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C H A P T E R F O U R T E E N
Managing
Organizational
Change: Strategic
Planning and
Organizational
Development
14
Lecture Outline
The Prevalence of Change in Organizations
The Message is Clear: Change or
Disappear!
Change is a Global Phenomenon
The Nature of the Change Process
Targets: What, Exactly is Changed?
Magnitude: How Much is Changed?
Environmental Forces
Strategic Planning: Deliberate Change
Basic Assumptions About Strategic
Planning
The Strategic Planning Process
Resistance to Change: Maintaining the
Status Quo
Individual Barriers to Change
Organizational Barriers to Change
When Will Organizational Change
Occur?
Organizational Development Interventions:
Implementing Planned Change
Management by Objectives (MBO)
Survey Feedback
Appreciative Inquiry
Action Labs
Quality of Work Life Programs
Three Critical Questions About
Organizational Development
Is Organizational Development
Inherently Unethical
Does OD Really Work?
Is OD A6ected by National Culture?
Managing organizational change and organizational
development are discussed in this chapter. Di6erent
types of change in organizations are explored.
Organizational change is promoted by advances in
technology, changing employee demographics,
performance gaps, government regulation, and
global economic competition. Management engages
in a process of strategic change planning in respond
to these changes. Strategic change is the process of
formulating, implementing, and evaluating
organizational changes in ways that enable an
organization to achieve its objectives. The ten step
process is presented in detail: (1) de9ning goals, (2)
de9ning the scope of product or service, (3)
assessing internal resources, (4) assessing the
external environment, (5) analyzing internal
arrangement, (6) assessing competitive strategy, (7)
developing competitive strategy, (8) communicating
the strategy, (9) implementing the strategy, and (10)
evaluating the outcome. Four conditions are likely to
prompt organizational change. Resistance to change
is an important consideration. There are a number of
reasons that change is resisted including: economic
insecurity and perceived threats to the stability of the
work environment. Organizational development is a
set of techniques for systematically planning
organizational change to enhance personal and
organizational outcomes. The three techniques most
commonly deployed are: (1) survey feedback, (2)
management by objectives (MBO), and (3)
appreciative inquiry. The chapter concludes with a
discussion of ethical considerations concerning OD.
©2013 Pearson Education, Inc. publishing as Prentice Hall 76
©2013 Pearson Education, Inc. publishing as Prentice Hall 77
ANNOTATED OUTLINE
1. THE PREVALENCE OF CHANGE IN ORGANIZATIONS
Organizational change – planned or unplanned transformation in an
organization’s structure, technology, and/or people
A. The message is clear: change or disappear
1. Research shows that leaders of successful organizations support
change 94 percent of the time, whereas others support change only 76
percent of the time
2. Change is a global phenomenon
1. Change is a fact of life in organizations around the world –
surveys across 25 countries revealed the same change factors
a. Large restructurings
b. Mergers
c. Divestitures and acquisitions
d. Reductions in employment
e. International expansion
2. THE NATURE OF THE CHANGE PROCESS
What happens when organizational change occurs?
What forces are responsible for unplanned organizational change?
A. Targets: what, exactly, is changed?
1. Three prospective targets:
a. Changes in organizational structure
b. Changes in technology
c. Changes in people
i. Unfreezing – recognizing the need for change
(a). Doomsday management – creating a sense of
urgency in employees by introducing the idea
that there is an impending crisis
ii. Changing – implementing planned change
iii. Refreezing – accepting newly changed state
B. Magnitude: how much is changed?
1. First-order change (incremental change) ― change that is
continuous in nature and involves no major shifts in how an
organization operates
2. Second-order change (quantum change) ― radical change involving
major shifts in di6erent levels of the origination and di6erent aspects
of the business
C. Environmental forces: why does unplanned change occur?
1. Shifting employee demographics
a. U.S. workforce more diverse
2. Performance gaps
a. Discrepancies between real and expected levels of
organizational performance
3. Government regulation
a. Imposing and eliminating regulations
4. Global competition
a. Key driver of change
5. Fluctuating economic conditions
©2013 Pearson Education, Inc. publishing as Prentice Hall 78
a. Key driver of change
6. Advances in technology
a. Most potent impetus for change
3. STRATEGIC PLANNING: DELIBERATE CHANGE
Strategic planning – the process of formulating, implementing, and
evaluating changes that enable an organization to achieve its objectives
A. Basic assumptions about strategic planning
1. Strategic planning is deliberate
a. Changes tend to be radical
2. Strategic planning occurs when current objectives no longer can be
met
a. If present strategy is e6ective, no change is necessary
3. New organizational objectives require new strategic plans
B. About what do companies make strategic plans
1. Products and services
2. Organizational structure
a. Outsourcing – hiring outside 9rms to perform noncore
business
b. O&shoring – using outsourcing services of overseas companies
C. The strategic planning process: making change happen
1. The strategic planning process involves ten steps:
a. De9ne goals ― clearly stated goals
b. De9ne the scope of products or services
i. If scope is de9ned too broadly, it will dilute its
e6ectiveness
ii. If scope is de9ned too narrowly, it will overlook
opportunities
c. Assess internal resources
i. Funds, physical assets, and human assets
d. Assess the external environment
e. Analyze internal arrangements
f. Assess the competitive advantage
i. A company has a competitive advantage when its
resources cannot easily be imitated, resources will not
depreciate soon, and competitors do not have better
resources
(a). Superiority must be assessed in terms of quality,
price, reliability of performance, etc.
g. Develop a competitive strategy - the means by which the
organization achieves its goal
h. Communicate the strategy to stakeholders
i. Stakeholders ― individual or group in whose interest
the organization is run
i. Implement the strategy
j. Evaluate the outcome
Self-Assessment Exercise Developing a Strategic Plan
Students should consider the following upon completion of the exercise.
©2013 Pearson Education, Inc. publishing as Prentice Hall 79
1. How easy or diKcult was it to develop this plan? What would have made the process
easier?
2. Which of the ten steps do you imagine would be easiest to implement? Which do you
think would be the most challenging? Explain your answers.
3. What special challenges, if any, would the employees of your company face as they
attempted to implement this plan? How would you overcome these challenges?
4. RESISTANCE TO CHANGE: MAINTAINING THE STATUS QUO
Resistance to change – stems from both individual and organizational
variables
A. Individuals barriers to change:
1. Economic insecurity
B. Organizational barriers to change
1. Structural inertia ― jobs are designed to have stability, often diKcult
C. When will organizational change occur?
1. Change is more likely when:
a. There is dissatisfaction with the current conditions
D. How can resistance to change be overcome?
1. Gain leadership support
a. Key organizational leaders endorse change
2. Identify and neutralize change resisters
3. Educate the workforce
a. Upper management must show emotional sensitivity
7. Create a learning organization - organizations that have developed
the capacity to adapt and change continuously
a. Establish commitment to change
©2013 Pearson Education, Inc. publishing as Prentice Hall 80
Winning
Practices
Making Changes Stick: How Three Successful Organizations Do It
Use Winning Practices for a discussion on using the technique of CI to facilitate change
5. ORGANIZATIONAL DEVELOPMENT INTERVENTIONS: IMPLEMENTING PLANNED CHANGE
Organizational development (OD) – set of social science techniques
A. Management by objectives: clarifying organizational goals
1. Management by objectives (MBO): Four basic steps:
a. Goals are jointly selected by management and subordinates
b. An action plan indicating exactly what needs to be done is
c. Implementation ― carrying out the plan and assessing its
B. Survey feedback: inducing change by sharing information
1. Survey feedback method - employees must understand the
C. Appreciative inquiry
1. Appreciative inquiry (AI) - focus on the positive and the possible
2. Four steps:
a. Discovery ― identify positive aspects of the company (what is)
D. Action labs
1. Action lab – teams of participants work o6-site to develop and
E. Quality of work life programs: humanizing the workplace
1. Quality of work life (QWL) programs – designed to increase
a. Quality circles (QCs)
6. THREE CRITICAL QUESTIONS ABOUT ORGANIZATIONAL DEVELOPMENT
©2013 Pearson Education, Inc. publishing as Prentice Hall 81
A. Is organizational development inherently unethical?
1. Useful from perspective of management
2. From an individual’s perspective:
B. Does OB really work?
1. OD interventions are more e6ective among blue-collar employees than
2. Bene9cial e6ects of OD can be enhanced by using a combination of
3. OD techniques must have support of top management
C. Is OD a6ected by national culture?
1. OD depends, in part, on the extent to which the values of the
You Be the Consultant Suggested Answers
1. Besides new operating procedures, what other planned and unplanned changes
would you suspect as being responsible for the employees’ negative responses?
Student answers will vary. Key points are presented in bullet form.
2. What barriers to change are likely to be encountered in this situation and what steps
would you propose to overcome them?
3. Do you think that an OD intervention would help in this case? If so, which one (or
ones) do you propose, and why?
All three techniques could be used
©2013 Pearson Education, Inc. publishing as Prentice Hall 82
©2013 Pearson Education, Inc. publishing as Prentice Hall 83
