Reading: Lesson 8 - Managing Organizational Change

12.8.A - Managing Organizational Change

1. PLANNING ORGANIZATIONAL DEVELOPMENT PROGRAMS

1. As soon as the company identifies a problem or a need for change, it should plan and implement an organizational development program. Because almost all important changes in a business involve or affect employees, the human resources department should have an important role in the program. The changes may involve developing new employee skills or increasing or decreasing the size of the workforce. A major reorganization may affect management-employee relationships. The company may decide to change the pay or benefits plans to reduce costs. Planning and implementing an organizational development program involves six major steps.
   
2. STEP 1. AFFIRM MISSION AND GOALS Affirmation of the mission and goals of the organization is critical. There must be agreement within the company about the purpose of the business and the criteria used to determine if the company is successful. Employee belief and acceptance of the organization’s mission and goals is a key factor for success. A company should not frequently change its mission or goals but may need to change them in response to the external and internal environments if it otherwise would mean failure.
   
3. STEP 2. IDENTIFY IMPORTANT MARKETS AND PRODUCTS The organization needs to identify the primary markets that will be the company’s focus and the products and services needed to serve those markets. This step will require establishing customer service standards. Customer service standards are measures against which the company judges its performance in meeting customer expectations. Those standards may include the required baseline levels of product quality, delivery speed, order-fulfillment accuracy, and customer support and follow-up.
   
4. STEP 3. DETERMINE REQUIRED CHANGES The business must determine the organizational changes required to achieve the company’s mission, goals, and customer service standards and prepare a plan for implementing the changes. These will usually involve one or more of the following factors: work processes, organizational structure, work relationships, and employee skills. Also, the plan should include performance standards, which are specific statements of the expected results from critical business activities. These types of major changes will not occur immediately. Implementation may take many months, and the company may not see results for a year or more.
   
5. STEP 4. BUILD COMMITMENT It is necessary to build commitment within the organization for the changes. Effective organizational change requires the understanding and support of managers and employees. Support among management and staff is most likely if employees are fully informed of (a) the change, (b) the reasons change is necessary, (c) the likely results if the change is not made, (d) how employees will be affected by the change, and (e) how the organization and its employees will benefit if the change is successful. Successful organizational development usually results when company personnel are involved early in the process and when they have a role in designing the plan.
   
6. STEP 5. FOLLOW THROUGH Every successful organizational development plan requires follow through. Employees will support the plan if they see that the organization is committed to ensuring that change will occur. Managers should keep employees informed of results from the changes even if the outcomes are not always positive at the beginning. Unless something occurs that makes it clear that the plan will not work, the organizational development plan should continue until it achieves the stated goals or is refined as the market changes.
   
7. STEP 6. INCORPORATE THE CHANGE Making the new process part of the organization’s culture is the final critical step. If people believe the change is unimportant or is only temporary, they will not commit to its success. When the new process is implemented and supported, the organization has changed, and the old procedures are no longer appropriate, the organizational development program is complete. Alliance Industries, discussed in the opening scenario, needed to implement an organizational development program for the major changes it was planning. 
   

2. IMPROVING THE WORK ENVIRONMENT

1. The needs and expectations of workers today are very different from those of workers in the past. Work is just one part of an employee’s life. Of course, employees want jobs that provide a reasonable wage or salary. But the amount of money earned is not always the most important factor in employment. Today, employees are concerned about a variety of factors related to their work, including the work schedule and working conditions. Vacations, insurance, retirement plans, and other benefits are also important to most people. They also want an interesting and challenging job as well as recognition for their work. Both personal and financial needs are important to employees, and managers must recognize those needs in order to maintain an effective workforce. Satisfied employees are more productive, have fewer absences, and are more likely to voluntarily stay with the company. Therefore, managers spend considerable time working with employees to make the work environment as satisfying as possible. Studies have found that employees are most satisfied with their work when they (1) perform interesting work, (2) feel responsible for the work, (3) receive recognition for good work, and (4) have a feeling of achievement. It is surprising to many managers that although the amount of compensation is important to employees, it is not necessarily more important than other factors related to the job. Because of these studies, companies are directing their organizational development efforts toward the design of the work environment and jobs to better meet employee needs. Job design refers to the kinds of tasks that make up a job and the way workers perform these tasks in doing their jobs.
   
2. Organizations try to make work more meaningful and motivating for employees. One way to do this is through job enlargement, or making a job more interesting by adding variety to the tasks. For example, three workers on an assembly line might be responsible for three separate tasks, each one performing one task repeatedly. With job enlargement, each worker is given responsibility to complete all three tasks. In this way they can perform a greater variety of tasks, making the work less monotonous. Also, the company now has three people who can perform all of the work rather than three specialized employees who can perform only one part of a complex job. Employees should be involved in making the decision to change the job and in redesigning the job. Employees also need training and adequate time and practice to develop the new skills. Companies should not enlarge jobs just to reduce the number of employees or to have fewer employees complete more work. If employees believe that these are the real reasons for enlarging their jobs, they will not accept the changes willingly.
   
3. Another use of job design to increase employee effectiveness and motivation is cross training. With cross training, employees are trained to perform more than one job in the company, even though they typically perform only one on a daily basis. Employees can be rotated to other jobs when an extended coworker illness or absence occurs, while a replacement employee is being trained, when a significant increase or decrease in the amount of work occurs for a specific job, or simply to provide change and variety for employees. Cross training makes an employee more valuable to the company because that person can perform a broader set of work tasks. Employees learn more about the work performed in the organization as they learn multiple jobs and increase their skills. Cross training has many key benefits for an organization. Even a well-run organization has employee departures, and the organization does not want to lose all skills in specific job roles. As part of organizational development and change processes, the effectiveness of cross training initiatives should also be tested. This can be done by making employees responsible for ensuring that someone else in the organization shares the needed skill-set. Then the newly trained employees can be assigned to the new tasks temporarily to ensure they can complete the tasks without reliance on their peers.
   
4. Another way to use job design to improve employee satisfaction is to involve employees in decision making. Job enrichment gives employees the authority to make meaningful decisions about their work. For example, managers may allow workers to make choices about how to do their jobs. Managers may ask employees for advice on how to improve performance or reduce errors. Job responsibilities may be changed so employees can solve problems themselves without checking with their supervisor. For example, in one major hotel chain, employees are empowered to immediately take the necessary steps to resolve a customer problem or complaint without consulting a manager if the resolution can be achieved for less than $200. Some companies have given work teams responsibility for the entire assembly of a product, performance of a service, or operation of a small unit in the business. The team helps with goal setting, shares all tasks, and is responsible for the results. Companies using this system have found that team members develop a strong loyalty to the other members and take personal responsibility for the effective operation of the team and the quality of its work. Some companies expand the duties and responsibilities of employees for the wrong reasons. To save money, the companies cut the number of personnel and divide the additional work among the remaining employees. Sometimes that is done without providing additional training or any recognition or rewards for employees who are required to take on the additional work. Employees are already upset about losing coworkers and concerned that they might also lose their jobs. If they feel forced to take on additional responsibilities that may require longer work hours and greater job pressure, the changes will not be accepted.
   
5. The effects of downsizing have been studied for many decades by researchers. An MIT study found that there are four types of employee responses to downsizing, which are based on whether each employee trusts the executives and managers of the firm and whether the employee feels empowered. Of the four possible outcomes, only those who trust the management of the firm and feel empowered are viewed as able to help an organization that has just undergone downsizing or restructuring. An improved work environment and worker involvement are important goals of organizational development. Improving management and employee relationships, making work more meaningful, and developing effective work teams are all important organizational development programs. They affect the internal environment of the business. In addition, some organizational development programs work to improve relationships in the external environment, including the way employees interact with other businesses in the distribution channel and with customers. Many businesses involve personnel from cooperating businesses in solving problems and developing new procedures. They frequently gather information from customers in order to consider their needs and perceptions in planning organizational changes.