Expert Answer:Management Week Discussion

  

Solved by verified expert:Discussion Board #5 focuses on that section of your textbook (Chapter 7) that deals with “Organization Change and Innovation.” This week’s question has two components: 1. First, I would like you to identify and describe the reason some people “strongly” resist organizational change, a normal part of life in organizations. 2. For the second part of this discussion, I would like you to describe and explain, according to your text, some of the appropriate steps or actions that management can implement to attempt to minimize the resistance to organizational change. Along with reading chapter 7, I’ve included a short YouTube video for you to view below entitled, “What is Change Management? Training Video.” This video should help everyone generate their creative “change” juices for our weekly discussion board. I also uploaded Chapter 7 file for you. Video is available on YouTube at https://www.youtube.com/watch?v=__IlYNMdV9E (Please note there are alternate spellings for some of the words seen in this video)
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Chapter 7: Organization Change and
Innovation
7-1The
Nature of Organization
Change
Organization change is any substantive modification to some
part of the organization. Thus, change can involve virtually
any aspect of an organization: work schedules, bases for
departmentalization, span of management, machinery,
organization design, people themselves, and so on. It is
important to keep in mind that any change in an organization
may have effects extending beyond the actual area where the
change is implemented. For example, when General Motors
recently installed a new automated production system at one of
its plants, employees were trained to operate new equipment,
the compensation system was adjusted to reflect new skill
levels, the span of management for supervisors was altered, and
several related jobs were redesigned. Selection criteria for new
employees were also changed, and a new quality control system
was installed. In addition, it is quite common for multiple
organization change activities to be going on simultaneously.
7-1aForces
for Change
Why do organizations find change necessary? The basic reason
is that something relevant to the organization either has
changed or is likely to change in the foreseeable future. The
organization therefore may have little choice but to change as
well. Indeed, a primary reason for the problems that
organizations often face is failure to anticipate or respond
properly to changing circumstances. The forces that compel
change may be external or internal to the organization.
External Forces
External forces for change come from the organization’s general
and task environments. For example, two energy crises, an
aggressive Japanese automobile industry, floating currency
exchange rates, and floating international interest rates—all
manifestations of the international dimension of the general
environment—profoundly influenced U.S. automobile
companies. New rules of production and competition forced
them to dramatically alter the way they do business. In the
political area, new laws, court decisions, and regulations affect
organizations. The technological dimension may yield new
production techniques that the organization needs to explore.
The economic dimension is affected by inflation, the cost of
living, and money supplies. The sociocultural dimension,
reflecting societal values, determines what kinds of products or
services will be accepted in the market.
Because of its proximity to the organization, the task
environment is an even more powerful force for change.
Competitors influence an organization through their price
structures and product lines. When Dell lowers the prices it
charges for computers, Hewlett-Packard may have little choice
but to follow suit. Because customers determine what products
can be sold at what prices, organizations must be concerned
with consumer tastes and preferences. Suppliers affect
organizations by raising or lowering prices or changing product
lines. Regulators can have dramatic effects on an organization.
For example, if OSHA rules that a particular production process
is dangerous to workers, it can force a firm to close a plant until
it meets higher safety standards. Unions can force change when
they have the clout to negotiate for higher wages or if they go on
strike.
Internal Forces
A variety of forces inside the organization may cause change. If
top management revises the organization’s strategy,
organization change is likely to result. A decision by an
electronics company to enter the home computer market or a
decision to increase a ten-year product sales goal by 3 percent
would occasion many organization changes. Other internal
forces for change may be reflections of external forces. As
sociocultural values shift, for example, workers’ attitudes
toward their job may also shift—and workers may demand a
change in working hours or working conditions. In such a case,
even though the force is rooted in the external environment, the
organization must respond directly to the internal pressure it
generates.
7-1bPlanned
Versus Reactive Change
Some change is planned well in advance; other change comes
about as a reaction to unexpected events. Planned change is
designed and implemented in an orderly and timely fashion in
anticipation of future events. Reactive change is a piecemeal
response to circumstances as they develop. Because reactive
change may be hurried, the potential for poorly conceived and
executed change is increased. Planned change is almost always
preferable to reactive change.
Georgia-Pacific, a large forest products business, is an excellent
example of a firm that went through a planned and wellmanaged change process. When A. D. Correll became CEO, he
quickly became alarmed at the firm’s high accident rate—9
serious injuries per 100 employees each year, and 26 deaths
during the most recent 5-year period. Although the forest
products business is inherently dangerous, Correll believed that
the accident rate was far too high and set out on a major change
effort to improve things. He and other top managers developed
a multistage change program intended to educate workers
about safety, improve safety equipment in the plant, and
eliminate a long-standing part of the firm’s culture that made
injuries almost a badge of courage. As a result, Georgia-Pacific
achieved the best safety record in the industry, with relatively
few injuries.
On the other hand, Caterpillar was caught flat-footed by a
worldwide recession in the construction industry, suffered
enormous losses, and took several years to recover. Had
managers at Caterpillar anticipated the need for change earlier,
they might have been able to respond more quickly. The
importance of approaching change from a planned perspective
is reinforced by the frequency of organization change. Most
companies or divisions of large companies implement some
form of moderate change at least every year and one or more
major changes every four to five years. Managers who sit back
and respond only when they have to are likely to spend a lot of
time hastily changing and rechanging things. A more effective
approach is to anticipate forces urging change and plan ahead to
deal with them.
7-2Managing
Change in
Organizations
Animation-Implementing Change
Watch this animation to gain further knowledge of this concept.
Volume 91%
Copyright © Cengage Learning. All Rights Reserved
Organization change is a complex phenomenon. A manager
cannot simply wave a wand and implement a planned change
like magic. Instead, any change must be systematic and logical
to have a realistic opportunity to succeed. To carry this off,
the manager needs to understand the steps of effective change
and how to counter employee resistance to change.
7-2aSteps
in the Change Process
Researchers have over the years developed a number of models
or frameworks outlining steps for change. The Lewin model was
one of the first, although a more comprehensive approach is
usually more useful in today’s complex business environment.
The Lewin Model
Kurt Lewin, a noted organizational theorist, suggested that
every change requires three steps. The first step is
unfreezing—individuals who will be affected by the impending
change must be led to recognize why the change is necessary.
The second step is the implementation of the change itself. The
third step is refreezing, which involves reinforcing and
supporting the change so that it becomes a part of the system.
For example, one of the changes that Caterpillar faced in
response to the recession noted earlier involved a massive
workforce reduction. The first step (unfreezing) was convincing
the United Auto Workers (UAW) to support the reduction
because of its importance to long-term effectiveness. After this
unfreezing was accomplished, 30,000 jobs were eliminated
(implementation). Then it worked to improve its damaged
relationship with its workers (refreezing) by guaranteeing
future pay hikes and promising no more cutbacks. As
interesting as the Lewin model is, it unfortunately lacks
operational specificity. Thus, a more comprehensive perspective
is often needed.
A Comprehensive Approach to Change
The comprehensive approach to change takes a systems view
and delineates a series of specific steps that often leads to
successful change. This expanded model is illustrated in Figure
7.1. The first step is recognizing the need for change. Reactive
change might be triggered by employee complaints, declines in
productivity or turnover, court injunctions, sales slumps, or
labor strikes. Recognition may simply be managers’ awareness
that change in a certain area is inevitable. For example,
managers may be aware of the general frequency of
organizational change undertaken by most organizations and
recognize that their organization should probably follow the
same pattern. The immediate stimulus might be the result of a
forecast indicating new market potential, the accumulation of a
cash surplus for possible investment, or an opportunity to
achieve and capitalize on a major technological breakthrough.
Managers might also initiate change today because indicators
suggest that it will be necessary in the near future.
Figure 7.1Steps in the Change Process
Managers must understand how and why to implement change. A
manager who, when implementing change, follows a logical and orderly
sequence like the one shown here is more likely to succeed than a
manager whose change process is haphazard and poorly conceived.
© Cengage Learning
Second, managers must set goals for the change: to increase
market share, to enter new markets, to restore employee
morale, to settle a strike, and to identify investment
opportunities—all might be goals for change. Third, managers
must diagnose what brought on the need for change. Turnover,
for example, might be caused by low pay, poor working
conditions, poor supervisors, or employee dissatisfaction. Thus,
although turnover may be the immediate stimulus for change,
managers must understand its causes to make the right
changes.
The next step is to select a change technique that will
accomplish the intended goals. If turnover is caused by low pay,
a new reward system may be needed. If the cause is poor
supervision, interpersonal skills training may be called for.
(Various change techniques are summarized later in this
chapter.) After the appropriate technique has been chosen, its
implementation must be planned. Issues to consider include the
costs of the change, its effects on other areas of the organization,
and the degree of employee participation appropriate for the
situation. If the change is implemented as planned, the results
should then be evaluated. If the change was intended to reduce
turnover, managers must check turnover after the change has
been in effect for a while. If turnover is still too high, other
changes may be necessary.
7-2bUnderstanding
Resistance to Change
Another element in the effective management of change is
understanding the resistance that often accompanies change.
Managers need to know why people resist change and what
can be done about their resistance. When Schlumberger first
provided all its managers with smartphones, most people
responded favorably. One manager, however, resisted the
change to the point where he maintained two telephone
numbers, one on his new smartphone (which he left with his
assistant) and his old standard cell phone that he continued to
use. Such resistance is common for a variety of reasons. The
“Leading the Way” feature illustrates resistance to change.
Uncertainty
Perhaps the biggest cause of employee resistance to change is
uncertainty. In the face of impending change, employees may
become anxious and nervous. They may worry about their
ability to meet new job demands, they may think that their job
security is threatened, or they may simply dislike ambiguity.
Nabisco was once the target of an extended and confusing
takeover battle, and during the entire time, employees were
nervous about the impending change. The Wall Street
Journal described them this way: “Many are angry at their
leaders and fearful for their jobs. They are swapping rumors
and spinning scenarios for the ultimate outcome of the battle for
the tobacco and food giant. Headquarters staffers in Atlanta
know so little about what’s happening in New York that some
call their office ‘the mushroom complex,’ where they are kept in
the dark.” More recently, 13,500 British Airways cabin crew
members voted to participate in a strike over a heavily traveled
holiday season. The action against the airlines was spurred by
high levels of uncertainty as British Airways planned to merge
with another airline and proposed cutting 1,700 jobs and
freezing employee wages in the process.
Threatened Self-Interests
Many impending changes threaten the self-interests of some
managers within the organization. A change might diminish
their power or influence within the company, so they fight it.
Managers at Sears once developed a plan calling for a new type
of store. The new stores would be somewhat smaller than a
typical Sears store and would not be located in large shopping
malls. Instead, they would be located in smaller strip centers.
They would carry clothes and other “soft goods,” but not
hardware, appliances, furniture, or automotive products. When
executives in charge of the excluded product lines heard about
the plan, they raised such strong objections that the plan was
cancelled.
Different Perceptions
A third reason that people resist change is due to different
perceptions. A manager may make a decision and recommend a
plan for change on the basis of her own assessment of a
situation. Others in the organization may resist the change
because they do not agree with the manager’s assessment or
perceive the situation differently. Executives at 7-Eleven
battled this problem as they attempted to enact a major
organizational change. The corporation wanted to take its
convenience stores a bit “upscale” and begin selling fancy fresh
foods to go, the newest hardcover novels, some gourmet
products, and higher-quality coffee. But many franchisees
balked because they saw this move as taking the firm away from
its core blue-collar customers.
Feelings of Loss
Many changes involve altering work arrangements in ways that
disrupt existing social networks. Because social relationships
are important, most people resist any change that might
adversely affect those relationships. Other intangibles
threatened by change include power, status, security, familiarity
with existing procedures, and self-confidence.
Leading the Way
Charting a “New” Old Course
Lenovo is a leading Chinese technology products company best known
for the line of ThinkPad personal computers it purchased from IBM. For
years, the company has struggled with balancing traditional Chinese
approaches to management with contemporary management practices
more widely practiced in global businesses. Lenovo’s founder, Liu
Chuanzhi, recently took back control of the firm in an effort to improve
its competitiveness.
Doug Kanter/Bloomberg/Getty Images
Lenovo was started in Beijing by Liu Chuanzhi in 1984. Initially, Lenovo made
computers for other companies. In 1990, the firm launched its own brand of PC
and by 1997 Lenovo was the top-selling PC in its home country. Unfortunately,
however, the company was not successful in gaining market share outside China.
One reason for this was the lack of brand recognition. Another was that Lenovo
simply did not have many top managers with global experience. But that changed
in 2005. When IBM decided to sell its PC operation that year, Lenovo was quick
to jump on the opportunity and bought IBM’s entire PC business for $1.75 billion.
Lenovo was allowed to continue using the IBM name through 2007 but then
started to brand all of its PCs with the Lenovo name. Along with the PC business
itself, Lenovo also got a team of skilled top managers well-versed in global PC
markets. Senior IBM executives were quickly integrated throughout the top
management structure, and one of them, Stephen Ward, was appointed chief
executive officer (CEO) of Lenovo. Liu Chuanzhi, meanwhile, moved into the
background but remained a director—he felt that Lenovo’s best opportunity for
the firm to gain international market share would be under the leadership of a
seasoned global manager like Ward.
But almost from the start, problems began to surface. Ward was extremely
autocratic and believed that Lenovo should function in a highly centralized,
command-and-control fashion. This alienated his new Chinese colleagues who
assumed that their roles were being diminished because they spent less time
with the CEO. Chuanzhi, for instance, had relied on a senior leadership team that
worked together to make decisions, whereas Ward made most of the major
decisions by himself. And at a more general level, the U.S. managers tried to
impose a rigid, centralized, and bureaucratic structure throughout the new
Lenovo. The Chinese, meanwhile, were highly resistant to these efforts, strongly
preferring the more consensus-style structure that they had used previously.
Within a matter of months, things came to a head. Among other changes, Ward
was pushed out and replaced with William Amelio, a senior executive recruited
from Dell Computer’s Asia/Pacific operations. Amelio immediately indicated his
intent to try to move Lenovo back toward the traditional Chinese structure. He
also thought that the firm could benefit from an infusion of additional
perspectives, so he began to aggressively recruit new executives from other hightech firms such as Dell, Motorola, Samsung, and Toshiba. He also softened the
rigid functional structure and tried building more coordination across areas by
creating cross-functional teams. Unfortunately, though, Amelio never carried
through on his plan to change how decisions were made, retaining much of the
decision-making authority himself and continuing the command-and-control
approach that had been Ward’s downfall. Lenovo also began to lose market share
and profits began to drop.
Finally, Chuanzhi decided that he had to take action. He pushed Amelio to resign
and took control of the firm himself. He then quickly restructured the upper
ranks of Lenovo to fall more in line with the traditional Chinese approach.
Chuanzhi formed the eight top managers at Lenovo into a close-knit team and
then brought them together regularly to make decisions and formulate plans.
After decisions and plans were made by consensus, the team continued to work
together to ensure that they were implemented effectively and with buy-in from
others throughout the organization. Today Lenovo is headquartered in Hong
Kong but has major operations in Beijing, Singapore, and Morrisville, North
Carolina. The firm’s products include PCs, workstations, servers, storage devices,
and information technology (IT) services. Lenovo has also entered the mobile
phone business, citing increased convergence between the PC and handheld
wireless technologies. In 2012, Lenovo generated profits of $273 million on
revenues of $21.6 billion and employed more than 27,000 workers. Right now,
it’s still too soon to know if the changes at Lenovo will improve its fortunes or
not. But Chuanzhi believes that his new approach, which he calls a “blend of old
Chinese thinking and modern global thinking,” will soon carry the day.
References: “Lenovo’s Legend Returns,” Time, May 10, 2010, pp. 65–68; “Lenovo: A Company
Without a Country,” Businessweek, January 23, 2010, pp. 49–50; “Lenovo’s Turnaround
Man,” Forbes, May 4, 2010, p. 88; Hoover’s Handbook of World Business 2013, Austin: Hoover’s
Business Press, 2013, pp. 236–237; “IBM Shows Secret to Corporate Longevity,” USA Today,
June 16, 2011, pp. 1B, 3B; Miguel Helft, “Can Lenovo Do It?” Fortune, June 10, 20 …
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