CHAPTER 18

Change Management

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

1. Understand the characteristics and objectives of change management
2. Discover the elements and causes of organizational change
3. List the types of organizational changes
4. Enumerate the steps in the change management process
5. Explain the types and symptoms of employee resistance
6. Learn the strategies to tackle resistance to changes
7. Discover why change initiatives fail
8. List the strategies to enhance success in change management
9. Present an overview of organizational restructuring

India’s Inspirational Managers

Vineet Nayar, the vice-chairman and CEO of HCL Technologies, is one of the eight Indians in Thinkers50, a global listing of the world’s best business minds. When HCL required a change strategy to transform the company into a high-performing organization, Nayar architected an unconventional strategy called “Employees First, Customers Second” (EFCS). Today, EFCS has become a global phenomenon and set a benchmark for good people-management practice. Nayar believes in transferring the ownership of the organizational change and growth to the next generation of leaders who are closest to where the decision impacts the organization. He insists that organizations should attract the “transformers,” who continuously want to change the world by pursuing their passion. He believes in three best practices to facilitate organizational change and growth. They are: (1) increased autonomy to employees by inverting the traditional organizational pyramid; (2) encouraging employee passion on a grand scale and (3) unfettered organic creativity and employee innovation. We shall now discuss change management strategies based on Vineet Nayar’s experiences and accomplishments.

Introduction

Change management is a systematic and planned process of transforming individuals, teams and organizations to achieve a desired future state. Due to relentless changes in the business environment, organizational changes and its management have almost become a continuous function of the management. Change management helps an organization not only in mitigating the business risk arising from its failure to manage the people side of change but also in completely avoiding them in many cases.¹ Managers of any type involved in managing people generally experience resistance to changes from employees. Change management enable them to prevent such resistance and lead changes. Change management is thus a process whereby changes required in an organization are executed in a planned and controlled manner.

Organizational change simply means any departure from the status quo in the organization. Changes in the organization are often caused by two forces, i.e. organization’s top management and its environment. Developments in the internal or external environment of an organization may necessitate changes in the organization. Though change is an inevitable element of any modern business environment, its implementation is a challenge to both the management and the employees. Typically, changes implemented in an organization cause the organizational systems to perform better and deliver increased levels of output. We shall now look at the definitions of change management.

Definitions of Change Management

Managing people in a changing environment to achieve desired results is the focus of many definitions of change management. We shall now see a few definitions.

“Change management is the process, tools and techniques to manage the people-side of business change to achieve the required business outcome and to realize that business change effectively within the social infrastructure of the workplace.”—Hiatt and Creasey²

“Change management can be defined as the process of continually renewing an organization’s direction, structure, and capabilities to serve the ever changing needs of external and internal customers.”—Moran and Brightman³

“Change management can be defined as “activities involved in (1) defining and instilling new values, attitudes, norms, and behaviours within an organization that support new ways of doing work and overcome resistance to change; (2) building consensus among customers and stakeholders on specific changes designed to better meet their needs; and (3) planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another.”—GAO, 1998⁴

“Change management incorporates the organizational tools that can be utilized to help individuals make successful personal transitions resulting in the adoption and realization of change.”—Tim Creasey⁵

Characteristics of Organizational Change Management

Based on the definitions, the following characteristics can be derived for organizational change and change management:

1. Organizational change refers to changing the elements of organizations, such as systems, processes, job roles and organizational structure.
2. Change is a continuous process in organizations that operate in environments characterized by continuous changes. In a dynamic world, not changing simply is not an option for organizations.
3. Change is a response to specific problems or opportunities of an organization that may arise out of external or internal stimuli. Change management is the bridge between the solution and results.
4. Change management involves moving an organization from its present state though a transition state to a desired future state. Present state refers to how activities are done today while future state refers to the new system, process, job structure or job roles as defined by change.⁶
5. The role, relevance and urgency of change management depends on the amounts of disruption created in an individual’s everyday work and also on the organization’s value system, culture, ethos, practices, policies etc.
6. Change management focuses narrowly on values of cost, quality and schedule.⁷

Objectives of Change Management

Change management is needed by organizations to fulfil many of their objectives. The objectives are as follows:

1. To systematically enable the employees to accept the changes proposed by the management.
2. To understand and remove the causes of resistance to change in organizations in a planned and phased manner.
3. To improve the organizational performance by solving problems, improving revenue, reducing cost, reducing wastes and inefficiencies, increasing quality, etc.
4. To seize and utilize the opportunities emerging in the internal and external environment of the organization.
5. To build relevant knowledge, skills and ability (KSAs) within the organization to execute change plans in a successful way.
6. To align and realign the relationship between the strategy and work depending on the changes and requirements.
7. To remain competitive in the changing market environment.

Elements of Change

As shown in Figure 18.1, three elements, i.e. processes, people and technology, drive change in any organization irrespective of its size, nature and complexity of operations. These elements are often targeted in many change management programmes. Usually, processes are shaped and reshaped as a response to the changing market conditions. Technology facilitates and enables the process designs. People, as a third element, leverage both the technology and processes to ensure the success of the intended change programme.⁸ We shall briefly look at each of these elements of changes.

Processes

Policies, procedures, rules and regulations along with process map determine the business processes. These processes design and describe the way different works are carried out in organizations. Based on the market conditions and developments, these processes are continuously redesigned so that the emerging market opportunities are exploited, challenges are met and organizational goals are accomplished.

Technology

Technology is normally applied to ensure consistency in the application of the processes. While executing changes, it helps in enhancing the performance efficiency of the processes. Typically, the technology requirements are influenced by the process requirements which are influenced by the intended changes.

People

In any situation, people in the process are those who make the process successful. Typically, people create process, own process and also get emotionally attached to the process. They also become emotional when these processes are changed. It thus becomes crucial for organizations to carefully consider the people side of the change. Organizations should also realise that the designing of new processes and the development of new technology will be of little or no use if people are not a part of the change process. It is people who design new processes, develop new technology and apply these processes and technology to accomplish the intended changes. Organizations should therefore ensure that the people are convinced of the need for changes and play an active role in the change process. Box 18.1 shows the change management approach of a software company.

Causes of Change in Organizations

Prior to planning, implementing and managing changes, it is essential for managers to trace the causes of changes. Managers must be prepared to deal with both the causes and effects of organizational changes.

There are many developments in the internal and external environments that may become individually or collectively responsible for the introduction of change initiatives in an organization. Typically, the factors responsible for changes affecting an organization can be classified into internal and external factors.

Internal Factors

The internal factors that cause organizational changes are:

1. Changes in managerial styles
2. Implementation of new technology
3. Changes in the characteristics of the workforce
4. Decline in the organizational performance and profitability
5. Employees’ suggestions for improvement
6. Conflict in the labour–management relations

Let us now discuss a few specific instances which necessitate changes. Management may feel the need for change when the (a) organization is considerably over-or under-staffed, (b) latest skills and knowledge are required to meet the present or expected operational requirements, (c) existing performance evaluation mechanism is not objective and the accountability for results is not clearly-defined, (d) existing communication systems are faulty, inconsistent and erratic, (e) workforce productivity is abysmally low or stagnant, (f) labour turnover is dangerously high and (g) employee morale is low.

External Factors

The external factors responsible for changes in an organization are:

1. Change in economic environment
2. Change in government policies
3. Entry or exit of competitors
4. Adoption of new strategies by competitors
5. Change in the cost of production like change in material and labour cost
6. Technology developments
7. Changes in relevant laws and legislations
8. Changes in labour market conditions
9. Shift in customers’ tastes and preferences
10. Role of pressure groups

Types of Organizational Changes

Organizations effect changes for survival, growth and prestige. In this regard, they remain in continuous contact with the external environment to get inputs, which indicate the existing or impending changes in the environment. When an organization receives definite clues about environmental changes, it begins to put in place necessary measures to effect changes. An organization has an option to choose between two types of changes. They are: (i) developmental change and (ii) transformational change.

Developmental Change

Developmental change is an incremental change in which necessary improvements are made in the existing organization. When individual parts of an organization deal increasingly and separately with one problem and one objective at a time, it is known as incremental change.⁹ The term developmental change may be defined as the improvement of a skill, method, conditions, which for some reason, does not measure up to current expectations.¹⁰ In this kind of change, the fundamental characteristics of the organization are preserved and only a few aspects of the organization are improved to align well with the changes occurring in the environment. For instance, improvements in the production techniques, work process and performance standards of employees are a few types of developmental changes. Generally, organizations carry out incremental changes at the time of mergers, acquisitions and new product or technology introductions.¹¹ By and large, these kinds of changes cause minimum stress to the employees and hence face little resistance from them.

Transformational Change

In this kind of organizational change, there would be fundamental changes in the organization. These changes would be complete in all aspects and impact every sphere of activities of the firm. In fact, the transformation in this kind of change is so deep and exhaustive that the result of organizational change could even be the emergence of a new organization. Organizations adopt transformational changes when the developmental changes are grossly inadequate or it is simply overwhelmed by the force and implications of external environmental changes. Transformational changes may result in an organization acquiring new identity, new mission or complete organizational restructuring.¹² Changes resulting in the closure of a division of an organization or drastic corporate reorganization are a few examples of transformational change. This type of change is often forced by developments in the external environment like advent of new technologies, drastic changes in market conditions like demand and supply, unexpected competition, etc.

Steps in the Change Management Process

As far as the change process is concerned, organizations may adopt different approaches to effect changes. For instance, some organizations may prefer planned, structured and explicit change process while others may opt for natural, unstructured and implicit change process. They may adopt suitable strategies for carrying out changes. Though managements can have their own plans on how they manage change in their organization, the change process shown in Figure 18.2 can be adopted by any organization with necessary modifications. The steps in the change process are: (i) defining the environmental problem that requires changes in the organization (ii) determining the goals of change process (iii) deciding the strategies and actions for introducing changes (iv) implementing the change plans and (v) evaluating and providing feedback.

Defining the Environmental Problems that Require Changes in the Organization

The first step in the change management process is assessing the need for change in the organization. Managers must first recognize that there exists a problem in the environment which has implications for the existing or future position of the organization. In this regard, they must constantly scan the internal and external environments to detect challenges and opportunities that require changes in the organization. Then, managers should identify the sources of that problem. The source of problem may be explicit or implicit. When there is a sudden decline in sales performance, rise in cost or increase in labour turnover, the problem is explicit. In contrast, sometimes the problems may not manifest for long time and remain dormant. Once the problem is defined, the source is identified and implications are understood, the organization should move to the next step of determining the goals of change initiatives.

Determining the End Goal of the Change Process

The second step in the change management process is the determination of goals. Managers must decide how the organization should be after change is successfully introduced. The goals must be precise, unambiguous and overarching to the entire change management process. At this stage, managers must also identify the obstacles to the achievement of goals and develop necessary strategies for tackling those obstacles. Managers should assess the likely response of the employees to the change management strategy of the organization. If they anticipate resistance to change within the organization, they should clearly forecast the nature, extent and source of resistance. The resistance may come from a few individuals, groups or even from the entire workforce. The prevailing culture of the organization plays a crucial role in determining the attitude of the employees. For instance, the existing culture may facilitate or hinder change efforts of the organization. As part of the change management process, managers may have to either strengthen or modify the existing culture depending upon its role in the change process.¹³

Deciding the Strategies and Actions for Introducing Changes

At this stage, managers must decide the strategies for introduction of changes in the organization. They should decide the scale and shape of change and appropriate strategies for its implementation. The strategy may involve choosing between gradual (developmental) change and radical (transformational) change.¹⁴ Similarly, the change strategy may also involve selection between participative approach and non-participative approach. The participative approach involves consultation and collaboration with employees and non- participative approach involves coercive action and practices to get the changes implemented in the firm.¹⁵ The focus of the strategies should also be on tackling employee resistance to change at various levels of the organization. The strategies may include among others an improved communication and better employee involvement. An effective communication can facilitate better information sharing with the employees on the need for change in the organization. Similarly, managers may devise plans for actively involving the employees in the discussions and decision-making process relating to change management.

Implementation of Change Plans

This is the most crucial phase in the change management process. At this stage, the change plans of the organization are put into actual practice. Generally, the timing of implementation is important for the success of the change plans. Similarly, high level of clarity in method, measurement, and control of change also facilitates the process of implementation. Further, the factors such as focus, persistence and consensus can also contribute to the success of the implementation process. At implementation, managers must be ready for predicted and/or unpredicted resistances to change process. They must be ready with strategies and counter-strategies to tackle the resistance that might arise in the course of implementation.

As far as implementation is concerned, organizations may adopt the top-down or bottom-up change implementation process.¹⁶ In the top-down process, the organization imposes the change from the top and acts quickly to achieve the desired result. The bottom-up process is a consultative process of change implementation and employees at different levels are actively involved in the planning and implementation process. The bottom-up is a consensus-oriented process and it co-opts resistance to change efforts.

Evaluation and Feedback

Since change is a continuous process, it is essential to evaluate the efficiency of the change management process. There must be a mechanism available in organizations to gather information on the extent of success of the change management process. Managers can use performance indicators such as change in sales, profitability, market size, labour turnover, and goal accomplishments to measure the efficacy of the change management process. The management may also gather feedback from the managers, employees and other stakeholders on various aspects of the change management process. Based on the evaluation and feedback, managers must revise the change strategies and process.

The Change Management Cycle

Macrimmon has suggested a change management cycle called REACTT, which describes the stages in the change management cycle. According to this cycle, the steps involved in the change management process are:

1. Recognise (R)—It involves the recognition of the future challenges that require changes in the people, processes, technology, system, structure and information.
2. Evaluate (E)—It involves understanding the alignment between the organization’s goals and aspiration and its future challenges. It also involves the evaluation of the tasks to be performed.
3. Adjust (A)—It refers to fine-tuning the change plans and programme to suit the change requirements.
4. Carry out (C)—It involves the implementation of the change plans and programmes to achieve desired results.
5. Track (T)—It is a post-implementation evaluation to ascertain the scope for improvement in future.
6. Treasure (T)—It refers to treasuring what was learnt out of the change management process like familiarity with the process, development of expertise and asset specificity, which means “possessing unique knowledge of the peculiarities of a given system.”¹⁷ Box 18.2 shows the modularized organizational change management solution of a service provider.

Resistance to Change

Resistance is an inevitable and a natural employee reaction to changes initiated by an organization. Folger, et al.¹⁸ define “resistance as employee behaviour that seeks to challenge, disrupt, or invert prevailing assumptions, discourses, and power relations.” If the management has several compelling reasons for introducing changes in the organization, the employees may have equally forceful reasons to resist those changes. The foremost reason for employee resistance to change is the fear of losing the status quo in the organization. The change may have varying degrees of effect on the employees, resulting in different responses from each one of them. The intensity of resistance to change is normally influenced by the management’s past action and credibility, existing industrial relations, strength of union and employees’ perception of motive of change.

At the individual level, an employee may express anger, sadness or bitterness as reaction to change. This reaction may manifest itself in different forms both within and outside the organization. Some of the common forms of expression of resistance are absenteeism, reduced productivity and performance, loss of interest and concentration on the job. At the group level, employees and their unions may resist changes by resorting to industrial actions like strike, picketing or gherao. Typically, employees decide their response to changes based on their assessment of the end result of the change process and its implications for them.

Types of Resistance

Once the employees become aware of the changes, they count their gains and losses and then decide their response to the changes. Depending upon the outcome of their assessment, they may decide to either adjust themselves to the change or resist the change initiative. However, the resistance to change need not be obstructive or destructive all the time as sometimes the resistance could be positive and productive. Based on the final outcome of the employee resistance, the resistance may be classified into: (i) positive employee resistance and (ii) negative employee resistance as shown in Figure 18.3.

Positive employee resistance—Although most of the employees’ resistances are branded as obstructions to the change management, some of the resistances indeed produce positive results for the organization. In case of positive resistance, the employees feel the need for change but want the change to be implemented as a collective and productive effort in a mutually-beneficial manner. When employee resistance provokes fruitful discussions, well-grounded debate and constructive criticism of the goals and the process of change, and ultimately leads to improvements in the change goals and the process, such resistance may be called positive resistance. The main concerns of employees in positive resistance are: fear of failure of the change process, the consequences of the change process for them, the attitude and ability of the change leaders, and independent decision making by the management in the change process.

Negative employee resistance—Employee resistances are generally categorized as negative resistances. Employees and their unions express negative resistances through actions such as striking, picketing, gheraoing, etc. In case of negative resistance, employees or their union attempt to block the change efforts through all possible means. Here, employees identify the flaws in the changes and use them effectively to sabotage the change initiative. The primary objective of negative resistance is ensuring the complete failure of change efforts. The main concerns of employees in negative resistance are: loss of job, authority and freedom; or increased difficulty, responsibility and accountability in the job. It is however the task of the managers to make the difference between positive resistance and negative resistance. In this regard, they should keep an open mind while introducing changes. They should never think that all resistances are harmful and must be crushed. Similarly, they should avoid thinking that all those questioning the changes are wreckers and have attitude problems.¹⁹ Thus, managers must have a balanced approach in handling employee resistance towards change initiative.

Employee resistance may further be classified into: (i) active resistance and (ii) passive resistance based on the employees’ behavioural response to the organization’s change efforts.

Active employee resistance—In the case of active resistance, employees either negatively or positively express their response to the change efforts of the organization. They explicitly make their responses known to the organization regarding organizational change initiatives through words and deeds. Direct participation by employees in strikes, picketing and other disruptive actions are the manifestation of active employee resistance to organizational change process. Active resistance might enable the management to determine its strategic response as a part of the change management process. In this type, the employees force the management to understand that they have concerns about the goals and the process of change initiatives, and require improvements in or complete abandonment of the change efforts.

Passive employee resistance—In this type of resistance, employees never express their resistance through actions but somehow inform the management that they are not in favour of change. Outwardly, they neither support nor oppose the change initiatives of the organization. The reason for passive resistance could be the employees’ indecisiveness, fear of reprisal by management, or bitter experiences in the past in similar situations. Further, the employees may resort to passive resistance when they have no alternative proposals to solve the problems requiring changes. Similarly, they may prefer passive resistance when they are afraid of the consequences of failure of resistance or doubtful about the real motives of the resistance leaders in opposing changes. Talking badly about the changes with co-workers, speaking ill of the organization, careless performance of the job, and adopting paradoxical standards towards change process are a few forms of passive employee resistance.

Symptoms of Resistance

There are various ways through which employees can demonstrate their resistance to the change initiatives of the management. Their efforts to defeat change initiatives may differ at individual, group and organizational levels. At the individual levels, the resistance is normally subdued and passive while it is vociferous at the organizational and group levels. Similarly, at individual levels the resistance is more spontaneous and less planned whereas the resistance at group or organizational levels is more planned and organized. We shall now see the important symptoms of resistance to change in organizations.

Resistance from employees: These are as follows:

1. Sudden increase in employee absenteeism
2. High labour turnover, including loss of high value employees
3. Non-participative and indifferent behaviour
4. Lack of initiatives from employees
5. Procrastination
6. Irate and uncooperative reaction to change initiatives
7. Insensitivity
8. Unprofessional conduct
9. Groupism
10. Dereliction of duties and responsibilities

Resistance from managers and supervisors: These are as follows:

1. Indulging in partisan politics
2. Sabotaging change process and initiatives²⁰
3. Information blocking and filtering regarding change initiatives
4. Inadequate discussion and negative remarks about changes with employees
5. Assigning inadequate resources, time and efforts for change initiatives

Strategies to tackle resistance to changes—In handling employee resistance to change, prevention is always better than cure. Management must have effective strategies and good practices to foresee and forestall resistance to change efforts of the organization. In this regard, some strategies for ensuring hassle free introduction of changes in the organization have been developed based on the guidelines provided by Cynthia D. Scott et al.¹⁸

1. The management must have good and valid reason for introducing changes in the organization.
2. It must ensure total and active involvement of employees in the change process.
3. The management must continuously assess the preparedness of the organization for change efforts.
4. There must be a constant review of the HR policies and practices to make certain that they support and not obstruct change.
5. Persons in charge of planning and managing changes must have high integrity and respect among the employees. The organization can have transitions management teams to plan, foresee, troubleshoot, harmonize and focus on change efforts.
6. The leadership in charge of change must ensure that their words and deeds are consistent and trustworthy at all times.
7. There must be adequate training and guidance for employees to help them acquire new values, skills and behaviours to successfully deal with a post-change situation.
8. Whenever and wherever necessary, external expertise must be sought to reinforce the direction in which the organization intends to proceed.
9. Developing and establishing symbols of change like new logos, slogans, newsletters to connect employee with changes and to seek their cooperation.
10. Acknowledging the struggles and sacrifices of people connected with the change process by rewarding them appropriately. There must also be a disincentive for negative resistance.

Why Change Initiatives Fail?

Managing change is generally tough, especially when it involves the accomplishment of long-term goals and requires best possible coordination among and cooperation of many people. A recent study has shown that only 25% of change management initiatives are successful in fulfilling the long-term objectives.²¹ We shall now look at a few specific reasons why change initiatives fail.

1. Absence of well-defined and realistic change management plans and initiatives.
2. Lack of adequate support from the top management for change initiatives.
3. Inadequate communication about changes and the reasons for such changes.
4. Unwillingness among employees to adopt new attitude and behaviour required to make the change work.
5. Absence of any sense of urgency that drives the need to change among organizational members.
6. Disconnect between the members involved in the planning and execution of change management plans. Similarly, there may absence of coordination and even infighting among the team members engaged in the change management plan implementation.
7. The tendency among the change leaders to declare success even before the change management plan is fully executed and goals are fully achieved.
8. Absence of periodic measurement of the progress and direction of change and early interventions to set right the deviations, if any.
9. Lack of clear strategy among change leaders on when to accelerate or decelerate the pace of change.
10. Absence of incentives for employees in the change management plans. Change may fail to establish a link between the success of change initiatives and the employee’s compensation.
11. Non-availability of technology needed for implementation of change management plan.
12. Adoption of a one-dimensional solution to the problem that requires change.

Strategies to Enhance Success in Change Management

Change is inevitable for any organization and hence managements undertake changes at various points of time. The reasons for change may differ from one organization to another and also from one period to another. For instance, some organizations may carry out changes to achieve growth while some others may change just to survive in the business field. Organizations continually make efforts to plan and implement changes to tackle many environmental challenges. However, all organizations may not succeed in their attempt to bring about desired changes. Even among successful organizations, the degree of success may differ from one organization to another and also from one situation to another. This is because some organizations are good at managing changes while others may not be so good and just struggle and miserably fail. We shall now look at the strategies that can enhance the success rate of change management.

• Organizations should develop a worthy vision and realistic change management plans for achieving success in plan initiatives.
• They should establish a change team that is fully supported by the senior management team.
• They need to integrate the change teams with other teams in the organization, like HR teams, transition management team, etc.
• The change initiatives should be accompanied with necessary organizational learning and development.
• There must be adequate emphasis on information sharing among the change leaders. Change leaders should also be listening to and communicating with the employees.
• There must be constant, clear and inspiring communication through various channels for every employee to achieve their true potential.
• Top management should develop a belief in the change initiatives and be positive about the outcomes of such initiatives.
• The change willingness of the organizational members should be periodically monitored and necessary steps to be initiated to constructively deal with resistance.
• Change leaders should learn to develop multi-dimensional solutions to problems that require changes.
• Management should ensure that the operational disruptions are kept to a minimum during change initiatives.
• Management should develop and implement specific risk mitigation strategies relating to employee retention.
• Continuous feedback on the efficiency of change management initiatives should be gathered and used for future improvements.

Richard H. Axelrod²² has suggested some principles for improving the change management initiatives. They are: the principal of expanding the circle of involvement, principle of connecting people to each other, principle of communities for action and the principle of promoting fairness.

Organizational Restructuring

A successful change initiative in an organization typically facilitates strategic organizational systems to be well-aligned with the changed environmental conditions. Sometimes the change process may require among others a complete or partial organizational restructuring. Organizational restructuring involves adapting an organization to the demands of the changing external environment, depending upon the prevailing industrial scenario that necessitated changes in the structure and functioning of the organization.

Managers have to decide on the kind of restructuring required to make the organization flatter and leaner. In any form of restructuring, work is often redefined and hence workers are disturbed. This may result in resistance to the restructuring programmes. Here, an effective management must foresee the quantum and the cost of change and should devise appropriate plans to implement them with less resistance. Generally, a successful restructuring programme will lead to improved productivity and morale, reduced personnel turnover and improved organizational effectiveness and flexibility.

Summary

1. Change management is a process by which changes required in an organization are executed in a planned and controlled manner.
2. Three elements that drive organizational changes are processes, people and technology
3. The internal factors that cause organizational changes are: (i) changes in managerial styles, (ii) implementation of new technology, (iii) changes in the characteristics of the workforce, (iv) decline in the organizational performance and profitability, (v) employees’ suggestions for improvement and (vi) conflict in the labour–management relations.
4. The external factors that cause organizational changes are: (i) change in economic environment, (ii) change in government policies, (iii) entry or exit of competitors, (iv) adoption of new strategies by competitors, (v) change in the cost of production, (vi) technology developments, (vii) changes in relevant laws and legislations, (viii) changes in labour market, (ix) shift in customers’ tastes and preferences and (x) role of pressure groups.
5. Organizational change can be classified into developmental change and transformational change.
6. Steps in the change management process are: (i) defining the environmental problem that requires changes in an organization, (ii) determining the goals of the change process, (iii) deciding the strategies and actions for introducing changes, (iv) implementing the change plans and (v) evaluating and providing feedback.
7. Employee resistance may be classified into: (i) positive resistance and (ii) negative resistance. It may also be classified into: (i) active resistance and (ii) passive resistance.

Review Questions

Short-answer questions

1. What do you mean by change management?
2. State the characteristics of change management.
3. What are the objectives of change management?
4. Explain briefly the elements of organizational change.
5. Distinguish between developmental change and transformational change.
6. What is meant by the change management cycle?
7. Write a note on organizational restructuring.

Essay-type questions

1. Critically evaluate the causes of organizational changes with example.
2. Discuss in detail the different types of changes with necessary examples.
3. Enumerate the steps in the organizational change management process.
4. Examine the various types of employee resistances and identify the symptoms of resistance.
5. Managing change is generally tough, especially when it involves the accomplishment of long term goals. Discuss.
6. Describe the reasons for the failure of change initiatives and suggest strategies for improving the success rate of change management initiatives.

Case Study

Resisting for Change in Recruitment Policy with Times

Alectek Shoes is a manufacturer of popular shoes in the country. It is one of the oldest footwear manufacturers in India with a sizeable market share in the industry. It also exports considerable portions of its premium segment products to overseas markets. This company has a strong workforce of over 11,000 employees. It is engaged not only in manufacturing but also in marketing operations through its own retail outlets.

Being an old company, most of its HR policies are conventional and empirical. Based on its bitter experience in the past, the top management firmly believed that the candidates with a revolving-door approach towards a job (changing jobs frequently) are less committed employees and are prone to leave the organization early. The recruitment philosophy and policy of this company clearly reflected this and, understandably, discriminated against those candidates who changed their jobs frequently in the past. In fact, the HR people were instructed to eliminate the applicants with a poor track record of jobs stability, irrespective of their levels of skills and abilities. These candidates were eliminated by the HR department either by rejecting their application at the serutiny satage or by eliminating them in the very early phase of the selection process. Since its compensation packages are the best in the industry, the company had so far never faced any problem in finding the required number of people to fill the job positions.

Recently, the company developed a huge manufacturing facility in a metropolitan city located in southern India in order to double its production capacity. With this production expansion, the company was looking to emerge as India’s leading footwear player. As part of this expansion plan, it decided to strengthen the manufacturing, sales and marketing division with increased workforce. It decided to conduct a major recruitment drive for filling all the new vacancies in addition to the routine ones. Obviously, the number of positions to be filled up in the company just swelled. The company conducted an extensive advertisement campaign to attract the best candidates for filling the available job positions.

The recruitment campaign evoked a good response in the sense that many prospective candidates applied for the advertised positions. However, the scrutiny of these applications revealed that a significant number of these candidates had poor job stability records as they seemed to have worked in different companies for short tenures. But for this shortcoming, these candidates were found to be suitable for the offered positions. Due to this unprecedented situation, the company was now in a quandary. If these candidates were eliminated, the company might not get a sufficient number of candidates with the required skills for filling all the existing vacancies. In contrast, if they were selected, the firm might not get a sufficient number of candidates with the required skills for filling all the existing vacancies. In contrast, if they were selected, the firm might face problems of unanticipated and untimely employee desertions and the resultant work disturbances.

However, the HR manager was clear about how this situation ought to be handled. He demanded drastic revisions in the HR policy to make it relevant for the existing labour market scenario. First of all, he wanted some major alterations in the recruitment policy to enable the organization to consider seriously and equitably the candidature of all the applicants, irrespective of their past track record about job stability. Next, he insisted that the company design and develop effective career development programmes for the employees immediately so that there were better career prospects available for them in the company itself. This should also obviate their need for leaving the company to seek better prospects elsewhere, he averred. Moreover, a good career plan would establish long-term relationships between the organization and the employee through better employee commitment and motivation. He also insisted on evolving plans for training these employees continuously as part of the skill enhancement exercise. These measures, he believed, would bring down the chances of employee desertion and associated problems.

However, the management did not buy his arguments. It raised serious doubts about the efficacy of the HR manager’s proposal. It actually feared that a better trained and skilled employee would leave the organization early as there would be an increased demand for his skills in the labour market. It also felt that it was difficult to thwart a habitual job deserter from quitting the organization, however effective the career development programme may be. Thus, the management insisted on maintaining the status quo in recruitment policy and asked the HR manager to come up with more practical suggestions for solving the present problem.

However, the management did not buy his arguments. It raised serious doubts about the efficacy of the HR manager’s proposal. It actually feared that a better trained and skilled employee would leave the organization early as there would be an increased demand for his skills in the labour market. It also felt that it was difficult to thwart a habitual job deserter from quitting the organization, however effective the career development programme may be. Thus, the management insisted on maintaining the status quo in recruitment policy and asked the HR manager to come up with more practical suggestions for solving the present problem.

Questions

1. What is your assessment of the whole situation in Alectek Shoes?
2. What is your opinion about the role of recruitment policy in the entire controversy?
3. If you are made the HR manager of Alectek Shoes, what would be your suggestion to solve the problem?
4. What more can the company do in terms of career planning and development activities of the firm vis-a-is the employee attritions, besides the HR manager’s suggestion?

Note: The solution for the above case is available at www.pearsoned.co.in/duraipom2e

References

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