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CHAPTER EIGHTEEN: Managing Change and Stress
LEARNING OJBECTIVES
See Slides 18-2, 18-3
When you finish studying the material in this chapter, you should be able to:
• Discuss the external and internal forces that create the need for organizational
change.
• Describe Lewin’s change model and the systems model of change.
• Discuss Kotter’s eight steps for leading organizational change.
• Define organization development (OD), and explain the OD process.
• Explain the dynamic model of resistance to change.
• Discuss the key recipient and change agent characteristics that cause resistance
to change.
• Identify alternative strategies for overcoming resistance to change.
• Define the term stress, and describe the model of occupational stress.
• Discuss the stress moderators of social support, hardiness, and Type A behavior.
• Review the four key stress-reduction techniques and the components of a holistic
approach toward stress reduction.
CHAPTER SUMMARY
Chapter 18 discusses organizational change, including the external and internal forces
of change. Models of planned change, including Lewin’s change model, a systems
model of change, and Kotter’s steps for leading organizational change are explained.
The process for using organizational development (OD) for creating change is
described. The reasons why people resist workplace change are explored and
alternative strategies for overcoming resistance to change are presented. Finally, the
concept of workplace stress is discussed.
Organizations face both external and internal forces for change. Figure 18-1 lists
various external and internal forces for change. External forces originate outside the
organization and include demographic characteristics, technological advancements,
shareholder, customer and market changes, and social and political pressures. Internal
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forces for change come from inside the organization. These forces include human
resource problems and managerial behavior/decisions. Internal forces for change can
manifest as low productivity, conflict, or strikes. Job dissatisfaction, absenteeism and
turnover are also potential indictors of a need for change.
Three types of change are identified in Figure 18-2: adaptive, innovative, and radically
innovative change. Adaptive changes reintroduce a familiar practice. Innovative
changes introduce a practice new to the organization. Radically innovative changes
introduce a practice new to the industry. Radically innovative changes have the highest
degree of complexity, cost, and uncertainty and therefore face the highest potential for
resistance to change.
Researchers and managers have tried to identify effective ways to manage the change
process. Three models of planned change include Lewin’s change model, a systems
model of change, and Kotter’s eight steps for leading organizational change. Kurt Lewin
developed a three-stage (unfreezing, changing, and refreezing) model of planned
change that explains how to initiate, manage, and stabilize the change process. The
aim of the unfreezing stage is to create the motivation to change. Individuals are
encouraged to replace old behaviors and attitudes with the new desired behaviors and
attitudes. The changing stage involves learning new information, new behavioral
models, new processes or procedures, new equipment, new technology, or new ways of
getting the job done. Change is stabilized during refreezing by helping employees
integrate the changed behavior or attitude into their normal way of doing things.
Managers can use positive reinforcement, coaching, modeling, and extrinsic rewards to
reinforce the changes.
A systems model of change is based on the idea that any change has a cascading
impact throughout the organization. Figure 18-3 provides a framework for diagnosing
what to change and for determining how to evaluate the success of a change effort.
The four main components of a systems model are inputs, strategic plans, target
elements of change, and outputs. Inputs include the firm’s mission, vision, internal
strengths and weaknesses, and external opportunities and threats. The strategic plan
outlines an organization’s long-term direction. Target elements of change include
organizational arrangements, social factors, methods, and people. The people
component is in the center because all organizational change ultimately impacts
employees. Outputs represent the desired end results of change and they should be
consistent with the organization’s strategic plan. Change can be directed at the
organizational level, department/group level, or individual level. The double-headed
arrows connecting each target element of change in Figure 18-3 indicate that a change
in one target element affects the others. The key to a successful change program is to
know which change levers to push and pull to influence various aspects of an
organization to be able to accomplish the goals.
Kotter believes that organizational change efforts fail due to failures in implementation
and he proposed an eight-step process for leading change. Kotter’s steps to leading
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organizational change are: (1) establish a sense of urgency, (2) create a guiding
coalition, (3) develop a vision and strategy, (4) communicate the change vision, (5)
empower broad-based action, (6) generate short-term wins, (7) consolidate gains and
produce more change, and (8) anchor new approaches in the culture. The value of
Kotter’s steps is that they provide specific recommendations about behaviors that
managers need to exhibit to successfully lead organizational change.
Organization development (OD) consists of planned efforts to help persons work and
live together more effectively, over time, in their organizations. OD constitutes a set of
techniques or interventions used by change agents to implement planned organizational
change. Figure 18-4 presents the OD steps: (1) diagnosis, (2) intervention, (3)
evaluation, and (4) feedback. Thus, OD entails diagnosing the problem and its causes;
determining what intervention can be used to solve the problem; using measures of
effectiveness to determine if the intervention is working; and using feedback to
determine the effectiveness of how the intervention was implemented. OD research
indicates that planned organizational change works, but multifaceted interventions are
advised; change programs are more successful when they are geared toward meeting
both short-term and long-term results; organizational change is more likely to succeed
when top management is truly committed to the change process and its goals; and the
effectiveness of OD interventions is affected by cross-cultural considerations.
Resistance to change is an emotional/behavioral response to real or imagined threats to
an established work routine. Resistance can be as subtle as passive resignation and as
overt as deliberate sabotage. Figure 18-5 illustrates the three causes of resistance to
change: recipient characteristics, change agent characteristics, and change agent–
recipient relationship. People resist change due to: (1) their individual predisposition
toward change, (2) surprise and fear of the unknown, (3) fear of failure, (4) loss of status
and/or job security, (5) peer pressure, and (6) past success. Characteristics of the
change agent that can foster resistance to change include: (1) decisions that disrupt
cultural traditions or group relationships, (2) personality conflicts, (3) lack of tact or poor
timing, (4) leadership style, and (5) failing to legitimize change. Resistance is reduced
when change agents and recipients have a positive, trusting relationship.
Resistance is a form of feedback and managers need to understand why it is occurring
before trying to overcome it. Table 18-2 describes various strategies managers can use
to address resistance to change. Although employee participation in the change
process is an approach for reducing resistance, it is not cure-all for resistance to
change. There is no universal strategy for overcoming resistance to change and
managers should use a contingency approach. Managers should not assume that
people are consciously resisting change and they should obtain employee feedback
about any obstacles that may be affecting employees’ ability or willingness to accept
change. Change agents should not be afraid to modify the targeted elements of change
or their approach toward change if people are resisting for valid reasons.
Stress is defined as behavioral, physical, or psychological response to stressors. Stress
triggers the fight-or-flight response whereby one either confronts stressors or attempts
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to avoid them. Both positive and negative events can trigger an identical stress
response. Stress is an inevitable part of living. It can be managed, but not avoided.
Figure 18-6 identifies four levels of potential stressors: individual, group, organizational,
and extraorganizational. Stress can result in psychological, behavioral, cognitive, or
physical outcomes. Moderators of the stressors/outcomes relationship include social
support, hardiness, and Type A behavior. Social support is the amount of perceived
helpfulness derived from social relationships. The five most frequently used stress–
reduction techniques described in Table 18-4 are muscle relaxation, biofeedback,
meditation, cognitive restructuring, and holistic wellness.
LECTURE OUTLINE
I. Forces of Change See Slide 18-4
i) External Forces See Slide 18-6
(1) External Forces Overview
(a) Figure 18-1: The External and Internal Forces for Change identifies
various forces for change. See Slide 18-5
(b) External forces: originate outside the organization.
(c) External forces may cause an organization to question the essence of
what business it is in and the process by which products and services
are produced.
(2) Demographic Characteristics
(a) Organizations are changing aspects of the work environment in order
to attract, motivate, and retain diverse employees.
(b) Organizations are changing the way in which they design and market
their products and services and design their store layouts based on
generational differences.
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(3) Technological Advancements
(a) Organizations are increasingly using technology as a means to
improve productivity, competitiveness and customer service while also
cutting costs.
(b) Telepresence: a technology that enables organizations to change the
way they deliver products, coordinate virtual workers, encourage
employee collaboration, improve communication, and increase
productivity.
(c) The Real World/Real People: Telepresence Enhances
Collaboration and Reduces Travel by Linking People around the
Globe profiles how telepresence systems can help firms cut their travel
expenses.
(4) Shareholder, Customer and Market Changes
(a) Shareholders have become more involved with pressing for
organizational change.
(b) Increasing customer sophistication is requiring organizations to deliver
higher value in their products and services.
(c) Customers are demanding more now than they did in the past.
(d) The cost to switch sellers has been falling, so customers are more
likely to shop elsewhere if they do not get what they want.
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(e) Swings in the economic cycle also spur a need to change in response
to surging or falling demand for products, requiring companies to
produce more or survive on less.
(5) Social and Political Pressure
(a) Widespread concern about the impact of climate change and rising
energy costs have been important forces for change in almost every
industry around the world.
ii) Internal Forces See Slide 18-7
(1) Internal Forces Overview
(a) Internal forces: originate inside the organization.
(b) Internal forces can be subtle, such as low job satisfaction, or can
manifest in outward signs, such as low productivity, conflict or strikes.
(2) Human Resource Problems/Prospects
(a) These problems stem from employee perceptions about how they are
treated at work and the match between individual and organization
needs and desires.
(b) Job dissatisfaction is a symptom of an underlying employee problem
that should be addressed.
(c) Unusual or high levels of absenteeism and turnover also represent
forces for change.
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(3) Managerial Behavior/Decisions
(a) Excessive interpersonal conflict between managers and their
subordinates is a sign that change is needed.
(b) Inappropriate leader behaviors such as inadequate direction or support
may result in human resource problems requiring change.
II. Models and Dynamics of Planned Change
i) Types of Change
(1) Figure 18-2: A Generic Typology of Organizational Change presents a
useful three-way typology of change. See Slide 18-9
(2) Adaptive Change
(a) Adaptive change is lowest in complexity, cost, and uncertainty.
(b) This type of change reintroduces a familiar practice.
(c) Adaptive changes are not particularly threatening to employees
because they are familiar.
(3) Innovative Change
(a) Innovative changes fall midway on the continuum of complexity, cost,
and uncertainty.
(b) This type of change introduces a practice new to the organization.
(c) Unfamiliarity, and hence greater uncertainty, makes fear of change a
problem with innovative changes.
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(4) Radically Innovative Change
(a) At the high end of the continuum of complexity, cost, and uncertainty
are radically innovative changes.
(b) This type of change introduces a practice new to the industry.
(c) Changes of this sort are the most difficult to implement and tend to be
the most threatening to managerial confidence and employee job
security.
ii) Lewin’s Change Model
(1) Lewin’s Change Model Overview
(a) Kurt Lewin developed a three-stage model of planned change that
explained how to initiate, manage, and stabilize the change process.
(b) Assumptions underlying Lewin’s model include:
(i) The change process involves learning something new, as well as
discontinuing current attitudes, behaviors, or organizational
practices.
(ii) Change will not occur unless there is motivation to change.
(iii)People are the hub of all organizational changes.
(iv)Resistance to change is found even when the goals of change are
highly desirable.
(v) Effective change requires reinforcing new behaviors, attitudes, and
organizational practices.
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(2) Unfreezing See Slide 18-10
(a) The focus of this stage is to create the motivation to change.
(b) Encourages the replacement of old behaviors and attitudes with those
desired by management.
(c) Managers can begin the unfreezing process by disconfirming the
usefulness or appropriateness of employees’ present behaviors or
attitudes.
(d) Managers also create the motivation for change by presenting data
regarding effectiveness, efficiency, or customer satisfaction.
(e) Benchmarking: process by which a company compares its
performance with that of high-performing organizations. See
Slide 18–11
(f) Benchmarking results can be used to unfreeze employees’ attitudes
and motivate people to change.
(3) Changing See Slide 18-13
(a) This stage entails providing employees with new information, new
behavioral models, new processes or procedures, new equipment,
new technology or new ways of getting the job done.
(b) What is changed should be targeted to a specific desired end-result.
(c) The systems model of change provides managers with a framework to
diagnose the appropriate target of change.
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(4) Refreezing See Slide 18-14
(a) Refreezing helps employees integrate the changed behavior or attitude
into their normal way of doing things.
(b) Positive reinforcement is used to reinforce the desired change.
(c) Coaching and modeling help reinforce the stability of the change.
(d) Extrinsic rewards, particularly monetary incentives are frequently used
to reinforce behavioral change.
(5) Putting Lewin’s Theory into Action
(a) The Real World/Real People: Application of Lewin’s Model:
Creating Customer Focus within a Call Center describes the tactics
used by one firm to address negative evaluations from customers.
iii) A Systems Model of Change See Slides 18-15, 18–16, 18-17
(1) Systems Model of Change Overview
(a) The systems approach is based on the notion that any change will
have a cascading effect throughout an organization.
(b) Model provides a framework for diagnosing what to change and for
determining how to evaluate the success of a change effort.
(c) Figure 18-3: A Systems Model of Change illustrates the four main
components of a systems model of change. See Slide 18-19
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(2) Inputs
(a) Inputs include the firm’s mission, vision, internal strengths and
weaknesses, and external opportunities and threats.
(b) All organizational changes should be consistent with an organization’s
mission, vision, and resulting strategic plan.
(c) Mission statement: represents the “reason” an organization exists.
(d) Vision: a long-term goal that describes “what” an organization wants
to become.
(e) A SWOT analysis of the company’s internal strengths and weaknesses
against its environmental opportunities and threats is a key input.
(3) Strategic Plans
(a) Strategic plan: outlines an organization’s long-term direction and the
actions necessary to achieve planned results.
(b) The SWOT analysis aids in developing an organizational strategy to
attain desired goals such as profits, customer satisfaction, quality,
adequate return on investment, and acceptable levels of turnover and
employee satisfaction and commitment.
(4) Target Elements of Change See Slide 18-18
(a) Target elements of change: components of an organization that may
be changed.
(b) Target elements include organizational arrangements, social factors,
methods and people.
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(c) The key to a successful change program is to know which one of these
change levers to push and pull to influence various aspects of an
organization to be able to accomplish the goals.
(d) Implications of Figure 18-3: A Systems Model of Change:
(i) The double-headed arrows connecting each target element of
change indicate that change ripples across an organization—
change one element and it may change another.
(ii) The “people” component is in the center because all organizational
change ultimately impacts employees.
(5) Outputs
(a) Represent the desired end results of change.
(b) Change can be directed at the organizational level, department/group
level or individual level.
(c) Change efforts are more complicated and difficult to manage when
they are targeted at the organizational level since these changes are
more likely to affect multiple target elements of change.
(6) Applying the Systems Model of Change See Slide 18–20
(a) Model can be applied as an aid during the strategic planning process.
(b) Alternatively, the model can be used as a diagnostic framework to
determine the causes of an organizational problem and to propose
solutions.
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iv) Kotter’s Eight Steps for Leading Organizational Change
(1) Kotter proposes an eight-step process for leading change to avoid typical
implementation errors.
(2) The model is not diagnostic in determining what needs to be changed, but
helps managers sequence the change process.
(3) Table 18-1: Steps to Leading Organizational Change describes the
following steps: See Slide 18–21
(a) Establish a sense of urgency: unfreeze the organization by creating
a compelling reason why change is needed.
(b) Create the guiding coalition: create a cross-functional, cross-level
group with enough power to lead the change.
(c) Develop a vision and strategy: create a vision and strategic plan to
guide the change process.
(d) Communicate the change vision: create and implement a
communication strategy that consistently conveys the new vision and
strategic plan.
(e) Empower broad-based action: eliminate barriers to change, and use
target elements of change to transform the organization: encourage
risk taking and creative problem solving.
(f) Generate short-term wins: plan for and create short-term
improvements. Recognize and reward people who contribute to the
wins.
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(g) Consolidate gains and produce more change: the guiding coalition
uses credibility from short-term wins to create more change.
(h) Anchor new approaches in the culture: reinforce the changes by
highlighting areas where new behaviors and processes are connected
to organizational success.
(4) Kotter’s steps provide specific recommendations about behaviors that
managers need to exhibit to successfully lead organizational change.
(5) The Real World/Real People: MasterCard Implements Kotter’s Model
profiles how one firm used this change model.
v) Creating Change through Organization Development
(1) Organization Development Overview
(a) Organization development (OD): a set of techniques or tools used to
implement planned organizational change. See Slide 18–23
(b) OD goals are achieved by applying behavioral science principles,
methods, and theories adapted from the fields of psychology,
sociology, education, and management.
(c) Change agent: someone who is a catalyst in helping organizations to
deal with old problems in new ways.
(d) Change agents can be external consultants or internal employees and
they put OD into practice in companies.
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(2) How OD Works
(a) OD change agents follow a medical-like model whereby they help
“sick” companies “diagnose” their ills and then prescribe and
implement an “intervention” and “evaluate” the progress.
(b) Figure 18-4: The OD Process presents the components of the OD
process: See Slide 18-24
(i) Diagnosis: What is the problem and its causes?
(ii) Intervention: What can be done to solve the problem?
(iii)Evaluation: Is the intervention working?
(iv)Feedback: What does the evaluation suggest about the diagnosis
and the effectiveness of how the intervention was implemented?
(c) In the diagnosis stage, change agents use a combination of interviews,
surveys, meetings, written materials, and direct observation to
determine the problem and its associated causes.
(d) A contingency approach should be used to select the intervention that
seems best suited for the problem and causes at hand.
(e) Evaluation requires the organization to develop measures of
effectiveness and the proper measure used depends on the problem.
(f) If the evaluation stage reveals that the intervention worked, then the
OD process is complete and the change agent can consider how best
to “refreeze” the changes.