17 Organizational Change McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc All rights reserved Organizational Change at Home Depot Home Depot CEO Robert Nardelli (left in photo) has dramatically changed the big box retailer’s culture by introducing systems that reinforce the new values McShane/Von Glinow OB4e Slide 17-2 © 2008 The McGraw-Hill Companies, Inc All rights reserved Force Field Analysis Model Desired Conditions Restraining Forces Restraining Forces Current Conditions Driving Forces Restraining Forces Driving Forces Driving Forces Before Change McShane/Von Glinow OB4e During Change Slide 17-3 After Change © 2008 The McGraw-Hill Companies, Inc All rights reserved Resistance to Change Direct Costs Saving Face Forces for Change Fear of the Unknown Breaking Routines Incongruent Systems Incongruent Team Dynamics McShane/Von Glinow OB4e Slide 17-4 © 2008 The McGraw-Hill Companies, Inc All rights reserved Resisting Change at the FBI The FBI has been slow to shift from law enforcement to domestic intelligence due to: – Incongruent systems career paths, reward system, decentralized structure – Breaking routines unfamiliar with intelligence gathering roles – Saving face past turf wars with CIA created an anti-investigation mindset McShane/Von Glinow OB4e Slide 17-5 AP/ Wide World Photos © 2008 The McGraw-Hill Companies, Inc All rights reserved Creating an Urgency for Change • Inform employees about driving forces • Most difficult when organization is doing well • Must be real, not contrived • Customer-driven change – Adverse consequences for firm – Human element energizes employees McShane/Von Glinow OB4e Slide 17-6 © 2008 The McGraw-Hill Companies, Inc All rights reserved Minimizing Resistance at Nissan © Eriko Sugita/Reuters/Corbis Carlos Ghosn launched a turnaround at Nissan Motor Company that saved the Japanese automaker and relied on change management practices rarely seen in Japan Employee involvement was a key strategy to minimize resistance to the turbulent changes that occurred McShane/Von Glinow OB4e Slide 17-7 © 2008 The McGraw-Hill Companies, Inc All rights reserved Minimizing Resistance to Change Communication  Highest priority and first strategy for change  Improves urgency to change  Reduces uncertainty (fear of unknown)  Problems time consuming and costly McShane/Von Glinow OB4e Slide 17-8 © 2008 The McGraw-Hill Companies, Inc All rights reserved Minimizing Resistance to Change Communication Learning McShane/Von Glinow OB4e  Provides new knowledge and skills  Includes coaching and action learning  Helps break old routines and adopt new roles  Problems potentially time consuming and costly Slide 17-9 © 2008 The McGraw-Hill Companies, Inc All rights reserved Minimizing Resistance to Change Communication Learning Employee Involvement  Increases ownership of change  Helps saving face and reducing fear of unknown  Includes task forces, future search events  Problems time-consuming, potential conflict McShane/Von Glinow OB4e Slide 17-10 © 2008 The McGraw-Hill Companies, Inc All rights reserved Action Research Process Establish ClientConsultant Relations Diagnose Need for Change Introduce Intervention Evaluate/ Stabilize Change Disengage Consultant’s Services McShane/Von Glinow OB4e Slide 17-19 © 2008 The McGraw-Hill Companies, Inc All rights reserved Appreciative Inquiry at Canadian Tire Canadian Tire relied on appreciative inquiry by asking staff to describe events that have made the retailer successful The company’s core values were then rebuilt around those positive experiences Store employees were also involved in an appreciative inquiry exercise to reinforce these values McShane/Von Glinow OB4e Slide 17-20 © 2008 The McGraw-Hill Companies, Inc All rights reserved Appreciative Inquiry Approach  Directs participants’ attention away from problems and towards the group’s potential and positive elements  Reframes relationships around the positive rather than being problem oriented McShane/Von Glinow OB4e Slide 17-21 © 2008 The McGraw-Hill Companies, Inc All rights reserved Four-D Model of Appreciative Inquiry Discovery Discovery Dreaming Dreaming Designing Designing Delivering Delivering Discovering Discovering the the best best of of “what “what is is Forming Forming ideas ideas about about “what “what might might be” be” Engaging Engaging in in dialogue dialogue about about “what “what should should be” be” Developing Developing objectives objectives about about “what “what will will be” be” McShane/Von Glinow OB4e Slide 17-22 © 2008 The McGraw-Hill Companies, Inc All rights reserved Parallel Learning Structure Approach • Highly participative social structures • Members representative across the formal hierarchy • Sufficiently free from firm’s constraints • Develop solutions for organizational change which are then applied back into the larger organization McShane/Von Glinow OB4e Slide 17-23 © 2008 The McGraw-Hill Companies, Inc All rights reserved Parallel Learning Structures Parallel Structure McShane/Von Glinow OB4e Organization Slide 17-24 © 2008 The McGraw-Hill Companies, Inc All rights reserved Cross-Cultural and Ethical Concerns • Cross-Cultural Concerns – Linear and open conflict assumptions different from values in some cultures • Ethical Concerns – Privacy rights of individuals – Management power – Individuals’ self-esteem – Consultant’s role McShane/Von Glinow OB4e Slide 17-25 © 2008 The McGraw-Hill Companies, Inc All rights reserved Rules for the Road Ahead • Understand your needs and values • Understand your competencies • Set career goals • Maintain networks • Get a mentor McShane/Von Glinow OB4e Slide 17-26 © 2008 The McGraw-Hill Companies, Inc All rights reserved Organizations are About People “Take away my people, but leave my factories, and soon grass will grow on the factory floors Take away my factories, but leave my people, and soon we will have a new and better factory.” Andrew Carnegie (1835-1919) McShane/Von Glinow OB4e Slide 17-27 © 2008 The McGraw-Hill Companies, Inc All rights reserved 17 Organizational Change McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc All rights reserved 17 Discussion of Activity 17.3 Strategic Change Incidents McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc All rights reserved Scenario #1: “Greener Telco” • Scenario #1 refers to Bell Canada’s Zero Waste program, which successfully changed wasteful employee behaviors by altering the causes of those behaviors McShane/Von Glinow OB4e Slide 17-30 Courtesy of Bell Canada © 2008 The McGraw-Hill Companies, Inc All rights reserved Bell Canada’s Change Strategy Relied on the MARS model to alter behavior: Motivation employee involvement, respected steering committee Ability taught paper reduction, email, food disposal Role perc communicated importance of reducing waste Situation Created barriers to wasteful behavior, eg removed trash cans McShane/Von Glinow OB4e Slide 17-31 Courtesy of Bell Canada © 2008 The McGraw-Hill Companies, Inc All rights reserved Scenario #2: “Go Forward Airline” • Scenario #2 refers to Continental Airline’s “Go Forward” change strategy, which catapulted the company “from worst to first” within a couple of years McShane/Von Glinow OB4e Slide 17-32 © 2008 The McGraw-Hill Companies, Inc All rights reserved Continental Airlines’ Change Strategy  Communicate,  Introduced communicate, communicate 15 performance measures  Established stretch goals (repainting planes in months)  Replaced 50 of 61 executives  Rewarded new goals (on-time arrival, stock price)  Customers McShane/Von Glinow OB4e as drivers of change Slide 17-33 © 2008 The McGraw-Hill Companies, Inc All rights reserved ... Canada’s Zero Waste program, which successfully changed wasteful employee behaviors by altering the causes of those behaviors McShane/Von Glinow OB4e Slide 17-30 Courtesy of Bell Canada © 2008... Refreezing the Desired Conditions • Realigning organizational systems and team dynamics with the desired changes – Alter rewards to reinforce new behaviors – Feedback systems • Help employees.. .Organizational Change at Home Depot Home Depot CEO Robert Nardelli (left in photo) has dramatically changed the big box retailer’s culture by introducing systems that