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The Nature of Planned Change

The Nature of Planned Change

The pace of global, economic, and technological development makes change an inevitable feature of organizational life. However, change that happens to an organization can be distinguished from change that is planned by its members. Here, the term change will refer to planned change. Organization development is directed at bringing about planned change to increase an organization's effectiveness. It is generally initiated and implemented by managers, often with the help of an OD practitioner either from inside or outside of the organization. Organizations can use planned change to solve problems, to learn from experience, to reframe shared perceptions, to adapt to external environmental changes, to improve performance, and to influence future changes. All approaches to OD rely on some theory about planned change. The theories describe the different stages through which planned change may be effected in organizations and explain the process of applying OD methods to help organization members manage change.
Theories of Planned change:


The three major theories of organization change that have received considerable attention in the field are: Lewin's change model, the action research model, and contemporary adaptations of action research.

Lewin’s Change Model:


According to the open-systems view, organizations— like living creatures—tend to be homeostatic, or continuously working to maintain a steady state. This helps us understand why organizations require external impetus to initiate change and, indeed, why that change will be resisted even when it is necessary. Organizational change can occur at three levels— and, since the patterns of resistance to change are different for each, the patterns in each level require different change strategies and techniques. These levels involve:

1.


Changing the individuals who work in the organization—that is, their skills, values, attitudes, and eventually behavior—but making sure that such individual—ehaviora4 change is always regarded as instrumental to organizational change.

2.


Changing various organizational structures and systems—reward systems, reporting elationships, work design, and so on.

3.


Directly changing the organizational climate or interpersonal style—how open people are with each other, how conflict is managed, how decisions are made, and so on. According to Lewin, a pioneer in the field of social psychology of organizations, the first step of any change process it to

unfreeze


the present pattern of behavior as a way of managing resistance to change. Depending on the organizational level of change intended, such unfreezing might involve, on the individual level, selectively promoting or terminating employees; on the structural level, developing highly experiential training programs in such new organization designs as matrix management; or, on the climate level, providing data-based feedback on how employees feel about certain management practices. Whatever the level involved, each of these interventions is intended to make organizational members address that level’s need for change, heighten their awareness of their own behavioral patterns, and make them more open to the change process. The second step,
movement


, involves making the actual changes that will move the organization to another level of response. On the individual level, we would expect to see people behaving differently, perhaps demonstrating new skills or new supervisory practices. On the individual level, we would expect to see changes in actual organizational structures, reporting relationships, and reward systems that affect the way people do their work. Finally, on the climate or interpersonal- style level, we would expect to see behavior patterns that indicate greater interpersonal trust and openness and fewer dysfunctional interactions. The final stage of the change process,

refreezing


, involves stabilizing or institutionalizing these changes by establishing systems that make these behavioral patterns “relatively secure against change,” as Lewin put it. The refreezing stage may involve, for example, redesigning the organization’s recruitment process to increase the likelihood of hiring applicants who share the organizations new management style and value system. During the refreezing stage, the organization may also ensure that the new behaviors have become the operating norms at work, that the reward system actually reinforces those behaviors, or that a new, more participative management style predominates. According to Lewin, the first step to achieving lasting organizational change is to deal with resistance to change by unblocking the present system. This unblocking usually requires some kind of confrontation and a retraining process based on planned behavioral changes in the desired direction. Finally, deliberate steps



need to be taken to cement these changes in place—this “institutionalization of change” is designed to make the changes semi-permanent until the next cycle of change occurs.

Figure: 07


Whatever the level involved, each of the three interventions is needed to make organizational members address the level’s need for change, heighten their awareness of their own behavioral patterns, and make them more open to the change process.

Stage 1: Unfreezing


Three ways of unfreezing an organization are: i. Disconfirmation ii. Induction of guilt or anxiety iii. Creation of psychological safety

i. Disconfirmation


or lack of confirmation. Organizational members are not likely to embrace change unless they experience some need for it. Embracing change typically means that people are dissatisfied with the way things are – quality is below standard, costs are too high, morale is too low, or direction is unclear, for example. Unfreezing involves reducing those forces maintaining the organization’s behavior at its present level. Unfreezing is sometimes accomplished through a process of “psychological disconfirmation.” By
introducing information that shows discrepancies between behaviors desired by organization members and those behaviors currently exhibited, members can be motivated to engage in change activities.

ii. Induction of guilt or anxiety


. This is a matter of establishing a gap between what is current but not working well and some future goal that would make things work better. When people recognize a gap between what is and what would be better and more desirable, they will be motivated via guilt or anxiety to reduce the gap. But disconfirmation and induction are not enough to accomplish the unfreezing stage. One more process is necessary.

iii. Creation of psychological safety


. To face disconfirmation, experience guilt or anxiety, and be able to act or move, people must believe that moving will not bring them humiliation or loss of self-esteem. People must still feel worthy, psychologically safe. The consultant must be concerned with people not losing face and must take care that when people admit that something is wrong they will not be punished or humiliated.

Stage 2: Moving (Changing)


The second step,

movement


, involves making the actual changes that will move the organization to another level of response. On the individual level, we would expect to see people behaving differently, perhaps demonstrating new skills or new supervisory practices. On the structural level, we would expect to see changes in actual organizational structures, reporting relationships, and reward systems that affect the way people do their work. On the climate or interpersonal level, we would expect to see behavior patterns that indicate greater interpersonal trust and openness and fewer dysfunctional interactions.

There are two main processes for accomplishing this stage:


i. Identification with a new role model ii. Scanning the environment for new information

i. Identification with a new role model, mentor, boss, or consultant


to “begin to see things from that other person’s point of view. If we see another point of view operating in a person to whom we pay attention and respect, we can begin to imagine that point of view as something to consider for ourselves”.

ii. Scanning the environment for new, relevant information


. In working with the chairman of a company and the president or CEO, the consultant explored many reasons for their conflict with one another. To help with reducing some of this conflict, the consultant worked on clarifying roles and responsibilities. He quotes other chairman-president/CEO models from other client organizations, some that worked very well and some that did not. This process was an activity of bringing to the two of them new, relevant information that might help them move forward with the changes needed in the relationship.

Stage 3: Refreezing


This final stage is one of helping the client integrate the changes. This stage involves stabilizing or institutionalizing these changes by establishing systems (such as norms, policies, and structures) that make these behavioral patterns “relatively secure against change”. The refreezing stage may involve Redesigning the organization’s recruitment process to increase the likelihood of hiring applicants who share the organization’s new management style and value system. During the refreezing stage, the organization may also ensure that the new behaviors have become the operating norms at work, that the reward system actually reinforces those behaviors, or that a new, more participative management style predominates.

This stage can be seen in two parts – self and relations with others:


i. Personal refreezing ii. Relational refreezing

i. Personal refreezing


is the process of taking the new, changed way of doing things and making it fit comfortably into one’s total self-concept. This process involves a lot of practice – trying out new roles and behaviors, getting feedback, and making adjustments until the new way of doing things feels reasonably comfortable.

ii. Relational refreezing


is the process of assuring that the client’s new behavior will fit with significant others. In a system, when one begins to do things differently, will this difference quickly affect others with



whom the person interacts? If you and I interact frequently and I change to maintain the relationship you will have to change as well, at least to some extent to maintain the relationship. This process involves openly engaging with others about the new way of doing things, to help them see why the change is better than the old way.

Case Example: British Airways


In 1982 Margaret Thatcher’s government in Great Britain decided to convert British Airways (BA) from government ownership to private ownership. BA had regularly required large subsidies from the government (almost $900 million in 1982), subsidies that the government felt it could not provide. Even more important, the Conservative government was ideologically opposed to the government’s ownership of businesses—a matter they regarded as the appropriate province of private enterprise. The growing deregulation of international air traffic was another important environmental change. Air fares were no longer fixed, and the resulting price wars placed BA at even greater risk of financial losses. In order to be able to “privatize”—that is, sell BA shares on the London and New York Stock Exchanges—it was necessary to make BA profitable. The pressures to change thus exerted on BA by the external environment were broad and intense. And the internal organizational changes, driven by these external pressures, have been massive and widespread. They have transformed the BA culture from what BA managers described as “bureaucratic and militaristic” to one that is now described as “service-oriented and market- driven.” The success of these efforts over a five- year period (1982—1987) is clearly depicted in the data. This figure 8 reflects BA’s new mission in its new advertising slogan—”The World’s Favorite Airline.” Five years after the change effort began, BA had successfully moved from government ownership to private ownership, and both passenger and cargo revenues had dramatically increased, leading to a substantial increase in share price over the offering price, despite the market crash of October 1987. Indeed, in late 1987 BA acquired British Caledonian Airways, its chief domestic competitor. The steps through which this transformation was accomplished clearly fit Lewin’s model of the change process.

Table: 01 The British Airways Success Story: Creating the “World’s Favorite Airline” 1982 1987 Ownership Government Private Profit/loss $900 million $435 million Culture Bureaucratic and militaristic Service-oriented and market-driven Passenger load factor Decreasing Increasing-up 16% in Ist quarter 1988 Cargo load Stable Increasing-up 41% in Ist quarter 1988 Share price N/A Increased 67% (2/11/87-8/11/87) Acquisitions N/A British Caledonian Unfreezing:


In BA’s change effort, the first step in unfreezing involved a massive reduction in the worldwide BA workforce (from 59,000 to 37,000). It is interesting to note that, within a year after this staff reduction, virtually all BA performance indices had improved—more on-time departures and arrivals, fewer out-of-service aircraft, less time “on hold” for telephone reservations, fewer lost bags, and so on. The consensus view at all levels within BA was that the downsizing had reduced hierarchical levels, thus giving more autonomy to operating people and allowing work to get done more easily. The downsizing was accomplished with compassion; no one was actually laid off. Early retirement, with substantial financial settlements, was the preferred solution throughout the system. Although there is no question that the process was painful, considerable attention was paid to minimizing the pain in every possible way. A second major change occurred in BA’s top management. In 1981, Lord John King of Wartinbee, a senior British industrialist, was appointed chairman of the board, and Cohn Marshall, now Sir Colin, was appointed CEO. The appointment of Marshall represented a significant departure from BA culture. An outsider to BA, Marshall had a marketing background that was quite different from that of his predecessors, many of whom were retired senior Royal Air Force officers. It was Marshall who decided, shortly after his arrival, that BA’s strategy should be to become “the World’s Favorite Airline.” Without question, critical ingredients in the success of the overall change effort were Marshall’s vision, the clarity of his understanding that BA’s culture needed to be changed in order to carry out the vision, and his strong leadership of that change effort.



To support the unfreezing process, the first of many training programs was introduced. “Putting People First”—the program in which all BA personnel with direct customer contact participated - was another important part of the unfreezing process. Aimed at helping line workers and managers understand the service nature of the airline industry, it was intended to challenge the prevailing wisdom about how things were to be done at BA.

Movement:


Early on, Marshall hired Nicholas Georgiades, a psychologist and former professor and consultant, as director (vice president) of human resources. It was Georgiades who developed the specific tactics and programs required to bring Marshall’s vision into reality. Thus Georgiades, along with Marshall, must be regarded as a leader of BAS successful change effort. One of the interventions that Georgiades initiated—a significant activity during the movement phase—was to establish training programs for senior and middle managers. Among these were “Managing People First” and “Leading the Service Business”— experiential programs that involved heavy doses of individual feedback to each participant about his or her behavior regarding management practices on the job. These training programs all had more or less the same general purpose: to identify the organization’s dysfunctional management style and begin the process of developing a new management style that would fit BA’s new, competitive environment. If the organization was to be market- driven, service-based, and profit-making, it would require an open, participative management style— one that would produce employee commitment. On the structures and systems level during the unfreezing stage, extensive made of diagonal task forces composed of individuals from different functions and at different levels of responsibility to deal with various aspects of the change process—the need for MIS (management information systems) support, new staffing patterns, new uniforms, and so on. A bottom-up, less centralized budgeting process—one sharply different from its predecessor—was introduced. Redefining BA’s business as service, rather than as transportation, represented a critical shift on the level of climate/interpersonal style. A service business needs an open climate and good interpersonal skills, coupled with outstanding teamwork. Off-site, team-building meetings—the process chosen to deal with these issues during the movement stage—has now been institutionalized. None of these changes would have occurred without the commitment and involvement of top management. Marshall himself played a central role in both initiating and supporting the change process, even when problems arose. As one index of this commitment, Marshall shared information at questionand- answer sessions at most of the training programs—both “to show the flag” and to provide his own unique perspective on what needed to be done. An important element of the movement phase was acceptance of the concept of “emotional labor” that Georgiades championed—that is, the high energy levels required providing the quality of service needed in a somewhat uncertain environment, such as the airline business. Recognition that such service is emotionally draining and often can lead to burnout and permanent psychological damage is critical to developing systems of emotional support for the service workers involved. Another important support mechanism was the retraining of traditional personnel staff to become internal change agents charged with helping and supporting line and staff managers. So, too, was the development of peer support groups for managers completing the “Managing People First” training program? To support this movement, a number of internal BA structures and systems were changed. By introducing a new bonus system, for example, Georgiades demonstrated management’s commitment to sharing the financial gains of BA’s success. The opening of Terminal 4 at Heathrow Airport provided a more functional work environment for staff. The purchase of Chartridge House as a permanent BA training center permitted an increase in and integration of staff training, and the new, “user-friendly” MIS enabled managers to get the information they needed to do their jobs in a timely fashion.

Table: 02 Applying Lewin’s Model to the British Airways (BA) Change Effort Levels Unfreezing Movement Refreezing


Individual Downsizing of workforce ($9,000 to 37,000); middle management especially hard hit. New top management team. “putting people first” Acceptance of concept of “emotional labor”. Personnel staff as internal consultants. “managing people first” peer support groups. Continued commitment of top management. Promotion of staff with new BA values. “Top Flight Academies”. “Open Learning” programs Structures and systems Use of diagonal task forces to plan change. Reduction in levels of hierarchy. Modification of budgeting process Profit sharing (3weeks pay in 1987). Opening of Terminal 4. Purchase of Chartridge as training center. New, “User-friendly” MIS New performance appraisal system based on both behavior and performance. Performance-based compensation system. Continued use of task forces Climate/interpersonal style Redefinition of the business: service, not transportation. Top-management commitment and involvement. Greater emphasis on open communications. Data feedback on work-unit climate. Off-site, team-building meeting. New uniforms. New coat of arms. Development and use of cabin-crew teams. Continued use of databased feedback on climate and management practices.

Refreezing:


During the refreezing phase, the continued involvement and commitment of BA’s top management ensured that the changes became “fixed” in the system. People who clearly exemplified the new BA values were much more likely to be promoted, especially at higher management levels. Georgiades introduced additional pro-grams for educating the workforce, especially managers. “Open Learning” programs, including orientation programs for new staff, supervisory training for new supervisors, and so on, were augmented by “Top Flight Academies” that included training at the executive, senior management, and management levels. One of the academies now leads to an MBA degree. A new performance appraisal system, based on both behavior and results, was created to emphasize customer service and subordinate development. A performance-based compensation system is being installed, and task forces continue to be used to solve emerging problems, such as those resulting from the acquisition of British Caledonian Airlines. Attention was paid to BA’s symbols as well— new, upscale uniforms; refurbished aircraft; and a new corporate coat of arms with the motto “We fly to serve.” A unique development has been the creation of teams for consistent cabin-crew staffing, rather than the ad hoc process typically used. Finally, there is continued use of data feedback on management practices throughout the system.

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