Understanding Organizational Change

Jean Helms-Mills, Kelly Dye, Albert J Mills

• Publisher: Routledge
• Year: 2008
• Print ISBN: 9780415355773
• eBook ISBN: 9781134253159
• Topic: Business
• Subtopic: Business General
• Index: Business

This exciting new text fills the gap in the management literature on organizational change. It presents a balanced view, which raises questions about the imperative of change, who's interests are being served, how change programmes impact on employees and why organizations continually engage in such programmes. It gives readers a comprehensive history of:

• change management literature
• types of change techniques over time (i.e. TQM, BPR, Balanced Scorecard, Six Sigma, etc.)
• the role of management gurus in the rise and fall of management fashions
• the impact of organizational change on organizational members.

The authors provide case vignettes of companies from both sides of the Atlantic, which have undergone some of the better-known change techniques, and explore the reasons for their successes and failures. This is an innovative and important new text for students of organizational behaviour, organizational change, strategy and HRM.

1
Making sense of organizational change

Objectives of this chapter:

By the end of this chapter, you should:

1 Understand what is meant by programmatic change

2 Be able to define organizational change

3 Be familiar with the development of the field of change management

4 Understand the importance of change management

5 Be familiar with developments in both the theory and practice of change management

6 Understand and be able to apply the sensemaking framework

Business as usual. A day in the life of the business world

Tuesday, June 7, 2005 was, as things go, a fairly normal day in the world of business and political affairs. In the news Alexander Solzhenitsyn, the former Soviet dissident, had emerged from years of obscurity to warn that Russia was ripe for a new pro-democracy revolution; Tony Blair, Britain’s Prime Minister, clashed with President Jacques Chirac of France over changes to the constitution of the European Union; the United States government considered banning the use of marijuana for medical purposes; and Canada’s Ontario Provincial Government announced plans to end mandatory retirement at age sixty-five.

Meanwhile, innumerable companies were going about their business and those that were large enough, important enough and/or interesting enough made it into the business pages of the major newspapers. That day The Times of London reported on the affairs of forty-three leading companies; The New York Times covered fifty-five companies; and Canada’s Globe and Mail focused on one hundred and forty companies. Interestingly, of the two hundred and five individual companies

featured (see Figure 1.1) only twenty-seven drew the attention of more than one of the three newspapers. Of these twenty-seven, only a quarter were newsworthy because of their success. Of the successful companies, five had expanded their operations by taking over other companies, including media company E.W. Scripps (purchased the online comparison-shopping site Shopzilla), US real estate investment trust ProLogis (bought Catellus Development), US savings and loan company Washington Mutual (purchased the credit card company Providian Financial), the London-based drinks company Diageo PLC (took over Allied Domecq), and the oil-drilling outfit Weatherford International (bought two divisions of Precision Drilling Corporation). Two other companies announced expansion plans – Flybe, the UK regional airline, ordered a large number of new aircraft, and US home improvement giant Lowe’s revealed plans to open branches in Canada in 2007. For four other companies the news was mixed. Daimler-Chrysler announced above average growth overall but a drop in its Mercedes sales; Pfizer reported that the US government had both approved extension of sales of Viagra for pulmonary hypertension and fined the company for price-fixing; Citigroup announced the takeover of ABN/Amro, and the loss of important data; and, similarly, Time-Warner had taken over another company – Adelphia, and was experiencing data security failure.

The majority of the twenty-seven companies were undergoing challenges of a different kind. Several faced bankruptcy or takeover, including Adelphia Communications Corp., Allied Domecq, Catellus Development, Precision Drilling Corp., Providian Financial Corp. and Shopzilla. Data security failure, i.e. lost or stolen data, dogged four companies (Citigroup, Time-Warner, Bank of America, Wachovia). Five companies faced corruption charges that included accusations of doc-tored accounts (American International Group), a criminal probe into false reporting on sales and stockpiling (Bristol-Myers Squibb), investigation by the US Justice Department (Quest Diagnostics), and price-fixing fines (Pfizer; Serono Inc.). Boeing was newsworthy for laying off employees and selling one of its plants to Onex. Morgan Stanley was going through a series of resignations by executives and was dropped from a group handling the sale of France Télécom. United Airlines was reportedly using pension law loopholes to hide its economic problems; and Microsoft was ordered to pay $8.9 million to a Guatemalan inventor in a patent case, and there was reportedly near agreement with the European Commission to comply with anti-trust legislation.

This tip of the business iceberg reflected much that was going on in the remaining 178 companies featured in the business news that day. Competitiveness and expansion characterized more than sixty per cent. Some companies were newsworthy because of their market position (e.g. WB ‘one of the big six broadcasters’ in the US), financial standing (e.g. TransCanada Power a ‘blue-chip trust’) or share value (e.g. Canadian Tire Corp., ‘a good investment’). Others made the news for takeovers (e.g. Aga Foodservice purchased rival Waterford Stanley) and mergers (e.g. UK drug distributor Alliance Unichem joined with Portugal’s National Association of Pharmacies), expansion (e.g. Asda’s expansion into Northern Ireland) and exploration (e.g. Dragon Oil), new strategies (e.g. CVS Corp), new leaders (e.g. the appointment by Kodak Canada of a new CEO and President), and new products (e.g. Swiss company Novartis’ development of an anti-malaria drug). On the dark side of the coin, seventeen companies were reported to be involved in some form of corrupt business practice, fifteen reported loss of business, slumping sales, or excess capacity, while a further ten declared bankruptcy or were taken over; five companies reported data security problems, three were involved in top leadership problems, two each experienced financial problems, trade disputes, or injunctions against them; two companies were involved in an advertising controversy, one faced a discrimination claim, and one declared lay-offs. In other words, one third of the featured 178 companies, were undergoing some form of change that brought them negative attention. And for those in charge, June 7 was either a good or a bad day, depending on which company they led.

That day The Times, the Globe and Mail and The New York Times reported the affairs of seventy-one business leaders – sixty-seven men and four women (see Figure 1.2). Of these, only two men and one woman were of interest to more than one newspaper. Debby Hopkins, the Chief of Operations and Technology for Citigroup came off well. True, Citigroup was involved in a data loss problem but that was somewhat overshadowed by the announcement that the company was taking over ABN/Amro. Maurice Greenburg (former head of AIG) and John Houldsworth (former head of General Reinsurance Corp’s Dublin operations) did not fare so well: Greenburg reportedly had been forced to retire due to ‘regulatory scrutiny’, while Houldsworth pleaded guilty to criminal conspiracy. Greenburg and Houldsworth were not the only ones to receive negative press. Richard M. Scrushy (co-founder and former CEO of HealthSouth) was on trial, indicted on eighty-five

counts of accounting irregularities, and Frank Quattrone (Chief Technology Banker at Credit Suisse First Boston) was on trial for fraud and obstruction of justice. Scrushy was later found innocent on all counts but Quattrone was sentenced to eighteen months for obstruction of justice. However, the great majority of business leaders who were front-and-centre received positive press for announcing advances in their companies’ fortunes. By all accounts, business was doing well.

The operations of companies and other organizations are impacted by a variety of factors, including leadership change, merger, growth and expansion, downsizing, the introduction of new products, technological change, industrial disputes, competition, changing political climate and legislation, changing consumer tastes, legal intervention and many other factors. Some of these factors – such as changed strategies, downsizing, and new leadership – are responses to a changing environment. Some – such as new or increased competition and changing consumer tastes – are the triggers of organizational change. Some – such as new technologies, changed strategies and new leaders – are both responses to perceived change and powerful triggers of organizational change. And, on Tuesday, June 7, 2005, all of these factors were of sufficient impact to be newsworthy for a number of leading companies. Interestingly, what was not mentioned was programmatic change, i.e. pre-packaged change programmes, such as Total Quality Management and Business Process Re-engineering, which focus on changing core organizational processes through the application of a series of elaborate rules and guidelines. On June 7, 2005 none of the companies were mentioned as having adopted or applied programmes of Culture Change (CC), Total Quality Management (TQM), Business Process Re-engineering (BPR), the Balance Scorecard (BSC) or Six Sigma (SS).

Change is an everyday occurrence but it is not just any change that catches attention and forces organizational leaders and other stakeholders to take action. It is usually not the everyday occurrence that makes an impact on the thinking of those in charge of organizations. When we think about organizational change we are referring to that level of difference that makes a significant or substantial impact on the way people think about their organization. It is a change that affects some aspect of peoples’ jobs and the way they carry out th...

Table of contents

• Contents
• Figures
• Acknowledgements
• 1 Making sense of organizational change
• 2 The discourse of change: from theory to practice
• 3 From Lewin to OD: planned approaches to change
• 4 Organizational culture and culture change
• 5 Organizational learning, the learning organization and appreciative inquiry
• 6 The quality movement – TQM and business process re-engineering
• 7 A measure of change: Six Sigma and the Balanced Scorecard
• 8 Leading change
• 9 Power and resistance
• 10 Diversity management
• 11 Institutionalization and change
• Endnotes
• Bibliography
• Index