Organizational Change Management Theory

Peoples and Organization Management in the Built Environment

Organizational Change Management Theory


To understand alteration in an organisation, it is of import to analyze an organisation and its civilization. This is because, altering an organisation is nil but altering its civilization which finally causes alteration in public presentation.

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An Organization can be defined as “social agreement of consciously coordinated activities for accomplishing controlled public presentations in the chase of common goals” . ( Price and Chahal, 2006, p. 238 )

Organizational civilization can be defined as “characteristic, spirit and belief of an organisation [ … ] by and large held about how people should act and handle each other in an organisation [ … ] and attitudes to change.” ( Price and Chahal, 2006, p. 238 )

Depending on the market demands, an organisation is setup harmonizing to- resource allotment, production capacity, technological demand etc. This is why organisations have to constantly alteration to accommodate to the ever-changing market while procuring the organisation ‘s positions. Depending on the market state of affairs, it can be a crisis alteration or chosen alteration. Organizational alteration can be developmental ( making better than current state of affairs ) , transitional ( execution of new coveted province ) or transformational ( evolutionary new province ) . ( Price and Chahal, 2006 ) But whether it is intended or forced, the company needs to alter in order to stay competent. Change direction helps defy the consequence that alteration in the market has on an organisation, increasing the importance of alteration direction over the old ages. ( Cap Gemini Ernst & A ; Young, 2004 )

Changing an organisational civilization affects the people involved in it in assorted ways like alteration in occupation profile, larning new techniques, occupation cut, etc. So, it becomes necessary to pull off all the people involved, to successfully implement alteration while non upseting the company ‘s end. This makes alteration direction a complex procedure. Sing different orientations like planning, stake-holder direction etc. alteration direction can be defined as- A uninterrupted collection of procedures, instruments and techniques, to better the efficiency of the organisation in job resolution and mark attainment, achieved by extinguishing the causes of opposition to alter, working in an organized and systematic manner, from both company and employee positions. ( Cap Gemini Ernst & A ; Young, 2004 )

Change procedure:

Since the whole alteration procedure is really complex, allow us see a case-study to understand it better. We will analyse it utilizing three theoretical accounts of alteration direction, after which we will try to pull a strategic alteration direction model which can be used in any organisation. Our case-study will besides be critically analyzed against this model.


Aluminium Company of America ( ALCOA ) ( 1990 ) works at Swansea is the company under reappraisal. ( Price and Chahal, 2006 ) Senior directors of this company realized the demand to reexamine their works civilization and procedures. They presented their instance to the ALCOA board at Pittsburg, USA stressing on the company ‘s present and coveted province. The board was convinced about the demand to alter. Senior directors so established a taskforce to take the duty of the alteration plan. It had 12 members runing from employees, production directors, applied scientists, forces, operators and craftsman. The undertaking force drew the undermentioned Vision Statement-

‘To aid set up ALCOA, Swansea, as a theoretical account company by developing a works that contributes to the long-run prosperity and security of the company and its employees. ‘ ( Price and Chahal, 2006, p. 245 )

In 1991, the taskforce drafted the internal papers comprising of some of import elements and schemes including vision, need to alter, benefits, critical factors, opposition, etc. The ‘plan to get the better of opposition ‘ was: “ [ … ] we must travel frontward and better or discontinue to make business” . ( Price and Chahal, 2006, p. 245 )

The taskforce reviewed and changed their fabrication procedures and processs by benchmarking with other companies like ALCOA Tennessee, Cadbury ‘s etc. They observed no initial opposition while implementing new procedures and processs. But, subsequently they noticed some symptoms like reduced productiveness and they observed the grounds, as employee facets like working patterns, multi-tasking, wage, originating because of the old construction of organisation holding senior status and nonionized systems. To get the better of this, the work force appointed a new squad, which developed a system by analysing the organisation ‘s present and coveted province. They changed the working doctrine of the works work force and the footing for wage. They conducted a series of workshop preparations for the full work force. Though this full procedure was hard, they observed improved public presentation at the start of 2000. They were really near to their marks. The new decreased work force was extremely committed and motivated. But after all this success, ALCOA Swansea out of the blue closed down in 2003. The senior direction blamed overcapacity and slow market growing for failure. ( Price and Chahal, 2006 )


Although the senior direction blamed overcapacity and slow market growing, it clearly indicates that they failed to analyse the market and adjust to it by aggressive selling, necessary lay-offs etc. To understand the grounds for the failure, we will analyse the case-study utilizing three theoretical accounts viz. The Leavitt ‘s Model ( 1965 ) , Weisbord ‘s six-boxes ( 1976 ) , McKinsey 7S Framework ( 1981-82 ) .

Leavitt ‘s Model:

Leavitt focused on four variables in the organisation, their mutuality and their influence on the alteration procedure. The variables considered are-

* Task and subtasks- Those which are involved in accomplishing the mark.

* People- Who carry out the undertaking.

* Technology- Which is adapted to accomplish the undertaking.

* Structure of the organization- In footings of authorization, communicating, workflow etc.

Interlinking of the variables suggests that this is an synergistic and uninterrupted procedure. He did non take external factors into history. ( Falletta, 2005 )

In our case-study, the first factor to vary was ‘Task ‘ . Change directors decided to alter the company ‘s works civilization and procedures. Then they appointed a work force, so the 2nd variable changed was ‘People ‘ . Then ‘Technology ‘ and ‘Structure ‘ changed as a consequence of the changed works procedures and processs that is alteration in the on the job doctrine and wage. But subsequently on, an eruption of opposition demanded a alteration in the human variable every bit good as the Structure. This resulted in the creative activity of a new extremely motivated work force. This increased the company ‘s productiveness and changed the sub-task, which was to win adequate undertakings for the work force to maintain them motivated and achieve the ‘vision ‘ . But, the senior direction was non a portion of the undertaking force and became an external factor taking to ignorance of critical selling map. Sing the slow market growing, the alteration directors could hold changed either ‘Technology ‘ or ‘People ‘ variable ; that is they could hold sold some machinery or reduced the work force to accomplish the coveted productiveness. Ignorance of all these resulted in failure of the alteration procedure and finally company closing.

Weisbord ‘s six-boxes:

Weisbord considered six wide classs as shown above. When compared with Leavitt ‘s theoretical account, there are three different factors considered-

* Relationship- The manner in which people interact with each other and with the engineering.

* Rewards- Given to workforce for public presentation.

* Leadership- Common leading undertakings including the equilibrium between the other factors.

External environment is besides considered in this theoretical account unlike Levitt ‘s theoretical account. It besides tells us about the importance of input and end product in relation to the external and internal environments. It does non foreground much on interconnectivity of all the internal factors ( Falletta, 2005 ) .

In our instance survey, Relationship between the squad was maintained good, doing it extremely motivated. Relationship between people and engineering was besides maintained which was achieved through preparation. Provision for wagess was made by altering the footing for wage. But, the Leadership failed. This is because of the failure to analyse the balance between external and internal inputs and end products like decreased market growing, less productiveness and profitableness. This may be the consequence of deficiency of co-ordination between senior and junior direction and non inclusion of senior direction in the undertaking force. When the junior directors observed lesser productiveness than expected, senior directors should hold made an effort to acquire more occupations by aggressive selling or should hold reduced the work force. The ‘vision ‘ was partly achieved. Though they tried to accomplish employee security by retaining them, the company ‘s position of long term prosperity and security was non achieved and the procedure failed.

McKinsey 7S Model:

This theoretical account was drawn by the employees at McKinsey, who did matching research in concern and industry. It considers seven variables which are-

* Strategy- The program in apportioning resources to accomplish the mark.

* Systems- Existing processes followed in the organisation.

* Staff-Different classs of forces.

* Skills- Different capablenesss.

* Style- How cardinal directors behave to accomplish the end.

* Shared value- The important guiding constructs common among the organisation.

The interconnectivity between these is shown by the form of the theoretical account. The writer advises that the company can non merely alter one or two variables to alter the whole organisation. In order to accomplish long term benefit, variables should be changed to go more congruous as a system, proposing that alteration is a uninterrupted procedure. It does non see external environment. The construct of the public presentation or effectivity is non clear in the theoretical account. ( Falletta, 2005 )

In our case-study, Shared values are the ‘vision statement ‘ as this is the common end of all the employees. Skills were as per the demand of the alteration procedure which was achieved through preparation. Production Systems were as per demands, but Financial Systems needed more cheque on productiveness and profitableness. Staff and Style failed because of deficiency of coordination between senior and junior directors due to non-inclusion of the senior direction in the undertaking force, doing them an external factor. As a consequence, they were unable to set up system to take attention of shared values. Strategy failed as the company did non apportion more staff in selling squad, while production squad needed lay-off. Hence, the vision was non achieved and company closed down.

Strategic model of Change direction

We will pull a six measure strategic model to assist implement alteration in any organisation. We will besides analyse our instance survey utilizing this model. The chief distinguishing feature of this model is, that it considers the elaborate function of all those involved in the alteration direction procedure.

1. Fixing the organisation

This initiates the thought procedure. The first measure is to analyze the organisation ‘s present province to find its alteration capacity to hold a realistic vision. Analyzing the organisation ‘s present modus operandis gives an apprehension of how the organisation operates which guides about its public presentation in a specific modus operandi. This will once more beef up the apprehension of organisational operations and will steer about relevant public presentation. ( Feldman, 2003, p. 729 ) Change directors so interact with different stakeholders to understand the demand to alter to accomplish the right intent and hold on the organisation ‘s coveted province, sing internal and external drivers of alteration. This helps directors list out wide types of cultural and technological alterations required. This is so conveyed to the full work force along with the benefits the company and employees would acquire through the alteration. This helps win their assurance and do them experience secured and involved. Care is taken non to convey information about a specific group or single to avoid the feeling of misgiving amongst the whole organisation. ( Price and Chahal, 2006 )

In our instance survey, this measure was implemented efficaciously. Organizational analysis for present and future province was done absolutely and it was conveyed to people in such a manner that everybody was convinced about the demand to alter.

2. Developing the procedure

Vision is the steering statement of the alteration procedure which relates the company ‘s ultimate end, doing it the most of import measure of the alteration direction procedure. The vision and aims should be realistic and clear. ( Cap Gemini Ernst & A ; Young, 2004 ) Change directors foremost decide three groups viz. execution squad, scope of stakeholders and work force. Feedback from measure one is analyzed and used as the footing to happen out different alteration schemes. All these schemes are so evaluated against certain inquiries which are –

* Does the option have a clear position and a systematic attack?

* Does the option support organizational or personal ends?

* Were all the working environments and beginning positions considered?

( Price and Chahal, 2006 )

Different alteration schemes analyzed supra are once more brainstormed and evaluated within the group and a concluding strategic procedure is decided which can even be the combination of some of the options evaluated. Finally a on the job papers is drafted. Different subdivisions in the bill of exchange include- Background, Vision, Goal, Objectives, Design, Implementation program, Timescales, etc. ( Price and Chahal, 2006 ) Execution program should include of import facets like cultural development, employee mobilisation, cognition direction, incentive systems, transmutation map, and stakeholder direction. It is observed that 10 % to 30 % of companies fail to be after for this. ( Cap Gemini Ernst & A ; Young, 2004 )

Cost-benefit analysis is a really of import facet of alteration. Every alteration costs something which can be categorized as economic and psychological. Economic cost is related to outgo incurred, while psychological cost is the strain caused when people try to set to the alteration. ( Newstrom and Davis, 2000 ) So this cost-benefit analysis is required to find the worthiness of alteration. Merely 40 % of the companies think that cost-benefit analysis is a must because all activities are investings that must pay off in the terminal. ( Cap Gemini Ernst & A ; Young, 2004 )

In our instance survey, the vision statement was good written and the execution program was reasonably drawn. But they failed to use the Cost-benefit analysis at the right clip and could non acknowledge that their resources were over assigned. Besides, they failed to be after for the altering market state of affairs, hence could non set to the market growing.

3. Test support

This is the stage before the concluding planning phase. Once the strategic procedure is decided, direction ensures that the squad is still enthusiastic about the program. This is the last chance to reexamine all the certification and suit any last minute developments before the existent execution. This phase confirms the determination about the strategic procedure. ( Newstrom and Davis, 2000 )

In our instance survey, this measure was either non taken or non mentioned in the article. But, it finally did non impact the procedure.

4. Communication

Successful communicating of vision and aims at the right clip, to the stakeholders and the people affected by the alteration is the key to success. In order to associate strategic and operational alteration, it is necessary to pass on it stoping on a warning. ( Whipp and Pettigrew, 1992 ) Implementation squad should place the consequence alteration has on the groups every bit good as on the persons. While delegating new occupations, they should seek to collaborate with the employees to the highest grade possible and do them experience involved. “When people think about what actions they are to take in an organisational modus operandi, they are non confined to believing about public presentations of the modus operandi they are ordaining but may believe loosely about a broad assortment of organisational performances” . ( Feldman, 2003, p. 729 )

Change directors need to be proactive in cut downing the sum of opposition by holding the ‘plan to get the better of opposition ‘ ready. ( Price and Chahal, 2006 ) Personal communicating, struggle direction, leading development and squad edifice are the most of import facets of effectual communicating. Retention direction is the most unmarked facet observed in about 50 % of the companies. ( Cap Gemini Ernst & A ; Young, 2004 )

In our instance survey, communicating with employees ended on a warning note as given in the program to get the better of opposition. Change was communicated successfully and the directors cooperated with the work force ensuing in successful restructuring of the organisation ; rectifying all the defects.

5. Execution

This is a important stage of the procedure. Change directors follow the execution program and go on to make so till the terminal. If non done decently, there is a great hazard of meeting opposition which can be recognized through symptoms like decreased productiveness, gossips/rumors, etc. When recognized, its beginning demands to be identified and treated harmonizing to the ‘plan to get the better of opposition ‘ drawn at measure 4. ( Price and Chahal, 2006 )

There are some common execution barriers observed, such as- excessively many activities without prioritization, no sustained monitoring of activities ( observed in more than 40 % of the companies ) . Other barriers are- changeless reorganisations of the company, unequal support from line direction, unequal preparedness to take duty etc. ( Cap Gemini Ernst & A ; Young, 2004 )

In our instance survey, execution of the program was successful in the beginning. When they observed opposition, they took necessary action against it. But it was non followed till the terminal. The program was to increase the productiveness. When the market slowed down, necessary action should hold been taken like work force decrease or aggressive selling to convey sufficient occupations for the extremely motivated work force.

6. Evaluation

Change directors can measure the effectivity of the procedure utilizing Key Performance Indicators, at any phase of execution. Generally, be aftering applied scientist or execution squad is non involved because of the obvious vested involvements. Middle direction can make it better, with indifferent positions. This can be done with procedure reviews and audits. New procedures can be reviewed and compared with the chosen procedure. After making so, if any job is identified, necessary accommodations need to be made to the procedure ; this can be repeated several times. This continues and the procedure becomes a driver for the following alteration. ( Price and Chahal, 2006 )

In our instance survey, this measure was about neglected by the alteration directors. They either failed to analyse the less productivity ensuing from the slow market growing or failed to integrate necessary alterations in the procedure to accomplish the vision.


Change direction is a really complex procedure because of the different factors involved in it. Though there is no globally accepted theoretical account, we can utilize different theoretical accounts in the same state of affairs. Some theoretical accounts are easier to utilize, while others need more critical analysis harmonizing to the state of affairs. It depends on the alteration director to accommodate a certain procedure. If all the stairss are followed through, maintaining the vision in head, we can successfully implement alteration. Otherwise it can be every bit black as company closing.