a workshop designed to address sales inte- gration and transition issues. Many attendees first looked at each other suspiciously. Following some ice-breaker exercises, however, an HP representative talked about how HP had been working with key customer SBC, the telecom- munications company. That was followed by a Compaq rep discussing how it sold to SBC. Then the big group drew up a 100-day work plan for selling to SBC in the future, including a weekly conference call for the team every Friday. The progress from these sessions was tracked by a team of 650 part-time internal “cul- tural consultants,” who also continued in their normal jobs at the company.

• The cultural workshops delivered in the first quarter after the deal was signed set the stage for further cultural integration. The work- shops welcomed everyone to the new team, described the HP business, HP’s values and operating models, the roles and objectives of different groups, and how people were

expected to work together. All of this material was pushed out into the HP market before the launch, inviting a few thousand of the top HP managers to an orientation and education ses- sion on what to do, how to communicate, and the details of the new HP and their roles in it.

• The clean team also made extensive “Day-one” plans. Day-one readiness included plans to address customers, issues of leadership and structure, and internal administrative issues. The new HP was launched with everyone on the same email, not a paycheck missed, and every sign changed the morning of launch day. Customers participated heavily in the transition process. Customer councils, interviews, research, information sessions, education, and other data were included in the knowledge trans- fer to groups that faced the customer. The go- to-market plans were detailed, with playbooks given to each group manager who touched the customers, so that on launch day they knew what to do, what to say to a customer, where to get information. Each customer was given an HP buddy from the same level so that he or she could contact that person and get whatever infor- mation the customer needed. There was an enormous amount of detail, down to the script of what to say, what answers to give to specific questions, where to get further information, and how to transition an inquiry to the right person.

By most measures, this transition work paid off: HP met the integration goals that Chairman and Chief Executive Carleton S. Fiorina set for the merged company. The biggest of these was cost savings, which surpassed expectations. By mid- 2003, HP said it saved $734 million—14% more than projected—from payroll cuts and better terms with its suppliers.

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to sustain momentum for carrying change through to completion: providing resources for change, building a support system for change agents, developing new competencies and skills, reinforcing new behaviors, and staying the course.

8-6a Providing Resources for Change Implementing organization change generally requires additional financial and human resources, particularly if the organization continues day-to-day operations while try- ing to change itself. These extra resources are needed for such change activities as training, consultation, data collection and feedback, and special meetings. Extra resources also are helpful to provide a buffer as performance may drop during the transition period. Organizations can underestimate seriously the need for special resources devoted to the change process. Significant organizational change invariably requires considerable management time and energy, as well as the help of OD consul- tants. A separate “change budget” that exists along with capital and operating budgets can earmark the resources needed for training members in how to behave differently and for assessing progress and making necessary modifications in the change pro- gram.46 Unless these extra resources are planned for and provided, meaningful change is less likely to occur.

8-6b Building a Support System for Change Agents Organization change can be difficult and filled with tension not only for participants but also for change agents as well.47 They often must give members emotional support, but they may receive little support themselves. They often must maintain “psychologi- cal distance” from others to gain the perspective needed to lead the change process. This separation can produce considerable tension and isolation, and change agents may need to create their own support system to help them cope with such problems. A support system typically consists of a network of people with whom the change agent has close personal relationships—people who can give emotional support, serve as a sounding board for ideas and problems, and challenge untested assumptions. For example, OD professionals often use trusted colleagues as “shadow consultants” to help them think through difficult issues with clients and to offer conceptual and emotional support. Similarly, a growing number of companies, such as Procter & Gamble, The Hartford, and Kaiser Permanente, are forming internal networks of change agents to provide mutual learning and support.

8-6c Developing New Competencies and Skills Organizational changes frequently demand new knowledge, skills, and behaviors from organization members. In many cases, the changes cannot be implemented unless mem- bers gain new competencies. For example, employee involvement programs often require managers to learn new leadership styles and new approaches to problem solving. Change agents must ensure that such learning occurs. They need to provide multiple learning opportunities, such as traditional training programs, on-the-job counseling and coaching, and experiential simulations, covering both technical and social skills. Because it is easy to overlook the social component, change agents may need to devote special time and resources to helping members gain the social skills required to implement changes.

200 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT

As part of McKesson’s commitment to quality, the corporation identified specially selected high performers to become Six Sigma black belts and then promoted them accordingly to signal the importance of these skills and knowledge in career planning. In addition, senior managers in all of the divisions are required to attend training that builds new problem-solving skills, team behaviors, and a commitment to the quality philosophy.48

8-6d Reinforcing New Behaviors In organizations, people generally do those things that bring them rewards. Consequently, one of the most effective ways to sustain momentum for change is to reinforce the kinds of behaviors needed to implement the changes. This can be accomplished by linking formal rewards directly to the desired behaviors. For example, Integra Financial encouraged more teamwork by designing a rewards and recognition program in which the best team players got both financial rewards and management attention, and a variety of behaviors aimed at promoting self-interest were directly discouraged.49 (Chapter 15 discusses several reward- system interventions.) In addition, desired behaviors can be reinforced more frequently through informal recognition, encouragement, and praise. Perhaps equally important are the intrinsic rewards that people can experience through early success in the change effort. Achieving identifiable early successes can make participants feel good about themselves and their behaviors, and thus reinforce the drive to change.

8-6e Staying the Course Change requires time, and many of the expected financial and organizational benefits from change lag behind its implementation. If the organization changes again too quickly or abandons the change before it is fully implemented, the desired results may never materialize. There are two primary reasons that managers do not keep a steady focus on change implementation. First, many managers fail to anticipate the decline in performance, productivity, or satisfaction as change is implemented. Organization mem- bers need time to practice, develop, and learn new behaviors; they do not abandon old ways of doing things and adopt a new set of behaviors overnight. Moreover, change activities, such as training, extra meetings, and consulting assistance, are extra expenses added onto current operating expenditures. There should be little surprise, therefore, that effectiveness declines before it gets better. However, perfectly good change projects often are abandoned when questions are raised about short-term performance declines. Patience and trust in the diagnosis and intervention design are necessary.

Second, many managers do not keep focused on a change because they want to implement the next big idea that comes along. When organizations change before they have to, in response to the latest management fad, a “flavor-of-the-month” cynicism can develop. As a result, organization members provide only token support to a change under the (accurate) notion that the current change won’t last. Successful organizational change requires persistent leadership that does not waver unnecessarily.

Application 8.5 describes the implementation of an engagement and innovation pro- cess at the RMIT University Library in Australia. After initial interventions were made, a midterm review suggested additional changes that were designed to sustain the change process’s momentum.50

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SUSTAINING CHANGE AT RMIT UNIVERSITY LIBRARY IN MELBOURNE, AUSTRALIA

R MIT University is a large tertiary educa- tional institution located in Melbourne Australia. The university has more than 75,000 students, including approximately

16,000 students attending an off-shore campus or studying with partner institutions. Australian education is undergoing rapid change in response to various government initiatives, the change to a “demand-driven” system, and a general tightening of funding. These pressures have resulted in the need for more innovation in the education process and increased leadership capacity to support these changes.

In addition to the changes in the broader education environment, the large amount of technological change in the information industry provided the library management and staff an important context and encouragement to inno- vate and change. The most direct and obvious indicator of the changing role of the library was the steady drop in its traditional form of service—loaning out books. Despite a 33% increase in students between 2000 and 2010, the number of book loans per student declined from 10.8 to 5.7. Other indicators of library use also changed, including a shift from long, in- depth reference questions from faculty and stu- dents to shorter and more specific inquiries.

Engaged staff and confident leaders were needed to adapt to changed patterns of use, to meet changing user expectations, and to envis- age and implement new approaches to service. However, input from a broad leadership group formed inside the library and an organization- wide climate survey, which provided results at unit level, indicated that library staff engage- ment levels were below desirable levels.

Over the last five years, the RMIT University Library has adopted strategies that were designed to increase and sustain employee engagement and levels of innovation. The library’s initial approach involved four interventions: leadership development, specific purpose working groups, cross unit work experiences, and increased involvement in professional associations.

LEADERSHIP DEVELOPMENT

As part of a broader University-level leader- ship development program—leadRMIT—the RMIT University Library worked to strengthen its leadership capacity. Since 2008, the library has recognized 18 to 20 staff as a “leader- ship” group. The group identified the positive and negative elements of the library’s existing culture. Desirable changes to the culture were then identified and a variety of leadership development activities were provided to equip managers to support the agreed direc- tion. This included participating in the lead- RMIT courses which involved several full-day sessions with expert external facilitators over a few months. In addition, survey instruments that identified the leadership skills and emotional competencies of the managers provided insights into the approaches and leadership styles that supported staff engage- ment. The library arranged sessions to address specific people management skill needs. After the initial batch of training, a round table was formed as an ongoing oppor- tunity to share insights gained from profes- sional reading, conferences, and other sources, and to discuss leadership and man- agement issues.

THE CUE PROGRAM

As in any large library, there was a tendency towards a culture of specialization in the work- place. Staff in the loans area, for example, had little knowledge or experience in the technical service areas, and those in technical service areas tended not to have experience working with library users. To overcome this “silo effect” and build a more flexible workforce, cross unit work experience opportunities (called “CUEs”) were instituted in 2008. Under this system, man- agers were invited to create training opportu- nities that were then placed on an internal register. A CUE was initiated by a librarian expressing interest in an opportunity that was

202 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT

mediated by the staff development librarian. Four cat- egories of CUEs were defined, including:

1. Short, half-day opportunities over a three-day period were primarily aimed at staff in their first two years of employment to enhance cross unit cooperation.

2. A shadowing assignment provided a short- term opportunity to gain insight into another’s work, often where actually doing the work was not feasible.

3. Longer one-day/week for six months opportu- nities promoted multiskilling and workforce flexibility.

4. Full-time immersion experiences over four to eight weeks provided an opportunity to deepen and enhance multiskilling and workforce flexibility.

SPECIFIC PURPOSE WORKING GROUPS

A variety of specific working groups were created to encourage more open and innovative approaches to the changing environment. For example, the New Professionals Group was created with the intention of entrenching a positive organizational culture and developing organizational savvy and capability. It was hoped that the formation of this group would support the less-experienced professionals to act as change agents. Similarly, the Innovative Librarians or “Innovatives” group focused on exploring new technologies, communicating these to staff, and making recommendations as to how these might be used. One of the challenges in terms of the impact of this group was that the members were in relatively low-influence positions in terms of tradi- tional hierarchy and they often lacked strong advo- cacy skills and confidence.

INVOLVEMENT IN PROFESSIONAL ASSOCIATIONS

To maximize innovative activity requires buy-in which extends beyond leaders and select indivi- duals. As a result, the university librarian promoted involvement in professional associations and led by example. Library staff were encouraged and sup- ported to participate in professional activities, including attending and presenting at meetings and conferences, writing news items and articles, and undertaking study tours.

Although every intervention ideally should receive a separate and formal assessment, sev- eral indicators were used to sense implementa- tion success and suggest follow-on activities. For example, a management skills audit undertaken in late 2010 and early 2011 affirmed significant prog- ress in the overall confidence levels of managers regarding their people management skills. Anec- dotal evidence, evaluation forms provided by par- ticipants in the CUE program, and the ongoing commitment of managers to create and support the scheme indicated that the experience was valuable for the staff member and productive from the manager’s perspective. Finally, the impact of participation in cross unit projects and the specific purpose groups had clearly had posi- tive impact on participants.

To sustain the staff’s engagement and to encourage additional innovation at the library, a simple innovation process was created and was supported by an individual and team development program.

A MODEL OF INNOVATION

The RMIT University Library innovation process was modeled after popular processes developed by IDEO as well as library specific processes located through benchmarking efforts. In itself the model was far from novel, but its simple “gener- ate, develop and deploy” labels provided a com- mon language for units and staff across the library and served as a basis for skill development in support of innovation.

For example, a short-term specific-purpose working group was formed to select and describe idea generation techniques considered appropriate to the RMIT University Library. This group also devel- oped approaches for strengthening ideas. They wanted to avoid “idea assassination” where ideas were recommended without adequate thought and to ensure that good ideas were as well presented as possible before formal approvals were sought. This necessitated clarifying criteria used to decide whether or not to accept and implement sugges- tions, and reaching agreement on a template for making suggestions and providing feedback. To ensure this work was not isolated from reality, tech- niques were piloted on current library projects.

CHAPTER 8 MANAGING CHANGE 203

SUMMARY

In this chapter, we described five kinds of activities that change agents must carry out when planning and implementing changes. The first activity is motivating change, which involves creating a readiness for change among organization members and overcoming their resistance. The second activity concerns creating a vision that builds on an organization’s core ideology. It describes an envisioned future that includes a bold and valued outcome and a vividly described desired future state. The core ideology and envisioned future articulate a compelling reason for implementing change. The third task for change agents is developing political support for the changes. Change agents first must assess their own sources of power, then identify key stakeholders whose support is needed for change

and devise strategies for gaining their support. The fourth activity concerns managing the transition of the organization from its current state to the desired future state. This requires planning a road map for the change activities, as well as planning how to gain commitment for the changes. It also may involve cre- ating special change-management structures and a set of learning processes that accelerate the transition. The fifth change task is sustaining momentum for the changes so that they are carried to completion. This includes providing resources for the change program, creating a support system for change agents, develop- ing new competencies and skills, reinforcing the new behaviors required to implement the changes, and stay- ing the course.

INDIVIDUAL AND TEAM DEVELOPMENT

To support broader individual and team skill development, the library adopted a team man- agement profile process. Staff members com- pleted an online survey and then participated in workshops to understand the sources of team effectiveness, to gain insights into and apprecia- tion of diverse approaches to work, to assess team strengths weaknesses and priorities, and to take steps to enhance effectiveness. While the workshops did not place a major focus on the link between team effectiveness and inno- vation, the team management profiles and workshop experiences laid an important founda- tion for improving innovation levels by identify- ing individual work preferences, affirming the value of each person’s unique contribution, increasing understanding between individuals which may increase levels of trust, and opening up conversations on new ways of thinking about work.

The RMIT University Library used initial interventions and an informal midterm assessment to track the progress of the change and then crafted additional interven- tions to sustain the change. The initial inter- ventions of leadership development to enhance the knowledge, motivation, and skills of managers to engage staff; cross unit work experiences to build a more flexible workforce; specific purpose working groups to address particular issues; and the promo- tion of involvement in professional associa- tions helped start the change. Subsequently, adoption of a common innovation process model and the provision of practical team effectiveness techniques helped to sustain innovation and engagement in the organiza- tion. A repeat organizational climate survey in the future will help to determine whether the engagement levels have risen among library staff.

204 PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT