Chapter 7- Change Management- Human Resources Planning PDF

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Chapter 7: Change Management Opening Vignette- Can HR Lead Change?  Denotes that in order for organizational change to take place, all departments and employees need to be onboard  This means HR professionals must become agents of change for them to be effective- it is a requisite competency and non-optional  However, HR departments are usually seen as a supporting body to the organization- they advise the business line, but do not lead it. Successful change requires an organizational culture that is:  Open to constant learning  Empowering employees to question processes  To experiment with new ways of thinking and doing things To support organizational change and become a leader in change management, HR professionals should possess the following competencies:  Strategic positioner- to be able to identify the activities, outcomes, and human capital necessary for a business to succeed in its market  Credible activist- to be a trustworthy partner to the business in helping to understand how to solve business challenges  Paradox navigator- to be able to understand and work from different points of view, and different mental models o i.e. to be able to bring together top-down views of competencies from a bottom-up view of KSAO's from job analysis  Communicator- to be able to create an environment in which employees feel they can speak up about what is working and what needs to be improved, and believe that they can have an impact on the organization as a whole  Systems thinker- to be able to understand all aspects of the business, including what customers value about the firm's products or services. Why is Organizational Change Important? Note that organizations are dynamic entities- they are constantly evolving to respond to changes in the internal and external environment The planning process anticipates organizational resource requirements in response to organizational change using a variety of HR demand and supply forecasting methods  To plan for and anticipate resource requirements planners must have a strong understanding of organizational change  Recall: chapter 1, indicates that a firm's strategy provides the ideological context in which organizational change takes place What is Change Management- according to Oxford: "the management of change and development with a business or similar organization"  An alteration of an organization's structure, it's environment, it's culture, it's technology or its people The increasing pace of change Innovations including the internet namely, connect people and ideas across the globe in ways never thought possible not too long ago. Game-changing innovations such as:  Crowd-funding  Open source technologies/software  Collaborative knowledge repositories (i.e. Wikipedia)  Mass customization  The sharing economy (Uber, AirBNB)

These changes come alongside unprecedented levels of political, economic and environmental uncertainty This means that organizations are required to respond to change quicker than ever for the sake of their survival. Some strategies to invoke quicker change are:  utilizing a flattened organizational structure which mean changes can be rolled out more quickly than those with many tiers and layers  More fluid job roles  Greater employee autonomy  Team-based learning and decision making o Note: experts say that the ability to manage change is the only sustainable competitive advantage firms can have Societal, Industrial and Organizational Levels of Change Note that organizational change can occur at the societal (largest) industrial (medium) or organizational (smallest) scales. At the societal level…  Economic and environmental issues can be strong drivers in change  i.e. the economic recession of 2008 resulted in huge changes for big-box stores like Wal Mart, Best Buy o The idea is that the large-store format was not as accessible for smaller communities, as well as the fact that useful locations for larger stores were hard to come by and oversaturated o To respond, big-box retailers are developing smaller versions of their stores to adapt to these societal changes At the industrial level…  Change follows the S-curve pattern: o Sales of a new product or service start off slow as demand builds o Followed by rapid growth as demand for the product/service becomes mature o Customer demand tapers as demands from the audience change and evolve o i.e. the approach Apple took when rolling out the iPad, they brought out a smaller version of the same device when the need for average sized iPads peaked and the marketplace flooded with competitors' versions At the organizational level…  Firm-level changes usually come at the hands of stakeholders and their changing demands  Stakeholders may demand higher return on investment, changes in leadership may also result in a different strategic direction  Firms like GE, with multiple business units in different industries, may be constrained by management capabilities and resource capabilities when aiming to decide which project to continue with and which ones to shelve/downsize Overall…  Research states that 70% of organizational change efforts result in failure Models of Organizational Change Note that there are many models of organizational change, including the following: (a) Organizations as Open Systems Open systems are systems that receive inputs from its external environment

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Organizations are systems comprised of multiple subsystems Marketing or HR departments, for example, could be a subsystem This model sees these subsystems as constantly interacting entities The open-system perspective views the organization not from the perspective of an individual subsystem or groups of subsystems, but from the perspective of the organization as a whole Organizations are open systems because they interact with their external environment, and internal subsystems interact with one another

The importance of feedback  Note that open systems are input-through-output systems that take inputs from their environment, transform or convert those inputs, then output the finished product or service back into the environment  Factor that determines the structure of an open system is its goal o Goals are used as indicators as to whether the system is functioning in alliance with its purpose o The purpose of an open systems model is to structure an organize all subsystems so they can work together to collectively deliver on its goal  To do this, feedback needs to be attained to gage how successful the model is doing 2 main kinds of feedback:  Negative feedback: the kind of information that tells you whether or not the system is achieving its goal o i.e. if a company needs to produce 1000 pairs of shoes/month, negative feedback would indicate if this goal is being met  Positive feedback: the kind of information used to determine if its purpose is best suited for its environment o i.e. if a company has determined that producing 1000 pairs of shoes/month is the goal, positive feedback would aim to affirm if 1000 pairs of shoes is the right value, what style of shoes should be created, etc. Note that all models for organizational change incorporate methods for utilizing negative and positive feedback into the design and decision making processes around change  This implies that, if an organization is benefitting from changes, it is learning  Organizations must have different systems in place for learning in order to use the feedback and different methods in learning are required to access both negative and positive feedback Chris Argyris, coined the methods of single-loop and double-loop learning Single-loop learning is the attempt to solve a problem using a single strategy without examining the validity of the problem itself  Seeks to learn how to achieve a set goal within its current environment and within its current environmental variables  Focuses on the use of negative feedback only  Organization proceeds using information that supports the status quo  This can impede change implementations, especially when the changes require new goals to be realized and set  Note: Overcoming Single-Loop learning, Notebook 9.1, pg. 225 Double-loop learning is a method of learning that involves questioning current assumptions, examining a problem from different perspectives, and questioning the validity of the problem itself

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Involves questioning the strategy itself and whether or not it supports the organization's underlying purpose Focuses on using positive feedback Encourages participation in decision making and open expression of conflicting views The "double loop" enables decision makers to bypass the assumptions that may be locking them into a particular mindset or mental schema for more open thought

The success of an organizational change is dependent on the methods of feedback the organization uses, the validity of the information, the alignment of goals to the organization's purpose/ the change implementation, and the extent to which double-loop learning is used The Generic Model of Change

1. (1) Recognizing the need for change and starting the process    

One of the most difficult stages in the process The need for change needs to be broadly felt by all participants Once the change is identified, the motivation for this change needs to be motivated throughout the firm Successful initiatives tend to involve employees and management discovering a problem and developing solutions- an inclusive style tends to promote a shared understanding of the issues

2. (2) Diagnosing what needs to be changed  Note that organizational change is complex, involves multiple stakeholders, can result in unpredictable outcomes and unexpected consequences  One can diagnose what needs to be changed by analyzing: o The leader of the change process o The overall purpose of the change o Degree of planning involved One must consider the following factors when deciding where changes need to take place:  Will leadership be top-down style, coming from management and communicated to subordinates?  Will change take on the bottom-up approach wherein all levels of employees share in determining what needs to be changed AND are included in the formulation of strategy?

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Is the purpose of the change to maximize economic value by focusing on shareholder value o In this case, a top-down approach can make more sense Is the purpose to develop human capabilities to aid in the implementation of the firm's strategy o In this case, a bottom-up approach may be Is the level of planning detailed, wherein firm goals and a timeline are clearly established? Is the level of planning loose, wherein the direction is present but the timelines may shift considerably?

3. (3) Planning and preparing for change Note the type of change intervention that will be most successful depends on the following factors:  Organizational culture  Leadership  Timeline available to implement the change  The purpose of the change The type of change intervention is chosen based on how many employees are intended to take part in the implementation of the change as well as the scope of the implementation  i.e. the implementation of a new HRIS would be rolled out by senior management that chooses the HRIS and rolls it out to the broader organization- this is considered a narrow level of involvement for a broad implementation The proliferation of high-involvement/high performance work practices in recent years suggests that firms are moving more towards greater levels of employee involvement in organizational decision making  I.e. a profit sharing plan wherein employees are rewarded when production costs are lessened and profits are increased

(4) Implementing the Change Note that implementing change requires particular skills from both change leaders and those involved in the change.  Change leaders rely on their ability to make use of complex social networks that connect people in the organization

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Change leaders rely on their political skills, which can be defined as the ability to persuade, manipulate and negotiate to achieve a particular outcome Political skills are also important to achieve wide-spread buy-in for change initiatives o Convincing others to buy into a change is not about making one large argument; its achieved by listening to others, learning about positions and perspectives of others and incorporating those views into an argument

Social networks are networks or ties that an individual has with other individuals  Not formally drawn out or part of a reporting structure  Influential members of these networks possess high levels of firm-specific human capital if they can be instrumental to getting work done or inspiring others to get work done Overall: change leaders need to harness strong political and persuasion skills and draw from social networks to successfully implement a change initiative. (5) Sustaining the Change Implementing change also requires a firm-wide approach to enable the change process, regardless of its scope:  Narrow, more focused change initiatives may make use of a new business model and matching levels of training around the new process  Larger scale initiatives are more broad and may involve many unknowns which makes training less obvious o Such training entails organizational learning and experimentation in order to plot a successful change path Once a change has been implemented it is essential measures are put in place to ensure old habits are not revisited  Changes will not endure if they do not fit into existing mental models of how things work within an organization  Changes will not endure if they misalign with the firms' organizational culture either o i.e. failed merger of Daimler and Chrysler- they did not account for the different organizational cultures when merging the 2  The firm must be open to feedback from employees that indicate when goals that relate to successful change are being met The Planned Model of Change Kurt Lewin's 3 step model of planned organizational change is the model by which other change models are conceived  Developed in the 1940s  Developed the 3 step model as part of the Planned Approach to change, comprised of 4 elements in total: o Field theory o Group dynamics o Action research o The 3 step model o Together these create an interrelated approach to understanding and developing solutions for change problems (1) Field Theory was developed as an approach to understanding and changing individual or group perceptions and behaviors

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Seeks to understand the interdependent forces that act on individuals/groups that motivate them towards certain courses of action and away from others The totality of all psychological forces that impact an individual's set of behaviors such as work life or home life is called life-space o Forces acting on someone's life space is always in flux o They do form a kind of quasi-equilibrium referred to as the status quo o A status quo can be changed by altering the forces that make up the person's life space

Behavioral change is a matter of understanding the strength of the forces that act on an individual's/group's life space and reinforcing the forces that move them towards the desired behavior and away from undesirable ones  The analysis of these forces acting on individuals or groups is called force-field analysis Force-field analysis is a framework for analyzing a problem that seeks to identify all the relevant factors and stakeholders that are acting to either sustain the current state or to move away from the current state  Meant to analyze a condition and plan corrective actions  Begins with a statement of how things are and a statement of the desired condition  The analysis attempts to plot forces that are supporting/driving efforts into the desired future state as well as plot forces that are restraining efforts to achieve the future state  This is an important first step in a change plan  Forces a planner to focus on solutions rather than just existing problems because you start with what the future state should look like

(2) Group Dynamics Note: groups may not have formal codes of conduct but they do have norms that develop over time that govern the behaviors of individuals comprising the group A group is more than the sum of its members- a group establishes normative behaviors that alter the behavior of the group Lewin believed that organizational change could only be achieved by changing behaviors at the group level- not the individual level only

This means that individual behaviors in an organizational setting is, to a point, a function of the group setting (3) Action research Action research is an iterative trial-and-error process of discovery that involves diagnosing the problem, planning a solution, acting on the solution, evaluating the results of those actions, learning from the outcomes and asking new questions  Its theory based but is embedded in the specific context in which it operates  Used to help solve problems in an evidence-based methodological manner rather than relying on theory alone  The cycle is meant to spiral deeper towards greater insight into the problem and its ultimate set of solutions Main benefits of action research:  Each step used to implement change involves input from stakeholders and uses information from prior steps  Allows for improvisation and sudden change

(4) Three-Step Model This is the main component of the Planned Model for change and is the primary change framework for this chapter. 3 main steps are:  Unfreezing  Moving  Refreezing (a) Unfreezing is the initial stage of organizational change, unfreezing involves the development of a shared understanding among stakeholders that a particular change is necessary  This parallels the first step in action planning  Note that organizations, like organisms, try to maintain equilibrium/status quo and are naturally change-adverse

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However, this equilibrium needs to be disrupted for changes to norms and conditions can take root Edgar Schein expanded on Lewin's 3 step model by suggesting that the process of unfreezing requires 3 conditions to take place: o Disconfirmation of the validity of the status quo: stakeholders must be convinced that the current model is no longer successful. This is done by: o Inducing survival anxiety: individuals/groups must develop a sense of survival anxiety/pressure to change to overcome the natural change to resistance they likely feel  However learning new behaviors comes with its own learning anxieties, or fear of failure  In the realm of force-field analysis this is a large driving source  As a result, moving away from the status quo requires both increasing the driving force to change and decreasing the restraining force of learning anxiety. This can be facilitated by: o Creating psychological safety: this is the belief that an individual can take certain risks and discuss workplace issues without fear or threat to their well-being  This means stakeholders must understand that the way of doing things currently is not working, and taking on the risk of a new path or expressing new ways to do things will not be met negatively  Without this in place, change efforts will be hampered

(b) Moving is the second stage of the change process, the moving stage involves the trial-and-error process of taking action to move the firm through the intended change  This parallels the second step in action planning- the trial and error process  This is the phase where action is taken and the results are evaluated  This creates a loop of actions taken, mistakes being made, modifications being made  This stage requires an organizational culture that allows room for mistakes as part of the learning process o Double-loop learning must be the model o If employees are punished unfairly for making mistakes this will result in the development of defensive routines and single-loop learning (C) Refreezing is the third stage in the change initiative process, refreezing involves putting policies, practices and structures in place t...