Master of Business Administration- MBA Semester 4

NAME : PUJA GUHA

ROLL NO. : 571112609

LEARNING CENTER CODE : 01637

DATE OF SUBMISSION : 15-02-2013

MU0018 –Change Management

Q1. What are the requirements for making organizational change.Ans. Cummings and Worley (Organization Development and Change, 1995) describe a comprehensive, five-phase, general process for managing change, including:

Motivating Change: - This phase includes creating a readiness for change in your client organization and developing approaches to overcome resistance to change. General guidelines for managing this phase include enlightening members of the organization about the need for change, expressing the current status of the organization and where it needs to be in the future, and developing realistic approaches about how change might be accomplished. People need to feel that their concerns are being heard. Leaders must widely communicate the need for the change and how the change can be accomplished successfully. Leaders must listen to the employees – people need to feel that the approach to change will include their strong input and ongoing involvement.Creating Vision: - Leaders in the organization must articulate a clear vision that describes what the change effort is striving to accomplish. Ideally, people in the organization have strong input to the creation of the vision and how it can be achieved. The vision should clearly depict how the achievement of the vision will improve the organization. It is critically important that people believe that the vision is relevant and realistic. Research indicates that cynicism is increasing in organizations in regard to change efforts. Developing Political Support: - This phase of change management is often overlooked, yet it is the phase that often stops successful change from occurring. Politics in organizations is about power. Power is important among members of the organization when striving for the resources and influence necessary to successfully carry out their jobs. Power is also important when striving to maintain jobs and job security. Power usually comes from credibility, whether from strong expertise or integrity. Power also comes from the authority of one’s position in the organization.Managing Transition: - This phase occurs when the organization works to make the actual transition from the current state to the future state. In consultations, this phase usually is called implementation of the action plans.The plans can include a wide variety of “interventions,” or activities designed to make a change in the organization, for example, creating and/or modifying major structures and processes in the organization. These changes might require ongoing coaching, training and enforcement of new policies and procedures.

Sustaining Momentum: - Often, the most difficult phase in managing change is this phase when leaders work to sustain the momentum of the implementation and adjustment of plans. Change efforts can encounter a wide variety of obstacles, for example, strong resistance from members of the organization, sudden departure of a key leader in the organization, or a dramatic reduction in sales. Strong, visible, ongoing support from top leadership is critically important to show overall credibility and accountabilities in the change effort. Those participating in the change effort often require ongoing support, often in the form of provision of resources, along with training and coaching. The role of support cannot be minimized – despite its importance during organizational change; the role of support is often forgotten.

Q2. What is an organizational design? Explain its components.Ans. Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. The process focuses on improving both the technical and people side of the business.

I. Work Specialization:- Describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity.

II. Departmentalization: - It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities.

There are five common forms of departmentalization:Functional Departmentalization: - As shown in the Figure 2-1, it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.

Figure 2-1Functional Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations

o Coordination within functional area

o In-depth specialization

o Poor communication across functional areas

o Limited view of organizational goals

Product Departmentalization: - It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization

Figure 2: Product Departmentalization exampleSource: Bombardier Annual Report

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Allows specialization in particular products and services

o Managers can become experts in their industry

o Closer to customers

o Duplication of functionso Limited view of

organizational goals

Geographical Departmentalization: - It groups jobs on the basis of territory or geography.

Figure 2-3: Geographical Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More effective and efficient handling of specific regional issues that arise

o Serve needs of unique geographic markets better

o Duplication of functionso Can feel isolated from other

organizational areas

Process Departmentalization: - It groups on the basis of product or customer flow.

Figure 2-4: Process Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More efficient flow of work activities

o Can only be used with certain types of products

Customer Departmentalization : - It groups jobs on the basis of common customers

Figure 2-5: Customer Departmentalization example

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Customers' needs and problems can be met by specialists

o Duplication of functionso Limited view of

organizational goals

III. Chain of command : - It is defined as a continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. There are three important concepts attached to this theory:

Authority: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.

Responsibility: The obligation to perform any assigned duties. Unity of command: The management principle that each person should report to

only one manager.

IV. Span of Control: - It is important to a large degree because it determines the number of levels and managers an organization has. Also, determines the number of employees a manager can efficiently and effectively manage.

V. Centralization and Decentralization

More Centralization More Decentralization

Environment is stable Lower-level managers are not

as capable or experienced at making decisions as upper-level managers.

Lower-level managers do not want to have say in decisions

Decisions are significant. Organization is facing a crisis

or the risk of company failure. Company is large. Effective implementation of

company strategies depends on managers retaining say over what happens.

Environment is complex, uncertain.

Lower-level managers are capable and experienced at making decisions.

Lower-level managers want a voice in decisions.

Decisions are relatively minor. Corporate culture is open to

allowing managers to have a say in what happens.

Company is geographically dispersed.

Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions

VI. Formalization: - It refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

Q3. How do change managers recognize resistance of employees to change?Ans. It is important to be able to spot the resistance to change when it occurs rather than get surprised when the change mysteriously fails. Identifying the same will help you to respond appropriately to it. This is one of the biggest challenges faced by the change managers. If you can catch the resistance early, it will then give you a chance to respond to it before it takes hold, hence, effectively nipping it in the bud. Let us first look into some of the early signs of resistance.

These can be in the form of:Gossip: - When a change is announced, the tom-toms will start beating loudly and the grapevine will bear fruits of much and varied opinion. Keep your ear to the ground so as to know what is being said around the coffee points. Listen particularly for declarations of intent and attempts to organize resistance.Grumbling and complaints are natural ways of airing discomfort, so you should not try to squash it as

this will anyway lead you to failure. The biggest danger happens when it is allowed to ferment in an information vacuum.Respond to the gossip by opening it up, show that you are listening to the concerns and that are taking them seriously. Providing lots of valid information will help to fill the vacuum.

Testing: - Just as a high school class tests a teacher's ability to maintain discipline, so will some brave souls test out what would happen when they resist the change. An example, the resisters may not turn up to a meeting or may openly challenge a decision.How you deal with such early resistance has a significant effect on what happens next. For example, you can shout at them and hurt their sentiments, or you can take an adult position, describe what they have done and assertively question their motives.

Resistance to change can occur in two ways, namely:

Individual action: - Individuals, may resist, however, this is generally limited to the extent of their personal power. For those with a lower power, this may include passive refusals and covert action. For those with more power, the resistance may include open challenge and criticism.An individual action must be handled individually. It should be started with those who possess a greater power and then the message gets automatically conveyed to those below. An example of dealing with an individual who is resisting change: Disciplining a senior executive can send a strong signal to the other resistors.

Collective action: - People generally do not bother of organizing unless and until they have serious issues with the change. This gives rise to what is known as organized resistance. Organized resistance is usually a sign of a serious problem. When these people find a common voice in the organized resistance, then their words and actions could create a significant threat to the change, even though they might be individually less powerful.

Q4. What are the challenges that managers face in implementing successful change?Ans. There are many challenges that have to be addressed for implementing the change. It is human tendency to resist the changes since the change require learning new skills when we are very much comfortable with the old rules.There are many challenges that have to be faced by the organization that have to be implemented by the organization. They are:

There is more competition from other countries in the market of today. In this situation we have to look with our organization whether the organization is able to cope with the market after implementing the change.

There will be some socio, economic problems like the resource allocations and the impact of the resource allocation like depletion of resources on the environment.

There are some changes may affect the life style of the people. There may be extra effort that is needed in the case of change process.

There is a need to learn about the learning of new skills in the case of implementation of change that has to be carried out.

There are many theories that explain why the people resist the change even when there is a necessity for the change. The resistance to change is the major challenge that is faced in all the organizations of today’s world,

Resistance to change can be averted via some factors. They are:

Commitment: From the top level authorities in the organization to the low level authorities, each employee has to commit for the plan. This begins at the top so that it shows the good leadership.

A change mandate: it is necessary to tell the employee in a very convincing way that the change is necessary and it is not a choice.

Input: Any employee who is going to undergo the change must be given an opportunity to raise their queries in the respected way.

Accountability: Every individual those who are involved in the change process are responsible for implementing their own individual change activity. If they do not meet that responsibility then they may have to face some consequences.

Rewards and celebrations: The successful implementation in the organization should be well acknowledged. The organization as a whole should honor the successful implementation.

Evaluation: The Examination of the implementation is carried at the regular intervals for the success of the organization.

Whenever a change takes place in an organization, the personal compact, that is, the relationship between the employers and employees gets affected.

Q5. Explain the Dissipative Equilibrium Change Model.

Ans. The dissipative systems model

The theory of dissipative structure upon which the current discussion is based can be treated as the open systems model extended with a capability to continuously impose a revolutionary change or transformation.

The theory of dissipative structure: - Pioneered by the Brussels school of thought in the 1970s (Prigogine, 1976; Nicolis and Prigogine, 1977, 1989; Prigogine and Stengers, 1984), this theory is firmly rooted in physics and chemistry. Nevertheless, it was later applied to urban spatial evolution (Allen and Sanglier, 1978, 1979a, 1979b, 1981), organisational change and transformation (Gemmill and Smith, 1985; Leifer, 1989; Macintosh and Maclean, 1999), changes in small groups and group dynamics (Smith and Gemmill, 1991), and political revolutions and change in political systems (Artigiani, 1987a, 1987b; Byeon, 1999).

Dissipative structure in physical systems

The most prominent example of dissipative structure in a physical system is convection in a liquid (Nicolis and Prigogine, 1977; Jantsch, 1980; Prigogine and Stengers, 1984). If cooking oil is heated in a shallow pan, the following macroscopic changes occur. Firstly, while the temperature of liquid is relatively uniform, heat is transmitted through the body of liquid by means of conduction in which the molecules’ heat energy (molecular vibration) is transmitted to neighbouring molecules via collision without major change of position. We can say that the system is still in a thermodynamic equilibrium. Next, as the pan is heated further, the temperature gradient between the upper and lower portion of the oil in the pan becomes more pronounced and thermal non-equilibrium increases. At a certain temperature gradient, convection starts and heat is then transferred by the bulk movement of

molecules. Evidently, however, the surrounding environment at first suppresses the smaller convection streams, but beyond a certain temperature gradient, the fluctuations are reinforced rather than suppressed. The system moves into a dynamic regime, switching from conduction to convection, and a new macroscopic order called ‘Benard cells’ (i.e. a pattern of regular hexagonal cells that appear on the surface of liquid) emerges, caused by a macroscopic fluctuation and stabilised by an exchange of energy with the environment. Such a structure is called a hydrodynamic dissipative structure, and is a version of spatial structure (Haken, 1980).

Order in a non-equilibrium state

As mentioned earlier, open systems make an effort to avoid a transition into thermodynamic equilibrium by a continuous exchange of materials and energy with the environment. By doing this, a negative entropy condition can be maintained. It has been understood for a long time that entropy is a quantification of randomness, uncertainty, and disorganisation, and negative entropy therefore corresponds to (relative) order, certainty, and organisation (Bertalanffy, 1973; Kramer and De Smith, 1977; Nicolis and Prigogine, 1977; Prigogine and Stengers, 1984; Miller, 1978; Van Gigch, 1978, 1991; Flood and Carson, 1993). However, the mechanics underlying this idea had not been clear until it was explained in the work of Nicolis and Prigogine (1977), Prigogine and Stengers (1984), and Jantsch (1980) in the theory of dissipative structure and order that exists in the non-equilibrium condition.

According to the theory of dissipative structure, an open system has a capability to continuously import free energy from the environment and, at the same time, export entropy. As a consequence, the entropy of an open system can either be maintained at the same level or decreased (negative entropy), unlike the entropy of an isolated system (i.e. one that is completely sealed off from its environment), which tends to increase toward a maximum at thermodynamic equilibrium. This phenomenon can be represented in quantitative terms as follows (Nicolis and Prigogine, 1977; Jantsch, 1980; Prigogine and Stengers, 1984). According to the second law of thermodynamics, in any open system, change in entropy dS in a certain time interval consists of entropy production due to an irreversible process in the system (an internal component) diS and entropy flow due to exchange with the environment (an external component) deS. Thus, a change in entropy in a certain time interval can be represented as dS = deS + diS (where diS > 0). However, unlike diS, the external component (deS) can be either positive or negative. Therefore, if deS is negative and as numerically large as, or larger than, diS, the total entropy may either be stationary (dS = 0) or decrease (dS < 0). In the former case, we can say that the internal production of entropy and entropy exported to the environment are in balance. An open system in a dissipative structure sense can be viewed as shown in

Figure 11.4. An open system’s entropy production and dissipation.

It can be concluded that order in an open system can be maintained only in a non-equilibrium condition. In other words, an open system needs to maintain an exchange of energy and resources with the environment in order to be able to continuously renew itself.

Entropy and sustainability of dissipative systems

The internal structure and development of dissipative systems, as well as the process by which they come into existence, evolve, and expire, are governed by the transfer of energy from the environment. Unlike isolated systems (or closed systems in a broader sense), which are always on the path to thermal equilibrium, dissipative systems have a potential to offset the increasing entropic trend by consuming energy and using it to export entropy to their environment, thus creating negative entropy or negentropy, which prevents the system from moving toward an equilibrium state. A negentropic process is, therefore, the foundation for growth and evolution in thermodynamic systems.

For dissipative systems to sustain their growth, they must not only increase their negentropic potential, but they must also eliminate the positive entropy that naturally accumulates over time as systems are trying to sustain themselves. The build up of the system’s internal complexity as it grows is always accompanied by the production of positive entropy (diS > 0), which must be dissipated out of the system as waste or low-grade energy. Otherwise, the accumulation of positive entropy in the system will eventually bring it to thermodynamic equilibrium, a state in which the system cannot maintain its order and organisation (Harvey and Reed, 1997).

Q6. Suppose you are appointed as an HR Manager of a local bank. You are assigned the task of implementing computerization in the bank. The implementation would result in a complete shift from maintaining records and transactions manually to a fully computerized and online system. What are the various phases involved in the process of managing this change?

Ans.

Change management process: - The change management process is the sequence of steps or activities that a change management team or project leader would follow to apply change management to a project or change. Based on Prosci's research of the most effective and commonly applied change, most change management processes contain the following three phases:

Phase 1 - Preparing for change (Preparation, assessment and strategy development)Phase 2 - Managing change (Detailed planning and change management implementation)Phase 3 - Reinforcing change (Data gathering, corrective action and recognition)

These phases result in the following approach as shown below in Figure 1.

It is important to note what change management is and what change management is not, as defined by the majority of research participants.

Change management is not a stand-alone process for designing a business solution.

Change management is the processes, tools and techniques for managing the people-side of change.

Change management is not a process improvement method.

Change management is a method for reducing and managing resistance to change when implementing process, technology or organizational change.

Change management is not a stand-alone technique for improving organizational performance.

Change management is a necessary component for any organizational performance improvement process to succeed, including programs like: Six Sigma, Business Process Reengineering, Total Quality Management, Organizational Development, Restructuring and continuous process improvement.

Change management is about managing change to realize business results.