UNIT - V ORGANIZATIONAL CHANGE AND DEVELOPMENT

Meaning of organizational Change:

Organizational change can be defined as the alteration in structure, technology or people
in an organization or behavior by an organization. Here we need to note that change in
organizational culture is different from change in an organization. A new method or style or
new rule is implemented here.
An organizational change occurs due to two major factors namely −
 External factor − External factors are those factors that are present outside the firm but
force the firm to change or implement a new law, rule etc. For example, all banks are
bound to follow the rules laid down by the RBI.
 Internal factor − Internal factors are those factors that are caused or introduced inside
an organization that forces a change. For example, no smoking in the workplace.
Kurt Lewin, is a noted organizational theorist, who proposed the force field analysis for
organizational change. In this theory, he has prioritized two factors for change in an
organization, namely −
 Driving force − Driving force can be defined as an organizational force that makes a
change with respect to structure, people and technology. In short, it drives the
organization from one culture to another.
 Restoring force − Restoring force is the force which changes the culture from the
existing state to the old state. It indicates a backward motion while the driving force
indicates a forward motion.

Importance of Organizational Change

There is a need of change in an organization because there is always a hope for further
development, and in order to survive in a competitive market, the organization needs to be
updated with changes. However, we have listed some reasons to explain why changes are
deliberately made and carefully planned by the organization before implementation.

 It improves the means to satisfy the economic requirements of people.

 It enhances the profitability of organization.
 It promotes employee satisfaction and well-being.

Nature of work change:

Work is constantly reshaped by technological progress. Firms adopt new ways of production,
markets expand, and societies evolve. Overall, technology brings opportunity, paving the way to
create new jobs, increase productivity, and deliver effective public services.

In today's world, the structure, content, and process of work have changed. Work is now:
 More cognitively complex
 More team-based and collaborative
 More dependent on social skills
 More dependent on technological competence
 More time pressured
 More mobile and less dependent on geography.

In today's world, you will also be working for an organization that is likely to be very different due to
competitive pressures and technological breakthroughs. Organizations today are:

 Leaner and more agile

 More focused on identifying value from the customer perspective
 More tuned to dynamic competitive requirements and strategy
 Less hierarchical in structure and decision authority
 Less likely to provide lifelong careers and job security
 Continually reorganizing to maintain or gain competitive advantage.

This Resource Page explores the changing nature of organizations and work, the drivers behind the
changes, and the consequences for workers and the workplace.

Planned Change
We can define planned change as any kind of alteration or modification which is done in
advance and differently for improvement.

The Need for Planned Change

Planned change takes places in an organization when there is a demand for change due to
two types of forces. These forces are grouped into internal sources and external sources.
Internal forces that lead to a planned change in an organization include obsolescence of
production and service, new market opportunities, new strategic direction, increasing workforce
diversity, and shift in socio-cultural values.
External forces that lead to a planned change in an organization include regulators,
competitors, market force, customers, and technology. Each of these forces can create pressing
demand for change in small or big, public or private, business or non-business organizations.
Pressure for change:
Pressures for change are created from both inside and outside the organization. Organization
must forge ahead on these forces to survive. Some of these are external, arising from outside the
company, whereas others are internal arising from sources within the organization.
Customers, competition, the economy, technology, political and social conditions, and
resources are common external factors that influence the organization. In order for managers to react to
the forces of internal and external environments, they rely on environmental scanning
External Environment
External forces are those changes that are part of an organization's general and
business environment. There are several kinds of external forces an organization might face:
Demographic. A changing work demographic might require an organizational change in culture

The following section identifies the external influences that have an effect on organisational
culture:

 The political dimension.

 The economic dimension.
 The social dimension.
 The religious dimension.
 The educational dimension.
 The international dimension.
 The reigning ideologies.

Internal Environment
The following section identifies the internal influences that have an effect on organisational
culture:

 The types of people employed in terms of age, male/female, language and community,
religious beliefs, race, composition.
 The workplace environment in which the employees work.
 The types of labour policies that are in place within the organization, for example a
highly unionized labour force.
 The rate at which technology in the form of computers and automation has or is being
deployed.
 The types of resources and resource policies that are employed.
 The history and ownership of the organization.
 The values and beliefs, in particular the rituals of the organization.
 The management style in place, such as bureaucratic and structured, to malleable and
change orientated.
The perception of people of a product or a company and even a country’s industrial and
technological competency is dependant almost entirely on the leaders of industries and their
ability to direct restructure and mould the kind of organisational culture that will promote the
following:

 Excellence in all that it does.

 The creation of a benchmarking culture, whereby good practice is taken from other
industries and installed into their own.
 The ability to build on the existing capability of the organisations that they control, thus
increasing the capacity building capability.
 The quality of both the product and services that they provide to both to external and
internal customers.
 The development and enhancement of the employees within the organisation.
 The ability to intervene in the capacity building process, evaluation, productivity
assessments, company audits, data cleansing and staff development, without damaging
both the external and internal reputation of the organisation.

Process of Change
Once the management decides to implement some changes in the organization, it needs to
be done carefully as it is a very sensitive issue. It is very important for all the employees to
adapt to change. According to Kurt Lewin, the planned organizational change is implemented in
three different stages. They are −
 Unfreezing − In this stage, the organization studies if the change is required or not, what
and why is the change necessary. Considering the entire situation, the organization
decides for appropriate change. Thus a plan and strategy is formulated as required.
 Changing − In this stage, the organization executes the plan and program for change.
For this purpose, proper precautions are taken in order to maintain cooperation and
coordination between the employees and management, avoiding miscommunication or
disputes. Adequate supervision and control is arranged as needed.
 Refreezing − This is the final stage, in order to bring organizational change. By way of
supervision, the organization tries to evaluate the effectiveness of change. Collecting all
this information, the management interprets whether to continue or replace change by
some other alternatives or to make further minor changes.

5 STEPS IN THE CHANGE MANAGEMENT PROCESS

1. Prepare the Organization for Change

For an organization to successfully pursue and implement change, it must be

prepared both logistically and culturally. Before delving into logistics, cultural
preparation must first take place.

In the preparation phase, the manager is focused on helping employees recognize

and understand the need for change. They raise awareness of the various challenges or
problems facing the organization that are acting as forces of change and generating
dissatisfaction with the status quo. Gaining this initial buy-in from employees who will
help implement the change can remove friction and resistance later on.

2. Craft a Vision and Plan for Change

Once the organization is ready to embrace change, managers must develop a
thorough and realistic plan for bringing it about. The plan should detail:
 Strategic goals: What goals does this change help the organization work toward?
 Key performance indicators: How will success be measured? What metrics need to be
moved? What’s the baseline for how things currently stand?
 Project stakeholders and team: Who will oversee the task of implementing change?
Who needs to sign off at each critical stage? Who will be responsible for
implementation?
 Project scope: What discrete steps and actions will the project include? What falls
outside of the project scope?
The plan should also account for any unknowns or roadblocks that could arise during the
implementation process and would require agility and flexibility to overcome.

3. Implement the Changes

After the plan has been created, all that remains is to follow the steps outlined
within it to implement the required change. Whether that involves changes to the
company’s structure, strategy, systems, processes, employee behaviors, or other aspects
will depend on the specifics of the initiative.
During the implementation process, change managers must be focused
on empowering their employees to take the necessary steps to achieve the goals of the
initiative. They should also do their best to anticipate roadblocks and prevent, remove, or
mitigate them once identified. Repeated communication of the organization’s vision is
critical throughout the implementation process to remind team members why change is
being pursued.

4. Embed Changes Within Company Culture and Practices

Once the change initiative has been completed, change managers must prevent a
reversion to the prior state or status quo. This is particularly important for organizational
change related to processes, workflows, culture, and strategies. Without an adequate plan,
employees may backslide into the “old way” of doing things, particularly during the
transitory period.

By embedding changes within the company’s culture and practices, it becomes

more difficult for backsliding to occur. New organizational structures, controls, and
reward systems should all be considered as tools to help change stick.

5. Review Progress and Analyze Results

Just because a change initiative is complete doesn’t mean it was successful.

Conducting analysis and review, or a “project post mortem,” can help business leaders
understand whether a change initiative was a success, failure, or mixed result. It can also
offer valuable insights and lessons that can be leveraged in future change efforts.

Types of Change
Different types of organizational change will require different strategies. Everything from
the implementation plan to the communication should be tailored to the type of change you want
to make. Before you begin strategizing for change, ask yourself: Is this change strategic,
structural, people-centric, or remedial?

Strategic and structural changes may call for additional training and gradual transitions, while a
remedial change would require immediate action. People-centric changes, on the other hand,
benefit from a well-thought-out change management communication strategy, so you can
navigate emotional reactions.

On the basis of a company’s requirement planned change is classified into three types. They
are −

 Change in structure
 Change in technology
 Change in people

Change in Structure
We say that the planned change required is change in structure when development is required in
these following areas −

 Change in management
 New management
 Change in position or location
 Change in objective, rules, regulations etc.
 Launching new branches

Change in Technology
We say that the planned change required is change in technology when development is required
in these following areas −

 Need of office automation

 Installing new hardware and software
 Executing new working procedures
 New methods in production function
 Producing new products and devices
 New training, research and development program
Change in People
We say that the planned change required is change in people when development is required in
these following areas −

 New candidate requirement

 Promotion or demotion
 Transfer to other location
 Suspension or dismissal
 Deputation
 Training and development

1. Strategic transformational change

All changes will affect some aspects of a company, but not all changes are transformational.

Minor modifications to existing tools or policies will influence but not completely
redefine a business. Big changes, on the other hand, transform companies. Whether that
transformation is positive or disastrous depends on the strategy used to make it.

If you want serious results, you’ll need to do some serious planning. You need to identify
what the ultimate goal is and then design a plan to achieve it. Preparation and ongoing change
management are essential for implementing these large-scale types of organizational change.

Here are 3 examples of strategic transformational change

1. Updating your mission as you grow:
2. Introducing new technology:
3. Employee training and development for new skills

2. People-centric organizational change

While all changes affect people, people-centric types of organizational change include
instituting new parental leave policies or bringing on new hires.

Even if you think employees will be excited by the change, an empathetic approach is
key because emotional reactions are common. In fact, many change management models, such as
the Kübler-Ross Change Curve and Satir Change Model, focus specifically on managing
emotional reactions to change.

Here are 3 examples of people-centric change

1. New hires:

2. Changes to roles and responsibilities:

3. Employee training and development for new skills

3. Structural change
Structural changes involve major shifts in the management hierarchy, team organization,
and the responsibilities attributed to different departments, employees, or teams. These changes
often overlap with people-centric changes as they directly affect most, if not all, employees.

Here are 3 examples of structural change

1. Mergers and acquisitions:

2. The creation of new teams or departments:

3. Changes to the company organizational chart:

4. Remedial change
Remedial changes are reactionary. This type of change occurs when a problem is
identified, and a solution needs to be implemented. As these changes are designed to address an
issue; they call for immediate action.

Reactionary change may not be ideal, but it’s inevitable. The benefit of the remedial
change is that judging its success is quick and simple.

Was the problem solved or not?

Here are 3 examples of remedial change

1. Dealing with a loss of talent:

2. Addressing customer communication issues:

3. Providing more training for new hires:

Factors influencing change:

Change is inevitable in the life of an organisation. In today’s business world, most of the
organisations are facing a dynamic and changing business environment. They should either
change or die, there is no third alternative. Organizations that learn and cope with change will
thrive and flourish and others who fail to do so will be wiped out. The major forces which make
the changes not only desirable but inevitable are technological, economic, political, social, legal,
international and labour market environments.

In very simple words, we can say that change means the alteration of status quo or
making things different. “The term change refers to any alterations which occurs in the overall
work environment of an organisation.”
“When an organizational system is disturbed by some internal or external force, change
frequently occurs. Change, as a process, is simply modification of the structure or process of a
system. It may be good or bad, the concept is descriptive only.”

There are a number of factors both internal and external which affect organizational
functioning. Any change in these factors necessitates changes in an organisation. The more
important factors are as follows:

External Forces

Every organization exists in some context; no organization is an island in itself. Each

must continually interact with other organizations and individuals- the consumers, suppliers,
unions, shareholders, government and many more. Each organization has goals and
responsibilities related to each other in the environment. The present day environment is
dynamic and will continue to be dynamic. Changes in social, political, economic, technology,
and legal environment force organizations to change themselves. Such changes may result in
organizational changes like major functions production process, labour-management relations,
nature of competitions, economic constraints, organizational methods etc. In order to survive in
the changing environment, organization must change. How the change in various environmental,
organizations, must change. How the changes in various environmental factors necessitate
change in the organization may be seen in following context:-

 Technology: When there is a change in technology in the organizational environment and other
organizations adopt the new technology, the organizations under focus become less cost effective
and its competitive position weakens. Therefore, it has to adopt new technology, its work
structure is affected and a new equilibrium has to be established.
 Marketing conditions: Since every organization exports its outputs to the environment, an
organization has to face competition in the market. There may be two types of forces which may
affect the competitive position of an organization —other organizations supplying the same
products and, buyers who are not buying the product. Any changes in these forces may require
suitable changes in the in the organization. For example, when Indian economy was liberalized,
there were many foreign organizations that entered the Indian market. This forced many Indian
organizations to realign themselves with the new situations. The result in that there have been
many cases of divesting the business and concentrating on the core business, acquiring core
business, and developing competitive competence to face competitive threats. Similarly, there
may be changes in buyers in terms of their needs, liking —disliking and income disposal for a
product. These changes from the organizations to bring those products which meet buyer’s
requirement.
 Social changes: Social changes reflect in terms of people’s aspirations, the needs, and their ways
of working. Social changes have taken place because of the several forces like level of education,
urbanization, feeling of autonomy, and international impact due to new information sources.
These social changes affect the behavior of people in the organization. There, it is required to
make adjustment in its working so that it matches with people.
 Political and legal changes: Political and legal factors broadly define the activities which an
oganisation can undertake and the methods which will be followed by it in accomplishing those
activities. Any changes in these political and legal factors may affect the organization operation.

Internal Forces

It is not only the changes in external factors, which may necessitate organizational changes; any
change in organization’s internal factors may also necessitate changes. Such a change is required
because of two reasons: changes in managerial personnel and deficiency in existing
organizational practices.

 Changes in the managerial personnel: Besides environmental changes there is a change in

managerial personnel. Old managers are replaced by new mangers, which necessitated because
of retirement, promotion, transfer or dismissal. Each new manager brings his own ideas and way
of working in the organization. The relationships, more in the organization. The relationships,
more particularly informal ones, changes because of changes in managerial personnel. Moreover,
attitude of the personnel change even though there is no changes in them. The result in that an
organization has to change accordingly.
 Deficiency in Existing organization: Sometimes, changes are necessary because of deficiency
in the present organizational arrangement ad process. These deficiencies may be in the form of
unmanageable span of management, large number of managerial levels, lack in co-ordination
between various departments, obstacles in communication, multiplicity of committees, lack of
uniformity in policy decisions, lack of cooperation between the line and staff, and so on. Beside
these internal factors, there are two more internal factors that give rise to organizational changes.
 Nature of the work force: The nature of work force has changed over a passage of time.
Different work values have been expressed by different generations. Workers who are in the age
group of 50 plus value loyalty to their employers. Workers in their mid thirties to forties are loyal
to themselves only. The youngest generation of workers is loyal to their career. The profile of the
workforce is also changing fast. The new generation of workers has better educational; they
place greater emphasis on human values and questions authority of managers. Their behavior has
also become very complex and leading them towards organizational goals is a challenge for the
managers. The employee turnover is also very high which again put strain on the management.
 To avoid developing inertia: In many cases, organizational changes take place just to avoid
developing inertia or inflexibility. Conscious manager take into account this view of organization
that organization should be dynamic because any single method is not the best tool of
management every time. Thus, changes are incorporated so that the personnel develop liking for
change and there is no unnecessary resistance when major change in the organization are brought
about.

Organizational development process:

Organizational Development is a field of research, theory, as well as practice devoted to
expanding the knowledge and effectiveness of how people accomplish successful organizational
change and performance.
Organizational development is not an overnight transformation that can be done in an
organization, rather it is a gradual process that has to be executed systematically and by taking
care of the external environment.

Techniques for Organization Development:

Companies adopt organizational development technique to modify the behavior of people who
are resisting change. It is a program to bring a change in the values, norms, attitudes,
perception, and behavior of people and improve the quality of inter-personal relations. Some of
the major organizational development techniques are −

 Sensitivity technique
 Survey feedback
 Process consultation
 Team building
 Intergroup development

This process will begin when a problem is identified. This system can be used to make improvements on just
about any situation or problem that a business faces. It is a broad set of steps that are easily understood, and
provide companies with the ability to quickly make changes in an attempt to solve issues. Once the changes are
made, they can be evaluated to see if the problem was resolved, and if not, it will continue through
the development process.
o Problem Identification - A problem can be identified in a wide-range of ways including reports
from employees, data gathering, and more.

o Situational Assessment - Making a formal assessment of the situation is the next step. This can be
done by reviewing documentation, holding focus groups, interviewing, surveying, or just about
anything else. Gathering all the facts related to the problem at hand is important for developing an
effective solution.

 Action Planning - Making a plan of action on how the problem will be solved is the next step. This
should be done by incorporating input from all impacted parties so that a solution that addresses the
specific problem at hand can be found. In many cases, this will be the longest step in the process.

 Implement Plan - Taking the plan made in the previous step, and putting it into action. Depending on
the complexities of the change, this may include training and other steps needed to ensure the action
plan is put in place correctly.

 Gather Data - As soon as the change is put in place, it is time to start gathering data. This should be
done with a focus on identifying whether or not the changes made are having a positive impact on the
problem at hand.

 Analyze Results - Looking at the data that is gathered to see if it improved the problem, eliminated
the problem, did nothing to the problem, or made the problem worse. In addition, watching to see if
the changes had any secondary, negative, impacts on other issues is also done here.

 Get Feedback - Gathering feedback from all impacted parties is also important. If the problem is
eliminated, but it increases the risk of injury for employees, for example, then it wasn't a good
solution.
 Repeat - If necessary, the process will be repeated. If the changes made had some positive impact,
then the process will begin with the current system in place. If they didn't, it may be beneficial to go
back to the original way things were done in order to reevaluate.

By following through these steps, a company can make significant improvements in a very
orderly fashion. They will also be able to track the changes that are made in order to have real
data when it comes to finding solutions to problems.

Having access to this data not only helps to ensure problems are objectively solved, but it can
also help to find solutions to other issues more quickly. If another department is facing a similar
problem, the data and strategies used can be applied. This can help to cut back on the length of
time it takes to address many types of issues.

Engaging the Process

The organizational development process can be quite similar to many other process improvement
systems that are out there. Some people compare it to a Kaizen event, for example. While there
are certainly similarities, they aren't the same.

This system can actually take advantage of other process improvement methodologies while it is
being used. Choosing what type of solution to use when going through the process is one of the
most important things that can be done.

If a company is attempting to transition to lean manufacturing, the organizational development

process can be used to identify areas of waste, and then help to eliminate them. This is a very
effective way to accomplish specific tasks that will contribute to a large goal.

Organizational Development Interventions/Techniques:

Organizational Development (OD) Interventions are structured program designed to

solve a problem, thus enabling an organization to achieve the goal. These intervention activities
are designed to improve the organization’s functioning and enable managers and leaders to better
manage their team and organization cultures. These OD interventions are required to address the
issues that an organization might be facing ranging from process, performance, knowledge, skill,
will, technology, appraisal, career development, attrition, top talent retention and the list can
actually be pretty exhaustive.
There are 3 types of interventions that an organization should be able to identify and plan to
implement.

Individual: Interventions pertaining to an individual.

Group: Interventions pertaining to a group.
Organization: Interventions related to the organization’s strategy and policy.
An organization should be able to identify the kind of OD intervention required. Once the
intervention is identified the organization should then plan to address or eradicate the issue at
hand in an effective manner. Below mentioned are the OD intervention process that an
organization should have to address any intervention.

1. Entering and Contracting: Here we establish the fact that yes we do require OD
intervention to address an issue.

2. Diagnosis: In this process we identify the intervention and establish the root cause of the
issue.

3. Designing Intervention: In this process we design the approach to address the issue
or intervene to sort the issue out and bring value to business.

4. Leading and Managing Change : Here we establish a focus group with

management buy in and implement the designed intervention. OD intervention is a structured
programme driven from top to bottom.
5. Evaluating and Institutionalizing Interventions: Here we evaluate the
course of actions implemented and see if we are on track or if we need to re-design the approach
so that the objective if met.

There are 4 buckets in which the OD intervention process can be bundled together.

1. Human Process : Human process related activities are tagged under this group viz.
a. Job Analysis.

b. Team Building Activities.

2. Strategic : Activities related to organizational strategies and policies are grouped under
this bucket.

3. Human Resource Management : Human resource related activities are grouped

under this bucket viz.

a. Reward and Recognition.

b. Appraisal.

c. Career Development.

4. Technostructural : Activities related to technology or where technology is related are

tagged under this bucket.

Conclusion : These are some of the aspects of Organizational Development Interventions and
the effective mechanism to identify and address the issues at hand. These interventions are
unavoidable in totality, however a vigilant and matured organization should be able to apprehend
the issue much before it erupts off on bigger scale and should be able to address at the very
initial stage when it can be done with minimum efforts. The cost of negligence can have adverse
impact in terms of cost, wide spread agitation resulting in to image, reputation, and delivery and
branding loss.