MANAGING CHANGE



Managing Change 102
Photo by: Stephen VanHorn

One of the concepts discussed, written about, and analyzed most frequently in recent years has been organizational change and the related concepts of resistance to change and management of change. Change has been variously defined as making a material difference in something compared to an earlier state, transforming or converting something, or simply becoming different. All of these definitions can be applied to change as it occurs within organizations and businesses. Organizational change may mean changing technological infrastructures (e.g., moving from a mainframe environment to distributed computing), marketing strategies (targeting a new customer base), or management and decision-making practices.

Organizational change is not new to the American business landscape. Since the nineteenth century and the Industrial Revolution, corporations have had to deal with change on an increasingly rapid scale. The greater the technological developments and the greater the amount of products and information generated, the more necessary it becomes for corporations to provide effective management and develop solid organizational practices. The most revered business professionals of the United States have been those who were best able to exploit changes in business and the economy. For example, in the late nineteenth century, Andrew Carnegie greatly expanded his empire by purchasing the very businesses he depended on for his steel business, making his company one of the first successful examples of vertical integration.

Beginning in the 1990s, change came at an exponentially faster rate due to factors such as increased competition in a global economy, expanding markets, new ways of doing business (such as e-commerce), and the omnipresent task of keeping up with the latest technology. Management guru Peter F. Drucker devoted his book Management Challenges of the 21 Century to that very topic. As a result, businesses had to revise (or devise) corporate missions and goals, management practices, and day-to-day business functions. Companies routinely began redesigning business strategies, often replacing traditional hierarchical organization charts with flatter structures centered around "empowered" teams.

The ultimate goal for most organizations is to change corporate climate and culture. An organization's climate can be defined by how its employees view the organization's fundamental reason for being, specifically, the company's overall mission and goals and how important the employees' sense of well-being is to those goals. The corporate climate then breeds an organizational culture that consists of what employees see as management's beliefs and value systems. These two things, climate and culture, then determine how each manager and employee shapes his or her own performance, usually in order to most successfully meet company goals and hopefully ensuring his or her own success as well as the company's. These factors affect every aspect of each person's job, including decision-making processes, communication patterns within the organization, and individual accountability and responsibility.

INDICATORS OF CHANGE

There are four primary indicators of major work-place change. They are a change to the organizational structure, a new product or service, new management, and new technology. Organizational structure may change through major downsizing, outsourcing, acquisitions, or mergers. These actions are often accompanied by layoffs, particularly as certain positions become redundant. A new product or service has implications for changes in production, sales, and customer service. Additionally, by changing product or service the organization may face new competitors or new markets. New management, such as a change in chief executive officer or president, often brings a period of transition during which upper-level managers are likely to alter existing business processes and personnel policies. Finally, new technology can create vast changes to the organization. Technology can change the production process or the working conditions (i.e., telecommuting), and these changes may influence the skills that employees use on the job.

ROUTINE VERSUS
NON-ROUTINE CHANGE

There are changes in organizations that are routine (e.g., they are commonplace and often expected), and there are those that are not routine (e.g., unique and unexpected). Examples of routine changes are organizational turnover and staffing replacements, small changes to products or services, or changes in human resources policies. Routine changes are the easiest to manage, and employees are somewhat accustomed to routine changes. There is typically little concern over implementing such changes. However, if not handled properly by management, even routine change can prove to be difficult. If changes are not implemented properly or not well communicated, problems may arise. For example, a small change to the company vacation policy may seem insignificant to management, but if employees are not properly apprised of the change it could result in considerable difficulty if employees do not follow the new policy.

Non-routine change is much more difficult than routine change; it can be unpredictable, significant, or even radical, and employees are much less likely to adapt well to non-routine change. In general, a nonroutine change is seen as threatening, and employees are likely to be resistant. For instance, if a company announces a merger with a former competitor, this non-routine change is very likely to create anxiety about compensation and job security.

TYPES OF CHANGE

In addition to some of the major indicators of organizational change and the broad distinction of routine versus non-routine change, change can be categorized even more specifically into four categories: structural change, cost change, process change, and cultural change. Structural change occurs when there is an alteration to the company's organizational structure. This reorganization may occur due to a merger or acquisition, or it may be the result of a restructuring. For instance, an organization that is intent on increasing its innovation may reorganize its traditional functional structure into a more flexible matrix structure that uses small, self-managed teams. Or, an organization that is expanding into new markets may adopt a divisional structure in which different geographic locations operate nearly independently of one another.

Cost changes are those that occur when an organization attempts to reduce costs in order to improve efficiency or performance. Major adjustments may be made to departments to cut costs; reducing budgets, laying off employees in redundant positions, and eliminating nonessential activities may all be a result of cost change.

Process changes are implemented to improve efficiency or effectiveness of organizational procedures. This may occur in production settings; there may be changes to how a product is created, assembled, packaged, or shipped. Or, in a service organization, there may be changes to the procedures used to accomplish work; new computer systems may create the need to change how paperwork is completed, or a new manager may modify the process used to handle customer complaints.

Cultural changes are the least tangible of all the types of change, but they can be the most difficult. An organization's culture is its shared set of assumptions, values, and beliefs. A prototypical culture is the very bureaucratic, top-down style in which stability and standard processes are valued. When such an organization tries to adopt a more participative, involved style, this requires a shift in many organizational activities. Primarily, manager-employee relations are altered with a change in culture.

IMPLEMENTING CHANGE

To properly implement change, management must take a number of steps: involving key people, developing a plan, supporting the plan, and communicating often.

  1. The first step in implementing change is involving the key people; this typically means upper-level management and other executives whose processes and employees will be affected by the change. For instance, if a new computer system is to be installed in all areas of a company, key people would be not only top managers, but also lower-level managers who supervise the employees' use of the new technology. A different set of key people would be involved in a cost-cutting change. If the company is reducing its operating budget in a specific division, the managers of that division and also human resources personnel should be involved. In any circumstance in which there is a change to personnel policies or in which demotions, transfers, or layoffs occur, the human resources department should be involved to manage this change.
  2. After key personnel have been identified and properly involved, the second step in implementing change is to develop a plan for effective transformation. The plan should help to define the responsibilities of the key people involved while also laying out short-term and long-term objectives for the changes. Because change can be unpredictable, the plan should also be flexible enough to accommodate new occurrences.
  3. The third step in implementing change is to support the plan; this means that management follows through on the plan it created. Key to this step is enabling employees to adapt to the change. Employees may need training, reward systems may need to be adapted, or hiring may be required. If the organization does not provide the support necessary for the plan to take effect, it is unlikely to succeed.
  4. The final step in successful change implementation should occur throughout the change process. Communicating with employees about what is occurring, why the changes are being made, and how they will develop is critical. Because change can create a lot of fear, increased communication can be used to calm employees and encourage their continued support. In addition to downward communication, managers should pay attention to any upward communication that occurs. They should be available to take suggestions or answer questions that employees might have. Creating opportunities for employee feedback, such as holding meetings or having an open-door management policy, may facilitate change more successfully.

RESISTANCE TO CHANGE

As a general rule, it is not the proposed changes that people resist, but the impact that the changes will have on them, personally. People become comfortable in their jobs, in their areas of expertise, and in their relationships with coworkers and managers. Even when personnel are not very satisfied with the current workplace and therefore welcome change, they may find change to be stressful. Helping employees anticipate difficulties and informing employees of how these challenges will be handled can be a source of comfort to them. When an organization proposes large-scale change, those affected begin to worry about how their jobs will change, what new skills they will need, if their responsibilities will change, how established lines of communication will be altered, and how working relationships will change. The most successful members of a company may feel threatened because they were able to perform so well under the old organizational structure. Some common employee reactions to change include confusion, denial, loss of identity, and anger. And this resistance is not limited to employees—managers and executives may be just as prone as employees to experiencing problems with radical organizational change.

In their article "Challenging 'Resistance to Change,'" Eric B. Dent and Susan Galloway Goldberg discuss their research on the origins of this concept and the prevalent idea that managers must overcome this resistance or are doomed to failure. Kurt Lewin, the mid-twentieth-century social psychologist, introduced the term "resistance to change" as a systems concept affecting managers and employees equally. The term, and not its original context, was adopted and used as a psychological concept placing employees against managers. Dent and Goldberg feel that letting go of the term and its associations could help more useful models of change dynamics move forward.

There are theories of handling resistance to change that are related to this idea. While not explicitly questioning the use of the term, changing how organizations view resistance allows change to become an opportunity and not just a potential threat. Change is a personally challenging issue for everyone affected, but it also carries with it new possibilities. How corporate management responds to employee resistance can determine the fate of the organization. For example, a sense of confusion—usually represented by constant questioning from management and/or employees—usually means that not enough information has been provided. This can become an opportunity to convey additional information to employees, such as reiterating the big picture and why the company is working so hard to redefine its corporate culture. This is also a good time to provide assurances that management is going to take the time to address concerns.

Another common reaction is doubt or denial that actual change will occur. This reaction occurs sometimes because employees do not want change, and at other times because they do not believe management is fully committed to the idea. In any case, these reactions can also represent an opportunity for management to identify issues that may be present across the organization and address them. They can also alert management and higher-ups that actual implementation is not consistent with the plan that was put forth. A possibly related reaction is anger, sometimes accompanied by attempts to sabotage the company's efforts to change. Again, there can be benefits to this type of behavior. Employees who so visually make their feelings known let organizational leaders in on which impediments to change are likely to occur, and management can then formulate ways to address them. It also opens up areas for negotiation.

Peter Senge and his co-authors identified ten "challenges of change" (preferring the term "challenges" to "resistance") in the 1999 work The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations. As reported in Fast Company, he formalized these challenges as common excuses that are offered as reasons for resistance. These excuses can then be countered by addressing the real concerns behind them. For example, "This stuff isn't relevant" indicates the need for continuous and open communication from people who can convince others of the driving need for change in an organization. "This stuff isn't working" indicates a need for management to provide measurable criteria for success and clear expectations. "They…never let us do this stuff" indicates that, while management may be claiming to offer groups and teams more autonomy, they are really having trouble letting go of their control.

Another concern is the fact that people who consider themselves specialists or experts in a given area are often asked to start over (e.g., working in a different functional area or using different technology), sometimes more than once when companies make cross-training one of their goals. Again, this threatens the comfort zone for many people at all levels of an organization. Having proven themselves once, they are being asked to do so over again. In order to allay these fears, management needs to encourage people to ask questions, take initiative, and take risks. Fear of failure is possibly one of the strongest reasons for resisting change. Companies that hope change will be embraced need to view risks and failures as tools through which the organization can learn and grow.

Along these same lines, resistance need not be a dirty word. Whereas organizations once felt it was most important to put a positive spin on everything, corporate management is realizing that showing their own concerns about organizational change helps other personnel to deal with theirs. It also affords them the opportunity to teach others how to identify best practices under less than ideal circumstances, and to let employees know they empathize with their concerns.

Resistance to change, as put forth by Kurt Lewin, affects managers and employees equally when systems undergo change. As such, resistance is a naturally occurring phenomenon that can be dealt with in a constructive manner. In a sense, resistance is a sign that radical change is indeed occurring and that an organization is not just redefining the status quo. Management can help by anticipating common reactions and using them to their best advantage. For instance, if an employee is able to make requested changes to his or her performance but not willing to do so, some negotiation might be all that is required to convince that person to follow along with the company's new direction. For those who buy into the need for change but lack some of the necessary skills, targeted training could be all that is needed to quell the fears of those people. Whatever the resistance an organization encounters, it is almost a guaranteed part of change, which has become a constant in the business landscape. With the globalization of markets and speeding technological innovation, an organization cannot afford to rest on its laurels.

SEE ALSO: Organizational Culture ; Trends in Organizational Change

Wendy H. Mason

Revised by Marcia J. Simmering

FURTHER READING:

Champy, James, and Nitin Nohria, eds. Fast Forward: The Best Ideas on Managing Change. New York: McGraw-Hill, 1996.

Dent, Eric B., and Susan Galloway Goldberg. "Challenging 'Resistance to Change.'" Journal of Applied Behavioral Science (March 1999): 25.

DuBrin, Andrew J. Essentials of Management. 6th ed. Thomson South-Western, 2003.

Hampton, John J., ed. AMA Management Handbook. 3rd ed. New York: American Management Association, 1994.

Managing Change and Transition. Boston: Harvard Business School Press, 2003.

Ristino, Robert J. The Agile Manager's Guide to Managing Change. Bristol, VT: Velocity Business Publishing, 2000.

Senge, Peter M., Art Kleiner, Charlotte Roberts, George Roth, Rick Ross, and Bryan Smith. The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations. New York: Doubleday, 1999.

Sims, Ronald R. Changing the Way We Manage Change. Westport, CT: Praeger, 2002.

Williams, Chuck. Management. Cincinnati: South-Western College Publishing, 2000.



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