Plan Change

Typed, single-spaced, one-inch margins all around (top, bottom, right and left)
Student name, assignment information, date in, and page number upper right-hand corner
Times New Roman 12 font
Headings to denote subject change in the paper
Article citation to be in APA style

Required articles from library electronic periodical databases – No textbook will be used
Atkinson, P. (2005). Managing resistance to change. Management Services, 49(1): 14-19.
Ford, J.D., & Ford, L.W. (2009, April). Decoding resistance to change. Harvard Business
Review, 87: 99-103.
Humphreys, J., & Langford, H. (2008). Managing a corporate culture slide. MIT Sloan
Management Review, 49(3): 25-27.
Kotter, J.P. (1998, Fall). Winning at change. Leader to Leader, 10: 27-33.
Kotter, J.P. (2007). Leading change: Why transformation efforts fail. Harvard Business Review,
85(1): 96-103.
Kotter, J.P., & Schlesinger, L.A. (2008). Choosing strategies for change. Harvard Business
Review, 86(7): 130-139.
Loup, R., & Koller, R. (2005). The road to commitment: Capturing the head, hearts and hands of
people to effect change. Organizational Development Journal, 23(3): 73-81.
Schaffer, R.H. (2010, September). 4 mistakes leaders keep making: How to overcome deep-
seated obstacles to change. Harvard Business Review, 88(9): 86-91.

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Organizational Culture

The key characteristics that the organization values and that distinguish it from other organizations.

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What is Organizational Culture?
The set of important assumptions (often unstated) that members of an organization share in common.

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Culture

CULTURE IS TO HUMAN COLLECTIVITY WHAT PERSONALITY IS TO AN INDIVIDUAL

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Why is Culture Important?

Even firms doing well on traditional business criteria can stumble in blending their corporate personalities.

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Dimensions of Culture
Innovation and Risk Taking
Attention to Detail
Outcome Orientation
People Orientation
Team Orientation
Aggressiveness
Nonstability

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Innovation and Risk Taking

The degree that employees are encouraged to be innovative and take risks

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Attention to Detail

The degree that employees are expected to exhibit precision, analysis, and attention to detail

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Outcome Orientation

The degree that management focuses on results rather than process used to produce those results

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People Orientation

The degree that management decisions take into account how people in the organization will be affected

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Team Orientation

The degree that work is organized around teams rather than individuals

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Aggressiveness

The degree that people are aggressive and competitive rather than easygoing

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Non-stability

The degree that organizational activities emphasize growth as opposed to maintaining the status quo

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Reasons to Strive for a Strong Culture

They are associated with high organizational performance.

Increased employee commitment and loyalty

Yield a sustainable competitive advantage

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Where Does

Culture Come From?

Founders hire and keep employees who think and feel the way they do.

Founders indoctrinate and socialize these employees to their way of thinking.

Founders act as role models.

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How is Culture Transmitted to Employees?

Stories

Rituals

Material Symbols

Language

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How to Read an Organization’s Culture

Observe the physical surroundings

Ask to sit in on a team meeting

Listen to the language

Note to whom you’re introduced and how they act

Ask different people the same questions and compare their answers

Get the views of outsiders

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Conditions for Changing Culture

A Dramatic Crisis

Turnover in Leadership

Young and Small Organization

Weak Culture

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Changing the Culture

Actions to Change Culture

Do a Cultural Analysis

Create Sense of Urgency

Appoint a Visionary Change Agent

Create Supporting Conditioning Components

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Why is it Important to Adapt to Change?

Individuals, teams, or organizations that do not adapt to change in timely ways are unlikely to survive.

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Adapting to Change

Individuals, teams and organizations that recognize the inevitability of change, learn to adapt to it, and attempt to manage it, will be the most successful.

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What is Change?

Coping process of moving from a unsatisfactory present state to a desired state

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Reacting to Change

Unplanned

“Fire fighting”

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Planned Change

Results from deliberate attempts by managers to improve organizational operations

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Change Language

The literature usually refers to these forms of change as:

Emergent change
Deliberate change

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Unfreeze
Change
Refreeze

Three Phases of Planned Change

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Unfreezing

Help people accept that change is needed because the existing situation is not adequate

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Changing

Involves rearranging of current work norms and relationships to meet new needs

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Refreezing

Reinforces the changes made so that the new ways of behaving become stabilized

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I Disagree

“Disagree” is probably not the right word. Let’s just say I have concerns over this terminology.

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Managing the Planned Change Process

Improving the organization’s ability to cope with unplanned changes that are thrust upon it

Modifying employee’s attitudes and behaviors to make them more effective contributors to the organization’s goals

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Steps in the Planned Change Process
Recognize the need

for change

Diagnose and

plan change

Manage the

transition

Measure results

Maintain change

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Initiating the Planned Change Process

Recognize the need for change

Diagnose and plan change

Formulate Goals

Determine stakeholders’ needs

Examine driving and restraining forces

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Force-Field Analysis

Process of analyzing the forces that drive change and the forces that restrain it

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Driving Forces

Factors that push toward the new, more desirable status quo

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Restraining Forces

Factors that exert pressure to continue past behaviors or to resist new actions

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Force-Field Analysis Model

Restraining Forces
Driving Forces
Quasi-

Stationary

Equilibrium

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Managing the Planned Change Process

Consider contingencies to determine the best interventions

Manage the transition

Measure results

Maintain change

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Targets for Organizational Change

Strategy – Develop new visions, missions, strategic plans

Structure – Add a new department or division, or consolidate two existing ones

People – Replace a person or change knowledge, skills, attitudes, or behaviors

Technology – upgrade a data processing system

Management –Encourage participation by those involved in solution of problems

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Reasons for Resistance to Change

Selective Perception

Lack of Information

Fear of the Unknown

Habit

Resentment Toward the Initiator

Sub-Optimization

Structural Stability

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Overcoming Resistance to Change (Kotter & Schlesinger, 2008)

Education and Communication

Participation and Involvement

Facilitation and Support

Negotiation and Agreement

Manipulation and Co-optation

Coercion

Promote Positive Attitudes Toward Change

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Leading Organizational Change (Kotter, 1998)

Establish a Sense of Urgency

Form a Powerful Guiding Coalition

Develop a Compelling Vision and Strategy

Communicate Widely

Empower Others to Act on the Vision

Generate Short-term Wins

Consolidate Gains and Create Greater Change

Institutionalize Changes in the Organizational Culture

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Key Levers to Implement Strategy

Leadership (Style, staffing, and skills)

Structure (Organization of firm’s activities)

Culture (Shared values creating behavioral norms)

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Remember …

Strategy must always drive structure, NOT the other way around !

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Guidelines to Match Structure to Strategy
Restructure to emphasize and support strategically critical activities
Reengineer strategic business processes
Downsize, outsource, and self-manage
Recognize that strategy and structure often evolve in a predictable pattern

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Restructuring

Concept – Some activities within a business’s value chain are more critical to the success of the strategy than others

Considerations in restructuring

Strategically critical activities must be the building blocks for designing the structure

Organizational structure must be designed to help coordinate and integrate support activities to

Maximize their support of primary activities

Minimize their costs and time

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Reengineering Processes

Concept – Involves reorganizing a company to create value for the customer by eliminating barriers that create distance between employees and customers

Potential outcomes of BPR

Reduces fragmentation by crossing traditional department lines

Reduces overhead by compressing formerly separate tasks that are strategically intertwined in the process of focusing on the customer

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Steps Involved in Business Process Reengineering
Develop a flow chart of the total business process
Try to simplify the process first, eliminating unnecessary tasks and streamlining remaining tasks
Determine which parts of the process can be automated
Benchmark strategy-critical activities
Consider outsourcing non-critical activities
Design a structure for performing remaining activities and reorganize personnel accordingly

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Guidelines Regarding the Strategy-Structure Fit
1. A single-product firm or dominant product business should employ a functional structure
2. A firm in several related businesses should employ a multidivisional structure
3. A firm in several unrelated lines of business should be organized into strategic business units
4. Early achievement of a strategy-structure fit can be a competitive advantage

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Advantages
Already know key people, practices, and conditions
Personal qualities are better known and understood by associates
Have established relationships with peers, subordinates, suppliers, and buyers
Symbolizes organizational commitment to individual careers
Disadvantages
Less adaptable to major strategic changes because of their knowledge, attitudes, and values
Past commitments hamper the hard decisions required in executing a new strategy
Have less ability to become inspired and credibly convey the need for change
Using existing executives to implement a new strategy

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Advantages
May already believe in and have “lived” the new strategy
Are unencumbered by internal commitments to people (the “poor ol’ Fred” problem)
Come to the new assignment with heightened commitment and enthusiasm
Can send powerful signals throughout the organization that change is expected
Disadvantages
Is often costly in terms of compensation and “learning-to-work-together” time
Candidates suitable in all respects may not be available, leading to compromise choice
Uncertainty in selecting the right outsiders to bring in
“Morale costs”
Bringing in outsiders to implement a new strategy

Organizational Transformation …,

However, does NOT require mystical capacities, it simply requires effective leadership, thought, planning, formulation, and implementation. In short, it requires MANAGEMENT.

My Experience as a Change Agent

Just to provide some foundation for my thoughts going forward, let me describe to you the last change effort I was involved with during my corporate career.

Successful Transformation …
Requires significant knowledge of:

Change leadership
Change processes
Change strategies
Change techniques
Change implementation

The Essence of Leadership

“For without leaders, nothing good or noble, to put it concisely, was ever wrought anywhere.”
Xenophon (Anabasis II:39)

Why Should I Care?

The plain truth is, your organization has a noble mission – but to accomplish that mission, you must have people who are willing and able to become effective leader/managers.

Leaders & Managers

“What is a leader/manager?”

Managers

Administer

Maintain

Focus on systems

Rely on control

Have a short-range view

Ask how and when

Focus on the task

Do things right

Leaders

Innovate

Develop

Focus on people

Inspire trust

Have a long-range perspective

Asks what and why

Focus on the horizon

Do the right thing

The Truth
Of course, the truth is for optimal performance, an organization must have individuals in positions of authority and responsibility that have the ability to be both.

And No Offense but …

You likely have important organizational members that have very little training in either.

Vision

Many people also focus on vision when discussing leadership.

Unfortunately, many people misunderstand the vision element and view it as some sort of mysticism.

In Reality …

Vision associated with change management should be the by- product of competent analyses.

Leadership

Leadership is the ability to influence others.

Leadership

Truly effective leadership, then, must be tied to organizational goals. In other words, leaders must influence followers to consistently demonstrate goal-directed behavior.

Leaders & Followers

This suggests that true leadership CANNOT exist without the full inclusion, initiatives, and the cooperation of followers.

In other words, one cannot be a great leader without great followers!

So, What Enhances Goal-Directed Behavior of Followers?

Although most people think that money is the primary motivator in most organizations, research suggests effective leadership is a much more powerful indicator of follower satisfaction and commitment.

And That’s A Good Thing …

Because real-world organizations operate with resource constraints.

What’s It Mean?

It means that if your followers are unmotivated, dissatisfied, and uncommitted to the organization and its change efforts –

IT’S YOUR FAULT!

So, What Do We Know About Leadership?

Trait Theory

Trait theory was also called the “great man” theory. The idea was that only those people born with certain leadership traits and abilities could effectively lead others.

NOT TRUE!

Leadership

Effective leadership is NOT about leadership traits, it IS about:

BEHAVIOR.

Transformational Leadership
Idealized Influence – Provides vision and sense of mission, instills pride.
Inspiration – Communicates high expectations, expresses important purposes in simple ways.
Intellectual stimulation – Promotes rationality in problem solving.
Individual consideration – Treats each employee individually, coaches, mentors.

Transformational Leaders

This is important, as transformational leaders view themselves as change agents.

Moreover, transformational leaders have more successful change projects than do transactional leaders.

This is Possible Because …

Transformational leaders operate from a base of expert power and referent power.

The Good News
Research indicates that leadership skills are in great part learned behavior.

Therefore, transformational leadership skills can be taught and enhanced.

Transformation Steps

Effective leadership, however, is just a beginning point.

Based upon my experience and the work of numerous change researchers, we can systematically conceptualize, formulate, and implement an effective transformation plan.

Change as Strategy

Successful transformation efforts cannot be divorced from effective strategic management processes.

And remember, strategy must guide structure, not the other way around.

Establish a Sense of Urgency

Using the information from strategic analyses, you must build an authentic and compelling case for transformation.

Consider the Culture

Understanding the organizational culture is critical to change plans.

In fact, what is radical in one culture might be considered incremental in another.

Establish a Change Agent(s)

In my experience, organizational transformations are most successful when a change agent is identified and tasked with leading the change effort.

Determine Point A and Point B

Successful change efforts require change agents to deliberately define the scope and parameters of needed changes.

This includes determining whether needed transformation is evolutionary or revolutionary.

Establish a Time Frame

While direction is important, it is also helpful if an optimal time frame can be established for moving from Point A to Point B.

Form a Powerful Coalition

Even an effective change agent must have sufficient backing form a wider group if the transformation process is to be successful.

Firm up the Vision

Define an appropriate vision that emerges from the strategic analyses and operational definitions.

Create strategies for achieving the vision.

Communicate the Vision

Use multiple avenues to communicate the new vision and strategies.

Show followers how they fit into the vision and what the organization will look like on the other side of transformation.

Manage Resistance to Change

Determine appropriate methods for dealing with resistance to change.

In most organizations this will require some combination of communication, education, and participation.

Empower Others to Act on the Vision

Eliminate obstacles and change systems or structures that undermine or are inconsistent with the new vision.

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MGT 597 – Organizational Change Planning

Winter Mini 2021 – 2022

Organizational Change Case Scenario

Rural Bank, Inc. (RB) is a $5 billion financial services organization. For the past 50 years, RB has focused exclusively on the lending of money to farmers and ranchers for the purchase of land and equipment (tractors, cotton pickers, etc.). They operate solely in Texas and have an office in every county within the Sate. The average office is staffed with four customer service representatives (CSRs) who perform the majority of clerical duties, and four loan officers who take credit applications, analyze them, and make loan decisions. RB is a traditional lending institution where current and potential customers drive to their local branch and request funds as needed. That is until now.

Growth in the agricultural sector has been nonexistent for several years. The truth is that the bank is in decline, as new business is roughly 5% of the asset base per year while payoffs result in nearly 10%. The firm must grow rapidly and consistently or the bankruptcy spiral will continue. The leadership team understands the dilemma and has made the decision to undertake the needed revolutionary (radical) change to position the firm for growth. In response,
YOU have been brought into the firm as a leadership team member to function as the change agent.

The situation is this – First, a new technology has become available (radical change is often initiated by innovation). It is credit scoring software. It is reasonably cheap and has proven reliable in predicting loan repayment and maintaining credit quality. After a review of RB’s current trends, it has been determined that 90% of current lending could be accomplished satisfactorily with the new software.

This software would assist in RB’s change from a traditional banking culture to that of a very proactive sales culture. No longer would loan officers sit behind desks and wait for loan requests. They would have company cars, laptops, portable printers, etc. In essence, they would now be money salespeople. Instead of passively waiting, they would be outside calling on potential clients in search of the desperately needed new business. Of course, such a dramatic cultural shift, predicated by the change, will have numerous implications for the company.

For one, the change means the structure must also change (The strategy must dictate the structure, not the other way around). With the new business model, there will be no need for an office in every county. In fact, the company expects to move from the current 25

offices to only 20 strategically located around the State, as customers will no longer be expected to come to their local office. Of course, this impacts personnel. In particular the number of CSRs will decline and many of those remaining will likely have to relocate to the new regional area offices.

The bigger impact, though, will be on the loan officers. Most have been with the organization for many years and valued because of their exceptional abilities with credit analysis. The new system, though, means that actual “human” credit analysis will only take place with a small percentage of loans. Thus, the decision has been made to have one underwriting center in Dallas, staffed by only 40 business analysts (BAs). There are currently approximately 1,000 loan officers. And although we only need 40 of them doing “hands on” analytical work, we need the other 960 (and possibly even more) out “hitting the pavement” looking for new business (business development officers). Of course, some of these newly labeled BDO’s can make the transition from underwriter to money salesperson without a great deal of training. Others will make the transition with much training and great effort. Unfortunately, others will simply be unable to make the change, albeit through no fault of their own. It is safe to assume there will be significant resistance to change that you will have to overcome.

In response, our HR function will be greatly impacted. Not only will we need to hire many more employees, we need to make sure they have the newly valued skills – the ability to sell money is now more important than differential credit analysis. Moreover, these money salespeople will need to be compensated differently, with a portion of their income tied to their sales performance. Branch managers must now become effective sales managers. But we must also make sure that everyone, CSRs, BDOs, and BAs are all on the same page of seeking new business for growth and that all are treated fairly – not the same – but equitably. Because of the change, it is reasonable to assume that every HR function – training, development, compensation, benefits, etc. – will be impacted for every position in the company. Of course, these levels of broad change may also result in lowering the morale of many in the organization, so we need to make sure this is addressed.

In addition, the leadership team has made the decision to move beyond agricultural lending and pursue home loans in their attempt at rapid growth. Of course, all past suppliers, advertisers, etc. are solely focused on farming and ranching. The first home loan advertisement they ran had a tractor in the background and did not go over well with suburban home buyers. In response, RB has decided to go with a strategic business unit structure. They will basically have two separate organizations under the corporate umbrella of RB. This will necessitate a separation of sales and underwriting into agricultural markets and home loan markets, with personnel dedicated solely to each. This will have great impact in most every functional discipline in the firm – loan accounting, marketing, finance, etc.

And this is the point. While we often think of change in terms of going from point A to point B, we rarely consider the extensive reach of the implications organization wide. At this point, you can assume the leadership team has completed the proper analyses and their course of action is needed and in the best interest of the firm, so that part of the heavy lifting is done for you. Now the real issue with organizational change management –
YOU must develop the plan to implement the needed changes. You must maintain acceptable morale by properly educating the employees. You must effectively communicate a compelling vision of the change to all organizational personnel (remember transformational leadership?). You must foresee the implications upon and reactions by every functional discipline within this organization. You must create a comprehensive plan, complete with action steps and timelines, to educate, communicate, implement, and institutionalize the needed changes. As part of the plan, I want to see support (from the journal literature) for your methods. The survival of this firm, and the livelihoods of its many employees, is squarely placed upon your shoulders.

Welcome to organizational change planning. I wish you great effort!

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A Generic Organizational Change Plan Outline

(Based upon Kotter’s Perspective for Transformation)

I. Introduction

II. Executive Summary/Purpose/Goals

a. Include recognition of the need for change

b. Recognize need for a plan

III. Actions/Steps/Events that will Establish a Sense of Urgency Given the Organizational Culture

a. Analyze current and/or future market and competitive realities

b. Identify the opportunities and/or threats driving the need for change

IV. Actions/Steps/Events taken to Form a Powerful Guiding Coalition

a. Identify the key players needed to advance a change effort

b. Define the selection, structure, and relational characteristics of the team

V. Actions/Steps/Events to Create a Compelling Vision for Change

a. Create a vision for directing the change effort

b. Determine point A (where the firm is currently) and point B (where the firm desires to go)

c. Develop a timeline for the change journey

VI. Actions/Steps/Events to Effectively Communicate the Vision

a. How will communication take place? In what format and communication channel? (i.e., in person, by e-mail, by division, by focus groups, publicly, privately, etc.) How often and/or on what timeframe?

b. Who will be involved? How will they be selected? How will they be involved?

VII. Actions/Steps/Events to Manage Resistance to Change

a. Education and communication

b. Participation and involvement

c. Facilitation and support

d. Negotiation and agreement

e. Manipulation and co-optation

f. Explicit and/or implicit coercion

VIII. Actions/Steps/Events to Empower Others to Act on the Vision

a. Removing systems or structures that hinder the change project

b. Encouraging risk-taking and nontraditional ideas

IX. Actions/Steps/Events to Plan and Create Short-term Wins

a. Create visible performance improvements

b. Acknowledge and reward employees involved in improvements

X. Actions/Steps/Events to Consolidate Improvements and Produce More Change (i.e., advance the change project)

a. Use credibility from early successes to change additional systems/structures that do not fit the new vision

b. Develop employees/recruits who can implement the new vision

XI. Actions/Steps/Events to Institutionalize the New Approaches

a. Articulate the link between new behaviors/processes/structures and organizational success

b. Develop actions to ensure leadership development

XII. Actions/Steps/Events to Reevaluate Change

a. Evaluate critical success factors as control measures

b. Analyze the environment to determine if point B is still appropriate

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