MS Lecture 5 org change

Organizational Design:Organizational Change and

Learning

QSB2413 Management Science

Introduction

• Change is about aligning people, resources and culture with a shift in organizational direction.

• Changes are often initiated by critical events such as:Globalization and competitionNew CEOMergers or acquisitionsDeregulation or market shiftsFailure in operating results

Organizational Change

• The process by which organizations move from their present state to some desired future state to increase their effectiveness.

• Goal is to find improved ways of using resources and capabilities in order to increase an organization’s ability to create value.

Organizational Change

• An alteration of an organization’s environment, structure, culture, technology, or people.–A constant force–An organizational reality–An opportunity or a threat

• Change Agent - A person who initiates and assumes the responsibility for managing a change in an organization.

Basic Questions for Change Agent

• What are the forces acting upon me?– What are the pressures I should take into

consideration as I decide what to change and how I should change it?

• What should we change?– Should the changes be strategic and companywide

or relatively limited? • How should we change it?– How should we actually implement the change?

The Drivers of Change

1. Technological factors2. Organizational factors3. Economic factors4. Governmental influences5. Societal / Cultural influences6. Clients have changed

(1) Technological Factors

The industry and its building• Structure and fabric – since mid 19th Centuries• Building services – last 50 years• Construction methods – mechanization,

industrializationSociety and industry generally• Information technology (system)• Manufacturing, business processes (taking place in

buildings)

(2) Organizational Factors

Increasing specialization• Driven by technology, business strategy,

legislation.Separation of function• Especially design from construction• Growth for professional boundaries • The professional “hierarchy”

(3) Economic Factors

The importance of the industry• E.g. Construction industry contributes 6% to 7% of UK

economic activity, 5% - 6% of Malaysia economic activity.The economic cycle – “boom and bust”• Why construction suffers more and for longerThe industry as economic regulator• Governmental intention often overstressed• General economic controls affect industry becoming

hard

(4) Governmental Influences

Control of economy• As client of the industry – approximate 25% of

output is commissioned by public sector• Current changes in procurement – public or private

project (PAM/JKR form of contract)Legislation and Taxation• Direct impact – Planning, building regulations, safety• Indirect impact – Tax concessions, development

areas, etc.

(5) Societal/Cultural Influences

Greater influence of general public• Less accepting of authority – government,

professions• Environmental consciousness - protestBroader cultural influences• Changing population, easier world travelEntrepreneurial attitudes• Have varied with time• Increase in small businesses since late 70’s

(6) Changing Clients

Growth of the corporate client• Compared with 19th C, it was about the importance of

individual & sole traderGlobalization• Changing market for business & clients they generateBusiness priorities• Increasing concentration on time & cost performance• Less tolerant of failings – more litigiousTransfer of management methods• Project Management, procurement methods

Change Agent

Types of Organizational Change

Radical Change • Major makeovers of organizations.• Major makeovers of their component systems.Gradual Change • Occurs more frequently and with less dramatic

impact.• E.g. New products, new technologies, new

systems.

Phases Of Change

3-Stage ProcessUnfreezing: Getting people and things ready for change

Changing: Implementing the change

Refreezing: Making sure the change sticks as part of the new routine

Targets of Change

• Targets of change include improving effectiveness at four different levels:-

(1) Human resources(2) Functional resources(3) Technological capabilities(4) Organizational capabilities

Target For Change

• Purpose: Clarify or create new missions, visions and objectives.

• Objectives: Due to change in the environment, specific performance standards have to be modified or new performance standards set.

• E.g. In construction industry, firms are encouraged to apply the technology in order to improve the productivity instead of using the conventional methods of construction (BIM or IBS).

Target For Change

• Tasks: Updating job designs and scope for individuals and groups.

• People: - Update recruiting and selection practices.- Improving training and development.

Target For Change

• Structure: Update organizational design and coordination mechanism.

• E.g. team structure, virtual organization, boundaryless organization (eliminate chain of commands).

Target For Change

• Technology: Improve equipment, facilities and workflow.

• Culture: Core beliefs and values have to be clarified and modified to adapt to the changing environment.

Target For Change• Strategy: Strategic and operational plans have to be

clarified, modified or new ones created including: - External interface - Mission - Managing organization mission - Prescribed networks - Organizational process - Motivation of people - Emergent networks

What is resistance to change?

Resistance To Change

• Individual resistance (e.g. loss of position, power, status, quality of life and authority).

• Organizational resistance (e.g. change in the balance of power and structural inertia).

Why do people often resist to change?

Resistance To Change

• Information: “What’s going to happen?”• Personal involvement: “Will I survive the

change?”• Implementation: “How do I get started on the

change?”• Impact: “How will the change benefit us and

organization?”

Overcoming Resistance:A framework For Change

References: Management: Challenges for tomorrow’s leaders/Pamela S. Lewis – edition 6

A Framework For Change

Step 1: Establishing a Sense of Urgency• The need for change • Discuss changes in the market or competitive

conditions• Condition might be negative/crisis or

positive/opportunity for the organization• Clearly stated and shared throughout the

organization (communicate)

A Framework For Change

Step 2: Creating the Guiding Coalition• A team of people who are charged with taking,

initiating and effecting the change• Manager must select those who have an

emotional commitment to change and who have the right skills to effect the change

• An effective guiding coalition must have the right composition, a significant level of trust from others and a shared objective for their work

A Framework For Change

Step 3: Developing a change vision• Change vision – how the organization will look

once the change has been implemented.• The vision should be compelling, motivating,

realistic and time specific.• Vision is a very powerful tool for enabling

others to see the proposed change’s impact and understand how the future will be.

A Framework For Change

Step 4: Communicating the Vision • The most important part of the change process

is effective communication.• The message should go out to every

constituent affected by the change.• The message should be simple and repeatable.• Communication is two-way and open dialogue.

A Framework For Change

Step 5: Empowering Broad-Based Action• Empowering organizational members to

implement the change.• Managers must provide training and

educational opportunities to help employees learn the new behaviors, develop new technical skills, interpersonal skills and attitudes.

A Framework For Change

Step 6: Generating Short-term Wins• Ensuring short-term goals are established that

are highly visible and achievable.• Short-term wins not only encourage

supporters of the change, but also can turn neutral people into supporters and reluctant supporters into active helpers.

A Framework For Change

Step 7: Never Letting Up• Persistence – critical for successful change

initiatives.• Leaders must continue to push the

organization towards the ultimate goals.• New behaviors and practices must be fully

absorbed by the organization to ensure that the change will be long-lasting.

A Framework For Change

Step 8: Incorporating Changes in the Culture• Organizational culture is a deeply rooted

phenomenon.• New practices must grow deep roots in order

to remain firmly planted in the culture.

Some general rules about cultural change

Cultural Change

• You must be able to prove that the new way is superior to the old.

• The success must be visible and well communicated.

• You will lose some people in the process.• You must reinforce new norms and value with

incentives and rewards – including promotions.• Reinforce the culture with every new employee.

Summary• It is impossible to change one aspect of an

organization without affecting other aspects.• Changes in products or services offered may

require new technology, a new distribution system, new employee skills or different relationships with customers.

• Learning to recognize and manage change is one of the most important skills a manager can develop.

• Change is natural. Managers must help organizations work with it, not against it.

Discussion

• What is the cause to change in an construction organization?

- Competitive environment - Customer preferences - Information technology (IBS/BIM) - Globalization• List the reasons of resistance to change. - Rigid culture - Personality

Discussion

• Do you think change is good to construction industry? Example using BIM.

• What about other industries, says manufacturing? Auto industry – car producing (hybrid / electronic technology)

• Innovation – key to success• http://www.strategy-business.com/article/rr0

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The End