CHAPTER THIRTEEN

MANAGING ORGANIZATIONAL CHANGE AND DEVELOPMENT

If, as Chapter Six asserts, organizational effectiveness is the fundamental issue in organizational analysis, then the challenge of changing organizations is a strong candidate for second place. A sprawling literature addresses organizational change and innovation, with much of it focused on how to change organizations for the better. As earlier chapters point out, controversy simmers over whether public organizations and their employees resist change. The truth is that researchers and experts often note a paradoxical aspect of change in public organizations. Far from being isolated bastions of resistance to change, they change constantly. This pattern may sometimes impede substantial long-term change, however. In many public organizations, the politically appointed top executives and their own appointees come and go fairly rapidly. In federal agencies, the agency heads stay less than two years on average. Shifts in the political climate cause rapid shifts in program and policy priorities. This can make it hard to sustain implementation of major changes. Conversely, we now have an abundance of examples of successful change in public organizations, and this chapter describes some of them.

Relatively Natural Change: Organizational Life Cycles

Members of organizations plan and carry out some changes purposefully. Other changes occur more spontaneously or naturally as organizations pass through phases of development or respond to major shifts in their environment. The two types of change intermingle, of course, as managers and other members respond to shifting circumstances. In the past two decades, in their writing and research on organizational life cycles, birth, and decline, scholars have turned more attention to externally imposed and naturally evolving change processes (Aldrich, 1999; Baum and McKelvey, 1999; Cameron, Sutton, and Whetten, 1988; Kimberly, Miles, and Associates, 1980). Much of this work concentrates on business firms but applies to public organizations as well (for example, Quinn and Cameron, 1983; Van de Ven, 1980). Years ago, Simon, Smithburg, and Thompson (1950) noted that public organizations become distinct by the nature of their birth. An influential set of interests must support the establishment of a public organization as a means of meeting a need that those interests perceive, and they must express that need politically. Public agencies are born of and live by the satisfaction of interests that are sufficiently influential to maintain the agencies’ political legitimacy and the resources that come with it.

Later, Downs (1967) suggested a number of more elaborate ways in which public bureaus form. For one of these ways, Max Weber coined the phrase “routinization of charisma,” in which people devoted to a charismatic leader press for an organization that pursues the leader’s goals. Alternatively, as Simon, Smithburg, and Thompson (1950) pointed out, interested groups press for the formation of a bureau to carry out a function for which they see a need. A new bureau can split off from an existing one, as did the Department of Education from what used to be the Department of Health, Education, and Welfare (Radin and Hawley, 1988). Also, entrepreneurs may gain enough support to form a new bureau. Admiral Hyman Rickover became a virtual legend by building an almost autonomous program for the development of nuclear propulsion in the nuclear power branch of the navy’s Bureau of Ships and the nuclear reactor branch of the Atomic Energy Commission (Lewis, 1987).

The Stages of Organizational Life

Downs also said that bureaus have a three-stage life cycle. The earliest stage involves a struggle for autonomy. “Zealots” and “advocates” dominate young bureaus and struggle to build political support for their bureau’s legitimacy and resource requests. Once a bureau has established itself and ensured its survival, it enters a stage of rapid expansion, in which its members emphasize innovation. Ultimately, it enters a deceleration phase, in which the administrators concentrate on elaborating rules and ensuring coordination and accountability. Downs associated this process with what he called the rigidity cycle for bureaus. He said that as bureaus grow older and larger and enter the deceleration stage, the zealots and advocates either depart for more active, promising programs or settle into the role of “conservers.” Conservers come to dominate the bureau, and it ossifies. Others have pointed out that over time many bureaus form strong alliances with interest groups and legislators—especially legislators on the committees that oversee them. These allies guard the bureaus’ access and influence and stave off many change attempts (Seidman and Gilmour, 1986; Warwick, 1975).

Yet Downs oversimplifies the foot-dragging bureaucracy. Large, old organizations change markedly, as has been recognized in recent life-cycle models. Quinn and Cameron (1983) developed a framework based on similarities among models that others have proposed. Their framework conceives of four stages of organizational life cycle—the entrepreneurial, collectivity, formalization and control, and elaboration stages.

In the entrepreneurial stage, members of the new organization concentrate on marshaling resources and establishing the organization as a viable entity. An entrepreneurial head or group usually plays a strong leading role, pressing for innovation and new opportunities and placing less emphasis on planning and coordination. Quinn and Cameron illustrated this stage by describing a newly created developmental center for the mentally disabled in a state department of mental health (DMH). The energetic center director led a push for new treatment methods that involved deinstitutionalizing clients and developing their self-reliance. The center began to receive expanded support from federal grants, the DMH, and the legislature. In this stage, the center emphasized the open-systems model of organization.

Out of the first stage develops the second, the collectivity stage. In this stage the members of the center developed high cohesion and commitment. They operated in a flexible, team-based mode, exhibiting high levels of effort and zeal for the center’s mission. This type of shift represents an expanded emphasis on teamwork, marked by adherence to the human relations model as well as to the open-systems component of the competing values framework described in Chapter Six.

The research on life cycles points out that crises sometimes push organizations into new stages. About six years after the formation of the center, a major newspaper ran articles attacking the DMH for inefficiency, poor treatment of clients, and loose administrative practices. The articles cited critical reports from oversight agencies citing inadequacies in such control mechanisms as organizational charts, records, job descriptions, policy manuals, and master plans. The DMH conducted a special investigation and instructed the center director to move toward a more traditional organizational structure and more traditional controls. The director left, and the new director emphasized clear lines of authority, rules, and accountability. Staff commitment fell, and many staff members left. The center had clearly moved into the formalization and control stage. In competing values terms, the rational control model predominated, and the importance of open systems and human relations criteria declined.

The case ended at this point, but the life-cycle framework includes a fourth stage, involving structural elaboration and adaptation. Confronting the problems of extensive control and bureaucracy that develop during the third stage, the organization moves toward a more elaborate structure to allow more decentralization but also corresponding coordination processes. The organization seeks new ways to adapt, to renew itself, and to expand its domain. A large corporation may become more of a conglomerate, multiplying its profit centers, or it may adopt a matrix design (Mintzberg, 1979). It appears to be difficult for public agencies to decentralize in these ways, however (Mintzberg, 1989). They have no sales and profit indicators to use in establishing profit centers, and they face stronger external accountability pressures. Note that in the DMH case the press and the oversight agencies both pressed for traditional bureaucratic structures—charts, manuals, job descriptions. Some public agencies also reconfigure in later stages, however, as described shortly.

Organizational Decline and Death

Many older, supposedly entrenched organizations face intense pressure to renew themselves. During the 1970s and 1980s, such pressures rose to particular intensity in the United States. Businesses faced surging international competition and swings in the price of oil and other resources. Government agencies faced tax revolts and skepticism about government. This climate bolstered the Reagan administration’s efforts to cut the federal budget, including funding for many agencies and for federal support to state and local governments, many of which also faced state and local initiatives to force tax cuts (Levine, 1980a). In the 1990s, these pressures eased in certain ways because of a strong economy, and research on decline in public agencies slackened. Nevertheless, many factors continued to pressure public organizations in many nations to do more with less. In the United States, a drive to reduce taxes and the federal deficit continued. The Clinton administration’s National Performance Review eliminated 324,580 jobs from the federal workforce, bringing federal employment to its lowest level since 1950. As the new century got under way the Bush administration issued the President’s Management Agenda, which criticized the Clinton administration for making these employment reductions in an across-the-board, poorly planned way that did not take into account strategic human resource needs. At the same time, however, the management agenda announced that competitive sourcing would be one of the primary emphases of the administration. This involves conducting competitive assessments to determine whether government jobs and tasks should be outsourced, or contracted out to private organizations (U.S. Office of Management and Budget, 2002). The administration further announced the objective of considering more than eight hundred thousand federal jobs for outsourcing, and the Department of the Army announced a plan to contract out more than two hundred thousand jobs. In many other nations, reforms as part of the New Public Management movement often emphasized using more businesslike arrangements in government, including contracting out and privatizing governmental activities. So the challenge of reductions, declines, and cutbacks looms very large for people in government.

Even before these recent pressures, organizational researchers realized that while such pressures may have intensified during the period, they actually reflected ongoing processes of decline and demise that had received little attention in organizational research (Cameron, Sutton, and Whetten, 1988; Kimberly, Miles, and Associates, 1980). Bankruptcy rates among business firms have always been high, and all organizations, including public ones, tend to have low survival rates (Starbuck and Nystrom, 1981). Organizations may decline at various rates and in various patterns, for a number of reasons (Levine, 1980b). They may atrophy, their performance declining due to internal deterioration. They may become rigid, inefficient, and plagued with overstaffing and ineffective structures and communications. As described later, the Social Security Administration (SSA) once became so backlogged in processing client requests that everyone involved agreed that something had to be done. In the late 1990s, the IRS undertook a major transformation in response to performance problems and public criticisms (Thompson and Rainey, 2003).

Vulnerability and Loss of Legitimacy.

Organizations, especially new ones, can be quite vulnerable to the loss of resources or support from their environment. Shifts in consumer preferences can undercut businesses. Government organizations face an analogous problem when voters resist taxes. This issue is related to another reason for decline, the loss of legitimacy. Private firms, such as tobacco companies, can suffer when the public or public officials question the legitimacy of their products or activities. Legitimacy figures even more crucially for public organizations. Public and oversight authorities often impose stricter criteria on public organizations for honest, legitimate behaviors, as in the example of the HUD scandal described in Chapter Seven.

Environmental Entropy.

An organization’s environment can simply deteriorate in its capacity to support the organization. Resources may dry up. Political support may wane. Public organizations often lose support because of the waning of the social need they address (Aldrich, 1999; Levine, 1980a).

Responses to Decline.

Organizations respond to decline with greater or lesser aggressiveness and with more or less acceptance of the need for change (Daft, 2013; Whetten, 1988). Some organizations take a negative, resistant disposition toward the pressures for change. They may aggressively strike a preventive posture or passively react in a defensive mode. They may try to prevent pressures for change by manipulating the environment. Public agencies may try to develop or maintain legislation that rules out competition from other agencies or private providers of similar services. Public employee unions sometimes attack privatization proposals because public employees may find them threatening. Conversely, organizations may adopt a less proactive defense against cuts, citing statistics showing the need for their programs and working to persuade legislators that their programs meet important social needs.

Other organizations take a more receptive approach to the need for change, either by reacting or by generating change and adaptation. Many public agencies react with across-the-board cuts in subunit budgets, layoffs, or other reductions in their workforce. Conversely, organizations can also adapt through flexible, self-designing structures and processes. They may allow lower-level managers and employees to redesign their units when they feel the need (Whetten, 1988).

The pressures for reduced government just described have led to a rich discussion of tactics for responding to funding cutbacks. Table 13.1 summarizes Charles Levine’s description of some of those tactics (1980b). Rubin (1985) analyzed the Reagan administration’s cutbacks in five federal agencies. She found that the agencies’ responses in some ways matched what one would expect from the public administration literature and in some ways differed markedly. The president was fairly successful in achieving cutbacks in the agencies. His strong popular support blunted interest-group opposition to the cuts in the early phases. Still, agencies with interest-group support more effectively resisted the cutbacks. Yet Rubin found no evidence of strong “iron triangles” (tight alliances of agencies, interest groups, and congressional committees, as discussed in Chapter Five) protecting the agencies.

TABLE 13.1. ORGANIZATIONAL DECLINE AND CUTBACK MANAGEMENT: TACTICS FOR RESPONDING TO DECLINE AND FUNDING CUTS

Source: Adapted from Levine, 1980b.

The agencies were not nearly so self-directed and uncontrollable as is sometimes claimed. Agency heads tended to comply with the president’s cutback initiatives and usually did not work aggressively to mobilize interest-group support. Career personnel carried out many of the cuts as part of their responsibility to serve the president. Some of the agencies, particularly central administrative and regulatory agencies, had no strong interest-group support and were more vulnerable to cuts. Golden (2000) analyzed the career civil servants’ reactions to policy changes that Reagan appointees sought in four federal agencies and found that the careerists put up little strong resistance. Their tendency to resist and their manner of doing so depended on many factors, such as professional background. Attorneys in one agency argued more with the Reagan appointees, but felt that it was part of their professional responsibility to carry out their duties conscientiously even when they disagreed with the priorities of the Reaganites.

These analyses establish some extremely important points. Agency responses to decline are more complex and perhaps less politically resistant than depicted in the general literature—agencies do change, and they do not necessarily resist change as forcefully as stereotypes and some theories suggest. Still, politics figures very importantly in change and cutback attempts and can severely impede them. Understanding when and how one can effect change becomes the major challenge, to which we return later.

The Ultimate Decline: Organizational Death.

A conclusion similar to Rubin’s comes from a debate over whether public agencies can “die.” Kaufman (1976) investigated the question of whether government organizations are immortal, in view of the many assertions about their staunch political support and their intransigence against pressures for change, reduction, or elimination. He noted many threats to an agency’s survival. They face competition from other agencies, loss of political support, and the constant reorganization movements that keep officials continuously hunting for ways to reshape government, especially ways that appear more efficient. Kaufman reviewed statistics on the death rates of federal agencies and concluded that such rates are not negligible. Generally, however, federal agencies have a strong tendency to endure. Of the agencies that existed in 1923, he said, 94 percent had lineal descendants in 1974.

Later, Starbuck and Nystrom (1981) mounted a fascinating challenge to this conclusion. They pointed out that Kaufman had classified agencies as lineal descendants even if they had changed organizational locations, names, or personnel or had substantially different functions. When agencies merged, he treated the new agency as a descendant of both of the former ones. Starbuck and Nystrom pointed out that studies of death rates of industrial organizations typically treat mergers between corporations as resulting in only one existing organization. When a corporation goes bankrupt and employees start a similar new one, analysts do not count this as a continuation. Difficult issues exist, then, in defining organizational death. Starbuck and Nystrom reanalyzed Kaufman’s data, using criteria more akin to those used in studies of industry; they found that government agencies and industrial corporations have similar death and survival rates. A large proportion of both government agencies and business firms do not survive very long. The analysis turns on whether one uses criteria biased toward organizational change or against it.

Peters and Hogwood (1988) also reported finding a great deal of organizational change in the U.S. federal bureaucracy. Their analysis showed, however, what other organization theorists have seen when they have studied public organizations (Meyer, 1979): public organizations may be quite change-resistant and intransigent in some ways, and steering them in new and innovative directions can be a major challenge for society. Yet they do, in fact, change a great deal, including undergoing the ultimate change of passing out of existence. As described in later sections, they can also revitalize themselves after periods of decline.

Daniels (1997) analyzed the termination of public programs, pointing out that programs do get terminated. Termination, he concluded, is hard to achieve, involves a great deal of political conflict, and presents an American political paradox in that “everyone supports it, and everyone opposes it” (p. 70). Similarly, but with more emphasis on the likelihood of agency termination, Lewis (2002) reported a study of government agency mortality between 1946 and 1997 and concluded that 62 percent of agencies created since 1946 have been terminated. He also emphasized the major role of political processes, concluding that agencies face the greatest likelihood of mortality when shifts in the political climate bring their critics and opponents into power.

Innovation and Organizations

Another response to pressures on organizations, a response that they need in order to survive, is innovation. Innovations in society and in organizations figure so importantly in social progress that a body of research focused specifically on such processes has developed in the last several decades. Some of it addresses the broad topic of diffusion of innovations in societies and across levels and units of government. Numerous studies have explored such topics as the adoption of birth control methods in overpopulated countries, new agricultural methods in less developed countries, and different ways of providing firefighting, garbage collection, and teaching services in governments across the United States. Some studies have also analyzed general measures of innovativeness in a certain type of organization, such as the number of health-related innovations adopted by county health departments. According to Rogers and Kim (1985), the vast majority of these innovation studies have focused on public organizations or public programs, and their application to business organizations remains open to question. They also pointed out that many of these studies followed what they called the classical diffusion model, which includes the following components: characteristics of the innovation itself (see Exhibit 13.1), communication channels in the social system being studied, time (for example, rate of adoption of innovations), and members of the social system (the characteristics of its individuals and groups and how those characteristics influence their response to innovation). Students of innovation have also developed process models emphasizing initiation and implementation processes in which people perceive a performance gap and match an innovation to a perceived problem, and then implement the innovation through restructuring and institutionalization. Exhibit 13.1 offers a simplified look at this important topic and all the work on it, but it has potential use for practicing managers as well as researchers thinking about the characteristics of an innovation that can influence its success.

Organizational researchers have also studied innovation within organizations, of course. Mone, McKinley, and Barker (1998), for example, argued for a contingency perspective on the relationship between innovation and organizational decline. They proposed that organizations will respond to decline with more innovation when power is more widely diffused in the organization, and when the organization’s mission is not strongly “institutionalized.” Other studies tend to concentrate on private sector organizations, involving variables related to market share and competition, in ways that make their application to many government agencies difficult to interpret (see, for example, Greve and Taylor, 2000).

Innovation in Public and Nonprofit Organizations

In something of a revolt against the literature and stereotypes that cast government organizations as rigid and change-resistant, a stream of research and discussion about innovative government organizations has burgeoned in the past couple of decades (see, for example, Behn, 1994; Borins, 1998, 2008; Cohen and Eimicke, 1998; Holzer and Callahan, 1998; Ingraham, Thompson, and Sanders, 1998; Levin and Sanger, 1994; Light, 1998; Linden, 1990, 1994). The studies vary widely from one another and offer complex conclusions, making it difficult to summarize them without producing a blurring array of lists of their conclusions. The following examples, nevertheless, offer a picture of some of these contributions.

Linden (1990), on the basis of a set of case observations, drew conclusions about how an innovative manager can make an organization more effective. Innovative managers, he found, share seven characteristics: strategic action, holding on and letting go, creating a felt need for change, starting with concrete change, using structural changes, dealing with risk, and using political skills. Innovation involves both rational and intuitive thinking, and successful innovation is a function of many small starts and pilots. Successful innovation also tends to involve the use of multifunction teams, and occurs when leaders and sponsors provide time, freedom, flexibility, and access to resources, and when they offer autonomy and support for committed champions, while preventing an emphasis on “turf” protection. Linden (1994) later described a set of cases of successful process reengineering initiatives in government organizations, which involved moving away from organizing around functional groupings and toward being “seamless.”

Borins (1998) conducted an elaborate analysis of 217 state and local government programs that had won awards in the Ford Foundation and Kennedy School of Government’s Innovations in American Government Awards program. Borins found an array of factors that tended to characterize the programs that had made award-winning innovations. The successful innovations, he concluded, occurred when there was systematic thinking and planning for change, when the programs delivered multiple services, and when they were partnered with other organizations. Effective innovation also tended to occur when the programs applied new technology; undertook process improvements and organizational redesign; and emphasized empowerment, incentives instead of regulation, prevention instead of remediation, and use of the private sector, voluntarism, and internal competition. As for when and why successful innovation takes place, Borins’s analysis indicated three main paths: politicians responding to crises, newly appointed agency heads restructuring organizations, and midlevel and front-line workers responding to internal problems and taking advantage of opportunities. Interestingly, Borins found that about half of the persons initiating the award-winning innovations were career civil servants below the agency-head level.

Light (1998) conducted a questionnaire and case analysis of twenty-six public and nonprofit organizations in Minnesota that he identified as innovative, to determine how and why they were innovative. He chose the organizations because of their diversity in mission, size, age, and other factors. He discussed how people need to release creativity in the organization by lowering or removing internal and external barriers and debunking myths. He concluded from his observations that innovative organizations must work with and manipulate four factors that make up the organizational “ecosystem” on which long-term, sustained innovation depends: the external environment, the internal structure, leadership, and internal management systems. For each of these components he suggested a lengthy list of “preferred states” most conducive to innovation. For example, concerning the external environment, the organization should “center on mission,” “embrace volatility,” lower barriers to external collaboration by working with stakeholders and clients, and “harvest external support.” Concerning internal structure, the organization should “stay thin” by avoiding too many layers, push authority downward and democratize to maximize participation, encourage collaboration, and provide resources to support innovation and innovative thinking. Leadership should, among other emphases, issue a call for ideas, give permission to fail, communicate to excess, and keep faith and inspiration alive. Preferred states for management systems include downplaying pay, measuring performance, celebrating success, and constantly listening and learning. Light found that relatively small nonprofit organizations tend to be the organizations most likely to sustain innovations and innovativeness. He saw no single path to innovation, and observed that organizations show different mixtures of states. He concluded that core values, such as honesty, trust, rigor, and faith, play a strong role in this process.

Other studies, described in later sections and chapters, also reflect on successful innovation and other forms of change in public organizations.

Large-Scale Planned Change

Besides facilitating individual innovations and patterns of innovativeness, organizations also undergo major, large-scale transformations and planned processes of development, such as the transformation of the Internal Revenue Service mentioned at several points earlier. A vast literature presents many different perspectives, models, and research issues about major organizational change (for example, Armenakis and Bedeian, 1999; Burke, 2010; Pettigrew, Woodman, and Cameron, 2001; Van de Ven and Poole, 1995). Rather than attempting to cover this range of material, the discussion here concentrates on certain key issues, such as resistance to change and types of change. This is followed by perspectives on the leadership and management of change and development, including organization development, some analyses of successful leadership of change, and examples of successful and unsuccessful change leadership in public organizations. The perspective on successful large-scale organizational change developed here is highly consistent with conclusions about the topic in recent overviews (Armenakis and Bedeian, 1999).

Resistance to Change

From the beginning, management and organization theorists have recognized the problem of resistance to change in organizations. Many authors have argued that traditional bureaucratic forms of organization inhibit change. They assign people to positions and departments on the basis of rules and job descriptions, require people to adhere to them, and reward them for doing so. This aggravates the normal human tendency to resist change for all the reasons implied by analysis of the characteristics of innovations (Exhibit 13.1): change can be costly, troublesome, unfamiliar, threatening, and difficult to understand and accomplish.

Human resistance to change can be one of the most destructive, dangerous tendencies in life, but managers and researchers often appear to forget that people have good reasons to resist change. Fairly typically, a new manager enters an organization with a desire to have an impact and not simply to serve as a caretaker. Employees sometimes throw objections and obstacles in the way of the new manager’s proposals. Quite often, the new manager expresses frustration with longtime employees’ commitment to the status quo.

Certainly, the new manager may have good reason to complain, but he or she may also cripple effective change by too readily assuming that resistance means laziness, selfishness, or stupidity. People may have well-justified reasons to resist. Some ideas are simply bad ideas, and the people with the most experience realize it. The New Yorker magazine once ran a cartoon in which two employees of a fast-food restaurant watched a family stopped in their car at the drive-through window of the restaurant. The family members were leaning out of the car with tongs in hand, struggling to serve themselves out of a large salad bowl perched on the windowsill of the drive-through window. Cherry tomatoes bounced like Ping-Pong balls on the pavement. Lettuce floated in the wind. One employee was saying to the other, “Well, it looks as if the drive-through salad bar is an idea whose time has not yet come.” Some ideas are bad ideas. They deserve to be resisted.

Unsuccessful ideas abound in government and industry. As one prominent example, Lyndon Johnson directed that the planning and program budgeting system (PPBS) be adopted in all federal agencies. Within a few years the directive was withdrawn. Many elected officials and politically appointed executives at all levels of government initiate new programs, reforms, or legislation but show a disinclination to become too deeply involved in implementing them. They often feel that their duty involves setting policy and directing the bureaucracy rather than closely following its management. Many of them do not stay very long in their positions. Their mandate is often far from clear, no matter how much they claim that it is. This can deprive the change process of essential support and leadership.

The point is not to defend the prerogative of the public bureaucracy to resist change but rather to emphasize a dilemma about organizational change in government. As described later, successful organizational change usually requires sustained support from leaders, participative planning, and flexible implementation. Government managers achieve these conditions more often than many people suppose, but much of the literature nevertheless suggests their scarcity in the public sector. What we learn from the management literature on change makes the point that, in the example just provided, the reason for the failure of PPBS was not necessarily that it was a bad idea. It was a well-intentioned innovation advocated by many experts on public administration. Good ideas are not simply born, however; they are made—developed and nurtured—through appropriate change processes. Too negative a view of resistance to new initiatives and ideas can cloud the message that people may have reasonable objections that can make a dubious idea into a better one. The challenge for public managers is to find ways to overcome obstacles to such participation and flexibility amid the political complexities and accountability pressures in government.

Types of Change

Many types, levels, and degrees of change complicate the discussion of the change process. Researchers have not thoroughly incorporated these variations into their models; instead they have moved to highly general frameworks that broadly cover many types of change. Still, the variations bear noting and have implications that are taken up in later sections.

Daft (2013) points out that organizations undergo at least four types of change:

• Technology changes occur in production processes and equipment, as in the installation of computerized client information systems or word processing systems.
• Administrative changes include new performance-appraisal systems, such as the Performance Management and Recognition System for all middle managers in the federal civil service; pay-for-performance systems, such as those that state and local agencies have tried to implement; and affirmative action programs.
• Changes in products and services abound in all types of organizations. As described later, the SSA has struggled for the past several decades with steady increases in the number and nature of Social Security services mandated by Congress.
• Human resource changes occur as a result of training, development, and recruitment efforts aimed at improving leadership and human relations practices or upgrading employee skills.

While each of these different domains may undergo limited change relatively independently, they frequently intertwine. In fact, for major changes, the challenge is to coordinate them. Tichy (1983) argued that most approaches to organizational change have concentrated on one of three primary dimensions: the political, technical, or cultural aspects of change. Strategic change, as Tichy called it, involves moving beyond these more fragmented approaches and coordinating these three dimensions to effect large-scale transformations in an organization’s relationship to its environment.

Golembiewski (1986) introduced the conception of three types of change that can occur in individual responses in organizations. Alpha change involves the change from one level to another along a measure of some dimension, such as job satisfaction. Beta change involves a similar change in degree, except that the significance that people attach to intervals on the measure may change as well. Gamma change, however, involves a general change in state rather than just a change in degree. A person may shift to a redefinition or new conception of reality such that the meaning of the dimension fundamentally changes for that person. In their research, Golembiewski and his colleagues found that virtually all the people in the most advanced stages of “burnout” fall at a point on a measure of work satisfaction that is almost the exact opposite of the point at which virtually all of those in the earliest phases fall. This suggests that once a person moves into the more serious phases of burnout, he or she also moves to a fundamentally different state, in which the meaning and nature of job satisfaction change radically. Differences in responses to job satisfaction measures do not fully capture this shift, which raises major issues for both research and practice pertaining to organizational change, because it complicates the measurement and assessment of change in challenging ways.

There are a variety of strategies and tactics for leading and managing these different types and degrees of change (Daft, 2013). Before covering examples of frameworks and suggestions about leading major change processes, it is useful to explore the topic of organization development, a well-established subfield of organization theory that concentrates on changing the human relations aspects of organizations for the better.

Organization Development

Writers and practitioners in organization development (OD) work to improve the functioning of organizations, especially along human relations and social dimensions, by applying social scientific theory and techniques. OD consultants or “change agents” work with people in organizations to improve communication, problem solving, renewal and change, conflict airing and resolution, decision making, and trust and openness. They often go into organizations to help them diagnose and overcome problems they have in these areas. Ideally, they seek to leave the organization better able to manage such processes effectively. A mountain of books, articles, and professional journals, as well as a number of professional associations, deliberate about OD, and large corporations and government agencies sometimes have OD offices or bureaus that minister to the other parts of the organization.

As this description suggests, OD has firm roots in the human relations orientation in organization studies and in the group dynamics movement. It also draws on various elements of social science and organizational behavior, such as theories of motivation, leadership, systems, and techniques such as survey research. OD theory and practice vary widely but tend to have common basic values and assumptions about organizations and the people in them. French and Bell (1999) pointed out that OD involves common assumptions about people, groups, and organizations:

• People have a drive to grow and develop, especially if they are provided with an encouraging environment. They want to make a greater contribution to their organization than most organizational settings permit.
• For most people, the work group is a very important factor. People value acceptance and cooperation in work groups. Leaders cannot provide for all leadership needs, so members of groups must assist one another.
• Suppressed feelings are detrimental to satisfaction, trust, and cooperation. Most groups and organizations induce suppressed feelings more than they should. Solutions to most problems in groups must be transactional, involving changes in people’s relationships.
• The leadership style and culture at higher levels tend to pervade the organization, shaping levels of trust and teamwork throughout.
• Win-lose conflict management strategies usually do harm in the long run.
• Collaborative effort has value. The welfare of all members of the system is important and should be valued by those who are most powerful in the system.

OD practitioners tend to value personal growth and a richer, more meaningful, more enjoyable, more effective life for people in organizations, especially through allowing people’s feelings and sentiments to have a legitimate value. They also value commitment to both action and research, and democratization and power equalization in organizations. One can begin to guess some of the controversies that these assumptions and values engender among management experts. Before looking at them, however, it is useful to consider how OD interventions in organizations tend to proceed.

OD Interventions and Change Processes

OD consultants take a variety of approaches, but the action-research model shown in Exhibit 13.2 illustrates a typical pattern. Key executives perceive a problem or performance gap. They bring in a consultant, who conducts a diagnosis of the organization and the problem, often using interviews, surveys, and group meetings. The consultant feeds the results back to the clients and works with them in interpreting the results and developing plans for the OD program, including objectives, problems to be addressed, and techniques to be used. The consultant continues gathering information for use in the activities, using such tools as group problem-solving and team-building sessions. Further planning takes place as new ideas arise from the activities, and the consultant continues to gather information to assess the newly planned activities and their effects. The consultant continues this developmental process for a time, until eventually he or she leaves the people in the organization to continue it on their own. Similar models include an ultimate phase, consisting of institutionalizing the changes that the OD project has developed and terminating the relationship with the consultant (Burke, 1994; French and Bell, 1999; French, Bell, and Zawacki, 2000).

OD Intervention Techniques

OD consultants can draw from an array of responses to the problems they help an organization identify. The literature in the field provides a variety of models, typologies, and tables suggesting the type and level of intervention that the people in the organization and the consultant might select (Burke, 1994; French and Bell, 1999). For example, if the organization wants to focus on problems at the level of individual organizational members, it might work on new approaches to recruitment and selection, training and development, counseling, and job design. At the broader organizational level, OD may involve organization-wide survey-feedback processes, grid OD projects, quality-of-work-life programs, management-by-objectives projects, or intergroup conflict-management procedures.

For the development of group processes, an OD project might employ team-building techniques that work groups can use to develop more effective relationships. Team-building exercises typically focus on setting goals for the group, analyzing members’ roles and responsibilities and the work processes of the team, and examining the relationships among the members. The OD consultant might draw on various techniques to support these efforts, such as a role negotiation process in which members list the things they feel each other member should do more or less of in the group. Then the members negotiate agreements about the changes and confirm these agreements with a written contract.

OD consultants also employ a technique they call process consultation. The consultant observes the work groups and other activities; gathers observations and information about key processes such as communication, teamwork, and interpersonal conflict handling; and consults with the members on interpreting and improving these processes.

OD projects in the past often employed T-groups, encounter groups, or sensitivity sessions. All are group sessions intended to develop communication and understanding among the members of the group and enhance each member’s sensitivity to the feelings and viewpoints of the other members. These approaches grew out of the work of Kurt Lewin and his colleagues described in Chapter Two. Such groups engage in intensive discussions aimed at helping participants learn more about how other people see them and respond to them and how they perceive others. The sessions follow a diverse array of approaches, often involving such exercises as having members take turns expressing perceptions of other members. In some versions, these techniques become highly confrontational and emotional, and participants often find the experience exhilarating. These techniques were widely used during the 1960s, but their use has dwindled, apparently because of controversy about whether they had much long-term impact, and evidence that when they did have an impact it often appeared to be damaging to some participants (Back, 1972).

OD Effects and Controversies

Just how a consultant selects, combines, and uses all these procedures depends on his or her experience and skill. No organizing theory links the aspects of OD or systematically guides its practice. OD consultants play a role much like that of clinicians in psychology or psychiatry in that they have no clear, uncontested theory or guide for practice. They operate on the basis of their experience and intuition, choosing from an array of loosely defined procedures. The complexity of organizations and their problems makes it hard for OD consultants to establish and prove clear successes. Critics sometimes attack OD for this lack of substantive theory and theory-based research. They say that OD’s concentration on human relations issues can lead to misdiagnosing an organization’s problems when they involve other dimensions, such as the accounting system or production processes. Some critics, for example, argue that OD concentrates on human resource issues in organizations when large-scale strategic change requires coordinating those issues with strategies for improving the organization’s technical and political dimensions. OD adherents respond that they know their efforts are often valuable, even if they cannot always produce simple, clear evidence of marked improvements in profits or other performance criteria. They also argue that other areas of organization theory hardly provide managers with beautifully crafted guides to changing and improving their organization, and that they are justified in trying to go out and do what they can to apply behavioral science knowledge to the problems that organizations face.

OD in the Public Sector

Despite these controversies, OD remains a widely used approach for improving and changing public and nonprofit organizations (Carnevale, 2003). OD experts who work with public sector organizations regularly discuss whether public and private organizations differ in ways that affect the application of OD. That discussion has an interesting history.

In a leading contribution to this debate, Golembiewski (1969; see also 1985) cited greater challenges in the public sector as a result of factors much like those discussed in earlier chapters. He said that five primary structural constraints complicate the application of OD in government:

Golembiewski argued that these factors interact with managerial “habits” in government in ways that hinder OD. Higher-level executives tend to avoid delegating authority and to establish multiple layers of review and approval because of their tenuous authority over lower levels. Legislative and legal strictures constrain many dimensions that OD often seeks to reform, such as reward systems and job classifications. Government agencies, more often than business firms, have secrecy and security requirements. People in government show more “procedural regularity and caution.” The role of the professional manager is poorly developed in government compared to business, according to Golembiewski. He suggested that this results in part from the difficulty of enhancing public managers’ sense of ownership of organizational objectives and values, due to the public nature of the organizations they lead. This in turn poses greater challenges in enhancing managers’ commitment to their agency.

Golembiewski concluded that these conditions create differences in the culture that predominates in public agencies. Unlike in other settings such as private business firms, managers in public organizations face more constraints and have fewer supports and rewards for inventiveness, risk taking, and effort. Not surprisingly, some public managers are cautious about supporting initiatives in their organization.

Most other authors who have examined this issue agree with Golembiewski in general but make variations in his analysis. Davis (1983), for example, offered a similar analysis of the effects of the external political environment on the use of OD in the public sector. Yet he more heavily emphasized the problem of public agencies’ pursuit of multiple goals with vague programs and performance criteria (perhaps because he drew on an OD project in a human services agency, the area of government in which these problems are probably severest). These writers and others (Carnevale, 2003) have nevertheless emerged from these discussions with the conclusion that OD certainly can succeed in the public sector. While their depictions of the public sector environment have made some common notions of bureaucratic rigidity sound positively optimistic, these OD experts treat the public sector context as perhaps more challenging than the private sector but ultimately manageable, and as presenting a set of conditions for which one can be prepared.

Golembiewski (1985) reported evidence that OD projects in the public sector enjoy a relatively impressive success rate, apparently in line with that of projects in the private sector. First, he and his colleagues reviewed numerous published reports of OD initiatives in public organizations and classified the difficulties they apparently encountered. They found that in 270 reports of OD applications, the writers frequently mentioned the sort of constraints that Golembiewski had described. They noted external constraints such as procedural rigidity (in 124 cases), diversity of interests and values (111 cases), public scrutiny (87 cases), and the “volatile political/administrative interface”—the rocky relationship between legislative and administrative units and between career officials and political officials (62 cases). They also mentioned internal constraints such as lack of professionalism (78 cases), weak chains of command (70 cases), complex objectives (61 cases), and short time frames (52 cases). In addition, the reports for city governments were generally similar to those for other levels of government. Although the reports cited these complications, Golembiewski noted that the large number of initiatives reported—especially considering that agencies carry out many efforts that are not reported in the professional literature—suggested that “the constraints may be tougher in the public sector, but they are not that tough” (p. 67).

Golembiewski also analyzed studies that have sought to assess the effectiveness of OD applications in both sectors. One of his students assessed the success of the 270 OD initiatives just mentioned, using procedures similar to those used in previous studies of OD success rates, and found that most of the reports indicated either positive effects (43 percent) or highly positive effects (41 percent), with only 7 percent indicating no effect and 9 percent reporting negative effects (Golembiewski, 1985, p. 82). The results also suggested that the public sector initiatives included a healthy percentage of the most demanding OD applications; furthermore, they did not indicate that the success rate in public agencies resulted from a tendency to try more limited forms of OD interventions in government. In addition, Golembiewski had independent observers do similar ratings of forty-four OD applications in city governments and found even higher success rates. These success rates are very similar to those reported for the private sector, Golembiewski concluded, and indicate that despite the apparent constraints of the government context, OD practitioners do fairly well at adapting to them.

Robertson and Seneviratne (1995) reported on a study that generally supported Golembiewski’s conclusions. Robertson and Seneviratne performed a general analysis (a meta-analysis) of about fifty studies of planned change interventions in public and private organizations. They found that OD interventions in public and private organizations showed similar rates of success in such areas as work setting and organizational outcomes. They found some differences in more specific areas, however. The evidence indicated that change efforts in the private organizations led to positive changes in four components of work settings—organizing arrangements, social factors, technology, and physical setting. In the public organizations, however, the change efforts appeared to have a positive effect only on organizing arrangements and social factors, not on technology and physical setting. In addition, even though change efforts showed positive effects on organizing arrangements in both sectors, these effects were significantly stronger in the private sector. Also, change efforts in both sectors showed positive influences on a general measure of organizational outcomes, with no significant difference between the sectors. Change interventions in the public organizations, however, showed a significantly stronger relationship to one dimension of the organizational outcomes measure—improved organizational performance—than change efforts in the private organizations. These results support many of the observations about public and private organizations cited in previous chapters—such as the greater constraints on organizational structures in public organizations. They also generally support Golembiewski and his colleagues’ conclusion that public agencies may face certain challenges. Generally, however, planned change initiatives appear to succeed about as often in public organizations as they do in private organizations. In spite of stereotypes and some academic assertions based more on simplistic theory than on systematic evidence, organizational change initiatives occur with frequency and apparent success throughout government.

Success and Failure in Large-Scale, Planned Organizational Change

The evidence of successful change initiatives in public organizations illustrates the importance of how the members of an organization manage and implement change. Organizations have always periodically undertaken large-scale planned change processes that are well beyond the scope of OD initiatives. In recent decades, challenges from international competition and other pressures have caused many U.S. corporations to undergo thorough overhauls. The management literature began to resound with terms such as transformation, reinvention, and reengineering, all referring to strategies for large-scale planned change in organizations. Under the pressures described earlier and in previous chapters, governments have followed suit (Gore, 1993; U.S. Office of Management and Budget, 2002). As noted earlier, the literature on large-scale organizational change is quite diverse and difficult to summarize succinctly. Two articles, however, in which the authors summarized patterns of organizational change and transformation, provide particularly valuable observations about analyzing and managing successful initiatives. Although they were published some thirty years apart, they have some interesting similarities, and according to recent overviews of the topic, they also show similarities to the perspectives of other organizational change theorists and researchers (Armenakis and Bedeian, 1999).

Over four decades ago, Greiner (1967) analyzed eighteen major organizational change attempts and drew conclusions about the patterns of successful change. He noted that some frequently used approaches to change often seem to founder. Examples include unilateral actions, such as top-down decrees or commands for structural changes; limited attempts at power sharing through group decision making; and efforts to encourage delegation of authority through T-group training. The successful change efforts that Greiner observed involved much more comprehensive approaches, as illustrated in Exhibit 13.3.

As indicated in step 5 (Phase III) of Exhibit 13.3, and implied in other phases, Greiner emphasized the key role of power sharing in successful patterns of change. He concluded that success requires power sharing and that it must occur through a developmental process. The failures he observed involved more unilateral pressures for change, with an illogical sequence of steps.

About thirty years later, Kotter (1995), a prominent author on leadership, organizational change, and other topics, published an article on organizational change in the same journal in which Greiner’s article had appeared, the Harvard Business Review. In the article, Kotter presented a number of reasons for the failure of organizational transformations (a currently fashionable term for large-scale, comprehensive change efforts). Exhibit 13.4 turns Kotter’s reasons for failure around, transposing them into requirements for success. Kotter’s observations about organizational change differ from Greiner’s in important ways. Kotter referred to vision, a contemporary and much discussed topic in management theory today. He also emphasized the role of a guiding coalition, in contrast to Greiner’s focus on a change leader who comes in from the outside (a later section in this chapter describes a successful change in the SSA that did not involve a change leader from the outside). Kotter’s phrasing is consistent with other research on large-scale change in organizations that emphasizes the essential role of shared values (which can equate to vision in important ways) and leadership teams rather than individual, heroic leaders (see, for example, Huber and Glick, 1993).

The similarities between the two views, offered thirty years apart, and their similarity to other current perspectives (Armenakis and Bedeian, 1999), are striking. Fernandez and Rainey (2006) conducted a search and review to find patterns of consensus among authors and research studies about organizational change, that show the similarities that the Greiner and Kotter frameworks show. Examining several dozen analyses of organizational change, they identified the determinants or conditions of success summarized in Exhibit 13.5.

These elements appear luxurious to public sector managers, because so many public organizations face frequent turnover of top executives, interventions and constraints from external authorities, and other conditions that might block some of these steps. Nevertheless, the following sections note examples of the effective adoption of many of these elements of successful change in public agencies.

Successful Revitalization in Public Agencies

Many of these conditions and steps, together with an emphasis on transforming organizational culture, characterize successful revitalization efforts in public organizations that had declined (Abramson and Lawrence, 2001; Decker and Paulson, 1988; Holzer, 1988; Poister, 1988a, 1988b; Poister and Larson, 1988; Stephens, 1988).

Poister (1988a) pointed out that these transformation efforts reflect multifaceted processes of strategic change, involving many policy, managerial, technological, and political initiatives and a series of strategies that developed over time. While diverse, they all emphasize developing a shared vision and mission, strategic planning, and developing the organization’s leadership and culture. They involve redistributions of power toward more active involvement of the agency’s members. Yet they also emphasize enhancements of management systems, such as financial, productivity-measurement, and information-management systems. Effective revitalization campaigns also required the agency managers to develop and maintain effective political support, to provide resources and a mandate for the changes. Thus successful revitalizations occur in different types of public organizations, often in patterns very similar to those in private firms. Yet success requires more than skillful employment of generic principles of organizational change—it requires skill in dealing with the political context and administrative features of public organizations. These skillful applications and the conditions supporting them can be further clarified by a comparison between a successful and an unsuccessful attempt at large-scale change in public agencies. Besides these examples and those described earlier in this chapter, there are many additional examples of successful leadership of change and development in public organizations (for example, Behn, 1994; Denhardt, 2000; Svara and Associates, 1994; Thompson and Jones, 1994; Thompson and Rainey, 2003).

Two Contrasting Cases

Reviewing two cases of large-scale change in government agencies helps to clarify the applicability of Greiner’s and Golembiewski’s observations. Warwick (1975) reported on a failed attempt in the U.S. Department of State to do what everyone would love to do—reduce bureaucracy. The SSA, however, succeeded in a similar effort. When the SSA faced extreme problems with administrative foul-ups and delays in processing claims, the people in the agency responded with a successful redesign of the organization and its claims processing system, and improved performance. These cases illustrate the validity of the many observations about the ways in which the political and institutional context of government and the internal cultures of public agencies can impede change. Yet they also support the claim that, under the right circumstances, applying sound principles of change, skillful public managers and employees can carry out major changes effectively.

The “O Area” Reforms in the Department of State.

Warwick (1975) described a fascinating case in which a well-intentioned undersecretary in the State Department initiated an unsuccessful effort to decentralize decision making and eliminate levels of hierarchy. An administrative area known as the O Area had become a complex array of hierarchical layers and diverse offices. The undersecretary’s reforms eliminated six hierarchical levels (including 125 administrative positions) and started a process of management by objectives and programs. According to the undersecretary’s plan, the program managers at the levels below the eliminated layers would manage more autonomously—without so many administrators above them and with more direct lines to the deputy undersecretary. They would also follow a management-by-objectives program in which they would specify objectives, target dates, and needed resources.

Although the undersecretary’s ideas for reform were heavily influenced by McGregor’s concept of Theory Y management (1960), other managers commented that he sought to apply Theory Y using Theory X methods. The undersecretary made the changes fairly unilaterally and then called together a large group of managers and employees to announce them. Rumors had gone around about the reforms, but the nature of them, according to Warwick (1975, p. 37), caught “even the most reorganized veterans off guard.”

Yet Warwick devoted most of his analysis to the factors hindering change in the State Department, which he tended to generalize to all government agencies. Externally, congressional relations and related politics played a major role. Some of the administrators whose positions were targeted for elimination had strong allies in Congress and among interest groups that opposed the changes. The State Department had several different personnel systems (foreign service officers and others), which complicated the change process. A bill that would have unified the systems, however, did not pass in Congress. A civil service union opposed it, a powerful senator felt that it would dilute the foreign service, and the chair of the Senate Foreign Relations Committee gave it little support because he wanted better cooperation from the secretary of state on matters pertaining to the war in Vietnam. The secretary of state became concerned about the wide span of control that the reduction in the hierarchy created (with many program managers reporting to the undersecretary).

Warwick argued that an administrative orthodoxy prevails in Washington and elsewhere in government. Legislators and political executives expect traditional chains of command and hierarchical arrangements and worry that their absence means disorganization. The secretary of state was facing a great deal of political pressure from Congress and the public over decisions about the Vietnam War and did not want to waste political capital on any controversy over the administration of the State Department.

Warwick argued that career civil servants are accustomed to turnover among top political executives every two or three years. Motivated by caution and security, they can easily build defenses against the repetitive cycles of reform and change that the political executives attempt during their short stays in public agencies. The careerists can simply wait out the top executives by doing nothing, or they can mobilize opposition in Congress and among interest groups. Like many public agencies, the State Department also had internal conflicts among units and specialists, including a tradition of rivalry between foreign service officers and other groups of State Department employees and between units organized by function and units organized by geographical regions of the world. These internal conflicts complicated change efforts, especially because the participants often had external political allies.

The undersecretary implemented his changes with some good effect. The changes appeared to have beneficial results for the autonomy, willingness to experiment, and motivation of some of the units and managers. Yet coordination appeared to suffer, and internal and external resistance mounted. Not long after attempting the changes, the undersecretary left the State Department. His successor derided the reforms, and within about nine months he eliminated most of them. Some useful remnants endured, according to Warwick, and some of the lessons learned proved valuable in later change efforts. Yet Warwick concluded that the reforms had clearly failed.

More generally, Warwick suggested that the types of conditions he found in the State Department tend to sustain complex bureaucracy in all government agencies. Congress and interest groups often resist change because they develop alliances with agencies and their subunits. They jealously guard against reorganizations that threaten those arrangements. Rapid turnover at the tops of agencies has the effects already noted. The diversity and interrelations of government agencies complicate change efforts. Any one public policy arena tends to involve many different agencies (for example, the Departments of Agriculture and Commerce and many other agencies are involved in foreign affairs). Because legislation and policymaking decisions may involve many agencies, consensus and support become elusive. Statutes and system-wide rules govern many aspects of organization and procedure, sometimes dictating the actual agency structure and placing constraints on job descriptions, purchasing, space procurement, personnel decisions, and many other processes. Administrative orthodoxy, coupled with diffuse agency goals, reinforces the tendency to impose classic bureaucratic control.

Warwick noted conditions particular to the State Department that had a lot to do with the outcome of the reforms—the problems of the Vietnam War during this period, a history of complex political influences on the department, internal rivalries, the particularly great need for secure communications, and the worldwide scope of operations. Still, he moved toward gloomy conclusions about prospects for changing public bureaucracies. Almost as if he was determined not to end on such a note, however, he offered suggestions about reducing and changing bureaucracy that echo those of Greiner and the OD experts. He pointed out that facile prescriptions for participative management in public agencies face some sharp challenges. Many of the conditions described earlier weigh against prospects for highly participative processes, but to facilitate successful change, government managers must deal with these conditions. Warwick argued that one cannot eliminate bureaucracy by decimation—by firing people or merging or cutting units—or by top-down demands for reform. Effective debureaucratization, he concluded, must have strong roots within the agency. The people in the agency must see the changes as important and useful to them. All significant internal constituencies must participate in considering the problem. There must be a careful, collaborative diagnosis, followed by broad-based discussions about concrete alternatives for change. Then proponents of the change must seek support from external controllers and allies. To avoid the problem of rapid turnover among top executives, a coordinating body should monitor and sustain the change, and this body should include more than one senior political appointee.

Modularization of Claims Processing in the Social Security Administration.

While the very words “modularization of claims processing” summon up the impulse to doze off, this example represents an effective attempt to do something similar to what the State Department reforms failed to do—to reform bureaucracy in the direction of decentralized control over the work and an enriched work environment. In the 1960s, the SSA became overloaded and backlogged in processing claims for Old-Age and Survivors Insurance (that is, Social Security payments). Clients complained to the SSA and to members of Congress, who passed the heat along to the agency. At one point, the SSA struggled with a backlog of one million claims. Something had to be done.

The problem had developed largely because Congress had added new programs and new forms of coverage to the original Social Security program, such as extending coverage to dependents, farmers, the self-employed, and the disabled. Along with population growth, these additions continually expanded the number of claims to be processed. Also, because of the different programs and the complications of individual cases, some of the claims could raise confounding difficulties. A claimant might have worked under multiple aliases, for example, and have a degenerative brain disease and no memory of his or her original name and birth date.

The organizational system for handling the claims proved more and more ineffective at responding to the load. The SSA had several major functional bureaus—for the retirement and survivors’ insurance (RSI) program, for disability insurance, for data processing and records, and for supervising the district offices. The district offices, located around the country, took in claims from clients applying for their benefits. For the RSI program, they then forwarded the claims to one of six program service centers (PSCs). These were located in six regions of the country. Each had about two thousand employees. When a claim arrived at a PSC from the district office, a clerical support unit would prepare a folder for the claimant and forward it to a claims unit. There, a claims authorizer would determine the type and degree of eligibility for Social Security payments. The folder would then be forwarded to a payments unit, where a benefit authorizer would compute the amount of the benefit payment and do some paperwork necessary to begin processing the payment through the computer. The folder would then go to an accounts unit, which assembled and coded information about the case, then to another unit for entry into the computer, then to a records maintenance unit for storage. In some of these units, hundreds of people worked at desks in long rows, receiving deliveries of stacks of folders from shopping carts, with coffee and lunch breaks announced by the ringing of bells. Control clerks and supervisors, emphasizing the technical issues and production rates of their unit, spot-checked the work for accuracy.

Any incomplete information or disagreements among the technical specialists would delay a claim, because it would have to be sent back to the earlier point in the process for clarification or correction. Communication about the problem usually had to be in writing. There was no provision for getting a problem claim back to the same person who had done the earlier work. The increasing number of claims and the complications of many of the claims increasingly clogged the system. The system created incentives for employees to “cream” the cases by avoiding the very difficult ones or even slipping them to the next phase to get them off their desk. Problem cases piled up.

Robert Ball, the long-term, highly respected commissioner of the SSA, appointed an experienced SSA official, Hugh McKenna, as director of the RSI bureau, with a mandate to correct the problems. McKenna initiated an open-ended process of change, with some four years of research, development, experimentation, and morale building. Several task forces with internal and external representation studied management processes, case handling, and labor relations. A consulting firm analyzed the case-management process. Large team-building and morale-boosting meetings were held between managers and staff from the PSCs, district offices, and the RSI central office. The office staff worked with the PSCs to develop training courses on participatory management. Interestingly, someone made a comment about McKenna similar to the one made about the State Department undersecretary—that he “ordered participatory management.” He did, but there was obviously a crucial difference in the way that order was imposed.

Out of these efforts emerged the concept of modular claims-processing units. The planning staff in the central office suggested setting up smaller units—composed of fifty employees—containing all the technical specialists needed to process a claim and letting them handle claims from beginning to end. Professing to draw on the ideas of McGregor, Herzberg, and Maslow (described in Chapters Two and Nine), the proponents of the module concept argued that it would provide job enrichment and participatory management. Individuals would identify with their tasks more and see their clients as individuals, they would have easier access to supervisors and managers, and they would have more control over the process and their part in it.

One of the PSCs tried out one such unit on an experimental basis and then created a total of six modules. Problems arose. At one point, productivity dropped in the modules, and termination of the experiment was seriously considered. However, the staff decided that the problems could be corrected. Managers apparently had some trouble adjusting to the new system. In one instance, two module managers tried to merge their modules to create combined functional units for files, accounts, claims, and so on. The central staff had to urge them back to the original concept. The blending of clerical staff and technical specialists in the modules caused some racial and status conflicts. Relations with other agencies, such as the Civil Service Commission (now the Office of Personnel Management), required skillful handling to obtain new space and to receive approval of new personnel structures. Ultimately, other PSCs adopted the modules, with some modifications. In one module, the specialists involved in processing a claim sat around a desk together, working through individual cases in direct contact with one another. The modular approach was also adopted by the Disability Insurance Bureau, although with more employees per module.

The modular concept became widely accepted in the agency as a success. At one point, processing time for new claims in the PSCs had dropped by 50 percent, to an average of twenty days, and it later dropped further, to an average of fifteen days, with very few long-delayed cases. Some employee surveys showed increased job satisfaction in the modules. The picture was not all rosy, however. Some long-standing employees disliked the change. Problems with computer systems complicated matters. Morale later suffered badly when the agency began a process of eliminating seventeen thousand employees in the 1980s, which apparently made it difficult to properly staff some of the modules. Nevertheless, many people in the agency regarded the modular concept as successful. Today, the PCSs are all organized into modules, and the employees regard them not as an innovation but as a standard feature of the centers. Recent developments, such as computerization of claims processing, are causing some problems for the modular design. Some of the centers are experimenting with new forms of organizing the claims-processing work. As they do so, managers and employees frequently express concern about moving away from the modular design—a sign of just how successful this change has been.

The success may simply reflect the proper application of some of the generic principles of change. The change was widely recognized as necessary, it had support from the top, and there was flexible implementation, with adaptation, feedback, and experimentation, and a realistic strategy for achieving the agency’s objectives. The change did, in a sense, have a top-down character, but in this case it appears to illustrate what the experts mean by “support from the top.” There must be sponsors and champions of the change with sufficient authority and resources to see it through.

Some particulars about the SSA case distinguish it from the State Department case; these are summarized in Exhibit 13.6. SSA had as chief executive a long-term career civil servant who had enjoyed trust and support from key congressional figures and thus could gain a grant of authority to solve the agency’s problems without interference. SSA has strong support from a large clientele receiving a specific service, and the agency’s tasks tend to be clear and mechanistic. The people in the agency were able to encapsulate their work processes and management methods and seal them off from political intervention.

While such factors may have provided SSA with advantages, the case suggests some key additional considerations about successful change in public organizations (Rainey, 1990). SSA had a durable, skillful power center that was committed to successful change. Ironically, for all the stereotypes about career bureaucrats resisting change, in this case the long-term civil servants were the champions of change. In one instance, they even had to outwit a conservative political appointee who sought to undercut the reforms because he thought they would result in “grade creep”—that is, employees might get higher salary grade classifications because of increased responsibilities in the modules. The leaders of the change effort hurried through an approval of the new personnel structure by the Civil Service Commission to prevent any blockage of the reforms. In this and many other ways, they utilized their knowledge of the political and administrative systems to sustain the change. Also, they were not leaving soon. They had the career commitment to the agency to want the changes to succeed, and they and others knew they would be there for the duration.

In addition, the SSA change took place at the appropriate time for it to garner collective support. (See the section on the agenda-setting process in Chapter Five for a discussion of the concept of windows of opportunity in the political process.) As noted earlier, the reform at the State Department was hindered by the Vietnam War and by other problems with the timing of the change. Of course, the SSA enjoys no inherent immunity from political interference; many agencies that do mechanistic work with clear outputs get buffeted by external political forces. The timing was right for this change at the SSA, however, in that no distracting crises or controversies weighed against it. The need for change was widely recognized both inside and outside the SSA. In part this reflects luck, and in part it reflects the skill of experienced public managers and staff members who knew when and how to work for better alternatives.

Indeed, they did develop a better alternative, one that was comprehensive, clear, and realistic. Rather vague, prepackaged models, such as management by objectives, will fail if they are not adapted to fit the particular structural and cultural conditions within an organization. The sponsors and champions of the change in the SSA applied relatively firm, consistent pressure for a reasonably clear, realistic idea, while allowing a degree of experimentation and variation in its implementation.

Other aspects of the Social Security program and related policies can be debated at length. Nevertheless, in this case, experienced career civil servants in the SSA brought about an effective improvement in a process essential to one of the largest single categories of disbursement from the federal budget of the United States, and that very directly affects the lives of at least sixty million Americans. The public has heard little about this. News reporters have overlooked it. But perhaps it should not receive heroic treatment—it represents only one of many instances of skillful change and management that go on in government continually.