Pathways Plus Strategic Management and Leadership

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1 Pathways Plus Strategic Management and Leadership Level 7 Unit 7010 Organisational change

2 Pathways Plus Unit 7010: Organisational change Copyright Chartered Management Institute, Management House, Cottingham Road, Corby, Northants NN17 1TT. First edition 2009 Authors: Consultant: Series consultant: Project manager: Editor: Page layout by: Peter Cumpstey and Phil Lindsay Bob Croson Roger Merritt Associates Trevor Weston Suzanne Pattinson Decent Typesetting British Library Cataloguing-in-Publication Data. A CIP catalogue record for this publication is available from the British Library. ISBN All rights reserved, save as set out below. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England WIT 4LP. Applications for the copyright holder s written permission to reproduce any part of this publication should be addressed to the publisher. Permissions may be sought directly from the Chartered Management Institute in Corby, UK. Phone Publications on (+44) (0) , or publications@managers.org.uk. This publication is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the publisher s prior consent in any form of binding or cover other than that in which it is published and without a similar condition being imposed on the subsequent purchaser. Approved centres may purchase a licence from the publisher, enabling PDF files of the publication to be printed or otherwise distributed solely within the centre for teacher and student use only according to the terms and conditions of the licence. Further information is available on the licence from the Chartered Management Institute. Phone (+44) (0) , or publications@managers.org.uk. Every effort has been made to trace holders of copyright material reproduced here. In cases where this has been unsuccessful or if any have inadvertently been overlooked, the publishers will be pleased to address this at the first opportunity. The publishers would like to thank the following for permission to reproduce copyright material: Harvard Business School Press for Figure 3.1d on p. 47, Christensen, C.M., Marx, M., and Stephenson, H.H., The tools of cooperation and change, Harvard Business Review, Oct 2006, Vol 84, Issue 10, pp and for Figure 3.1e on p. 49, Kotter, J.P., and Schlesinger, L.A., Choosing strategies for change, Harvard Business Review, Jul/Aug 2008, Vol 86, Issue 7/8, pp Cengage Learning Services Ltd for Figure 2.1a, Creativity level vs style, on p. 90; Figure 2.1b, Approaches to problem solving, on p. 91; Figure 2.1c, KAI Dimensions, on p. 93; Figure 2.1d, Adaptors vs Innovators, on p. 95, from Kirton, M.J., 2003, Adaption-Innovation in the Context of Diversity and Change, Routledge. Pearson Education for Figure 2.1a, The change kaleidoscope, on p. 30; Figure 2.1b, Glaxo s change kaleidoscope, on p. 33; Figure 3.1a, Inner ring of the change kaleidoscope, on p. 40 (all from Balogun, J., Hope Hailey, V., Johnson, G., and Scholes, K., Exploring Strategic Change, 2008), Figure 2.2a, The cultural web, on p. 34; Figure 2.2b, Cultural Web case study: Forestry Commission, on p. 37 (all from 2

3 Johnson, G., Scholes, K., and Whittington, R., Exploring Corporate Strategy 7e, 2005, pp. 200, 202 Reprinted by permission of Pearson Education, Inc., Upper Saddle River, New Jersey). Pearson Education, Inc, for Figure 1.2a, Staged process of change, on p. 19; Figure 1.3a, The change equation, on p. 21; from Beckhard, R.F. Harris., Organizational Transitions, 1987, p.29. Adapted by permission of Pearson Education, Inc., Upper Saddle River, New Jersey. Random House Inc for Figure 1.3a, How pain drives change, on p. 75; Figure 1.2a, Change disruption and recovery, on p. 126; Figure 1.2b, Impact of multiple changes, on p. 128; Figure 1.2c, Capacity vs Demand, on p. 127; Figure 3.2a, Transformation curve positive change, on p. 156; from Managing at the Speed of Change by Daryl R Conner, copyright 1993 by O.D. Resources, Inc. Used by permission of Villard Books, a division of Random House Inc. Taylor & Francis Informa UK Ltd Journals for Comparative analysis of management frameworks, on p. 201, Lippett N., Journal of Change Management, 2006, Vol 6, No 2, pp ; Figure 3.1a, Types of change, on p. 113, Higgs, M.J.D., and Rowland, D., Journal of Change Management, 2005, Vol 5. No 2, pp Academy of Management (NY) for KEYS environmental scales, on p. 105, Amabile, T.M., Conti, r et al from Academy of Management Journal, Assessing the Work Environment for Creativity, (5): pp

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5 Contents About Pathways Plus...9 Introduction Section 1 Processes for change Topic 1: Process models of change Unfreeze, change, refreeze Present, transition and future states The change equation Kotter s eight-stage process Topic 2: Organisational context for change The change kaleidoscope The cultural web Topic 3: Approaches to implementing change Five design choices Section summary Section 2 Exploring change Topic 1: Drivers for change The pioneer journey Competitive and environmental drivers of change Making the case for change Types of change Topic 2: Creativity and improvement How do we get more creativity? Models to focus and drive improvement The climate for creativity and innovation Topic 3: A new paradigm for change The future of change Section summary

6 Section 3 Impact of change on people Topic 1: Surviving change Experiencing change Changing behaviour Resilience and competencies Coaching to increase competencies Topic 2: Leading change Leadership and management functions Leadership practices Leadership practices and change requirements Topic 3: Tackling resistance to change Causes of change resistance Dealing with emerging resistance Handling resistance associated with negative perceptions..159 Section summary Section 4 Evaluating strategic change initiatives 168 Topic 1: Start with the end in mind Achieving what was planned Strategic versus operational evaluation Success criteria Applying measures to rate success A full evaluation Topic 2: Gathering evaluation data Valid and reliable data Reviewing data-gathering methods Gathering good data Topic 3: Evaluating change success and promoting learning Agreeing on the evaluation Learning from the experience Assessing the evaluation The difficulties with evaluation Section summary

7 Further reading Before you move on Preparing for assessment The Management and Leadership Standards Appendix: Comparative analysis of management frameworks References

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9 About Pathways Plus Development guides There are 12 development guides in the Pathways Plus series to cover the 14 units of the qualifications at CMI Level 7: Strategic Management and Leadership Personal development as a strategic manager (ISBN: ) 7002 Strategic performance management (ISBN: ) 7003 Financial management (ISBN: ) 7004 Strategic information management (ISBN: ) 7005 Conducting a strategic management project (ISBN: X) 7006/ 7011 Organisational direction and strategic planning (ISBN: ) 7007 Financial planning (ISBN: ) 7008 Strategic marketing (ISBN: ) 7009 Strategic project management (ISBN: ) 7010 Organisational change (ISBN: ) 7012 Human resource planning (ISBN: ) 7013/ 7014 Being a strategic leader and strategic leadership practice (ISBN: ) For further details on the development guides: Phone: (+44) (0) Fax: (+44) (0) publications@managers.org.uk 9

10 Organisational change Qualification structure There are three qualifications available: CMI Level 7 Award in Strategic Management and Leadership Candidates need to complete any combination of units to a minimum of 6 credits to achieve the qualification. CMI Level 7 Certificate in Strategic Management and Leadership Candidates need to complete any combination of units to a minimum of 13 credits to achieve the qualification. CMI Level 7 Diploma in Strategic Management and Leadership Candidates need to complete all core units (Group A) and three optional units (Group B) to a total of at least 66 credits to achieve the qualification. Units Group A Unit 7001 Personal development as a strategic manager Credit Unit 7002 Strategic performance management 7 Unit 7003 Financial management 7 Unit 7004 Strategic information management 9 Unit 7005 Conducting a strategic management project 10 Unit 7006 Organisational direction 9 Group B Unit 7007 Financial planning 6 Unit 7008 Strategic marketing 6 Unit 7009 Strategic project management 6 Unit 7010 Organisational change 7 Unit 7011 Strategic planning 9 Unit 7012 Human resource planning 8 Unit 7013 Being a strategic leader 7 Unit 7014 Strategic leadership practice

11 About Pathways Plus SR How to use the development guides The development guides provide a critical commentary to the ideas of writers and thinkers in the management and leadership field. They offer opportunities for you to investigate and apply these ideas within your working environment and job role. Structure Each guide is divided into sections that together cover the knowledge and understanding required for the equivalent unit or units of the Chartered Management Institute Level 7 Strategic Management and Leadership qualifications. Each section starts with a clear set of objectives linked to the learning outcomes of the qualification. You don t have to complete the sections in the order they appear in the guide (the mind map at the beginning of each guide will help you decide which sections and topics are of particular need or interest) but you should try to cover all sections if you are aiming for a full diploma qualification. Activities Throughout the guides there are activities for you to complete. These activities are designed to help you reflect on your own situation and apply your research to your organisation. Space and tables are provided within the activities for you to enter your own thoughts or findings, but in some cases you may choose to copy out the table or make notes in a separate notebook. Timings Timings are suggested for each activity to give you a rough idea of how long you should devote to them. They re not hard and fast, and you must decide whether you will benefit from spending longer on some activities than stated. Supporting resources The text of the guides is designed to provide you with an introduction to the subject and a commentary on some of the key issues, models and thinkers in the field. The activities are there to help provide a framework for your thinking. A key component of Pathways Plus (Pathways Plus because the development guides work together with the online supporting resources to provide an overall learning journey) is the list of references given throughout the text and at the end of each topic guiding you to the most appropriate supporting resources for you to explore yourself. These are marked with the symbol SR (as shown above). You have the opportunity to select those resources that are of most interest or relevance to you and to use them as a source of guided research on a particular topic. Many of the supporting resources are immediately available by logging into CMI s online 11

12 Organisational change P+ Student Resource Centre (SRC) or the CMI online management and leadership portal, ManagementDirect(MDir), whichever you have access to. These resources are marked in the reference list at the end of each topic with P+ standing for Pathways Plus. A button on the first page of the site (whether SRC or MDir) will take you straight to the list of supporting resources as listed in the Pathways Plus topics. When there, click on the title of your development guide, the section and the topic you re interested in and then click straight to the article, video, podcast, checklist, extract or report that you want to find. For those resources that are not available through the CMI site, you will be directed to other sources (some also online) to reach what you need. Preparing for assessment Further information on assessment is available in the Student Guide produced as part of the Pathways Plus series. If you have any further questions about assessment procedures, it s important that you resolve these with your tutor or centre coordinator as soon as possible. Further reading You will find suggestions for further reading at the end of this guide as well as in the Student Resource Centre section of the Institute website at Alternatively, mic.enquiries@managers.org.uk or telephone

13 Introduction There is no sign that the rate of change is going to slow down any time soon. In fact, every measure seems to indicate that it s continuing to accelerate and the unprecedented and largely unexpected global financial crisis that emerged in 2008/9 has driven even more change. New technologies add to the pace; increasing efficiency in the availability of information and knowledge adds breadth and heightens competition. The increased competition in turn means that the life cycle of many products has become shorter and therefore the volatility of the organisations that depend on those products becomes greater. Investors are ruthless in seeking new opportunities for gain and in squeezing performance from existing investments. Those that fail to make the necessary return on capital are picked off by the venture capitalists and the hedge funds for performance improvement before being sold back to the market at a significant profit! At the same time, people are facing longer working lives and increasing numbers of job changes during their working lifetime due to reducing employer loyalty and loss of the job for life perspective. While standards of living achieve new heights and continue to justify the never had it so good descriptor, there is increasing evidence of stress at work, longer working hours and a welter of work life balance and job security issues. While the general standard of living may be rising, many would argue that the quality of their lives is moving in the opposite direction. High on many organisations list of needs is the ability to implement more change more effectively. High on many people s wish lists is for fewer new initiatives and more time to catch up. In this development guide on organisational change you ll examine the increasing tensions between employees and their employers and look at approaches and methodologies that might improve the change implementation experience for both parties. Section 1 looks at developing a change strategy using implementation models. Section 2 goes on to look at how to apply solutions to organisational change. Section 3 analyses an organisational response to change. Finally, in Section 4 you ll evaluate the impact of change strategies. 13

14 Organisational change Development guide mind map Section 1: Processes for change Section 2: Exploring change Assessment Organisational change Section 4: Evaluating strategic change initiatives Section 3: Impact of change on people If you re studying for the Level 7 in Strategic Management and Leadership qualifications you will be assessed by your approved centre on your knowledge and understanding of the following learning outcomes: Unit 7010: 1 Understand how to apply solutions to organisational change 2 Understand how to develop a change strategy using implementation models 3 Be able to analyse an organisational response to change 4 Understand how to evaluate the impact of change strategies 14

15 Section 1 Processes for change SR 3 Introduction Charles Handy in his aptly named book Age of Unreason asks Can any other word be asked to do so much? Even in the context of how we use the word itself: Change is a part of life (a noun universal) Make a change in your schedule (a noun particular) Count your change (a noun metaphorical) Can you change a wheel? (a verb transitive) I will not change (a verb intransitive) Where do I change trains? (a verb metaphorical) She was a great change leader (an adjective) This section focuses on change, not from a grammatical perspective, but from a process perspective. In this section you ll review a range of processes that have been chosen for their particular insight and perspective on how to plan and implement organisational change. Second, you ll look at a process for analysing an organisation s preparedness for change. Finally, you ll look at some of the approaches to driving change and the key roles in the process. All of these elements focus on developing awareness and understanding of how best to plan and prepare for change from a process perspective. While no change process is complete without its people perspective, you ll balance this initial process driven perspective by looking closely at the impact of change on people. Learning outcomes This section covers the following learning outcome: Understand how to develop a change strategy using implementation models 15