UNIT- 6: Organization Culture and Change Management (Part -2)

 Part 2- Change Management

Meaning and Nature of Change

The term change in the organization context refers to any alteration that occurs in the work environment. Planned changes mean those changes which are effected in a planned manner after assessing the need for change and working out the details as to when and how they will be carried out. A planned change is also called proactive change. In contrast, reactive change is the one which takes place in random fashion as a crisis situation develops. For proactive or planned change to be initiated, manager shall be sensitive to the environmental changes affecting the organization so that organizational crisis situations can be averted.

Planned change or pro active change is purposeful or goal directed. There are two widely recognized goals of the planned change. One, it sets to improve the organizational ability to cope with, or adapt to change environment. Second, it seeks to change employee knowledge, attitude and behavior. Change in any part of the organization tends to effect the whole organization. Change is a human as well as a technical problem. Whenever there is a change, social equilibrium in the organization is affected. When change occurs in the organization, it requires employees to make new adjustments as the organization seeks new equilibrium.

 

Pressures for Change

The need for change exists when the manager finds that the goals are not being achieved. Thus, tension points in the organization are identified when the gap between the desired and the actual results is noticed. Such gaps could occur due to certain changes. In other words, these changes are precursors for organizational change, which are explained in the following pages.

Labor market Environment: one important aspect of labour market environment is the changing nature of the work force in terms of aspirations, outlook and various demographic variants. The work force composition is fast changing with increasing proportion of the woman, minorities, physically challenged. For instance, in India the work force diversity, of late is something unseen before. The present generation of work force wants quantification and seeks external reinforcement. Human resource management policies will have to change to attract, maintain a diverse work force. Increasing participation of woman means dual-career couples. So organizations have to change their transfer and promotional policies as well as provide child and elder care facilities. On the whole, there has been an increase in the formal education levels of work force. Modern businesses, therefore, have to redraw their human resources development plans and methods. Training programs need to be fine tuned aiming at upgradation of skills.

Technological developments: Changes in technology bring in their wake corresponding changes in the nature of the work. Computers, telecommunication systems, robotics, and flexible manufacturing systems, flexi time mode are some of the 21st century changes that have brought unimaginable changes at work place with respect to the time, comfort required for the execution of tasks. With changing technologies employees skills become obsolete. Hence, heavy investments become imperative. Modern control techniques substitute direct supervision which leads to wider spans and there by flat organizations. Information technology makes organizations more responsive to consumer demands. Narrow specialization in jobs gives way to work teams whose members perform multiple tasks and actively participates in group decisions.

Economic conditions: this is an age of discontinuity. To mention a few, oil shocks, accelerated inflation and interest rates, the stock market crashes, currency devaluation, etc., hit some industries and firms much harder than others. Globalization of markets is yet another significant change. The problem with these shocks is that it is impossible to predict what the future shocks will be and from where they come from.

Social Trends: High enrolment ratios are noticed in higher education. Higher education as a sector provides a mass market product. There is a changed composition of student community. Considerable proportion of woman students, part time students, outnumbering regular students has become the order of the day. Universities and colleges which fail to respond to these changes may find the going tough.

Work place diversity: Emergence of global markets, mobility of factors of production across the globe, integration of economic systems imposes certain demands on employees who have to interact with people in other countries and work with persons brought up in different cultures. Business organizations, therefore, have to prepare the work force which could perform and feel at home regardless of the place of work and the composition of work teams.

Competition: Competition is intensifying by the day in every product category. Businesses also in line with the changed realities and compulsions need to address themselves to the global context. Competitors may come from anywhere in the world, at times even from quite unexpected quarters. Heightened competition also means organizations need to defend themselves against traditional competitors and small entrepreneurial firms with innovative changes. Therefore, in order to meet competition, successful organizations in future rely on short production runs, short product cycles and a stream of innovative products. These will demand flexible work processes and schedules that can adapt to rapidly and even radically changing conditions.

Managing Change/Management of Change

Organization at any given time is a dynamic balance of forces supporting and restraining any change. The organization system is in a state of relative equilibrium. The current practice continues until the change is introduced. Change is introduced with in a group by increasing the supporting forces for it and/or reducing the restraining forces.

Strategies to build support to change: Chin and Benne describe three strategies managers commonly use in introducing organizational change:

Empirical – Rational Strategy: Managers acting as change agents must subscribe to the belief that people are rational beings and if they understand that the proposed changes will benefit them, they tend to accept change.

Normative – Reeducative Strategy: In this strategy, the belief is that people are guided by the socio-cultural norms they subscribe to. Hence, the change agent and those who will be influenced by the change should participatively and collaboratively plan and implement the necessary change.

Power – Coercive strategies: are used by the change agents assuming that people with less power will accept change brought by people with more power in the system.

 

Sources of Resistance to Change

Any change is complicated by the fact that it does not produce a direct adjustment. Instead, it operates through employees attitudes to produce a response that is conditioned by feelings towards change. The following chart known as Roethlisberger’s x-chart explains how attitudes affect the response to change.

From the above chart, it is obvious that how people feel about change ultimately determines the response to change. People as individuals interpret change with attitudes in the back ground. The response is expressed through the group behavior. All changes have some costs, economic, psychological and social costs. Because of these costs associated with change, initiatives for change require analysis to determine their usefulness. Hence, cost benefit analysis of change is required. The goal of any organization is to maximize the benefits. Organizational members are affected in different ways by a change. Some may benefit while others suffer losses. This is the reason why employees tend to resist work change because of the associated costs. The following are reasons for, and consequences of, resistance to change.

 

Three Types of Resistance to Change

They are Logical, psychological and sociological

Logical: arises from the time and effort needed to adjust to change. It is also due to new job duties to be learnt. These are short run costs to be paid by employee, though in the long term they are benefited by change.

Psychological: may arise due to attitudes and feelings of individuals about change. They fear the uncertainty, mistrust the management and feel insecurity. Therefore prefer status quo.

Sociological: political conditions, opposing union values, narrow outlook, vested interests, and desire to retain existing friendship are some of the reasons for resisting change.

Alternatively, resistance to change can also be studied under individual resistance and organizational resistance.

 

Individual resistance: The source of resistance resides in basic human characteristics, which are presented hereunder in a summary form:

 Habit: To cope with life complexity, human beings rely on habits or programmed responses. Confronted with a change, the tendency to respond in habitual ways is a source of resistance.

 Security: persons with high need for security resist change. In technologically intensive society, people perceive threats to the jobs and economic security. Hence, they resist change.

 Economic factor: one’s concern that change will lower one’s income is another source of resistance. When pay is tied to performance, people fear that they may lose their income by not being successful in performing their new job, more so when they need to apply new set of skills.

 Need for security blanket (Fear of the Unknown): apart from economic and job security, people prefer predictability and structured patterns in their lives. The need for this security blanket also makes them apprehensive about the change that characterizes ambiguity and uncertainty. Therefore, the preference for known for the unknown is obvious.

 Selective information processing: people see the world through their perceptions.They see and try to understand and accept information that is palatable to them. They ignore information that challenges the wolld they wish to operate in.

 Apprehension about understanding of status and authority: change in technology of work methods “undermining authority and status” is a source of resistance to change.

 Resistance is stemming from retooling and retraining: knowing that one has to learn new things is a source of resistance to change as any learning involves unlearning.

 Resistance due to non-involvement in the change process: when changes are incorporated with little input from those who are affected by them, resistance to change is expected.

 Resistance due to sunk costs: older employees seem to resist change more than younger ones. They have more psychological investment in older traditions. This is otherwise known as ‘sunk cost’ of energy and time.

 

Organizational Resistance: organizations by their very nature are conservative. They also become blindfolded and resist change. Six sources of organizational resistance to change are explained in what follows:

Structural inertia: organizations have built in mechanisms to produce stability such as selection process which chooses certain persons, training and socialization process reinforcing specific role requirements and skills and formalization of jobs for employees to follow. When change confronts organizations, their structural inertia acts as a counter force to organizational stability.

Limited focus of change: limited changes in sub-systems of the organization are likely to be opposed.

Group inertia: here group norms act as constraints for change. Threat to Expertise: organizational changes may be threat to the expertise of specialized groups. For example, decentralized end user computer was a threat to the specialized skills held by the centralized information systems departments.

Threat to established power relationship: any redistribution of authority for decision-making can be threat to established power relationships. For example, participation management is a kind of change seen as a threat to the authority of middle level managers.

Threat to established resource allocation: change is seen as a threat by those groups controlling sizable resources of the organization.

Consequences of Resistance to change: consequences are both positive and negative

Positive consequences

-          Resistance may force management to reexamine change proposals so that they are appropriate.

-          Resistance also pinpoints specific problem areas so that management can take corrective action before problems become serious.

-          It also encourages management to communicate change which in the long run ensures acceptance of change.

Negative consequences

Organizations failing to overcome resistance to change have to pay  a price. Change of greater magnitude introduced without gaining employee acceptance may lead to overt consequence such as employee unrest leading to strike, gherao, sabotage, etc. Implicit reactions to change may lead to alienation from the job i.e., tardiness, absenteeism and turnover.

 

Managing cross Cultures

Cross cultural management involves managing work teams in ways that considers the differences in cultures, practices and preferences of consumers in a global or international business context. Many businesses have to learn to modify or adapt their approaches in order to compete on a level in fields no longer bound by physical geography with online interactions more common in business and other situations.

Functions include

·         Recruiting candidates that can be effective in cross-cultural environments

·         Handling differing regulatory environments for business

·         Training employees to handle intercultural communication issues

·         Facilitating cross-cultural teams

·         Aligning HR policies and procedures across corporate entities in different nations

UNIT- 6: Organization Culture and Change Management (Part -1)

 Part 1- Organization Culture

 

Concept of Organizational Culture

Organizational culture is the set of assumptions, beliefs, values and norms that are shared by the members of an organization. It may be consciously created by its key members, or it may have simply evolved over time. It represents a key element of the work environment in which employees perform their jobs. A culture may exist across an entire organization, or it may refer to the environment within a single division, branch, plant, or department. The idea of organizational culture is somewhat intangible, for we cannot see it or touch it, but it is present and pervasive. Like the air in a room, it surrounds and affects everything that happens in an organization. Because it is a dynamic systems concept, culture is also affected by almost everything that occurs within an organization. They give an organizational identity to employees – a defining vision of what the organization represents. They are also an important source of stability and continuity to the organization which provides a sense of security to its members.

Characteristics of organizational Cultures

Each organization has its own history, patterns of communication, systems and procedures, mission statements and visions, stories and myths which, in their totality, constitute its distinctive culture. Cultures are also relatively stable in nature. Most organizational cultures have historically been rather implicit rather than explicit. A defining characteristic of most culture is that they are seen as symbolic representations of underlying beliefs and values.

·         Distinctive

·         Stable

·         Implicit

·         Symbolic

·         Integrated

·         Accepted

·         A reflection of top management

Measuring Organizational Culture

Systematic measurement and comparison of cultures is difficult. Most of the early attempts by researchers relied on examination of stories, symbols, rituals, and ceremonies to obtain clues. Others have used interviews and open ended questionnaires in an attempt to assess employee values and beliefs. In some cases, examination of corporate philosophy statements has provided insights into the espoused cultures (the beliefs and values that the organizations state publicly). Another approach is to survey employees directly and seek their perceptions of the organization’s culture. Another interesting method is to become a member of the organization and engage in participant observation.

Communicating Culture: If organizations are to consciously create and manage their cultures, they must be able to communicate them to employees, especially the newly hired ones. Individuals are generally more willing to adapt when they want to please others, gain approval, and learn about their new work environment. These cultural communication acts may be lumped under the umbrella of organizational socialization, which is the continuous process of transmitting key elements of an organization’s culture to its employees. Individualization occurs when employees successfully exert influence on the social system around them at work by challenging the culture or deviating from it.

Techniques of Managing Conflict

Several techniques are widely used to manage organizational conflict. We will now review the two most popular ones—bargaining and third-party intervention.

Bargaining: When conflicts arise between individuals, groups, or even entire organizations, the most common way to resolve them is to negotiate a solution that is acceptable to all the parties involved. This process is known as bargaining. Formally, we define bargaining as the process in which two or more parties in dispute with each other exchange offers, counteroffers, and concessions in an attempt to find a mutually acceptable agreement.

Obviously, bargaining does not work when the parties rigidly adhere to their positions without budging, or "stick to their guns." For bargaining to be effective, the parties involved must be willing to adjust their stances on the issues at hand. And, for the people involved to be willing to make such adjustments, they must believe that they have found an acceptable outcome—one that allows them to claim victory in the negotiation process. For bargaining to be most effective in reducing conflict, this must be the case for all sides. That is, outcomes must be found for all sides that allow them to believe that they have "won" the negotiation process—results known as win- win solutions. Several effective ways of finding such win-win solutions may be identified.

1. Avoid making unreasonable offers. Imagine that a friend of yours is selling a used car with an asking price of $10,000—the car's established "book value." If you were to attempt to "low ball" the seller by offering only $1,000, your bad-faith offer might end the negotiations right there. A serious buyer would offer a more reasonable price, say $9,000—one that would allow both the buyer and the seller to come out ahead in the deal. In short, extreme offers tend to anger one's opponents, sometimes ending the negotiation process on a sour note, allowing none of the parties to get what they want.
2.   Seek common ground. All too often, people in conflict with others assume that their interests and those of the other party are completely incompatible. When this occurs, they tend to overlook the fact that they actually might have several areas of interest in common.  When parties focus on possible areas of agreement between them, it helps bring them together on the areas of disagreement. So, for example, in negotiating the deal for purchasing the used car, you might establish the fact that you agree to the selling price of $9,000. This verifies that the interests of the buyer and the seller are not completely incompatible, thereby encouraging them to find a solution to the area in which they disagree, such as a payment schedule. In contrast, if either party believed that they were completely far apart on all aspects of the deal, they would be less likely to negotiate a win-win solution.
3. Broaden the scope of issues considered. Sometimes, parties bargaining with each other have several issues on the table. When this occurs, it often is useful to consider the various issues together as a total package. Labor unions often do this in negotiating contracts with company management whenever they give-in on one issue in exchange for consideration on another issue. So, for example, in return for not freezing wages, a company may agree to concede to the union's other interests, such as gaining representation on key corporate committees. In other words, compared to bargaining over single issues (e.g., the price of the used car), when the parties get to bargaining across a wide array of issues, it often is easier to find solutions that are acceptable to all sides.
4. Uncover "the real" issues. Frequently, people focus on the conflicts between them in only a single area although they may have multiple conflicts between them—some of which may be hidden. Suppose, for example, that your friend is being extremely stubborn when it comes to negotiating the price of the used car. He's sticking firmly to his asking price, refusing to budge despite your reasonable offer, possibly adding to the conflict between you. However, it may be the case that there are other issues involved. For example, he may be trying to "get even" with you for harming him several years ago. In other words, what may appear to be a simple conflict between two people actually may have multiple sources. Finding long-lasting solutions requires identifying all the important issues—even the hidden ones—and bringing them to the table.

      Note: Problem solving is a means of confronting the conflict and removing its causes. The emphasis is on facts and solutions, not personalities and assignment of blame. Optimizing or problem solving entails addressing the source of conflict and finding alternative strategies that benefit all parties. It promotes cooperative, positive attitudes that transfer to other organizational behaviors. Hence, optimizing may be worth the expenditure of more resources than  other strategies because it improves the future relationship of the parties. Smoothing is another conflict resolution technique in which differences are de-emphasized and common interests of the parties are emphasized. Smoothing (downplaying differences and emphasizing common interests) and compromise (requiring each party to make concessions) are diffusion approaches to conflict management. They have the disadvantage of not solving the underlying problems that created the conflict.

    Third-Party Intervention: As you probably know from experience, attempts at negotiating a solution between parties with conflicting interests sometimes deadlock. A widely used and effective means of breaking such deadlocks is to use third parties—individuals who are not involved in the dispute who are called upon to intervene in the interest of finding a resolution.

     One commonly used type of third-party intervention is known as mediation. In mediation, the third party attempts to create voluntary agreements between the disputants. Mediators have no formal power and cannot impose any agreement on the two sides. Instead, they seek to clarify the issues involved and enhance the communication between the parties. In short, the role of mediators is to serve as a facilitator—that is, to help the sides find mutually acceptable agreements.

     Another widely used technique is known as arbitration. In contrast to mediators, arbitrators do have the power to impose the terms of an agreement. However, depending on the specific type of arbitration employed, the parties may or may not accept the arbitrator's decisions. Specifically, in binding arbitration, the two sides agree in advance to accept the terms of the agreement imposed by the arbitrator. Contrastingly, in voluntary arbitration the two sides retain the option of rejecting the arbitrator's decision.

 

In addition to this important distinction, arbitration also varies in terms of the nature of the decisions that the arbitrators can consider. For example, in conventional arbitration, the arbitrator can offer any terms he or she desires. However, in final-offer arbitration, arbitrators are limited to selecting between the final offers made by one of the disputing parties.

     Although both mediation and arbitration are popular methods of resolving conflict (particularly in disputes between labor and management groups), they tend to be nowhere near as effective as settlements that are directly negotiated between the conflicting parties themselves. In other words, mediated and arbitrated settlements generally are less likely to hold than negotiated settlements. This occurs for several reasons. First, the disputing parties might not trust the third party, believing that he or she is biased, leading them to reject the decision. Second, because disputing parties generally invest more effort into finding solutions they have to negotiate them- selves than decisions that are made for them by third parties, they become more committed to accepting those decisions. Both of these explanations lead us to the same conclusion: Conflict can be managed more effectively by having the disputing parties negotiate with each other directly than by using third-party intervention.