CHANGE MANAGEMENT

“THE GREATEST DISCOVERY OF ANY GENERATION IS THAT A HUMAN BEING CAN ALTER HIS

LIFE BY ALTERING HIS ATTITUDE.”

• In 1997, Jack Welch General Electric CEO then, decided to send some mortgage and insurance application work to a small team in Gurgaon.

• By 2002, that work had expanded to 10000 people company and was biggest part of GE Capital.

• Genpact, the BPO, today is a $1.5 billion industry. Last estimates, some 2/3 of outsourced BPO work in the world is serviced from India by 1.5 million workers.

Change & Change Management.

• Adoption of a new idea or behavior by an organization.– Organizations need to continuously adapt to new

situations if they are to survive and prosper– Constant change keeps organizations agile– Indicative of “learning” organizations

Forces ForChange

Shifting Demographics

Technology

EconomicShocks

Competition

Globalization

WorldPolitics

Types of changes

• Strategic• Structural• Process- oriented• People centered

Purposeshared vision/values/goals

StrategyStructure

Workforce

Leadership

Culture

Organization systems

Who is responsiblefor what

Ongoing processes

Doing the right things

How you achieveyour goals

Underlyingassumptions that drive behavior

Capacity and capabilities of the people who do the work

ORGANIZING FOR CHANGE…

HUMAN SIDE OF IT.• Change is fundamentally about feelings. It needs

people’s heads and hearts together.• “Winning Attitudes” do make a difference, and it

is important to market new ideas and approaches within the organization very carefully.

• Culture and attitude has a very important role to play.

Issues in Managing Change

• Changing Organizational Cultures– Cultures are naturally resistant to change.– Conditions that facilitate cultural change:• The occurrence of a dramatic crisis• Leadership changing hands• A young, flexible, and small organization• A weak organizational culture

The Road to Cultural Change

• Conduct a cultural analysis to identify cultural elements needing change.

• Make it clear to employees that the organization’s survival is legitimately threatened if change is not forthcoming.

• Appoint new leadership with a new vision.

• Initiate a reorganization.

• Introduce new stories and rituals to convey the new vision.

• Change the selection and socialization processes and the evaluation and reward systems to support the new values.

Issues in Managing Change• Handling Employee Stress due to Change– Stress• The physical and psychological tension an individual

feels when confronted with extraordinary demands, constraints, or opportunities and their associated importance and uncertainties.• Functional Stress

– Stress that has a positive effect on performance.

– How Potential Stress Becomes Actual Stress• When there is uncertainty over the outcome.• When the outcome is important.

Causes of Stress

Issues in Managing Change• Making Change Happen Successfully– Embrace change—become a change-capable

organization.– Create a simple, compelling message explaining

why change is necessary.– Communicate constantly and honestly.– Foster as much employee participation as

possible—get all employees committed.– Encourage employees to be flexible.– Remove those who resist and cannot be changed.

Characteristics of Change-Capable Organizations

• Link the present and the future.

• Make learning a way of life.

• Actively support and encourage day-to-day improvements and changes.

• Ensure diverse teams.

• Shelter breakthroughs

• Integrate technology.

• Build and deepen trust.

Four Roles in Organizational Change

Inventor·Develops and

understandstechnical aspects of ideas·Does not know how

to win support for the idea or make abusiness of it

Champion·Believes in idea·Visualizes benefits·Confronts

organizationrealities of cost, benefits·Obtains financial

and political support Overcomes obstacles

Sponsor·High-level managerwho removesorganizational

barriers·Approves andprotects idea withinorganization

Critic· Provides reality

test·Looks for short-

comings·Defines hard-

nosedcriteria that ideamust pass

OrganizationalChange

planned Changes• Changes in products and services• Changes in administrative systems• Changes in organizational size or

structure• Introduction of new technologies• Advances in information

processing and communication

planned Changes• Changes in products and services• Changes in administrative systems• Changes in organizational size or

structure• Introduction of new technologies• Advances in information

processing and communication

Accidental Changes• Changing employee demographics• Performance gaps• Governmental regulations• Economic competition in the

global arena

Accidental Changes• Changing employee demographics• Performance gaps• Governmental regulations• Economic competition in the

global arena

Types of Changes:1) Planned2) Accidental

Types of Planned ChangesTwo Types

Operational Changebased on efforts to improve basic work and organizational processes

Transformational Changeinvolves redesign and renewal of the total organization

Organisational Change

Sequential Process• Initiation• Motivation• Diagnosis• Information Collection• Deliberation• Action Proposal• Implementation• Stabilization

Key Roles in Sequential Process of Organizational Change

Corporate ManagementConsultantCounterpartImplementor

Implemen.TeamTask forces

Involvementin process

Initi

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Moti

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Dia

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is

Info

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olle

ction

Del

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Actio

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Involvement in task

Impl

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Lewin’s 3 step Change process.

Unfreezing Changing Refreezing

Unfreezing Old behavior creates motivation to learn.

• The first step, “unfreeze” involves the process of letting go of certain restricting attitudes during the initial stages of an outdoor education experience.

• The second step, "change" involves alteration of self-conceptions and ways of thinking during the experience.

• The third step, "refreeze" involves solidifying or crystallizing the changes into a new, permanent form for the individual

Lewin’s Three-Step Process

Unfreezing Techniquespeople are taken from a state of being unready to change to being ready and willing to make the first step.

• Burning platform: Expose or create a crisis. • Challenge: Inspire them to achieve remarkable

things. • Evidence: Cold, hard data is difficult to ignore. • Education: Learn them to change. • Management by Objectives (MBO): Tell people what

to do, but not how. • Visioning: Form Visions. Visions work to create

change.

Burning Platform

• Show how staying where you are is not an option, and that doing nothing will result in disaster.

• Look for a crisis that you can highlight. They are often lurking nearby, forlorn and unnoticed.

• You can also engineer your own crisis that forces change.

Challenge

• Stimulate people into change by challenging them to achieve something remarkable. Show confidence in their ability to get out of their comfort zone and do what has not been done before.

• Once the group has bought the challenge, then they will bounce off each other to make it happen.

Evidence

• Find evidence that supports the need for change.

• Use data and statistics to create impressive graphs and charts.

• Cold, hard evidence is a good way of changing minds as counter-arguments require better data.

Education

• Teach people about the need for change and how embracing change is a far more effective life strategy than staying where they are or resisting.

• Teach people the methods of change, about how to be logical and creative in improving processes and organizations.

Management by Objectives (MBO)

• Set formal objectives for people that they will have to achieve, but do not tell them how they have to achieve this.

• Give people objectives that they can only achieve by working in the intended change.

•Give them relatively free rein in how they go about achieving the objectives. Encourage them to 'look outside the box' for creative new ways of achieving the objective.

Vision

• Create a motivating vision of thefuture.

• Share it with others.• Live it until it comes true.• Visions work only when they act to motivate and inspire the

large numbers of people that are needed to make the change happen.

• For the vision to be motivating, then it must be memorable. • For it to be memorable, it must be exciting and short.• To be believed, it must be a regular part of the conversation of

senior people.

Changing TechniquesOnce you have unfrozen the people, the next question is how you keep

them going.

• Coaching: Psychological support for executives. • Facilitation: Use a facilitator to guide team meetings.• First steps: Make it easy to get going.• Involvement: Give them an important role. • Open Space: People talk about what concerns them. • Step wise change: Break the work into packages.

Coaching

• When you have individual people who are having difficulty in managing to adapt to change, be a Coach to them.

• Coaching helps explore deeper motivations and beliefs about other people, and find practical ways to change these.

Facilitation

• Use skilled facilitators (HR) to support change activities.

• Facilitators can be used to guide various group events, from brainstorming and planning to improvement projects and change activities.

• Facilitators can also act as team coaches, helping people to improve within themselves and work together in better ways.

First Steps.

• Actually starting something is often the hardest thing. The Greek poet Horace said, ‘He has half the deed done who has made a beginning.’

• Make the first steps of change particularly easy. Make them the most obvious thing to do.

• Then make the next steps easy that it takes away all reasonable objections to enacting it.

Involvement

• Get them involved in the change.• Invite them to participate in discussions. • Give them things to do.• When people are a part of something, they

bond with it, making it a part of their identity.

Open space• It started when Harrison Owen was running conferences and

found that people preferred talking to others during the breaks than listening to speakers. He then began running conferences without speakers.

• The underlying philosophy is that trying to control a naturally chaotic universe just makes things worse. If you want people to collaborate, the basic principle is to bring them together and then get out of the way. For managers and facilitators this can be a very difficult part of the Open Space process. Yet the most successful Open Spaces are managed with but a very light touch.

• In change, this is useful for getting people talking together. For example, you can use it to get people to talk about their fears and concerns.

Stepwise Change

• Have clear steps in the change. Break the work into distinct packages and talk about each separately.

• Communicate about the change not as a single, but as a set of activities, each of which gains specific value.

Refreezing techniques people are taken from a state of being in transition and moved to a stable and

productive state

• Burning bridges: Ensure there is no way back. • Evidence stream: Show them time and again

that the change is real. • Institutionalization: Building change into the

formal systems and structures. • Reward alignment: Align rewards with desired

behaviors. • Socializing: Build it into the social fabric

Burning the bridges

• When changes are instituted, it is not uncommon for people to seek ways to go back the old way of working, hence ensure that there is no way back to previous ways of working.

• 'Burning bridges' is a deliberate way of preventing any backsliding by removing any method by which people can go back.

• Managers who may be not fully committed to the change are now strongly motivated to continue.

Evidence Stream• Get people to accept that a change is real by providing a

steady stream of evidence to demonstrate that the change has happened and is successful.

• Communicate through a range of media. Get people who have been involved to stand up and tell their stories of challenge and overcoming adversity.

• Evidence is a powerful tool for persuasion, particularly when people are doubtful whether something is real. This is particularly powerful when presented by people who are trusted by the audience for the information.

• A steady stream of evidence is needed because people are not always convinced by a few pieces of early evidence.

Institutionalization

• Make changes stick by building them into the formal fabric of the organization.

• Make them an organizational standard, building them into the systems of standards.

• Put them or aspects of them into the primary strategic plan.

• Build them into people personal objectives. • Ensure people are assessed against them in personal

reviews.• The formal systems and structures within the organization

are those which are not optional. People do them because they are 'business as usual‘.

Reward Alignment.

• When you make a change, ensure that you align the reward system with the changes that you want to happen.

• The saying 'Show me how I'm paid and I'll show you how I behave' is surprisingly common.

Socialize.

• Seal changes by building them into the social structures.

• Give social leaders prominent positions in the change. When they feel ownership for it, they will talk about it and sell it to others.

Kotter’s Eight-Step Plan for Implementing Change

1. Establish a sense of urgency by creating a compelling reason for why change is needed.

2. Form a coalition with enough power to lead the change.3. Create a new vision to direct the change and strategies for achieving the

vision.4. Communicate the vision throughout the organization.5. Empower others to act on the vision by removing barriers to change and

encouraging risk taking and creative problem solving.6. Plan for, create, and reward short-term “wins” that move the organization

toward the new vision.7. Consolidate improvements, reassess changes, and make necessary

adjustments in the new programs.8. Reinforce the changes by demonstrating the relationship between new

behaviors and organizational success.

Case Example

ICICI Bank merger with Bank of Madura (December 2000)

What does it reveal ?

It reveals the importance of change management for the Bank of Madura and how effective management of change could bring out best results from the employees in the Bank of Madura.

ICICI Bank Ltd. Bank of Madura (BoM)

ICICI was established by the Government of India in 1955.

Established in 1943, in Madurai, Tamilnadu. By 2000, it became the no. 1 in Tamilnadu.

Three times to that of Bank of Madura

One third the size of ICICI.

Staff strength was only 1,400. Staff strength was 2,500.

Departments into individual profit centers.

Management concentrated on the profitability of the overall bank.