Chapter 1: Change Cause and Organizational Diagnosis

Transcription

1 Chapter 1: Change Cause and Organizational Diagnosis

2 The dynamics of change: Shifting competitive environments and new opportunities lead companies to seek strategic renewal and organizational change Shifting Competitive Environment Strategic Renewal Organizational Change New Opportunities Altering Behavior Patterns of Employees

3 Examples of companies that have gone through a phase of strategic renewal: Company EG&G Government contractor Enron Energy production GE Commodity product Grand Union Low-cost H Altered Strategy Commercial vendor Energy trading Value-added products and services High-end grocery store

4 Practical Session 1.1. : Examples of strategic renewal Get together into 4 discussion groups: 1. Each group to discuss and search for national or European companies that have gone through such a process of strategic renewal. Which was the business concept before and after the transformational or evolutionary process? What triggered the need for renewal? Which do think were the challenges the company faced during the process? Was the strategic renewal successful? Present your results to the class

5 Strategic renewal in most (if not all) cases requires changes in behavioural patterns: From: To: Individual Follow procedures Short term Follow plans Avoid risks Do Subordinates = Followers Keep information Defend turf Hide mistakes High expectations Team Act creatively Long term Flexibility Take risks Learn Subordinates = Partners Share information Coordinate efforts Learn from mistakes Outstanding performance

6 However, it is not always the fundamental strategic renewal that requires change, there are many causes such as: Financial crises, crisis management; turnaround ( Sanierung), financial re-engineering: not considered here, not change management but emergency surgery Changes in the business environment: external threats and opportunities such as... Mergers and Acquisitions - post-merger integration Outsourcing and low cost sourcing Changes in work-style, organization and processes Introduction of new technologies New Managing Director / Senior Management And...

7 Nevertheless the corporate strategy together with the organizational structure and processes and the corporate culture represent the three key elements of change Strategy: Where do we want to be? What is our vision, mission objectives? How are we going to get there? Which desing, structures and processes are required? Culture: What kind of employee are needed/ would I like to have? What sort of culture is needed to attract / retain these people? What do I need to do the enhance the performance of employees / get the best of of them?

8 Every change process starts with the Organizational Diagnosis, which represents a process of learning about the dynamics of the organization in order to take action intended to improve performance. Not about data and facts but to arrive at a complete picture regardin the organisation through interviews, dialogue, questionnaires wit groups and individuals

9 Organizational Diagnosis: Key Questions that need to be addressed during the process Purpose: Which are the overriding aims and goals of the organization (Mission statement), do employees share a sense of pride and have commitment Business model: How will the organization generate revenues and make profit? Does the chain of interrelated activities including suppliers and the customers support the business model? Industry analyses: What are the elements of the competitive environment, the current state and potential disruptions to status quo?

10 Organizational analyses: Addressing the three key elements Strategy: What are the means by which the organization or business unit is differentiating itself from the competitors? How responsive is this strategy to changes? Design: What are the means by which the organization will achieve the required level of creativity, responsiveness and coordination? Behaviours: What are the enacted values of the organization, assumptions, the belief systems and norms that guide and shape our everyday behaviour? Are those behaviours aligned with the requirements of outstanding performance?

11 Putting the key questions together with the key elements of change into a matrix, we can now diagnose the entire organizational system in a structured way Strategy Design, structure, processes Behavior and culture Purpose Does strategy forward purpose and respond to changes in marketplace? Do the design and structure enhance or detract from goals? Does purpose create pride and commitment? Business Model Is business model congruent with strategy? Do design and structure support the business model? Do employee behaviors support business model? Industry analysis Is the strategy sustainable within the industry? Does the structure focus the activities toward the marketplace? Are behavior patterns consistent with requirements of outstanding performance

12 Dialogue: Organizational diagnosis involves dialogue among employees focussed on performance and the impediments and barriers to achieving an organization s strategic goals. A group explores complex difficult issues from many points of view. The result is a free exploration that brings to the surface the full depth of people s experience and thought and yet can move beyond their individual views. Senge, 1990

13 Dialogue involves a structured, collective discussion among two or more parties without a predetermined outcome. Dialogue creates the opportunity for an open and honest discussion among employees concerning how to implement a new strategy and sustain outstanding performance. Dialogue is guided by: Mutuality Belief that others have the capacity and desire to learn Reciprocity Believe they have something to learn from others Advocacy Willingness to reveal positions and assumptions Inquiry Openness to questions and challenges by others

14 Power distance inhibits openness and risk taking and distorts communication: Need to remove barriers and reduce distance through: (usually facilitated by external consultant) Delayering Removing hierarchical barriers that create distance and distort communications Decentralizing Pushing down decision making to close gap between decision makers and doers Egalitarianism Removing external artifacts of status differentials Third-party facilitation Structuring effective rules-of-engagement around feedback and dialogue Representation Inserting voice from multiple levels, both vertical and horizontal Teamwork Building shared purpose and mutual responsibility

15 Getting starting with organizational diagnosis involves four steps that need to be taken: 1. Collecting data on the organization and its environment 2. Entering into a dialogue of discovery that makes sense o and provides insight into the data that has been amasse 3. Receiving and providing feedback on what has been lea 4. Institutionalizing dialogue and diagnosis so that the becom an organic and ongoing part of the organization s activitie

16 In order to safeguard the success of organizational diagnosis the following principles should be adhered to: Systemic focus Target organizational system guided framework that focuses on by a interactions Consultant facilitated Special training External perspective Facilitation skills Client-oriented Employees participate in all stages to build commitment and competency Honest conversation Requirements of shared dialog: Mutuality, reciprocity, advocacy, inquiry Psychological safety Active steps taken to overcome climate of organizational silence

17 Diagnosis needs to be data driven, infused with valid information concerning the factors that impact on the performance of the organization and its ability to implement its renewed strategy. Data collection impacts on employees motivation and starts to alter behaviours Builds commitment on the part of the employees Do not underestimate the effect of this process on the entire change program

18 Questionnaires represent the most popular form to collect data Questionnaires: Advantages: Reach large numbers of employees Fast Anonymous Used for benchmarking Disadvantages: Based on preconceived ideas Can over simplify complex issues Does not expose root causes Does not create commitment

19 Diagnostic interviews involves a trained diagnostician to solicit information, can be structured or unstructured, open or closed questions or open dialogue Diagnostic interviews: Advantages: Collect rich data Begins process of dialogue Teaches communication skill Disadvantages: Requires investment in training interviewers Data hard to summarize or quantify Lacks anonymity

20 Watching the actual behaviours of employees and the management teams under real-life conditions Behavioral observation: Advantages: Work-based behavior as data Data rich and deep on interactions Reveals underlying emotions Disadvantages: Observation will impact behaviors Time consuming Requires highly skilled observers

21 Discovery: In the discovery stage employees enter into a process to analyze the data, make sense of what they have learned and consider the steps to take Involvement of individuals or groups and teams Enrichment of understanding of data, increase motivation and commitment Determination of whom to involve How to involve (face to face, group discussion, question and answer session) Staging event for upcoming change process

22 The feedback loop: Employees who have been involved in the collection and discovery phase will expect to learn how their efforts have been translated into action. Generally feedback required throughout the whole process, not restricted to diagnostic stage Feed back by top-management to employees Generate more learning If you fail to provide feedback you might as well stop your change program here!!

23 Practical Session 1.2. : Conduct organization diagnosis on the basis of questionnaires and diagnostic interviews Get together into two discussion groups. Each discussion group to form four subgroups with the following roles / tasks: Subgroup 1: Represents employee (s) of his/her own (real) company Subgroup 2: On the basis of the diagnostic matrix and own research define questions and design questionnaire for organizational diagnosis Subgroup 3: Generally as above but conduct diagnostic interview with company employee subgroup 1 Subgroup 4: Critically observe interview process but do not engage in discussion and report back on results