443
Chapter Fifteen Organizational Change
Facebook has a distinctive organizational culture and, in spite of its exponential growth, has discovered ways to maintain and perhaps even strengthen that culture throughout its global offices. Organizational culture consists of the values and assumptions shared within an organization.2 It defines what is important and unimportant in the company and consequently directs everyone in the organization toward the “right way” of doing things. You might think of organizational culture as the company’s DNA; it’s invisible to the naked eye, yet provides a powerful template that shapes what happens in the workplace.
This chapter begins by identifying the elements of organizational culture and then describing how culture is deciphered through artifacts. This is followed by a discussion of the relationship between organizational culture and performance, including the effects of cultural strength, fit, and adaptability. We then turn our attention to the challenges of and solutions to merging organizational cultures. The latter part of this chapter examines ways to change and strengthen organizational culture, including a closer look at the related topic of organizational socialization.
406
Part Four Organizational Processes
407
Chapter Fourteen Organizational Culture
Elements of Organizational Culture
As its definition states, organizational culture consists of shared values and assumptions. Exhibit 14.1 illustrates how these shared values and assumptions relate to one another and are associated with artifacts, discussed later in this chapter. Values are stable, evaluative beliefs that guide our preferences for outcomes or courses of action in a variety of situations (see Chapters 1 and 2).3 They are conscious perceptions about what is good or bad, right or wrong. In the context of organizational culture, values are discussed as shared values, which are values that people within the organization or work unit have in common and place near the top of their hierarchy of values.4 At Facebook, most employees embrace the shared values of making a difference (focus on impact), taking risks (be bold), and being entrepreneurial (moving fast).
Organizational culture also consists of shared assumptions—a deeper element that some experts believe is the essence of corporate culture. Shared assumptions are nonconscious, taken-for-granted perceptions or ideal prototypes of behavior that are considered the correct way to think and act toward problems and opportunities. Shared assumptions are so deeply ingrained that you probably wouldn’t discover them by surveying employees. Only by observing employees, analyzing their decisions, and debriefing them on their actions would these assumptions rise to the surface.
It has become a popular practice for leaders to identify and publicly state their organization’s shared values. Online retailer Zappos lists 10 core values, such as “Deliver WOW through Service,” “Embrace and Drive Change,” and “Create Fun and A Little Weirdness.” Gap Adventures, the Toronto-based outdoor adventure company, describes its five values: We love changing people’s lives, embrace the bizarre, lead with service, do the right thing, and create happiness and community.5
Do these values really represent the cultural content of Zappos and Gap Adventures? Very probably in the case of these two organizations, because their cultures are well known and deeply entrenched. However, the values statements of many organizations do not necessarily reflect the values that are widely shared and practiced in the organization. This distinction occurs because corporate leaders typically describe espoused values—the values that they want others to believe guide the organization’s decisions and actions.6 Espoused values are usually socially desirable, so they present a positive public image. Even if top management acts consistently with the espoused values, lower-level employees might not do so. Employees bring diverse personal values to the organization, some of which might conflict with the organization’s espoused values.
Organizational culture is not represented by espoused values. Instead, it consists of shared enacted values—the values that most leaders and employees truly rely on to guide their decisions and behavior. These “values-in-use” are apparent by watching executives
EXHIBIT 14.1 Organizational Culture Assumptions, Values, and Artifacts
Artifacts of organizational culture
Physical structures
Language
( Rituals and )
organizational culture
The values and assumptions shared within an organization.
and other employees in action, including their decisions, where they focus their attention and resources, and how they behave toward stakeholders. For example, Connections 14.1 describes how BP s stated (espoused) value of responsibility seems to be wildly at odds with the decisions, priorities, and behavior of its leaders and many employees.
CONTENT OF ORGANIZATIONAL CULTURE
Organizations differ in their cultural content, that is, the relative ordering of shared values. Facebook has an entrepreneurial culture where employees are encouraged to take risks to make a difference to the company and society. The company also recognizes that employees make mistakes (break things) along that innovation journey. The culture at Netflix is considerably different.7 Executives at the on-demand and mail-order movie rental com-i pany view themselves as a sports team. “Netflix leaders hire, develop, and cut smartly, so we have stars in every position,” a Netflix slideshow candidly states. The company even asks managers to regularly apply the “keeper test”: Determine which employees they would fight hard to prevent from leaving. And the others? “[They] should get a generous severance package now, so we can open a slot to try to find a star for that
( I connections 14.1 )
BP’s Espoused vs. Enacted Values
BP, the British energy giant, lists four core values: progressive, responsible, innovative, and performance-driven. The company says that these values “guide us in the conduct of our business.” In other words, BP claims these four core values are enacted; they are evident in the company’s decisions and allocation of resources, as well as in the daily behavior of its employees.
Most people around the Gulf of Mexico and in Alaska would quickly dismiss those claims. In particular, BP describes its “responsibility” value as being “committed to the safety and development of our people and the communities and societies in which we operate. We aim for no accidents, no harm to people and no damage to the environment.” Yet, the energy company’s track record on safety and environmentalism suggests otherwise.
BP is at the center of the Gulf of Mexico oil spill, now considered the worst environmental disaster in recent history. A few months before the spill occurred, the U.S. government’s Occupational Safety and Health Administration (OSHA) penalized BP with the largest fine in OSHA’s history for failing to sufficiently improve safety at its Texas City refinery. Four years earlier, 15 employees died in an explosion at that refinery. A U.S. government report on that explosion concluded that BP “did not provide effective safety culture leadership.”
BP’s “responsibility” value has been around for a few years, yet the company’s environmental and safety problems were well known long before the Gulf and Texas disasters. In 2003, the Norwegian government concluded that “a poor HES (Health, Environment, and Safety) culture” contributed to a fatality on a
BP describes one of its four core values as aiming “for no accidents, no harm to people and no damage to the environment,” yet the British energy company’s track record indicates that this value is espoused, not enacted.
BP oil platform. A few years earlier, a prominent newspaper concluded that a series of spills, accidents, and alleged hush-ups at the Alaskan operations managed by BP “raises serious questions about BP’s safety culture.” In short, being safety and environmentally “responsible” is an espoused value at BP but not likely part of the company’s current or recent culture.8
408
Part Four Organizational Processes
aconnect
Which corporate culture do you prefer? Go to www. mcgrawhillconnect.com to estimate your preference among a small set of common cultures, as well as to assist your learning about organizational culture and effectiveness.
role.” So, while Netflix has a winner-take-all performance culture, Facebook’s culture is more entrepreneurial: empowering employees to have an impact, taking risks, and receiving support for reasonable mistakes along the way.
How many corporate cultures are there? Several models and measures classify organizational culture into a handful of easy-to-remember categories. One of these, shown in Exhibit 14.2, identifies seven corporate cultures. Another popular model identifies four organizational cultures organized in a two-by-two table representing internal versus external focus and flexibility versus control. Other models organize cultures around a circle with 8 or 12 categories. These circumplex models suggest that some cultures are opposite to others, such as an avoidance culture versus a self-actualization culture, or a power culture versus a collegial culture.9
These organizational culture models and surveys are popular with corporate leaders faced with the messy business of diagnosing their company’s culture and identifying what kind of culture they want to develop. Unfortunately, they oversimplify the diversity of cultural values in organizations. There are dozens of individual values, and many more combinations of values, so the number of organizational cultures that these models describe likely falls considerably short of the full set. A second concern is that organizational culture includes shared assumptions, not just shared values. Most organizational culture measures ignore assumptions because they represent a more subterranean aspect of culture.
A third concern is that many organizational culture models and measures incorrectly assume that organizations have a fairly clear, unified culture that is easily decipherable.10 This “integration” perspective, as it is called, further assumes that when an organization’s culture changes, it shifts from one unified condition to a new unified condition with only
Innovation
Experimenting, opportunity seeking, risk taking, few rules, low cautiousness
409
Chapter Fourteen Organizational Culture
409
Chapter Fourteen Organizational Culture
Stability
Predictability, security, rule oriented
409
Chapter Fourteen Organizational Culture
Respect for people
Fairness, tolerance
409
Chapter Fourteen Organizational Culture
Outcome orientation
Action oriented, high expectations, results oriented
409
Chapter Fourteen Organizational Culture
Attention to detail
Precise, analytic
409
Chapter Fourteen Organizational Culture
Team orientation
Collaboration, people oriented
409
Chapter Fourteen Organizational Culture
Aggressiveness
Competitive, low emphasis on social responsibility
Source: Based on information in C.A. O’Reilly III, J. Chatman, and D.F. Caldwell, “People and Organizational Culture: A Profile Comparison Approach to Assessing Person-Organization Fit,” Academy of Management Journal 34, no. 3 (1991), pp. 487-518.
temporary ambiguity or weakness during the transition. These assumptions are probably incorrect or, at best, oversimplified. An organization’s culture is usually quite blurry, so much so that it cannot be estimated through employee surveys alone. As we discuss next, organizations consist of diverse subcultures, because employees across the organization have different clusters of experiences and backgrounds that have shaped their values and priorities. For example, after BP’s Texas refinery explosion a few years ago, an independent panel investigated the energy company’s safety culture across the United States. The panel concluded that a few of BP’s sites embraced the importance of safety, but most required a much stronger safety culture.11
Even these subcultural clusters can be ill-defined because values and assumptions ultimately vary from one employee to the next. As long as employees differ, an organization’s culture will have noticeable variability. Thus, many of the popular organizational culture models and measures oversimplify the variety of organizational cultures and falsely presume that it is relatively easy to fit organizations into these categories.
ORGANIZATIONAL SUBCULTURES
When discussing organizational culture, we are really referring to the dominant culture, that is, the values and assumptions shared most consistently and widely by the organizations members. The dominant culture is usually supported by senior management, but cultures can also persist in spite of senior management’s desire for another culture. Furthermore, organizations are composed of subcultures located throughout their various divisions, geographic regions, and occupational groups.12 Some subcultures enhance the dominant culture by espousing parallel assumptions and values. Others differ from but do not conflict with the dominant culture. Still others are called countercultures because they embrace values or assumptions that directly oppose the organization’s dominant culture. It is also possible that some organizations (including some universities, according to one study) consist of subcultures with no decipherable dominant culture at all.13
Subcultures, particularly countercultures, potentially create conflict and dissension among employees, but they also serve two important functions.14 First, they maintain the organization’s standards of performance and ethical behavior. Employees who hold coun-tercultural values are an important source of surveillance and critical review of the dominant order. They encourage constructive conflict and more creative thinking about how the organization should interact with its environment. Subcultures potentially support ethical conduct by preventing employees from blindly following one set of values. Subculture members continually question the “obvious” decisions and actions of the majority, thereby making everyone more mindful of the consequences of their actions.
The second function of subcultures is that they are the spawning grounds for emerging values that keep the firm aligned with the evolving needs and expectations of customers, suppliers, communities, and other stakeholders. Companies eventually need to replace their dominant values with ones that are more appropriate for the changing environment. If subcultures are suppressed, the organization may take longer to discover and adopt values aligned with the emerging environment.
Deciphering Organizational Culture Through Artifacts
410
Part Four Organizational Processes
connect
To assist your learning and test your knowledge about organizational culture artifacts and content, go to www.mcgrawhillconnect.com , which has activities and test questions on these topics.
Shared values and assumptions are not easily measured through surveys and might not be accurately reflected in the organization’s values statements. Instead, as Exhibit 14.1 illustrated previously, an organization’s culture must be deciphered through a detailed investigation of artifacts. Artifacts are the observable symbols and signs of an organization’s culture, such as the way visitors are greeted, the organization’s physical layout, and how employees are rewarded.15 A few experts suggest that artifacts are the essence of organizational culture, whereas most others (including the authors of this book) view artifacts as symbols or indicators of culture. In other words, culture is cognitive (values and assumptions inside people’s heads), whereas artifacts are observable manifestations of that culture. Either way, artifacts are important because they represent and reinforce an organization’s culture.
Artifacts provide valuable evidence about a company’s culture.16 An organization’s ambiguous (fragmented) culture is best understood by observing workplace behavior, listening to everyday conversations among staff and with customers, studying written documents and e-mails, viewing physical structures and settings, and interviewing staff about corporate stories. In other words, to truly understand an organization’s culture, we need to sample information from a variety of organizational artifacts.
The Mayo Clinic conducted such an assessment a few years ago. An anthropologist was hired to decipher the medical organization’s culture at its headquarters in Minnesota and to identify ways to transfer that culture to its two newer sites in Florida and Arizona. For six weeks, the anthropologist shadowed employees, posed as a patient in waiting rooms, did countless interviews, and accompanied physicians on patient visits. The final report outlined Mayo’s dominant culture and how its satellite operations varied from that culture.17
In this section, we review the four broad categories of artifacts: organizational stories and legends, rituals and ceremonies, language, and physical structures and symbols.
ORGANIZATIONAL STORIES AND LEGENDS
David Ogilvy is a legend in the advertising industry, but equally significant are the stories about him that have continued to reinforce the values that he instilled. One story recounts how Ogilvy s board of directors arrived at a meeting to discover a Russian matryoshka doll at each of their seats. The directors opened each doll, one nested inside the other, until they discovered this message inside the tiniest doll: “If you hire people who are smaller than you are, we shall become a company of dwarfs. If you hire people who are bigger than you are, we shall become a company of giants.” The Russian dolls became part of Ogilvy s culture, which demands hiring talent, not subservience.18
Stories such as Ogilvy s Russian dolls permeate strong organizational cultures. Some tales recount heroic deeds, whereas others ridicule past events that deviate from the firm’s core values. Organizational stories and legends serve as powerful social prescriptions of the way things should (or should not) be done. They add human realism to corporate expectations, individual performance standards, and the criteria for getting fired. Stories also produce emotions in listeners, and these emotions tend to improve listeners’ memory of the lesson within the story.19 Stories have the greatest effect on communicating corporate culture when they describe real people, are assumed to be true, and are known by employees throughout the organization. Stories are also prescriptive—they advise people what to do or not to do.20
The transformation of Ford Motor Company illustrates many of the strategies and practices necessary to change organizations. It reveals how CEO Alan Mulally created an urgency for change, revised systems and structures to support the change, introduced a pilot project (the Ford Focus development team) to spearhead the company’s new global approach, and continuously communicated the change process. Although Ford’s turnaround sounds like an smooth-running process, most organizational change is messy, requiring considerable leadership effort and vigilance. As we will describe throughout this chapter, the challenge of change is not just in deciding which way to go; the challenge is in the execution of this strategy. When leaders discover the need for change and identify preferred paths that will take the company to a better future, the change process involves navigating around the numerous obstacles and gaining organization-wide support for that change.
This chapter unfolds as follows. We begin by introducing Lewin’s model of change and its component parts. Our discussion includes sources of resistance to change, ways to minimize this resistance, and ways to stabilize desired behaviors. Next, the chapter examines four approaches to organizational change—action research, appreciative inquiry, large group interventions, and parallel learning structures. The last section of this chapter considers both cross-cultural and ethical issues in organizational change.
434
Part Four Organizational Processes
Lewin’s Force Field Analysis Model
“The velocity of change is so rapid, so quick, that if you don’t accept the change and move with the change, you’re going to be left behind.”2 This statement by BHP Billiton Chairman (and former Ford CEO) Jacques Nasser reflects the notion that organizations need to keep pace with ongoing changes in their external environment. Organizations are, after all, open systems that need to remain compatible with their external environments (see Chapter 1), such as consumer needs, global competition, technology, community expectations, government (de)regulation, and environmental standards. Successful organizations monitor their environments and take appropriate steps to maintain a compatible fit with new external conditions. Rather than resisting change, employees in successful companies embrace change as an integral part of organizational life. “I’ve always believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight,” says former General Electric CEO Jack Welch. “The only question is when.”3
iconnect
To assist your learning and test your knowledge about Lewin’s force field model of change, go to www.mcgrawhillconnect.com , which has activities and test questions on this topic.
It is easy to see that environmental forces push companies to change the way they operate. What is more difficult to see is the complex interplay of these forces with the internal dynamics of organizations. Social psychologist Kurt Lewin developed the force field analysis model to describe this process using the metaphor of a force field (see Exhibit 15.1).4 Although it was developed more than 50 years ago, recent reviews affirm that Lewin’s force field analysis model remains one of the most widely respected ways of viewing the change process.5
One side of the force field model represents the driving forces that push organizations toward a new state of affairs. These might include new competitors or technologies, evolving workforce expectations, or a host of other environmental changes. Corporate leaders also produce driving forces even when external forces for change aren’t apparent. For instance, some experts call for “divine discontent” as a key feature of successful organizations, meaning that leaders continually urge employees to strive for higher standards or better practices even when the company outshines the competition. “We have a habit of divine discontent with our performance,” says creative agency Ogilvy & Mather about its corporate culture. “It is an antidote to smugness.”6
The other side of Lewin’s model represents the restraining forces that maintain the status quo. These restraining forces are commonly called “resistance to change” because they
EXHIBIT 15.1
Lewin’s Force Field Analysis Model
435
Chapter Fifteen Organizational Change
I I Before change ► After change
appear to block the change process. Stability occurs when the driving and restraining forces are roughly in equilibrium—that is, they are of approximately equal strength in opposite directions.
Lewin’s force field model emphasizes that effective change occurs by unfreezing the current situation; moving to a desired condition, and then refreezing the system so it remains in the desired state. Unfreezing involves producing disequilibrium between the driving and restraining forces. As we will describe later, this process may occur by increasing the driving forces, reducing the restraining forces, or using a combination of both. Refreezing occurs when the organization’s systems and structures are aligned with the desired behaviors. They must support and reinforce the new role patterns and prevent the organization from slipping back into the old way of doing things. Over the next few pages, we use Lewin’s model to understand why change is blocked and how the process can evolve more smoothly.
Understanding Resistance to Change
Robert Nardelli pushed hard to transform Home Depot from a loose configuration of fiefdoms to a more performance-oriented operation that delivered a consistent customer experience. Change did occur at the world’s largest home improvement retailer, but at a price. A large number of talented managers and employees left the company, and some of those remaining continued to resent Nardelli’s transformation. Disenchanted staff referred to the company as “Home Despot” because the changes took away their autonomy. Others named it “Home GEpot,” a disparaging reference to the many former GE executives that Nardelli hired into top positions. After five years, the Home Depot board decided to replace Nardelli, partly because he made some unsuccessful strategic decisions and partly because of the aftereffects of Nardelli’s changes.7
435
Chapter Fifteen Organizational Change
(
force field analysis
Kurt Lewin’s model of systemwide change that helps change agents diagnose the forces that drive and restrain proposed organizational change.
unfreezing
The first part of the change process, in which the change agent produces disequilibrium between the driving and restraining forces.
refreezing
The latter part of the change process, in which systems and structures are introduced that reinforce and maintain the desired behaviors.
Robert Nardelli experienced considerable resistance to change at Home Depot. He has plenty of company. One survey reported that 43 percent of U.S. managers identified resistance to change as a primary barrier to workplace
How Effectively Do Organizations around the World Handle Change?8
436
Part Four Organizational Processes
( 47% 43% )80% 70% 60% 50% h| 40% I 30% hi
20% 10% |
0%
63%
49%
43%
42%
34%
31%
24%
India
United States
China United Total Germany France South Japan Kingdom Sample Korea
Percentage of employees, by selected countries, who agree or strongly agree that “change is handled effectively in my organization.” Not all 28,810 employees across the 15 countries surveyed are shown here, but all are included in the “total sample” figure.
productivity. This resistance is not short-lived. Twenty-one percent of 1,700 change agents surveyed across more than 40 countries acknowledged that employees still resisted a specific major change one or two years after it was implemented.9
Resistance to change takes many forms, ranging from overt work stoppages to subtle attempts to continue the old ways.10 A study of bank employees reported that subtle resistance is much more common than overt resistance. Some employees in that study avoided the desired changes by moving into different jobs. Others continued to perform tasks the old way as long as management didn’t notice. Even when employees complied with the planned changes, they engaged in resistance by performing their work without corresponding cognitive or emotional support for the” change.11 In other words, they resisted by letting customers know that they disapproved of the changes forced on them.
Subtle forms of resistance potentially create the greatest obstacles to change because they are not as visible. In the words of one manager, “[Change efforts] never die because of direct confrontation. Direct confrontation you can work with because it is known. Rather, they die a death of a thousand cuts. People and issues you never confront drain the life out of important [initiatives] and result in solutions that simply do not have the performance impact that they should have.”12 This resistance is not unique to North America. As Connections 15.1 describes, Mina Ishiwatari experienced various forms of resistance to her innovative marketing ideas at Hoppy, the Japanese beverage company.
EMPLOYEE RESISTANCE AS A RESOURCE FOR CHANGE
Although change agents are understandably frustrated by passive or active resistance to change, they need to realize that resistance is a common and natural human response. As economist John Kenneth Galbraith once quipped: “Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.”13 Even when people support change, they typically assume that it is others—not themselves—who need to change. The problem, however, isn’t so much that resistance to change exists. The main problem is that change agents typically view resistance as an unreasonable, dysfunctional, and irrational response to a desirable initiative. They often form an “us versus them” perspective without considering that the causes of resistance may, in fact, be traced back to their own actions or inaction.14
The emerging view among change management experts is that resistance to change is a useful indicator rather than an impediment to change. Resistance aids change agents in
connections 15.1
437
Chapter Fifteen Organizational Change
( Mina Ishiwatari (center) faced, and overcame, resistance to change in the company that her grandfath er founded. )Not Hoppy About Change
Hoppy, a carbonated, low-alcohol, malt-and-hops beverage, was popular around Tokyo after World War II as a cheap alternative to expensive beer, but it fell out of favor as beer became affordable. Mina Ishiwatari, granddaughter of Hoppy Beverage Co.’s founder, was determined to improve Hoppy’s image when she joined the company a decade ago. Unfortunately, the company’s 30 employees—mostly men in their fifties who were family relatives—didn’t want to disturb their cozy jobs.
“It was a turbulent decade of eliminating evils from the company and rebuilding a new organization from scratch,” recalls Ishiwatari, who began as a rank-and-file employee and is now the company’s executive vice president. “I tried to take a new marketing approach to change the image of Hoppy … but no one would listen to me.”
With limited support and budget, Ishiwatari developed a website that informed the public about the product, sold it online, and documented Ishiwatari’s views in an early weblog. As the contemporary marketing caught the attention of health-conscious young people, Ishiwatari pushed for further changes. Most managers who opposed Ishiwatari’s radical ideas eventually left the company.
But Ishiwatari experienced resistance even among those who remained. One day, the factory manager presented her with resignations from all of the factory workers. Ishiwatari resolved the dispute, acknowledging that she was pushing change through too quickly and without enough consideration for employee feelings.
In the seven years since Ishiwatari began introducing these changes, Hoppy’s annual sales have increased fourfold to about US$42 million, even though it is sold mainly around Tokyo. The company’s workforce has expanded to more than 50 people.15
437
Chapter Fifteen Organizational Change
^connect
Are you tolerant of change? Go to www.mcgrawhil1connect.com or the end of this chapter to assess your natural tendency to tolerate change, as well as to assist your learning about the sources of resistance to change.
three ways. First, it is a signal—a warning system—that the change agent has not sufficiently addressed the underlying conditions that support effective organizational change.16 In some situations, employees may be worried about the consequences of change, such as how the new conditions will take away their power and status. In other situations, employees show resistance because of concerns about the process of change itself, such as the effort required to break old habits and learn new skills.
Second, resistance is a form of constructive conflict that can potentially improve decision making, including identifying better ways to improve the organizations success. However, constructive conflict is typically accompanied by dysfunctional relationship conflict. This appears to be the case when change agents see resistance to change as an impediment rather than a resource. They describe the people who oppose them as the problem, whereas their focus should be on understanding the reasons why these people resist. Thus, by viewing resistance as a form of constructive conflict, change agents may be able to improve the change strategy or change process.
Third, resistance should be viewed in the context of justice and motivation. Resistance is a form of voice, so it potentially improves procedural justice (see Chapter 5). By redirecting initial forms of resistance into constructive conversations, change agents can increase employee perceptions and feelings of fairness. Furthermore, resistance is motivational; it potentially engages people to think about the change strategy and process. Change agents can harness that motivational force to ultimately strengthen commitment to the change initiative.
WHY EMPLOYEES RESIST CHANGE
Change management experts have developed a long list of reasons people do not embrace change. Some people resist change because of their personality and values.17 Aside from these dispositional factors, however, employees often lack the motivation or commitment
^connect’
Are you ready for change? Go to www.mcgrawhillconnect.com to
identify conditions that are holding back your readiness for a specific change initiative.
to change when they believe the change will fail, is the wrong action for the situation, or will be costly to them personally.18 This cost might be in the form of lost rewards and status, or it might represent negative consequences if they attempt to support the change. Another reason for resistance is the persons inability (or perceived inability) to change due to inadequate skills and knowledge. A third reason is that employees lack role clarity about the change. This lack of role clarity occurs when people misunderstand or magnify what is expected of them in the future. These three factors—motivation, ability, and role (mis) perceptions—are the foundations of the six most commonly cited reasons people resist change, which are summarized here.19
Direct Costs Employees lack commitment to (or even compliance with) a change initiative when their personal cost-benefit analysis calculation is negative rather than positive. They might believe the benefits for them (and possibly for the organization) are trivial (i.e., some pain for little gain). They might anticipate benefits from the change but also believe that they will be worse off overall. For example, the Malaysian government has introduced sweeping changes in which managers are expected to delegate more power and responsibility to staff. However, many government managers believe these reforms will give them less power and prestige, so they have hindered the change by delegating responsibility slowly.
Saving Face Several years ago, Rob McEwan, CEO of Goldcorp and USGold, decided to post the mining company’s confidential geological data online and offer a handsome reward to anyone who could help find more gold on the property. The Goldcorp Challenge was a huge success, but the firm’s geological staff complained just before the event was launched. “We have real concerns,” they told McEwen. “You’re going to ask the rest of the world to tell you where we’re going to find gold in our mine, and we think they’re going to think we’re really dumb and that you don’t have any confidence in us.”20
Goldcorp’s geological staff resisted the global challenge because it threatened their self-esteem. Although McEwan eased those concerns, employees often continue to quietly attack changes that did not originate from them. Due to this “not-invented-here” syndrome, staff sometimes deliberately inflate problems with changes that they did not initiate, just to “prove” that those ideas were not superior to their own. This form of resistance is widespread, according to change experts. Says one consultant, “Unless they’re scared enough to listen, they’ll never forgive you for being right and for knowing something they don’t.”21
Fear of the Unknown All change includes some degree of uncertainty. This uncertainty puts employees at risk. Their knowledge and skills might become obsolete; their
438 Part Four Organizational Processes
Ray Davis, CEO of Umpqua Bank, warns that employees tend to fall back into their old ways unless the change is reinforced through systems and structures. “When you are leading for growth, you know you are going to disrupt comfortable routines and ask for new behavior, new priorities, new skills,” says Davis, whose Oregon-based bank is regarded as one of America’s most innovative financial institutions. “Even when we want to change, and do change, we tend to relax and the rubber band snaps us back into our comfort zones.”23
438 Part Four Organizational Processes
valued work space, perquisites, or even social relationships might be disrupted and removed. Thus, people resist change out of worry that they cannot adjust to the new work requirements or that they will produce unknown costs. Overall, this uncertainty is usually considered less desirable than the relative certainty of the status quo.
Breaking Routines People typically resist initiatives that force them out of their comfort zones and require them to invest time and energy in learning new role patterns. Indeed, most employees in one Australian survey admitted they don’t follow through with organizational changes because they “like to keep things the way they are” or the changes seem to be too complicated or time wasting.22
Incongruent Team Dynamics Teams develop and enforce conformity to a set of norms that guide behavior. However, conformity to existing team norms may discourage employees from accepting organizational change. This form of resistance occurred at electronics retailer Best Buy when it introduced the results-only work environment (ROWE). ROWE evaluates employees by their results, not their face time, so employees can come to work and leave when they want. Yet coworkers often responded to deviations from the standard work schedule with half-humorous barbs such as “Forgot to set your alarm clock again?” These jibes supported the old employment model but undermined the ROWE program. Best Buy’s consultants eventually set up sessions that warned employees about these taunts, which they called “sludge.”24
Incongruent Organizational Systems Rewards, information systems, patterns of authority, career paths, selection criteria, and other systems and structures are both friends and foes of organizational change. When properly aligned, they reinforce desired behaviors. When misaligned, they pull people back into their old attitudes and behavior. Even enthusiastic employees lose momentum after failing to overcome the structural confines of the past.
439
Chapter Fifteen Organizational Change
Unfreezing, Changing, and Refreezing
According to Lewin’s force field analysis model, effective change occurs by unfreezing the current situation, moving to a desired condition, and then refreezing the system so it remains in this desired state. Unfreezing occurs when the driving forces are stronger than the restraining forces. This happens by making the driving forces stronger, weakening or removing the restraining forces, or both.
The first option is to increase the driving forces, motivating employees to change through fear or threats (real or contrived). This strategy rarely works, however, because the action of increasing the driving forces alone is usually met with an equal and opposing increase in the restraining forces. A useful metaphor is pushing against the coils of a mattress. The harder corporate leaders push for change, the stronger the restraining forces push back This antagonism threatens the change effort by producing tension and conflict within the organization.
The second option is to weaken or remove the restraining forces. The problem with this change strategy is that it provides no motivation for change. To some extent, weakening the restraining forces is like clearing a pathway for change. An unobstructed road makes it easier to travel to the destination but does not motivate anyone to go there. The preferred option, therefore, is to both increase the driving forces and reduce or remove the restraining forces. Increasing the driving forces creates an urgency for change, while reducing the restraining forces lessens motivation to oppose the change and removes obstacles such as lack of ability or situational constraints.
CREATING AN URGENCY FOR CHANGE
The opening story to this chapter described how Alan Mulally began the change process at Ford Motor Company by warning staff that the company would die if it didn’t change quickly. The fact is, organizational change requires employees to have an urgency for change.25 “I think there are two attributes for every successful company,” says Warren Erhart, CEO of White
Spot, western Canada’s oldest (since 1928) and most successful restaurant chain. “One is a sense of urgency, the other is a dedication to continuous improvement.” Erhart explains the importance of these two attributes: “We know that success is fleeting. We have to keep working at it and keep focused all the time.”26
A few months after he became CEO of Nokia Corp, Stephen Elop sent employees a scorching e-mail, warning them about the urgency for change. “I have learned that we are standing on a burning platform,” wrote Elop. “And, we have more than one explosion—we have multiple points of scorching heat that are fueling a blazing fire around us.” Elop described strong competition from Apple and Google, Nokia’s falling brand preference, and its declining credit rating. “We poured gasoline on our own burning platform,” he suggested, pointing to the company’s poor accountability and leadership.27
Creating an urgency to change typically occurs by informing employees about competitors, changing consumer trends, impending government regulations, and other forms of turbulence in the external environment. These are the main driving forces in Lewin’s model. They push people out of their comfort zones, energizing them to face the risks that change creates. In many organizations, however, leaders buffer employees from the external environment to such an extent that these driving forces are hardly felt by anyone below the top executive level. The result is that employees don’t understand why they need to change and leaders are surprised when their change initiatives do not have much effect.
Customer-Driven Change Some companies fuel the urgency to change by putting employees in direct contact with customers. Dissatisfied customers represent a compelling driving force for change because the organization’s survival typically depends on having customers who are satisfied with the product or service: Customers also provide a human element that further energizes employees to change current behavior patterns.28 Executives at Shell Europe applied customer-driven change a few years ago. Many middle managers at the energy company seemed blissfully unaware that Shell wasn’t achieving either its financial goals or its customer needs; so to create an urgency for change, the European managers were loaded onto buses and taken out to talk with customers and employees who work with customers every day. “We called these ‘bus rides.’ The idea was to encourage people to think back from the customer’s perspective rather than from the head office,” explains Shell Europe’s vice president of retailing. “The bus rides were difficult for a lot of people who, in their work history, had hardly ever had to talk to a customer and find out what was good and not so good about Shell from the customer’s standpoint.”29
Creating an Urgency for Change Without External Forces Exposing employees to external forces can strengthen the urgency for change, but leaders often need to begin the change process before problems come knocking at the company’s door. “You want to create a burning platform for change even when there isn’t a need for one,” says Steve Bennett, former CEO of financial software company Intuit.30 Creating an urgency for change when the organization is riding high requires rare persuasive capability that helps employees visualize future competitive threats and environmental shifts.
For instance, Apple Computer’s iPod dominates the digital music market, but the late Steve Jobs wanted the company to be its own toughest competitor. Just when sales of the iPod Mini were soaring, Jobs challenged a gathering of 100 top executives and engineers to develop a better product to replace it. “Playing it safe is the most dangerous thing we can do,” Jobs warned. Nine months later the company launched the iPod Nano, which replaced the still-popular iPod Mini before competitors could offer a better alternative.31
Experts warn, however, that employees may see the burning-platform strategy as manipulative—a view that produces cynicism about change and undermines trust in the change agent.32 Also, the urgency for change doesn’t need to originate from problems or threats to the company; this motivation can also develop through a change champion’s vision of a more appealing future. By creating a future vision of a better organization, leaders effectively make the current situation less appealing. When the vision connects to employee values and needs, it can be a motivating force for change even when external problems are not strong.
440
Part Four Organizational Processes
( EXHIBIT 15.2 Strategies for Minimizing Resistance to Change ) ( STRATEGY EXAMPLE WHEN APPLIED PROBLEMS Communication Customer complaint letters are shown to employees. When employees don’t feel an urgency for change, don’t know how the change will affect them, or resist change due to a fear of the unknown. Time-consuming and potentially costly. Learning Employees learn how to work in teams as company adopts a team-based structure. When employees need to break old routines and adopt new role patterns. Time consuming, potentially costly, and some employees might be unable to learn the new skills. Employee involvement Company forms a task force to recommend new customer service practices. When the change effort needs more employee commitment, some em ployees need to save face, and/or employee ideas would improve deci sions about the change strategy. Very time-consuming. Might lead to conflict and poor deci sions if employees’ interests are incompatible with organi zational needs. Stress management Employees attend sessions to discuss their worries about the change. When communication, training, and i nvolvement do not sufficiently ease employee worries. Time-consuming and potentially expensive. Some methods may not reduce stress for all employees. Negotiation Employees agree to replace strict job categories with multiskilling in return for increased job security. When employees will clearly lose something of value from the change and would not otherwise support the new conditions. Also necessary when the company must change quickly. May be expensive, particularly if other empl oyees want to ne gotiate their support. Also tends to produce compliance but not commitment to the change. Coercion Company president tells managers to “get on board” the change or leave. When other strategies are ineffective and the company needs to change quickly. Can lead to more subtle forms of resistance, as well as long-term antagonism with the change agent. Sources: Adapted from J.P. Kotter and L.A. Schlesinger, “Choosing Strategi es for Change,” Harvard Business Review 57 (1979), pp. 106-14; P.R. Lawrence, “How to Deal with Resistance to Change,” Harvard Business Review, May-June 1954, pp. 49-57. )REDUCING THE RESTRAINING FORCES
Employee resistance should be viewed as a resource, but its underlying causes—the restraining forces—still need to be addressed. As we explained earlier using the mattress coil metaphor, increasing the driving forces alone will not bring about change, because employees often push back harder to offset the opposing forces. Instead, change agents need to address each of the sources of resistance. Six of the main strategies are outlined in Exhibit 15.2. If feasible, communication, learning, employee involvement, and stress management should be attempted first.33 However, negotiation and coercion are necessary for people who will clearly lose something from the change and in cases where the speed of change is critical.
Communication Communication is the highest priority and first strategy required for any organizational change. According to one recent survey, communication (together with involvement) is considered the top strategy for engaging employees in the change process.34 Communication improves the change process in at least two ways.35 One way, which we described earlier, is by generating an urgency to change. Leaders motivate employees to support the change by candidly telling them about the external threats and opportunities that make change so important. Whether through town hall meetings with senior management or by directly meeting with disgruntled customers, employees become energized to change when they understand and visualize those external forces.
441
Chapter Fifteen Organizational Change
The second way that communication minimizes resistance to change is by illuminating the future and thereby reducing fear of the unknown. The more corporate leaders communicate their vision, particularly details about that future and milestones already achieved toward that future, the more easily employees can understand their own roles in that future. Similarly, as the leader communicates the future state more clearly, employees form a clearer picture about how the change relates to their jobs and responsibilities. “No. 1 is to always communicate, communicate, communicate,” advises Randall Dearth, CEO of chemical manufacturer Lanxess Corp. “If you’re bringing in change, you need to be able to make a very compelling case of what change looks like and why change is necessary.”36
Learning Learning is an important process in most change initiatives because employees require new knowledge and skills to fit the organization’s evolving requirements. For example, learning was an important strategy for change at CSC. The U.S. business and technology consulting and services firm’s executive team recognized that the company’s culture required better alignment with its growth strategy. To achieve this, CSC launched a leadership development program, which would minimize resistance to the change by equipping managers with the skills to coach employees toward emerging attitudes and values.37
Employee Involvement Unless the change must occur quickly or employee interests are highly incompatible with the organization’s needs, employee involvement is almost an essential part of the change process. In the chapter on decision making (Chapter 7), we described several potential benefits of employee involvement, all of which are relevant to organizational change. Employees who participate in decisions about a change tend to feel more personal responsibility for its successful implementation, rather than being disinterested agents of someone else’s decisions.38 This sense of ownership also minimizes the problems of saving face and fear of the unknown. Furthermore, the complexity of today’s work environment demands that more people provide ideas regarding the best direction of the change effort. Employee involvement is such an important component of organizational change that special initiatives have been developed to allow participation in large groups. These change interventions are described later in the chapter.
Stress Management Organizational change is a stressful experience for many people because it threatens self-esteem and creates uncertainty about the future.39 Communication, learning, and employee involvement can reduce some of the stressors. However, research indicates that companies also need to introduce stress management practices to help employees cope with changes.40 In particular, stress management minimizes resistance by removing some of the direct costs and fear of the unknown about the change process. Stress also saps energy, so minimizing stress potentially increases employee motivation to support the change process.
With brand-name clients and more than $500 million in sales, Lopez Foods Inc. has become the 10th largest Hispanic-owned company in America. To further improve its quality and efficiency, the Oklahoma City-based beef patty and sausage manufacturer recently involved employees in the change process. The current production process was mapped out on a large wall of brown paper, and employees were asked for ways to make it better. To management’s surprise, employees were enthusiastic about suggesting productivity improvements. “Things we thought would be a hard sell on the employees, they themselves have come up to us and said, ‘We can do this better,’ or ‘We don’t need five people here, we only need three,'” says CEO Eduardo Sanchez.41
442
Part Four Organizational Processes
Negotiation As long as people resist change, organizational change strategies will require a variety of influence tactics. Negotiation is a form of influence that involves the promise of benefits or resources in exchange for the target person’s compliance with the influencer’s request. This strategy potentially gains support from those who would otherwise lose out from the change. However, this support is mostly compliance with, rather than commitment to, the change effort, so it might not be effective in the long term.
Coercion If all else fails, leaders rely on coercion to change organizations. Coercion can include persistently reminding people of their obligations, frequently monitoring behavior to ensure compliance, confronting people who do not change, and using threats of sanctions to force compliance. Replacing people who will not support the change is an extreme step, but it is fairly common. For instance, one year after Robert Nardelli was hired as CEO of Home Depot, most of the retailer’s top management team had voluntarily or involuntarily left the company. Several years earlier, StandardAero CEO Bob Hamaberg threatened to fire senior managers who opposed his initiative to introduce lean management. “You must have senior management commitment,” Hamaberg said bluntly at the time. “I had some obstacles. I removed the obstacles.” Today, StandardAero is a world leader in the aircraft engine repair and overhaul business.42
Firing people is the least desirable way to change organizations. However, dismissals and other forms of coercion are sometimes necessary when speed is essential and other tactics are ineffective. For example, it may be necessary to remove several members of an executive team who are unwilling or unable to change their existing mental models of the ideal organization. This is also a radical form of organizational “unlearning” (see Chapter 1) because when executives leave, they remove knowledge of the organization’s past routines that have become dysfunctional.43 Even so, coercion is a risky strategy because survivors (employees who do not leave) may have less trust in corporate leaders and engage in more political tactics to protect their own job security.
REFREEZING THE DESIRED CONDITIONS
Unfreezing and changing behavior won’t produce lasting change. People are creatures of habit, so they easily slip back into past patterns. Therefore, leaders need to refreeze the new behaviors by realigning organizational systems and team dynamics with the desired changes.44 The desired patterns of behavior can be “nailed down” by changing the physical structure and situational conditions. Organizational rewards are also powerful systems that refreeze behaviors.45 If the change process is supposed to encourage efficiency, then rewards should be realigned to motivate and reinforce efficient behavior. Information systems play a complementary role in the change process, particularly as conduits for feedback.46 Feedback mechanisms help employees learn how well they are moving toward the desired objectives, and they provide a permanent architecture to support the new behavior patterns in the long term. The adage, “What gets measured, gets done,” applies here. Employees concentrate on the new priorities when they receive a continuous flow of feedback about how well they are achieving those goals.
Bank of New Zealand BNZ applied this refreezing strategy by changing the feedback and reward system at its call centers. Previously, call center employees received feedback and were rewarded for answering and completing calls quickly. However, management concluded that customers wanted efficient calls, not fast talkers. “What do fast calls have to do with great conversations?” asks Susan Basile, BNZ’s managing director of direct sales and service. “Sure, we don’t want to waste the customer’s time. But if we were to ask them what they most wanted from our call center, they might well say they want fast answers, but we’d be wrong to conclude they want fast talkers or hurried conversations.” Now, BNZ provides employee feedback and rewards around “great conversations,” not how quickly the call is completed. Employees are recognized for addressing customer needs rather than for how long it takes them to complete the call.47
Do you need a similar assignment done for you from scratch? Order now!
Use Discount Code "Newclient" for a 15% Discount!
