Chapter Sixteen
Organization Change and Change Management
Chapter Overview …………………………………………………….. Error! Bookmark not defined.
Learning Outcomes …………………………………………………………………………………………. 1
Real-World Challenge: Mismanaged Change at Kodak ……………………………………… 2
Chapter Outline ………………………………………………………………………………………………. 2
I. FORCES FOR CHANGE ………………………………………………………………………….. 2
II. PROCESSES FOR PLANNED ORGANIZATION CHANGE ……………………….. 4
Chapter Overview
Companies that change appropriately can continue as viable businesses. Those that do not make the right
changes, like Kodak, lose their ability to compete, cease to exist by going out of business, or get gobbled
up by a more successful organization. This chapter is about how organizations need to face the prospect
of change and develop processes to ensure their viability in a complex, ever-changing global
environment. The chapter begins with a discussion of some of the forces that create pressures for change
followed by a detailed explanation of the complex change process. Then we describe organization
development and sources of resistance to change, finishing with a summary view of how to manage
change in organizations.
Learning Outcomes
After studying this chapter, students should be able to:
1. Summarize the dominant forces for change in organizations and describe the process of planned
organization change.
Real-World Challenge: Mismanaged Change at Kodak
Summary: As recently as 1994, Eastman Kodak was among the top 20 companies in the Fortune 500. In
1996, the renowned manufacturer of photographic film and equipment employed 145,000 workers and
enjoyed revenues of more than $13 billion. In 2018, Kodak had around 6,000 employees. What had
happened to the onetime corporate giant? The so-called Digital Revolution—the widespread transition
from analog to digital.
Real-World Challenge: A former Kodak executive now working for a different company has asked for
your thoughts on why Kodak failed to adapt.
Real-World Response: According to Harvard’s John Kotter, “Kodak’s problem… is that it did not move
into the digital world well enough and fast enough.” It’s pretty much a consensus opinion. Kodak
Chapter Outline
I. FORCES FOR CHANGE
The four areas in which the pressures for change appear most powerful involve people, technology,
information processing and communication, and competition.
Table 16.1 gives examples of each of these categories.
A. People
The special characteristics of baby boomers show up in distinct purchasing patterns that affect
product and service innovation, technological change, and marketing and promotional
activities.
Employees must be prepared for constant change.
B. Technology
Not only is technology changing, but the rate of technological change is also increasing.
C. Information Processing and Communication
Advances in information processing and communication have paralleled each other.
Social networking may be the most radical and fastest growing aspect of the advances in
information processing and communication so far. Business uses of this phenomenon include
advertising, marketing, market research and test marketing, recruiting, and more.
D. Competition
Although competition is not a new force for change, competition today has some significant
new twists.
First, most markets are global because of decreasing transportation and communication costs
Global Issues: The Added Complexity of Global Change
Summary: Making changes in a multinational corporation is very complex. Consider just a few points of
change, for instance, related to organization design, leadership and motivation, and organizational control.
Managers in an international business must address the basic issues of organization structure and design
and dealing with human resources. Strategically, organizing decisions can be used to help promote
II. PROCESSES FOR PLANNED ORGANIZATION CHANGE
External forces may impose change on an organization. Ideally, however, the organization will not
only respond to change but will also anticipate it, prepare for it through planning, and incorporate it
in the organization strategy.
Organization change can be viewed from a static point of view, such as that of Lewin, or from a
dynamic perspective.
A. Lewin’s Process Model
Planned organization change requires a systematic process of movement from one condition to
Unfreezing is the process by which people become aware of the need for change.
The key factor in unfreezing is making employees understand the importance of a change and
B. The Continuous Change Process Model
Lewin’s model does not deal with several important issues. A more complex, and more helpful,
approach is illustrated in Figure 16.2.
This approach treats planned change from the perspective of top management and indicates that
change is continuous.
It is important to note that as change becomes continuous in organizations, different steps are
probably occurring simultaneously throughout the organization.
The final step is measurement, evaluation, and control. The change agent and the top
management group assess the degree to which the change is having the desired effect; that is,
they measure progress toward the goals of the change and make appropriate changes if
necessary.
Communication about the changes to all involved, from employees to customers and suppliers,
plays a key role in transition management.
Case Study: Flexibility at KPMG
Summary: Accounting firm KPMG wanted to decrease payroll costs while maintaining its commitment
to employees. KPMG gave employees the choice of a four-day workweek at 90 percent of their salary; a
III. ORGANIZATION DEVELOPMENT
On one level, organization development is simply the way organizations change and evolve. Thus,
in the broadest sense, organization development means organization change.
The term as used here, however, means something more specific. Our definition of organization
development is an attempt to describe a very complex process in a simple manner.
A. Organization Development Defined
“Organization development (OD) is a system-wide application of behavioral science
knowledge to the planned development and reinforcement of organizational strategies,
structures, and processes for improving an organization’s effectiveness.”
B. System-Wide Organization Development
The most comprehensive type of organization change involves a major reorientation or
reorganization—usually referred to as a structural change or a system-wide rearrangement of
task division and authority and reporting relationships.
No system-wide structural change is simple. Employees may resist the change for a number of
reasons; therefore, organizations must manage the change process.
Another system-wide change is the introduction of quality-of-work-life programs, defined as
the degree to which members of a work organization are able to satisfy important personal
needs through their experiences in the organization.
C. Task and Technological Change
Another way to bring about system-wide organization development is through changes in the
tasks involved in doing the work, the technology, or both.
The direct alteration of jobs usually is called “task redesign.” Changing how inputs are
transformed into outputs is called “technological change” and also usually results in task
changes. Strictly speaking, changing the technology is typically not part of organization
development whereas task redesign usually is.
It is extremely important to recognize the full range of potential costs and benefits associated
with a job redesign effort. Some are direct and quantifiable; others are indirect and not
quantifiable.
Implementing a redesign scheme takes careful planning, and developing a strategy for the
intervention is the final planning step. Strategy formulation is a four-part process.
D. Group and Individual Change
Groups and individuals can be involved in organization change in a vast number of ways. There
are four popular types of people-oriented change techniques: training, management
development, team building, and survey feedback.
1. Training
Training generally is designed to improve employees’ job skills. Training may also be used
in conjunction with other, more comprehensive organization changes.
2. Management Development
Management development programs, like employee training programs, attempt to foster
certain skills, abilities, and perspectives.
As corporate America invests hundreds of millions of dollars in management development,
certain guiding principles are evolving:
(1) Management development is a multifaceted, complex, and long-term process to which
there is no quick or simple approach.
3. Team Building
Team building emphasizes members working together in a spirit of cooperation and
generally has one or more of the following goals:
1. To set team goals and priorities
2. To analyze or allocate the way work is performed
4. Survey Feedback
Survey feedback techniques can form the basis for a change process. In this process, data
are gathered, analyzed, summarized, and returned to those who generated them to identify,
discuss, and solve problems.
In the data-gathering stage, the change agent interviews selected personnel to determine the
key issues to be examined and develops a survey questionnaire. The questionnaire data are
analyzed and aggregated by group or department. The change agent prepares a summary of
the results for the group feedback sessions.
The feedback meetings generally involve only two or three levels of management. During
the feedback sessions, participants discuss reasons for the scores and the problems that the
data reveal.
IV. RESISTANCE TO CHANGE
Change is inevitable; so is resistance to change. Paradoxically, organizations both promote and
resist change.
A commonly held view is that all resistance to change needs to be overcome, but that is not always
the case. Resistance to change can be used for the benefit of the organization and need not be
eliminated entirely.
A. Organizational Sources of Resistance
Daniel Katz and Robert Kahn have identified six major organizational sources of resistance:
overdetermination, narrow focus of change, group inertia, threatened expertise, threatened
power, and changes in resource allocation.
Of course, not every organization or every change situation displays all six sources.
1. Overdetermination
Organizations have several systems designed to maintain stability. Organizations control
2. Narrow Focus of Change
Many efforts to create change in organizations adopt too narrow a focus. Any effort to
3. Group Inertia
When an employee attempts to change his or her work behavior, the group may resist by
4. Threatened Expertise
5. Threatened Power
6. Resource Allocation
Groups that are satisfied with current resource allocation methods may resist any change
B. Individual Sources of Resistance
Researchers have identified six reasons for individual resistance to change: habit, security,
economic factors, fear of the unknown, lack of awareness, and social factors (see Table 16.3).
1. Habit
It is easier to do a job the same way every day if the steps in the job are repeated over and
2. Security
Some employees like the comfort and security of doing things the same old way. People
who believe their security is threatened by a change are likely to resist the change.
3. Economic Factors
4. Fear of the Unknown
Some people fear anything unfamiliar. Any disruption of familiar patterns may create fear
because it can cause delays and foster the belief that nothing is getting accomplished.
5. Lack of Awareness
6. Social Factors
V. MANAGING SUCCESSFUL ORGANIZATION CHANGE AND DEVELOPMENT
In order to increase the chances of successful organization change and development, it is useful to
consider seven keys to managing change in organizations.
Table 16.4 lists the points and their potential impacts.
A. Consider Global Issues
Given the additional environmental complexities multinational organizations face, it follows
B. Take a Holistic View
Managers must take a holistic view of the organization and the change project. A holistic view
information subsystems.
C. Start Small
join in.
D. Secure Top Management Support
The support of top management is essential to the success of any change effort. As the
E. Encourage Participation
Problems related to resistance, control, and power can be overcome by broad participation in
planning the change.
F. Foster Open Communication
Open communication is an important factor in managing resistance to change and overcoming
G. Reward Contributors
Although this last point is simple, it can easily be neglected. Employees who contribute to the
managing organizational behavior because organizations must change or face elimination.
VI. ORGANIZATIONAL LEARNING
A learning organization is an organization that facilitates the learning of all its members and
continually transforms itself.
In a learning organization, continual learning and change become part of the culture.
To facilitate organizational learning, it is important that learning happen during a project and
continue after the project ends.
1. What was supposed to happen?
2. What actually happened?
Summary and Application
Change may be forced on an organization, or an organization may change in response to the environment
or an internal need.
Planned organization change involves anticipating change and preparing for it. Lewin described
organization change in terms of unfreezing, the change itself, and refreezing.
In the continuous change process model, top management recognizes forces encouraging change, engages
in a problem-solving process to design the change, and implements and evaluates the change.
Discussion Questions
1. Is most organization change forced on the organization by external factors or fostered from
within? Explain.
Organization change is caused by both external and internal factors. However, most organization
2. What broad category of pressures for organization change other than the four discussed in the
chapter can you think of? Briefly describe it.
The chapter focuses on four categories of pressures for change: people, technology, information
3. Which sources of resistance to change present the most problems for an internal change agent?
For an external change agent?
For an internal change agent, individual sources of resistance present the most problems. For instance,
4. Which stage of the Lewin model of change do you think is most often overlooked? Why?
The Lewin model of change consists of three stages: unfreezing, change, and refreezing. Once change
5. What are the advantages and disadvantages of having an internal change agent rather than an
external change agent?
An internal change agent is likely to know the organization’s people, work tasks, and political
6. How does organization development differ from organization change?
The focus of organization development is much more specific than that of organization change. Three
7. How and why would organization development differ if the elements of the social system were
not interdependent?
If the elements of the social system were not interdependent, OD would be much less complex. If a
8. Do quality-of-work-life programs rely more on individual or organizational aspects of
organizational behavior? Why?
Quality-of-work-life programs tend to rely more on individual aspects of organizational behavior,
9. Describe how the job of your professor could be redesigned. Include a discussion of other
subsystems that would need to be changed as a result.
Students may generate a number of ways in which the professor’s job could be redesigned. For
10. Which of the seven keys for successfully managing an organizational change effort seem to be
the most difficult to manage? Why?
Depending on the situation, each of the seven could be quite difficult to manage. Making sure that top
Understand Yourself Exercise
In this exercise, students imagine themselves as the general manager of a running-down beachside hotel.
They must rank four possible action plans, think of additional plans, and develop an overall strategy for
trying to save the hotel while protecting their own interests.
Group Exercise—Planning a Change at the University
Learning Objective: This exercise will help students understand the complexities of change in
organizations.
Summary: Students are to plan the implementation of a major change in an organization.
Task:
Part 1: In small groups students will consider one of the following changes:
1. A change from the semester system to the quarter system (or the opposite, depending on the school’s
current system)
Part 2: Using the same groups as in Part 1, students describe the techniques used to implement the
change described in Part 1: structural changes, task and technology methods, group and individual
Follow-up Questions
Part 1
1. How similar were the implementation steps for each change?
Generally, students will appropriately anticipate areas of student resistance.
2. Were the plans for managing resistance to change realistic?
3. Do you think any of the changes could be successfully implemented at your school? Why or why
not?
Part 2
1. Did various groups use the same technique in different ways or to accomplish different goals?
2. If you did outside research on organization development techniques for your project, did you
find any techniques that seemed more applicable than those in this chapter? If so, describe one
of them.
Video Exercise
Videos and questions can be found in the eBook and MindTap video folder.
Mitchell Gold + Bob Williams: Organization Change and Development
Summary: Kim Clay has followed an unusual career at the home furnishings company MG+BW
Signature Stores, which also sells furniture at Pottery Barn, Williams Sonoma, and independent retailers.
Kim started out in Consumer Inquiry and moved to Customer Care, having responsibility for handling
orders and managing business-to–business relations. Now she manages the information technology
department.
1. What forces for organization change are reflected at Mitchell Gold + Bob Williams?
The company makes furniture and a computer tracking system tracks every piece of furniture through
2. Suppose that there was a need to move Kim Clay out of her current job and into a new one.
How might this change process be managed most effectively?
The best way may be the use of the simpler Lewin’s process for planned organization change. First,
again with the new IT manager.
3. In what ways is Mitchell Gold + Bob Williams using organization development?
The company planned the change for a new IT system where a piece of furniture is tracked
Now What?
Imagine Happy Time Toys has been making changes to both toy product lines and quality goals. You find
yourself listening to a coworker exhibiting resistance to Happy Time Toys’ quality and production goals
for a new product line. She complains about the changes and states that the product is tricky to assemble
and the goals are unrealistic. Also, because of recent changes, the coworker believes that the company is
too concerned about quality at the expense of productivity. The coworker feels that the company could
make a lot more money if they let some of the team’s borderline products go through. The coworker is
going to continue to tell the team to pass borderline products to help the team meet its production goals to
earn the bonus. This would reduce the employees’ stress and, after all, the products are not that bad. What
do you say or do? Go to this chapter’s “Now What?” video, watch the challenge video, and choose a
response. Be sure to also view the outcomes of the two responses you didn’t choose.
Discussion Questions
1. What types of resistance to change did you see in the various situations?
Organizational sources include a narrow focus of change. The company may have predicted their
2. How did Alex unfreeze Allison’s perspective and what impact did that have?
Allison thought the only way to meet production goals was to slip through some slightly defective
3. Using concepts from the chapter, what would you have done to make the transition to the new
product line go more smoothly?
Management could have anticipated the change of duties for production staff and helped them