The Challenge of Organizational

Renewal and ChangeAguipo | Jarabelo | Orteza

July 4, 2013

Objectives

• Recognize the factors contributing to accelerating rate of change

• Identify the ways an organization uses renewing processes to adapt to change

• Determine the individual and group methods of coping with change

The 5 Stages of Organizational Development

The Challenges of Change

• Market• Product• Competition• Downsizing• Reengineering• Flattening structures• Globalization• Technological Upgrade

Renewal

• Organizational renewal requires that top managers make adaptive changes to the environment.

• Manager must analyze the organization, its departmental system interrelationships, and the possible effects on the internal environment.

Constant Change

• Organizations exist in constant changing environment and therefore must have the capacity to adopt.

• Managers must do more than react; they must be able to anticipate the changing patterns of people, markets, product, and technology

The 6 Areas of Organizational Development

1. Organizational Renewal2. The Systems Approach3. The Sociotechnical System4. Future Shock5. Organizational Transformation 6. Organizational Development

Organizational Renewal: Adapting to Change

• Organizational renewal may be defined as an ongoing process of building innovation and adaptation into the organization.

– Entropy – the principle of physics stating that everything that is organized will break down unless it is maintained.

4 Ways for Organization toAdapt to Change

• Sluggish Thermostat Management.• Satisficing Management.• Reactive Management.• Renewing/Transformation Management.

Environment vs AdaptationWhere a hyper-turbulent environment is characterized by rapid changing product lines and increasing and changing set of competitors, rapid and continual technological innovation and rapid market growth.

A Model of Adaptive Orientation

Sluggish-Thermostat Management

• Stable environment, low adaptation.• Management style is based on low risk.• Organizations using this style:– Have very stable goals.– Highly centralized structure

Satisficing Management

• Stable environment, high adaptation.• Adequate and average.• Planning and decision-making concentrated at

top.

Reactive Management

• Hyperturbulent environment, low adaptation.• Reacting after conditions change. • Short-term, crisis type of adaptation.• Usually involves:– Replacing key people.– Hasty reorganization.

Renewing / Transformation Management

• Hyperturbulent environment, high adaptation.

• Deal with future conditions before they occur.

• Faster at developing new ideas.• More participative.

The Systems Approach

• The system approach to managing change views the organization as a unified system composed of interrelated units.

• Managers look at the organization as part of a larger external environment where it breaks the company into key processes and it creates teams from different departments to run them.

Basic Qualities of Systems

• It is designed to accomplish objectives.• Elements have established arrangement.• Interrelationships exist among elements.• Ingredients of process more vital than

elements. • Organization more important than

elements.

Organization as an Open System

• In continual interaction with environment.• Continually receives feedback from

environment.

Organization as an Open System

The Sociotechnical System

• Where an organization is viewed as an open system which coordinates human and technical activities.

The Sociotechnical System uses the following approaches:

Organized around process – not tasks.Flatten the hierarchy.

Use of teams to manage everything.Let customers drive performance.

Reward team performance.

The Sociotechnical System

Goals and Values Basic mission and vision of the organization

The Technical Subsystem Activities; operations; techniques and equipment

The Structural Subsystem Formal design; policies; procedures; organizational chart; division of work; patterns of authorities

The Psychosocial Subsystem (Culture)

Social relationship; behavioral patters of members; norms; roles; communications

The Managerial Subsystem Directing; organizing and coordinating

It consists of:

High Performance Systems

• Occur by design, not by chance.• Key variables are:– Business situation.– Strategy.– Design elements.– Culture.– Results.

The Sociotechnical System

Future Shock of Change

• Most people are utterly unprepared to cope with accelerated rate of change.

• Future shock is a time phenomenon, a product of a greatly accelerated rate of change in society

• Too much change in too short a time affects managers and organizations as well

• When change occurs rapidly, the capacity of management to react is strained, creating the danger of future shock

Organization Transformation and Development

OT and OD are both major approaches to managing change

in organization

Organizational Transformation

• Organization transformation may be defined as the action of changing an organization’s form, shape, or appearance, or changing the organization’s energy from one to another.

Organizational Development

• OD, or the planned organizational change, is a deliberate attempt to modify the functioning of the total organization or one of its major parts in order to bring about improved effectiveness

ORGANIZATION TRANSFORMATION

• OT changes organization’s form or appearance.

• OT is a revolution.• Transforms framework of

organization.• Unplanned changes in

response to pressures.• Change occurs in short time

frame.

ORGANIZATIONAL DEVELOPMENT

• OD like an evolution.• Planned change on large

scale.• Longer time frame than OT.• Gradual implementation.• Modifies total organization

or major parts.

What OD Focuses On

1. Individual effectiveness.2. Team effectiveness.3. Organization effectiveness.

Individual Effectiveness

• Organization is made of individual members, and each members has unique values, beliefs and motivations.

The goals are to improve the following: Managerial skills. Technical skills. Interpersonal competence.

Team Effectiveness

• Change efforts may also focus on the fundamental unit of an organization, team or work group, as means for improving the organization’s effectiveness.

Emphasis on: • Improving problem-solving.•Working through conflicts.• Team effectiveness.

Team Effectiveness

• Two separate dimensions of teams are– Task activities—what the team does.– Team process—how the team works.

• Process observations examine:– The way the group functions.– Leadership, decision making, communication.

Team Effectiveness

OD practitioners need to develop skills and observations to learn to be a participant-observer, that is to actively participate and at the same time be aware of group process.

Organizational Effectiveness

• The focus is on total organization system.• Improve effectiveness by changes in:– Structure.– Technology.– Management.

SUMMARY• Organizational renewal can occur as an

ongoing, continuous process or as episodic change.

• Organizations need continuous renewal because it adds a level of stability in the midst of internal and external triggers of change.

Reference:

Experiential Approach to Organizational Development 8/Eby Donald Brown

Feel free to ask questions!

Aguipo, JamesJarabelo, Kristelle

Orteza, Aldrin

The Challenge of Organizational Renewal and Change

July 4, 2013