Change Management

What is Organizational change?

Organizational change refers to change in strategy, employees, culture, resource allocation, and asset
disposal along with significant reengineering of the organizational structure as a standard part of many
change efforts.

As the environment the organization is operating is changes rapidly, the organization is forced to adapt
and bring modification in what they do and how they do.

Change management is defined as the methods and manners in which a company describes
and implements change within both its internal and external processes.

Change management is a systematic approach to dealing with the transition or transformation

of an organizational goals processes or technologies.

Examples

Here are some examples of change management:

 Digital transformation: This can include adopting new technologies or overhauling an

organization's digital presence. For example, McDonald's increased its digital orders by
23% between 2017 and 2020 by hiring a digital customer engagement team.

 Mergers and acquisitions: When companies merge, they need to integrate different
cultures and creative entities. For example, Disney's acquisition of Pixar required Disney
to respect Pixar's culture and creative freedom while also fostering collaboration.

 Rebranding: A company can rebrand to adapt to market changes or reach new markets.

 New products: Launching new products can be a change management example.

 Organizational restructuring: This can include reorganizing teams or addressing

employee performance.

 New HR software: Launching new HR software or business-related tools across multiple

departments is an example of change management in HR.

 Flexible work policy: Building a flexible work policy is another example of change
management in HR.
  Quality management system: A healthcare facility can implement a quality
management system to improve patient care and ensure compliance with industry
standards.

Strategic Change

Strategic change refers to significant adjustments or modifications within an organization

intended to enhance the company’s performance, market position, or operational
effectiveness. These changes often align with the company’s long-term objectives or strategic
vision.

Types of Strategic Change:

Strategic change can be categorized in several ways, often based on the change’s nature, scale,
and speed. Here are some common types of strategic change:

1. Incremental Change: This refers to a series of small, gradual changes that improve an
organization’s strategy, processes, or structures over time. Instead of one large-scale
overhaul, incremental change opts for a step-by-step approach that can be easier to
manage and cause less disruption.

2. Transformational Change: This is a radical, fundamental shift in an organization’s

operations, often involving a complete overhaul of the business model, strategy, or
culture. Significant external changes in the market or industry might trigger it. For
example, digital transformation is a common form of transformational change where a
business fundamentally changes its activities to incorporate digital technologies.

3. Anticipatory Change/ Planned Change: Anticipatory change is proactively initiated in

response to predicted future events, trends, or challenges. For instance, a company might alter
its product line to cater to anticipated shifts in customer preferences.

4. Reactive Change/ Unplanned Change: Reactive change occurs in response to unexpected

events or crises that have already happened. It’s typically more urgent and less planned than
anticipatory change. For instance, many companies rapidly shifted to remote working
arrangements due to the COVID-19 pandemic.

Resistance Change:
Resistance to change is the reluctance of people to adapt to change. Employees can be overt
or covert about their unwillingness to adapt to organizational changes.

Reasons of Resistance to Change

Job Factors
Fear of technological unemployment
Fear of change to working conditions
Fear of demotion or reduced pay

Personal Factors
Feel Less Valued
Work becomes more monotonus

Social Factors
Personal dislike of people implimenting change
Lack of consultation leading to rejection of change

Overcoming Resistance
Lewin’s 3 stage model
In the 1940s, Kurt Lewin, a social scientist, described a management model known as Lewin's change theory,
which is a three-stage model to change organizational behavior.
Stage 1 - Unfreezing: This is the first stage of transition and one of the most critical stages in
the entire process of change management. It involves improving the readiness as well as the
willingness of people to change by fostering a realization for moving from the existing comfort
zone to a transformed situation.

It involves making people aware of the need for change and improving their motivation for
accepting the new ways of working for better results. During this stage, effective
communication plays a vital role in getting the desired support and involvement of the people
in the change process.

Stage 2 - Change: This stage can also be regarded as the stage of Transition or the stage of
actual implementation of change. It involves the acceptance of the new ways of doing things.
This is the stage in which the people are unfrozen, and the actual change is implemented.

During this stage, careful planning, effective communication and encouraging the involvement
of individuals for endorsing the change is necessary. It is believed that this stage of transition is
not that easy due to the uncertainties or people are fearful of the consequences of adopting a
change process.

Stage 3 - Freeze (Refreezing): During this stage, the people move from the stage of transition
(change) to a much more stable state which we can regard as the state of equilibrium.

The stage of Refreezing is the ultimate stage in which people accept or internalize the new ways
of working or change, accept it as a part of their life and establish new relationships.

For strengthening and reinforcing the new behaviour or changes in the way of working, the
employees should be rewarded, recognized and provided positive reinforcements, supporting
policies or structures can help in reinforcing the transformed ways of working.
 Example: The three stages of Change Management can be aptly explained through the aid of an
example of Nissan Motor Company which was on the stage of bankruptcy due to the issues of
high debts and dipping market share.

During that period, Carlos Ghosn took charge as the head of the Japanese automaker who was
faced with the challenge of implementing a radical change and turning around the operations
of Nissan, yet by keeping the resistance to change under control which was inevitable under
such circumstances by forming cross-functional teams to recommend a robust plan of change in
different functional areas.

For facing the business challenges, he developed a change management strategy and involved
the employees in the process of change management through effective communication and
reinforcement of desired behaviours.

For refreezing the behavioural change of the employees, he introduced performance-based

pay, implemented an open system of feedback for guiding and facilitating the employees in
accepting the new behaviour patterns at work.

Balogun & Hope Hailey

Balogun and Hope Hailey to consider the contextual features that need to be taken into
account in deciding how a strategic change programme should be managed.

There are eight contextual factors, identified by Balogun and Hope-Hailey ,

which significantly influence strategic change

1. Capability

This refers to what experience there is of managing change in the organisation.

o Does the organisation have managers who have successively managed change in the past?
o Is the workforce used to change and have they readily accepted changes in their work
practices?

2. Readiness for change

This concerns the organisation’s attitude towards change.

o Is it likely to embrace it or oppose it?

o Are staff aware of the need for change?

If they are, how willing and motivated are they towards the change?
o How much support generally is there for the change? How much understanding is there for the
scope needed?

3. Preservation

o To what extent is it essential to maintain continuity in certain practices or preserve specific

assets?
o Do these practices and/or assets constitute invaluable resources or do they contribute towards
a valued stability or identity within an organisation?

4. Diversity

o Is the staff group concerned diverse or relatively homogeneous in terms of its values, norms
and attitudes?
o Are there many subcultures or national cultures within the group?
o Are there different departments or divisions or is it one particular staff group?
o Are there professionals who identify more with their profession than their organisation?
o With whom or what in the organisation do different staff groups identify – their team, job,
department, division or the whole organisation?

5. Capacity

o How much cash or spare human resource is there to divert towards the change?

6. Power

o Where is power vested within the organisation?

o For this change to be successful, who are the major stakeholders within and outside the
organisation whose support must be canvassed?
o Is the unit needing to change part of a larger group or is it relatively autonomous?

7. Time

This refers to the amount of time available to implement change.

o This occasionally can be super important, for example when the company is losing money at an
alarming rate (and so needs to change quickly).
o How much time does the organisation have to achieve this change? Is it in a short term crisis or
is it concerned with long-term strategic development?
o Are stakeholders, such as the stock market, expecting short term results from the change?

8. Scope of change

o Is just a small realignment or a big transformation (requiring a huge cultural change) needed?
 Then think of what action is needed (an incremental, evolutionary approach or a big bang one)
o Realignment does not alter the fundamental beliefs of the organisation. It is, therefore, easier
than transformation
o Evolution can take a long time.
o Revolution, on the other hand, is immediate and requires simultaneous action from many
change managers. It is, therefore, the most difficult to accomplish successfully.
o So Managers need to be aware of what type of change they are looking for: adaptation,
reconstruction, evolution or revolution

Business Process Improvement

A change to an individual business process might lead to a competitive advantage or remove

existing competitive disadvantage by either reducing costs or differentiating the business.

For example: If a bank can reduce its mortgage approval period from 10 days to 1 day. Then this
could allow the mortgage activity to stand out from rivals. In order to achieve this change the
bank will have to redesign the approval process( For example: by changing job roles, using more
effective IT system etc.)

These improvements can come in many ways: some might be outsourced to more efficient
business partners whilst others might be redesigned from scratch.

Harmon’s process-strategy matrix

According to Paul Harmon a process-strategy matrix is a matrix formed by an estimate of: the
strategic importance of a process on the horizontal axis. the process complexity and dynamics
on the vertical axis.

(Illustration from video)