12. Organizational Change & Theory

Organizational Development (OD)

• Definition & Scope

  • Family of planned, rational techniques aimed at helping organizations "change for the better".

  • Goes well beyond simple restructuring; typically reshapes how people work, communicate, and coordinate.

• Reactive vs. Proactive Change

  • Many changes are crisis-driven, hurried, and externally forced.

  • OD seeks to make change deliberate, systemic, and preventive.

• The Change Agent

  • A catalyst/guide (often an outside consultant) with expertise in improving organizational functioning.

  • Acts as trainer, facilitator, and process owner—not merely an advice giver.

• Armenakis & Bedeian (1999) Multistage Model

  • 1. Awareness: employees first learn that change is needed → typical emotions = anxiety, disbelief.

  • 2. Diagnosis & Design: specify the form of change; craft a concrete plan.

  • 3. Implementation: execute the plan; expect and manage resistance.

  • 4. Consolidation: new practices become the accepted, routine way of working (institutionalization).

Employee Acceptance of Change

• Necessity: Successful change requires willingness, commitment, and minimal resistance.

• Stress & Uncertainty: Change can trigger negative affect and fear of the unknown.

• Determinants of Acceptance

  • Individual factors: flexibility, high openness to experience, prior positive change experiences.

  • Organizational factors: transformational leadership, compelling vision, transparent communication.

• Practical Implication: Pair structural interventions (new tech/process) with psychological support (training, feedback, participation).

Organizational Change Techniques

Management by Objectives (MBO)

• Essence: Goal-setting cascade starting with top-level strategic objectives, filtering downward so each employee’s goal aligns with the level above (similar to modern OKRs).

• Goal Functions

  1. Motivate and direct effort.

  2. Provide criteria for performance appraisal.

  3. Coordinate disparate units toward shared aims.

• Goal Characteristics

  • Must be concrete & measurable.

  • Example: inappropriate—“Improve functioning”; appropriate—“Increase sales by (20\%).”

• Outcomes: When implemented with feedback and participation, MBO reliably elevates performance.

Survey Feedback

• Process Overview

  1. Design & administer attitude/opinion questionnaires (job satisfaction, conditions, problems).

  2. Feedback compiled results to all employees; jointly diagnose issues and brainstorm solutions.

• Key Features

  • Psychological safety: anonymous, non-threatening expression of views.

  • Often branded as ENPS (Employee Net Promoter Score) surveys.

• Value: Creates data-driven impetus for change, surfaces hidden problems, fosters shared ownership.

Team Building

• Rationale: Most organizational output is produced by teams; enhancing team effectiveness magnifies overall performance.

• Two Foci

  • Task-focused: refine methods, clarify roles, streamline workflow.

  • Interpersonal-focused: improve communication, trust, and conflict management.

T-Group (Training Group)

• Core Idea: Strangers engage in structured interpersonal-skills exercises with facilitator feedback.

• Intended Outcome: Greater self-awareness, empathy, and on-the-job interpersonal effectiveness.

• Decline in Popularity

  • Mixed or negative transfer to workplace.

  • Risk of quasi-psychotherapy; exploration of sensitive issues can harm participants.

Organizational Theories

Bureaucracy Theory (Max Weber, late 1800s)

• Goal: Identify characteristics of an effective, rational organization.

• Four Principles

  1. Division of Labor: distinct, specialized positions.

  2. Delegation of Authority: top relies on subordinates; tasks distributed downward.

  3. Chain of Command: clear lines of accountability for each function.

  4. Span of Control: optimal number of subordinates per supervisor—depends on subordinate skill & leader style.

• Line vs. Staff Roles

  • Line: directly execute the organization’s core purpose.

  • Staff: provide support (HR, IT, legal) enabling line functions.

Theory X / Theory Y (McGregor, 1960)

• Premise: Supervisors’ assumptions shape management style → employee behavior.

• Theory X

  • Employees are inherently lazy/indifferent; require direction & control.

• Theory Y

  • Employees are self-motivated; management organizes resources and removes obstacles.

• Evolution & Extensions

  • Shift from X to Y is gradual; most employees have been socialized under X.

  • Theory Z (Ouchi, 1981): lifetime employment fosters commitment and cooperative culture.

Open System Theory (Katz & Kahn, 1978)

• Metaphor: Organizations resemble living organisms—constant energy exchange with environment.

• Key Insight: To survive, systems must import resources, transform them, export products, receive feedback, and adapt.

Sociotechnical System Theory (Trist & Bamforth, 1951)

• Core Proposition: Social (people) and technical (technology) subsystems are interdependent and must be jointly optimized.

• Additional Principles (Cooper & Foster, 1971)

  • Joint Optimization: co-design tech and social structures.

  • Unit Control of Variances: the employee encountering a problem should resolve it—boosts motivation & saves managerial time.

  • Implementation: encourage self-regulation by individuals/teams.

• Modern Relevance: Supports flatter hierarchies, agile teams, and rapid adaptation in turbulent environments.

Organizational Culture

• Representative Definitions

  • “Belief system shared by members” (Spender).

  • “Strong, widely shared core values” (O’Reilly).

  • “The way we do things around here” (Deal & Kennedy).

• Components

  1. Set of underlying values.

  2. Values taken for granted as "givens".

  3. Symbolic communication (stories, rituals, language, artifacts) that convey those values.

• Impact: Culture guides behavior, shapes identity, and influences strategy execution.

Organizational Climate

• Definition: Employees’ shared perceptions of the recurring patterns of behavior, attitudes, and feelings in the organization.

• Focus: Current psychological atmosphere and its linkage to work performance.

Culture vs. Climate

• Similarities

  • Address overall work atmosphere.

  • Describe social context influencing behavior.

• Differences

  • Discipline: Climate → psychology; Culture → anthropology & sociology.

  • Malleability: Climate easier for management to manipulate; Culture anchored in history, harder to change.

  • Time Horizon: Climate ≈ present conditions; Culture ≈ enduring values/norms.

Creating (or Changing) Organizational Culture

1. Formulate Strategic Values

   • Fundamental beliefs about environment and competitive positioning.

2. Develop Cultural Values

   • Traits/behaviors employees must adopt to enact strategy.

3. Create Vision

   • Compelling picture of desired future state.

4. Initiate Implementation Strategies

   • Programs and actions that translate values & vision into reality.

5. Reinforce Cultural Behaviors

   • Align reward systems, share success stories, and stage rituals/ceremonies to embed norms.

Transitioning Priorities & Final Reflection

• Historical emphasis: Managing Change was considered a peripheral challenge; today it is a central strategic priority.

• Quote to remember: “Change is never easy. You fight to hold on. You fight to let go.” — Daniel Stern