Power Dynamics and Change Management Plans

373

Chapter Six Navigating Organizational Politics and Culture

Chapter Overview

Change leaders recognize the importance of observing and analyzing the informal components of an organization—power and culture— which are key forces at play within an organization, impacting all stakeholders in the change situation. Identifying the power dynamics in an organization is critical to a successful change process. Different sources of power are described, allowing change agents to assess the potential of their power and influence and gain leverage in their organizations, if needed. Force field analysis and stakeholder analysis are two tools to advance your understanding of the informal organizational system and how to change it. Know yourself as a change leader and stakeholder in the process.

Change leaders’ understanding of both the present and desired future state of organizations depends on an analysis of multiple dynamics within organizations. Chapter 5 looked at the formal structures and systems, noting how they impact change initiatives. Chapters 7 and 8 will examine the impact of key individuals in the organization on the change process. This chapter provides the background on the less tangible but no less real aspects of organizations: political dynamics and culture (see Figure 6.1).

It is important to note that in evaluating stakeholders in your organization, you, too, are a stakeholder. To get a full picture of the informal organization, it is important to use these political and cultural concepts to evaluate yourself as a part of the system. Be sure to ask yourself how your personality impacts you as a stakeholder and change agent. Evaluate your motivations and understand how you deal with power and how you view your organization’s culture.

Figure 6.1 The Change Path Model

374

If corporate mergers are the ultimate in change-management challenges, then the arrival of a new CEO may also challenge embedded power dynamics and cultural patterns. In December 2000, CEO Jim McNerney arrived at 3M’s 28-building, 430-acre, suburban Maplewood, Minnesota campus. Interestingly, McNerney was the first outsider to lead 3M in all of its 98-year history. 3M’s CEOs usually rise from within, after being steeped in the corporation’s culture and philosophy. However, 3M employees found that the new CEO was able to work with those around him.

375

Yahoo-Tumblr Merger: Power and Cultural Differences

It was 2007. High-school dropout David Karp founded Tumblr, a blogging service where users own their own pages. It quickly grew due to several factors: young individuals found their voices on the social networking site; like-minded people developed into strong communities; creatives launched Internet memes; and bloggers were offered and accepted numerous book deals. By spring, 2013, when the aging Web pioneer Yahoo bought Tumblr for $1.1 billion in cash, Tumblr had over 108 million blogs and reached 44 million people in the United States and 134 million worldwide. For Marissa Mayer, CEO of Yahoo, buying the social media site was her approach to changing the aging giant Yahoo and bringing in a much-needed young demographic to the company.

Skeptics of the purchase immediately talked about potential problems. Many analysts wondered how Yahoo would be transformed when it was not clear how Tumblr would ever become profitable. Karp had disliked and distrusted advertising and he and other Tumblr executives had not figured out how to monetize its bloggers. In 2012 he had burned through $25 million in cash, and by 2013 investors were not rushing in with additional money at an acceptable valuation. Karp, in other words, needed a savior and in May, 2013, CEO Mayer looked like a potential rescuer for Karp and Tumblr’s investors. At the announcement of the purchase for $1.1 billion, Mayer promised not to “screw it up” for Tumblr’s users.

The young demographic that Yahoo wanted, however, brought with them a particular culture: an acceptance of sexually explicit content on Tumblr. Advertisers, on the other hand, would not have their ads run on pages that featured pornography. Yahoo needed to figure out a policy that would keep young users on Tumblr while not offending advertisers and Yahoo customers. They never did figure out this cultural clash.

At first California-based Mayer and Yahoo executives had a hands-off approach to Tumblr and its 175 employees in New York City. By 2015, however, Mayer set a very aggressive target of $100 million in revenue for Tumblr; but, she set this goal with little input from its executives. A year later when the revenue target had not been hit, Mayer abruptly merged Tumblr’s ad sales team with Yahoo’s under an executive who had little experience or rapport with Tumblr employees. Quickly, Tumblr employees headed for the exit doors. The next year Mayer again reorganized the ad sales teams into two separate groups with chaos and anger following in the wake of the separation. More employees headed for the door.

By spring, 2016, Yahoo and Mayer hinted that the $1.1 billion Tumblr acquisition was a waste of money. At that time Yahoo reduced its overall workforce by 15%, closed offices around the world, and began its search for a private equity or corporate buyer, such as Verizon. Finally, in June, 2017, Verizon announced that it had bought Yahoo and, with it, Tumblr.

376

A tangle of issues—as many as five to seven—undid this merger. No one figured out how to make money at Tumblr. While Mayer’s hands-off policy with a continent between the two companies seemed appropriate at first, it also meant that employees kept their own assumptions and ways of the seeing the world rather than finding useful common ground in a shared culture. When Mayer did step in, people said that it was too little, too late, and too aggressive, particularly around the supersized revenue goal. Mayer’s appointed leaders did not connect with Tumblr’s employees who bolted when they did not like Yahoo’s actions. There was conflict between Yahoo’s leaders and Tumblr’s employees who reported being confused at the mixed signals which came from Sunnyvale, California.

In short, Mayer and her team never did the hard work of bringing together two diverse workplaces and workforces into a common culture. Nor did they deal effectively with issues of power and influence.1

Mcnerney Enters 3M

Jim McNerney’s style has let employees to feel that they, not McNerney, are driving the changes. He was able to introduce data-driven change without forcing his ideas from General Electric onto the organization.

McNerney was able to rely on existing 3M management rather than importing other GE executives. “I think the story here is rejuvenation of a talented group of people rather than replacement of a mediocre group of people,” he says. As part of his change plan, he avoids giving orders and reinforces the 3M culture whenever he can. “This is a fundamentally strong company. The inventiveness of the people here is in contrast with any other place I’ve seen. Everybody wakes up in the morning trying to figure out how to grow. They really do.” This diplomacy generally played well with the 3M faithful. “He’s delivered a very consistent message,” says Althea Rupert, outgoing chair of Technical Forum, an internal society for all 3M technical people. “There’s a sense of speed and a sense of urgency.”2

In the 3M case, McNerney shows a clear understanding of the players, their perspectives, and their needs, and this made the implementation much easier to accomplish. Perhaps McNerney had no choice. But he did act in ways that involved people, focused their attention and interest, and brought them along rather than attempting to impose an outside set of views.

While the stories of the Yahoo-Tumblr merger and the installation of a new leader within a fully functional 3M are quite different, they demonstrate the impact of power dynamics and the influence of an organization’s culture. How change leaders deal with power and

377

behavioral organizational norms and the difficult-to-define, amorphous organizational culture will affect the speed and nature of the change.

When assessing possible responses to change initiatives, leaders need to recognize the impact that individual and organizational history can have. Employees may have had significant experience with change that leads them to be wary. They may have also worked with the existing approaches and have their own perspectives on what change is needed, so ambivalence and concern are natural— particularly in individuals who have demonstrated commitment to the organization and the quality of the outcomes achieved.3 Some change projects are downsizings in disguise and yet change leaders somehow expect employees to welcome such initiatives with open arms. Surely, such optimism is naïve!

378

Power Dynamics in Organizations Mention the words “organizational politics,” and many people roll their eyes, throw up their hands, and say, “I don’t want to have anything to do with politics!” The assumption is that organizational politics is inherently dirty, mean-spirited, destructive, and that organizations and their members would be better off without “politics.”

Bolman and Deal make a persuasive argument that organizational “politics is the realistic process of making decisions and allocating resources in a context of scarcity and divergent issues. This view puts politics at the heart of decision making.”4 Negotiating, according to Bolman and Deal, is the key process in organizational politics. The marketing department, for example, wants to redesign the organization’s website, while the technology folks push back saying, “Not now! We have our hands full as we install the XYZ platform!” In short, organizational politics is the push-and-pull between and among individuals and departments and who gets what resources. There is nothing inherently good or bad about power. Rather, it is the application and purposeful use of power and its consequences that will determine whether it is “good” or “bad.”

In fact, the power to do things in organizations is critical to achieving change. Power is a crucial resource used by change agents to influence the actions and reactions of others. The knowledgeable change agent asks multiple power-related questions, such as, What power do I have and what are the sources of my power? What am I authorized to do by virtue of my title and position? What signatory authority and what dollar limits of expenditure does my position have? For example, can I hire someone based on my signature alone, or do I need to obtain approval for the hiring from HR? These questions help change agents to diagnose their formal authority and power.

379

Individual Power While organizations confer specific authority and power on particular positions, change agents also need to be perceived as influential. Change agents need to articulate positive beliefs about power—and to be aware of others’ perception of their power. There are both internal psychological and external, reality-based roadblocks to exercising power. Clearly, power can be real—one can influence people with knowledge, persuade them by strength of personality and integrity, or use rewards and punishments to direct people’s behaviors. But the perception of power is just as important, if not more important, than the actual resources that a manager holds. If others do not believe that a person is influential, then the facts will have little impact until those perceptions are changed. The rookie manager has the same formal power as the experienced one. However, the perception of their power and influence are generally very different. Often the perception that an individual has power to act is all employees need. When individuals have the trust of their CEOs, for instance, they want to maintain that trust and are therefore not likely to use inappropriate influence tactics on their boss.5

What gives people power in organizations? Individuals have power because of the position they hold, who they are (character and reputation), and who and what they know. When position, reputation, and expertise combine in one individual, that individual is likely to be powerful. These individual sources of power are classified in Table 6.1.6

380

Departmental Power In addition to personal influence, departments within an organization may have different levels of power. This power is dependent on the centrality of the work the department does, the availability of people to accomplish important organizational tasks, and the ability of the department to handle the organization’s environment. These can be categorized as follows:

Table 6.1 Types of Individual Power Table 6.1 Types of Individual Power

Positional Power

This is the legitimate authority of the title and position; it includes control and access to resources and the ability to formally make decisions and allocate resources. The formal authority to make decisions is a major source of power.∗

Network Power

Power in this area comes from the quality of the informal and formal network of connections that permits a person to access and pass on valuable information. People with large networks of colleagues across organizational levels and boundaries have access to more information and are often perceived to be more influential.

Knowledge Power

Expertise and knowledge is particularly important in some organizations; it is particularly important in such organizations as pharmaceutical and consulting firms. Expert power is the possession of a body of knowledge essential to the organization; credentials provide independent certification of expertise and increase one’s ability to influence. Information power is clout gained through the flow of facts and data: by creating, framing,

381

redirecting, or distorting information and by controlling who receives the information. Knowledge power also relates to a person’s depth of understanding of how things work in the organization in order to get things done. This relates to both the formal (e.g., how the formal approval process works) and the informal processes (e.g., how power and influence really manifest themselves in the organization) that influence how the organization operates.

Personality Power

The ability to inspire trust and enthusiasm from others provides many leaders with significant individual power. Sometimes leaders have charisma, a special charm that pulls people to them. Reputation, which comes from people’s experiences with the person, includes reports of success (or failure), and influences personal power.

Treatment of these power related concepts can be found in: Whetten, D.A., & K.S. Cameron, Developing Management Skills, 8th ed. New Jersey: Prentice- Hall, 2010.

∗ Another way of looking at this type of power is in terms of “yea- saying” or “nay-saying” power. Yea-saying means that a person can make it happen. For example, he or she could decide who would be hired. Nay-saying power means that a person could prevent something from happening. Thus, nay-saying power would mean that someone could prevent a particular person from being hired but could not decide who would be hired.

Ability to cope with environmental uncertainty: Departments gain power if they are seen to make the environment appear certain. Thus, marketing and sales departments gain power by bringing in future orders, diminishing the impact of competitors’ actions, and providing greater certainty about the organization’s future vitality in the marketplace. During times of economic turbulence, finance departments gain power through their ability to help the firm navigate its way. Likewise, other departments and functions either

382

enhance or diminish their power based upon their ability to absorb uncertainty and make the world more predictable and manageable for the organization. Low substitutability: Whenever a function is essential and no one else can do it, the department has power. Think, for example, of the power of human resources departments when no one else can authorize hiring of new personnel or the power of technology departments that often gets to decide what kind of hard- and software a firm will buy and use. Centrality: Power flows to those departments whose activities are central to the survival and strategy of the organization or when other departments depend on the department for the completion of work. In most large white-collar organizations, systems people have power because of our dependence on the computer and the information derived from it. Close the management information systems and you shut down the organization. Highly regarded and well-developed information systems anchor the success of firms such as Federal Express, Walmart, and Statistics Canada.

Hardy added to our understanding of the sources of power with her classification.7 She described three dimensions of power:

1. Resource power—the access to valued resources in an organization. These include rewards, sanctions, coercion, authority, credibility, expertise, information, political affiliations, and group power. Resource power is very similar to the individual power listed above.

2. Process power—the control over formal decision-making arenas and agendas. Examples of process power would be the power to include or exclude an item on a discussion agenda. Nominating committees have significant process power as they determine who gets to sit on committees that make decisions.

3. Meaning power—the ability to define the meaning of things. Thus, the meaning of symbols and rituals and the use of language provide meaning power. For example, a shift from reserved parking and large corner offices for executives to first-come parking and common office space can symbolize a significant move away from the reliance on hierarchical power.

Hardy’s introduction of process and meaning power adds significantly to the understanding of how one might influence a change situation. Anyone who has tried to get an item added to a busy agenda will understand the frustration of not having process power.

383

While many sources of power exist, the type of power used by managers can have different effects. Some types of influence are used more frequently than others. One research study found that managers used different influence tactics depending on whether they were attempting to influence superiors or subordinates. Table 6.2 outlines the usage of these power tactics. It shows that managers claim they use rational methods in persuading others. The use of overt power, either by referring something to a higher authority or by applying sanctions, is not a popular tactic.

Change agents, like all managers, need to think of themselves as “politicians.”8 Defining oneself as an organizational “politician” will suggest the need to negotiate, develop coalitions, build and use alliances, deal with the personality of the decision maker, and use contacts and relationships to obtain vital information. Savvy change leaders do not underestimate the need for power and influence in their determination to make something happen.

See Toolkit Exercise 6.2 to assess different kinds of power.

Table 6.2 Usage Frequency of Different Power Tactics

Table 6.2 Usage Frequency of Different Power Tactics

When Managers Influence Superiors

When Managers Influence Subordinates

Most Popular Tactic

↕

Least Popular Tactic

Use and give reasons

Develop coalitions

Act friendly

Negotiate

Be assertive

Refer to a higher authority

Use and give reasons

Be assertive

Act friendly

Develop coalitions

Bargain

Refer to higher authority

Apply sanctions Source: Kipnis, D., Schmidt, S. M., Swaffin-Smith, C., & Wilkinson, I. (1984, Winter). Patterns of managerial influence: Shotgun managers, tacticians and bystanders. Organizational Dynamics, 12(3), 56–67.

384

Organizational Culture and Change Organizational culture: What does it mean?

The concept of organizational culture is fairly new. While psychologists talked about group “norms” and social climates in organizations as early as 1939,9 the concept of “culture” only began to attract organizational behavior researchers in the 1980s and 1990s.10 Now, the idea is widely used among academics and practitioners alike: A 2014 search on Amazon books by the words “organization culture” yielded a listing of over 47,000 plus books.11 The widespread use of the term has not, unfortunately, created a standard definition. However, Ed Schein’s definition, which has been published in five editions of his book Organization Culture and Leadership (1992, 1996, 2004, 2010, and 2016), dominates the field and is quite useful in thinking about the phenomenon. Schein defined culture as follows:

1. a pattern of shared basic assumptions 2. that was learned by a group 3. as it solved its problems of external adaptation and internal

integration 4. that has worked well enough to be considered valid and, 5. therefore, is taught to new members 6. as the correct way to perceive, think, and feel in relation to those

problems [numbers were added by the authors].

Note the complexity of this definition with its six sub-parts. Schein is concerned with a group and its learning; with how an organization adjusts to the external environment’s ever-evolving demands and how internal players respond coherently and in alignment to those challenges; the fact that these ways of behaving are taught to new members “in a socialization process that is itself a reflection of (the) culture”; and that the culture promotes a particular way of thinking and feeling about problems.

385

How to Analyze a Culture To assess a culture, Schein identified three levels for analysis. The first level is the visible aspect—or artifacts—of the organization. These include everything from how employees dress and the design of an organization’s buildings to its structures and processes. While artifacts are easy to see, their meaning can be difficult to decipher and an observer needs to be careful to ascribe meaning to a single artifact or observation. The second level is an organization’s “espoused beliefs and values”; this second level includes an organization’s articulated mission, values, and strategy. Most change agents begin to change an organization by starting at this level of culture. The third level is the “basic underlying assumptions” that have become so ingrained and so much a part of a group’s thinking and perspective on the world that they are not questioned. Since these assumptions remain largely unarticulated, they are also non-debatable, making them extremely difficult to change. For example, a university faculty may see itself as caring passionately about the quality of the classroom experience, and protect its beliefs by actions that serve to silence anyone who raises questions in this area.

Many founders of organizations explicitly set out to establish a culture that is compatible with their beliefs about how organizations operate best and the values that should be embedded in the organization. For example, Gretchen Fox, founder and former CEO of FOX Relocation Management Corp., Boston, had worked in excessively hierarchical law firms before she started her relocation firm. At law firms she had observed large, physically fit men who were senior partners in the firm and whereby held high-level positions in the organization’s hierarchy. These men would ignore low-level women staff as they lifted and carried heavy boxes and bottles of water. For Fox, the human thing for the men to do would have been to help with the heavy lifting. Fox decided then and there that when she built her business, she would establish a flat, non-hierarchical firm. This belief was embedded in the layout of offices (Fox’s office was a regular-sized office in a row of offices, leaving the light-filled sunny corner spaces for employees); in the minimal use of titles; in a collective, decision-making process for hiring new employees; and in a rational approach to work that did not involve status in the hierarchy.

As FOX Relocation grew, some of the observable artifacts—such as titles—needed to change to accommodate folks in the external world’s

386

understanding of who did what inside the firm. The question became this: What else, if anything, needed to change inside the firm to adapt to its growth and to the external environment while maintaining the integrity of its culture?

387

Tips for Change Agents to Assess a Culture A change agent, then, needs to assess a culture at three levels. Such an analysis may lead to innovative ways to change a culture.

1. Observe the artifacts: How do people dress? How are offices arranged? What is the space differential for offices between top-level executives and other people who work in the organization? How are parking lots and spaces assigned, and who pays and does not pay for a space? How do members of the organization interact and relate to one another? Where and how are meals eaten? Is there an executive dining room and separate food for executives?

2. Read documents and talk to people to gain an understanding of an organization’s espoused beliefs and values: What does the organization say about itself on its website and social media platforms? What are the articulated mission, values, and strategy statements? What does it brag about in its press releases? Ask five to ten people: What does this organization value and believe in? What, if any, of its documents have changed in the past five years? How have they changed, and are these changes in alignment with changes in the artifacts of the organization?

3. Observe and ask people about underlying assumptions: Since these are often unarticulated and their origins developed years before, it may be difficult for people to express the organization’s fundamental suppositions. Observers need to look for clues on fundamental issues: What is the basic orientation to time in terms of past, present, and future? What time units are most relevant for the conduct of the organization’s business? For example, colleges and universities orient around the quarter or semesters, units of time that are not relevant to most businesses but would be to bookstores that serve universities and landlords who rent to students. A second example would be the nature of human beings: “Are humans basically good, neutral, or evil, and is human nature perfectible or fixed?” (p. 429).12 It is important to consider these fundamental issues, and then search for and develop hypotheses about what needs to change to improve the outcomes experienced and how to go about it.

Clashing Workplace Cultures*

388

Training & Careers, Inc. (TCI), a small nonprofit agency, focused on job training and placement for low-income residents included programs in culinary arts, janitorial work, and hotel and hospitality training. Due to financial issues, TCI merged with Careers, Inc. (CI), a national nonprofit that had a similar mission and programs. TCI, headquartered in Boston, had a relaxed and autonomous work culture. Careers, Inc. (CI), headquartered in New York City, had a regimented and tightly supervised workforce. As the organizations began to merge their operations, they neglected to address the differences in their workforce cultures. TCI was made up of white-collar staff, 25% of whom held a master’s degree in social work. TCI was able to attract this talent by offering flexible work schedules, three weeks of paid vacation, and letting the staff out early most Fridays. CI’s workforce, on the other hand, attracted largely blue- collar workers who led the janitorial training programs. This workforce had strict time reporting guidelines and few vacation incentives, as their compensation was commensurate with their high school or associate’s level education.

As the organizations attempted to merge, TCI experienced significant pushback from its employees as CI eliminated early-release Fridays and proposed cutting vacations. TCI moved away from staff autonomy by adopting CI’s time clock system, which required employees to punch in and out each day. Because the leaders of the two organizations did not sufficiently understand the cultural differences and take these into account during the merger, TCI experienced a 43% turnover of frontline staff following the merger. Remaining staff were disgruntled and openly sought other job opportunities outside the organization.

* The names and locations of the organizations are disguised.

This vignette suggests three levels of organizational culture. The time clock system, requiring employees to punch in and out each day, is an artifact that was present in one of the organizations, but not the other. The espoused beliefs and values were discernable in the comparable missions and programs of the two organizations and pointed to potential friction points. Further, the underlying assumptions of who to hire and how to manage them suggests differences at the third level of culture. At Careers Inc., executives believed that staff needed to be tightly controlled and supervised to make sure that they did a day’s work. By contrast, the underlying assumption of TCI was that staff accepted lower pay in return for more autonomy and time off perks. When this assumption was challenged, the results were disastrous.

To create one organization and one culture, the executives at CI required all of its employees to use the time clock, punching in and out daily. In making this requirement, CI executives sent a signal about

389

their core beliefs about the nature of human beings and how they should be managed.

390

Tools to Assess the Need for Change Individuals choose to consider and adopt a proposed organizational change—or choose not to. Sometimes they do this willingly and other times they choose reluctantly, either feeling forced or mixed about their decisions. This perspective is valuable when thinking about increasing the success of organizational change, for it is at the individual level that people decide to change. Their choices depend on their views of the situation and how it impacts their lives.

In the recent past, many change programs have been focused on cost cutting, including the downsizing of the number of employees in an organization. People are bright. They understand what is happening. And if a program will cost them their jobs, why would you expect them to be enthusiastic and positive? Such resistance demonstrates the point that individuals will choose to cooperate or not depending on their personal circumstances and their assessment of how the change will impact them personally. Individuals will adopt or accept change only when they think that their perceived personal benefits are greater than the perceived costs of change. This can be summarized as follows:

Change Occurs When

Perceived Benefits of Change > Perceived Cost of Change

This simple formula highlights several things. First, change agents have to deal with both the reality of change and its perceptions. Again, perception counts as much as reality. Second, in many situations, the costs of changing are more evident than the benefits of change. In most change situations, first the costs are incurred and then the benefits follow. The perceived benefits of change depend on whether people think the benefits are likely—that is, the probability of the change being successful in ways that count for them. As well, the benefits of change depend on the state of happiness or dissatisfaction with the status quo. Interestingly, people also tend to focus on the consequences of the change rather than the consequences of remaining the same. The more dissatisfied people are, the more they as individuals will be willing to change. The change equation can be modified to capture this as follows:

391

Change occurs when

Dissatisfaction × Benefits × Success > Cost

Where

Dissatisfaction = Perception of dissatisfaction with the status quo Benefits = Perception of the benefits of change Success = Perception of the probability of success Cost = Perceived cost of change

Thus, change agents need to build the case for change by increasing the dissatisfaction with the status quo by providing data that demonstrate that other options are better, demonstrating that the overall benefits are worth the effort of the change, and showing that the change effort is likely to succeed. When discussing these factors with others, it’s useful to extend the assessment beyond the rational, “head- related” factors such as cost savings, market share, improved profitability, and competitive advantage. The assessment should extend to “heart-related” matters, such as the human impact of the change on employees, work teams, the department/division, customers and the community. Doing your homework, engaging others in conversations about the change, and early successes are important parts of the change agent’s toolkit in the early stages of a change initiative.

It is important to differentiate between the costs and benefits to the organization and the costs and benefits to individuals. Too often, change leaders focus on the organizational benefits and miss the impact at the individual level. The earlier example highlighted this. If an individual sees that the change will increase profits and result in job loss, why would a manager expect support? It takes very secure people who feel they have alternatives and are being equitably treated to be positive under these circumstances even if they believe the change is needed for the organization.

Table 6.3 captures this. It contrasts the impact on individuals with the impact on the organization to predict the resulting support for a change initiative. The purpose of Table 6.3 is to encourage change leaders to avoid the trap of assuming that positive organizational outcomes will automatically be supported by individuals.

392

In addition to considering the direct impact of a change on a person, individuals will also think about and be influenced by the effects of the change on their coworkers and teammates. The strength of interpersonal bonds, including the shared values, goals, and norms within an organization, can have a significant impact on attitudes and actions. The traditions of how work is divided, how people and departments interact or do not, and simply the way of doing business create a culture within an organization. The desire to maintain the organization’s traditions, even if there is a mutual understanding for a need to move on, can hinder the acceptance of changes. This challenge is greater if there are shifts in roles and responsibilities and therefore a shift in power. A change leader needs to understand and respect individuals’ and organizational history and the individual members’ perceptions of that history to effectively negotiate the change process and appropriately engage stakeholders.

Table 6.3 Organizational and Individual Consequences and the Support for Change

Table 6.3 Organizational and Individual Consequences and the Support for Change

Perceived Impact of the Change on the Organization

Perceived Impact of the Change on the Individual

Direction of Support of the Change

Positive consequences for the organization

Positive outcome for the individual (e.g., less work, better work)

Strong support for change

Positive consequences for the organization

Negative outcome for the individual (e.g., more work, worse work)

Indeterminate support for change but very possibly resistance

Neutral consequences for the organization

Positive outcome for the individual (e.g., less work, better work)

Positive support for change

393

Perceived Impact of the Change on the Organization

Perceived Impact of the Change on the Individual

Direction of Support of the Change

Neutral consequences for the organization

Negative outcome for the individual (e.g., more work, worse work)

Resistance to change

Negative consequences for the organization

Positive outcome for the individual (e.g., less work, better work)

Indeterminate support for change

Negative consequences for the organization

Negative outcome for the individual (e.g., more work, worse work)

Resistance to change

Change agents need to think of the impact on individuals—particularly people critical to the change. When doing so, consider also the people who will actually have to change and how they will view the change equation and assess the benefits, costs, and risks. A general manager may decide that new systems are needed, but it is the individual who will be operating the systems who will have to learn how to work with them and change his or her behavior.

To consider the perceived impact of change see Toolkit Exercise 6.3.

394

Identifying the Organizational Dynamics at Play Each of the organizational models introduced in Chapters 2 and 3 assumed that organizations consist of people, systems, and structures that interact according to different forces at play. In organizational change, the key is to understand the forces and how they respond to shifts in pressure. In system terms, the technical term is homeostasis, meaning a system has a tendency toward a relatively stable equilibrium among its interdependent factors. Organizations are as they are because the forces involved are in balance. If one force is changed, it could affect many things and may well be resisted. Alternatively, it may give rise to unanticipated support for the change.

Two tools are particularly useful in helping change leaders to understand such forces and why the organization changes or doesn’t.

1. Force field analysis—a process of identifying and analyzing the driving and restraining forces impacting an organization’s objectives

2. Stakeholder analysis—a process of identifying the key individuals or groups in the organization who can influence or who are impacted by the proposed change and then of working with those individuals or groups to make them more positive to notions of change

Once these tools have been deployed, it is important to integrate them. Stakeholders will show up in the force field analysis as forces that need to be considered, and an in-depth assessment of them in the stakeholder analysis will put the change agent in a stronger position to manage those forces in ways that will advance the change.

395

Force Field Analysis13

The force field analysis identifies the forces for and against change. In situations that are stable or in equilibrium, the forces for change (driving forces) and the forces opposing change (restraining forces) are balanced. To create change, the balance must be upset by adding new pressures for change; increasing the strength of some or all of the pressures for change; reducing or eliminating the pressures against change; or converting a restraining force into a driving force. Figure 6.2 depicts a force field analysis chart.

Figure 6.2 Force Field Analysis

Pressures for change come in many shapes and include both internal and external sources. External factors often are the initial triggers that give rise to internal pressures. External driving forces could include benchmark data and various market forces that are putting pressure on senior management to improve their performance in the private sector. Politicians concerned about increased costs or declining service levels could generate driving forces in the public sector. Alternatively, external factors may involve opportunities for future growth or access to special incentives (e.g., tax relief) designed to promote certain activities. Internal pressures, such as the vision of a champion, work group attitudes and norms, and internal systems (e.g., the reward system) that are aligned with the change have the potential to act as driving forces.

Restraining forces for change might come from lack of access to sufficient resources, missing skills and abilities, power dynamics, cultural norms, and/or formal organizational systems that are

396

incongruent with the change. They can also come from outside of the organization in the form of customer and supplier concerns, industry standards, rules, and regulations. For example, if innovation is part of the desired change, control systems that focus on efficiency and minimize experimentation or variance from standards to reduce costs will act as a restraining force. Changes that are seen as threats to individuals will lead to resistance. Habits or patterns of behavior that could impede the change might be difficult to alter, even when individuals are supportive. The longer those habits have been in place, the more difficulty individuals will have in extricating themselves from those patterns. Work group norms, informal leadership patterns, and workplace culture may act as either driving or restraining forces, depending on the situation.

To do a force field analysis,

1. Identify the forces acting in the situation and estimate their strength. Both the immediate and the long-term forces need to be considered. The immediate forces are the ones that are acting now and have an immediate impact (e.g., quarterly sales targets). The long-term forces are those that may have less immediate effect but whose impact may linger longer, such as customer satisfaction or employee morale.

2. Understand how the forces might be altered to produce a more hospitable climate for the change and develop strategies that will maximize your leverage on the driving and restraining forces with the minimum effort. Conserving your energy and resources is important because change management is a marathon, not a 100- yard dash.

3. Look beyond the immediate impact and identify ways to increase support and reduce resistance. Consider unanticipated consequences that may result from what is implemented. For example, you may be able to reduce resistance by throwing financial rewards at individuals, but in doing so you may inadvertently promote unethical behavior, reduce organizational commitment, and destroy your compensation system.

In the 3M example mentioned earlier, the appointment of McNerney created a new force in the organization. The Six Sigma system he introduced from GE was data driven and thus appealed to the values of 3M employees. At the same time, he reduced defensiveness as a force by praising the 3M culture and showed how the employees could achieve more by focusing on the data and explicit goals. All of these

397

things added to forces for change and reduced or eliminated forces against change. As positive outcomes began to ensue from these initiatives, the process provided sustaining reinforcement.

Strebel suggests looking at force field analysis graphically. That is, consider the forces for and against change separately—not necessarily opposing each other directly but operating orthogonally (at right angles).14 Figure 6.3 shows this.

Strebel’s view of the change arena allows us to plot where forces for and against change are in balance. The change arena helps us to identify four areas with which many change agents are familiar: areas of constant or continuous change, areas of high resistance, areas of “breakpoint” change, and areas of “sporadic” or “flip-flop” change. With breakpoint change, pressures are significant and the resistance will be strong. Under these circumstances, resistance will prevent change until the driving forces strengthen to the point that the system snaps to a new configuration. For example, World War II was seen by many Americans to be someone else’s battle until the attack on Pearl Harbor dramatically altered the status quo. When breakpoint change occurs, it will be radical and create significant upheaval because of the strength of the changes involved. The situations faced by General Motors and the UAW in 2006 and 2009 are classic breakpoint situations. The market pressures on General Motors were very strong. The UAW faced equally strong resistance forces from both active and retired members, who wished to protect their health benefits and their pension plans.15 In 2006, this led to significant concessions from the UAW, but these were a pale imitation of those obtained in 2009 after GM exercised breakpoint change through declaring bankruptcy and seeking court protection while it restructured.

In flip-flop changes, forces are weak and change events are not very important, and the situation could change only to reverse itself easily. Flip-flop changes tend to occur when participants have shifting preferences or are ambivalent concerning matters that are of only modest importance to them.

Figure 6.3 Forces for and Against Change

398

Source: Strebel, P. (1994, Winter). Choosing the right change path. California Management Review, 29–51.

Force field analysis requires careful thinking about the dynamics of the situation and organization, including how people, structures, and systems affect and are affected by what is happening. How will these factors assist or prevent change?

Toolkit Exercise 6.4 asks you to do a force field analysis in order to develop your skills in this area.

Such analysis does lead individuals to think in relatively linear ways— forces are either for or against change. Their influence is linear and direct. However, a different, more nonlinear perspective is often needed. A tool called stakeholder analysis is valuable in gaining insights into a nonlinear interactive view of organizations.

Stakeholder Analysis Stakeholder analysis is the identification of those who can affect the change or who are affected by the change. Included in this is the analysis of the positions, the motives, and the power of all key stakeholders. Stakeholder management is the explicit influencing of critical participants in the change process. It is the identification of the

399

“entanglements” in the organization, the formal and informal connections between people, structures, and systems.

The purpose of stakeholder analysis is to develop a clear understanding of the key individuals who can influence the outcome of a change and thus be in a better position to appreciate their positions and recognize how best to manage them and the context. A useful starting point is to think carefully about who will be affected and who has to change their behavior in order for the change to be successful. An obvious but often overlooked point is exactly that—someone or some people will be affected and some will have to change their behavior!∗ Once the key person or persons are identified, change leaders must focus on who influences those people and who has the resources and/or power to make the change happen or to prevent it from happening.

∗ We are reminded of the old definition of insanity: Doing the same thing over and over, but expecting a different result!

In doing a stakeholder analysis, the first step is to identify those people who need to be concentrated on. A change leader can identify those people by asking the following questions:

Who has the authority to say “yes” or “no” to the change? Which areas or departments or people will be impacted by the change? How will they likely react, and who leads and has influence in those areas and departments? Note that the stakeholders relevant to a change do not always reside in the organization and can include customers, suppliers, communities, and government bodies. Who has to change their behavior or act differently for the change to be successful? This is a key question—the change ultimately rests on having these people doing things differently. Who has the potential to particularly ease the path to change, and who has the potential to be particularly disruptive?

Savage developed a model that plots stakeholders on two dimensions: their potential for threat and their potential for cooperation.16 If a stakeholder has high potential for both threat and cooperation, Savage suggests that a collaborative approach should be developed. In this way, the stakeholder is brought onside and his or her support obtained. If the stakeholder is supportive, that is, has high potential for cooperation and low potential for threat, Savage argues for a strategy

400

of involvement where the change agent maximizes support from the stakeholder. A stakeholder who is non-supportive, that is, has limited potential for cooperation but high potential for threat, should be defended against. Finally, a marginal stakeholder, one with limited potential for either cooperation or threat, should be monitored to ensure the assessment is correct.

Once these vested interests are mapped, the change leader can examine the effects of organizational systems and structures. Only with this deep understanding can change be managed well.

Change agents need to know who the key participants are, their motivations, and the relationships between them. Creating a visual picture of the key participants and their interrelationships can be helpful to understanding the dynamics of the situation. A stakeholder map lays out the positions of people pictorially and allows the change agent to quickly see the interdependencies. In drawing stakeholder maps, some add complexity: Members of the same groups can be encircled; different thickness of lines can be used to signify the strength of the relationship; different colors can be used to signify different things (e.g., level of support or resistance); or arrows can be used to point to influence patterns, with their thickness often used to characterize the strength of the relationship. The only constraint on the construction of a stakeholder map is one’s ability to translate data into a meaningful visual depiction of the key stakeholders and their interrelationships. As noted earlier, it is critical to not leave out stakeholders that are external to the organization. External stakeholders create and are a part of important dynamics, and understanding their connection to the organization as well as their power and influence will help the change agent in plotting the complete landscape.

Some of the factors that are useful to depict are

their wants and needs, their likely responses to the change, how they are linked, their sources and level of power and influence, the actual influence patterns, how they currently benefit from the status quo, how they may benefit from the change, and how they may be worse off from the change.

Figure 6.4 shows a hypothetical stakeholder map.

401

Cross and Prusak classify organizational members as:

Central connectors—people who link with one another. For example, Stakeholder #4 links Stakeholders #2, #3, and #6. Boundary spanners—people who connect the formal and/or informal networks to other parts of the organization. In the map, the change agent and Stakeholder #4 are both serving as boundary spanners. Information brokers—people who link various subgroups. In Figure 6.4, the change agent has the potential to play that role. Peripheral specialists—people who have specialized expertise in the network.17 Once the stakeholder map is developed, change agents can visually see groupings and influence patterns, levels of support and resistance, and the strength of existing groupings and relationships. They can use this map to assess their assumptions concerning the stakeholders by soliciting input and feedback from others. Action plans can be reviewed relative to the map and to see if the strategies and tactics are likely to produce stakeholder responses that will contribute to the desired results. These are just a few of the ways these maps can be applied.

Once the stakeholder map is developed, change agents can visually see groupings and influence patterns, levels of support and resistance, and the strength of existing groupings and relationships. They can use this map to assess their assumptions concerning the stakeholders by soliciting additional input and feedback. Action plans can be reviewed relative to the map, to see if the strategies and approaches are likely to produce stakeholder responses that will contribute to the desired results. These are just a few of the ways that the map can be applied.

Figure 6.4 Hypothetical Stakeholder Map

402

Understanding the positions of key players or stakeholders is essential if a change agent is to alter the forces that resist change and strengthen those that promote change. One can think about moving each stakeholder on a change continuum from an awareness of the issues to interest to a desire for action to taking action or supporting action on the change. One also wants to guard against unnecessarily driving them to actively resist the change.

Awareness → Interest → Desire for action → Take action

Classifying stakeholders according to this continuum is useful because it can guide what change tools you should use. For example, in the initial stages of a change process, the issue may be one of creating awareness of the need for change. Here, one-on-one communication to organization-wide publicity counts. Articles in an internal organizational newspaper can educate people. Forums or open sessions discussing the issues can play a role. Addresses by senior executives can both inform and generate interest in a topic. Benchmark data can convince skeptics that change is necessary, and a special budgetary allocation or a pilot project can pave the way for people to try out a change program. Which tactics are most appropriate to use at different points in time will depend on the situation; the people affected; the change agent’s skills, abilities, reputation, and relationships; as well as on the organization’s culture and previous experiences with change.

403

As a general rule, change leaders should shift from low-intensity forms of communication to high-intensity forms as individuals shift from awareness to interest and action. Impersonal but educational messages might inform, but persuasion often takes direct one-on-one action.

For example, in one organization, the CEO wanted independent sales agents to adopt a new and relatively expensive software program. Persuasion efforts about the costs and benefits had limited success. Finally, the change agent identified two things: First, the key influencers were the managers of the sales agents and second, these managers could be classed as supportive, neutral, or negative. The change agent had the CEO phone each manager directly, emphasize the strategic importance of the adoption of the software, query them about concerns they might have, and then directly ask them for their support. Clearly, this was a very powerful and persuasive technique, using all of the power and prestige of the CEO along with his considerable interpersonal skills.18

Stakeholders will vary not only in their readiness to change but also in their attitudes toward or predisposition to change. Some individuals tend to be inherently keener about change and fall into the categories of innovators or early adopters. Others will wait until the first results of the change are in—they follow the initial two groups of adopters and form the early majority. The late majority wait longer before adopting. They want more definitive data concerning the change and the reactions of others before they are prepared to commit. Finally, some will, by their nature, resist change until late in the process and can be classified as laggards or late adopters and non-adopters. Table 6.4 lists people’s predisposition to change.

Table 6.4 Individual Predispositions to Change Table 6.4 Individual Predispositions to Change

Innovators or early adopters Individuals who seek change and want variety

Early majority Individuals who are receptive to change but arenot first adopters

Late majority Individuals who follow others once the changehas been introduced and tried

404

Laggards or late adopters

Individuals who are reluctant to change and do so only after many others have adopted

Non-adopters Individuals who will not change or adapt undermost circumstances

In most organizations, we tend to know the innovators. They are constantly trying something new, including new products and services. Risk and novelty seem to provide the adrenalin they need to get through the day! Change comes easily and is sought. In contrast, we also know those who tend to be uncomfortable with new things. These individuals have a strong preference for order and routine. Change is to be avoided and when it must happen, it happens only after most others have shown the way and the status quo is no longer viable.

Change agents need to identify and work first with innovators and early adopters. There is no sense trying to shift someone whose personality resists change until others have adopted. It may be useful to keep certain stakeholders informed of your activities even though they are typically later adopters so as to avoid unnecessary backlash. However, the simple act of keeping people informed is not the same as working closely with innovators and early adopters to advance the initiative. Early in any change program, change agents must anticipate that they will lack support. Few people will know about the change, let alone support it. The process of adoption will often be gradual until a critical mass of support exists. This will be explored in greater detail in Chapter 9 when the topic of the tipping point is introduced.

While the willingness to change can be viewed, in part, as a personality variable, it is also dependent upon the degree to which someone understands the change and his or her commitment toward the change. Floyd and Wooldridge differentiated between understanding and commitment.19 In their view, someone could have high or low understanding of the change and have high, low, or negative commitment to the change.∗ This provides a matrix of possibilities that helps us to think about stakeholders and their positions. Change agents need to consider those who actively oppose the change as well as those who are positive in their commitments. Being neutral or skeptical due to ambivalent feelings about the change is not the same as being an informed opponent of the change. See Table 6.5.

∗ Another way of looking at commitment is to categorize people as “make it happen,” “help it happen,” “let it happen,” or “keep it from

405

happening.”

Floyd and Wooldridge stress that change agents need to understand people’s perspectives of the initiative and that there is no one “right” position. Often we assume that it is best to have people who both understand the change and are committed to it. This is the “strong consensus” cell in Table 6.5. Floyd and Wooldridge argue that at different times, blind devotion, informed skepticism, or a weak consensus is desirable. That is, at times we may need people to be blind devotees—if the change is a strategic secret, people need to accept the change and be committed to act and not ask questions because the change leaders are not in a position to answer them. On the other hand, when beginning a project and testing out ideas for action, change leaders may well want informed skeptics—people who understand the situation well and who are not too committed. These people may well give valuable advice regarding change tactics and strategies as well as contribute to the actual design of the change.

Table 6.5 Stakeholder’s Understanding and Commitment

Table 6.5 Stakeholder’s Understanding and Commitment

High Understanding of the Change

Low Understanding of the Change

High, positive commitment to the change

Strong consensus Blind devotion

Low, positive commitment to the change

Informed skeptics Weak consensus

Negative commitment to the change

Informed opponents

Fanatical opponents

Table 6.6 Analysis of Stakeholder’s Readiness to Take Action

Table 6.6 Analysis of Stakeholder’s Readiness to Take Action

406

Stakeholder’s Name

Predisposition to Change (innovator, early adopter, early majority, late majority, laggard)

Aware Interested DesiringChange Taking ActionCurrent

Commitment Profile (resistant, ambivalent, neutral, supportive or committed)

Jones

Smith

Douglas

Table 6.6 provides a grid that allows each stakeholder’s position and degree of resistance and awareness to be plotted. This form provides a systematic analysis of stakeholders. In the second column, each stakeholder’s predisposition toward change can be noted. Is the person typically an innovator or an early adopter, or does that individual wait and see how others are reacting? If the person waits, is he or she normally a part of the early majority of adopters or the late majority group, or does he or she tend to lag further (i.e., the laggards and non-adopters)?

The second column can also be used to assess the stakeholder’s current commitment profile. Is this person currently resistant, ambivalent, neutral, somewhat predisposed, or supportive of the change, or is he or she already committed to the initiative? The change agent can then consider power and influence patterns and develop strategies and tactics that will move the individual stakeholders along the adoption continuum (aware, interested, desiring the change, and taking action). The movement of the stakeholders can be plotted in the

407

appropriate columns, with attention given to learning (e.g., what was the impact of the action undertaken?) and the refining of strategies and tactics in the future. In the end, the objective is to move key stakeholders along the adoption continuum, or at minimum, prevent them from becoming significant obstacles to the success of the change initiative.

Summary

Change agents need to understand the power and informal dynamics in their organizations, including culture. They must recognize that resistance to change is likely and is not necessarily a bad thing—there is potential to use resistance in a positive way. It is important to know the forces impacting the organization and the individuals within them, as well as the internal and external stakeholders that will impact and will be impacted by the change process.

Two powerful tools to help us think through the organizational situation are force field analysis and stakeholder analysis. Force field analysis helps change agents to plot the major structural, systemic, and human forces at work in the situation and to anticipate ways to alter these forces. Stakeholder analysis helps us to understand the interactions between key individuals and the relationships and power dynamics that form the web of interactions between individuals. See Toolkit Exercise 6.1 for critical thinking questions for this chapter.

Key Terms

Informal organization—represented by relationships and processes that emerge spontaneously from the interaction of people within the formal systems and structures that define the organizational context. They include informal leadership, communication, and influence patterns; norms and informal roles; and, at a macro level, the culture of the organization that emerges and influences behavior.

Power—the capacity to influence others to accept one’s ideas or plans. The chapter set out a number of sources from which power can be derived.

Power tactics—strategies and tactics deployed to influence others to accept one’s ideas or plans.

The change equation—says that change occurs when the perception of dissatisfaction with the status quo times the perceived benefits of the change times the perceived probability of success is greater than the perceived cost of the change.