All successful changes involve changes in people and culture as well. For example, getting products to market fast requires that people learn to work collaboratively. Changes in people and culture pertain to how employees think—changes in mind-set. People change pertains to just a few employees, such as sending a handful of middle managers to a training course to improve their leadership skills. Culture change pertains to the organization as a whole, such as when the IRS shifted its basic mind-set from an organization focused on collection and com- pliance to one dedicated to informing, educating, and serving customers (taxpayers).50 In the business world, Jeff Immelt at General Electric strives to replace GE’s famous obsession with bottom-line results with a new culture of risk-taking, bold thinking, and creative energy.
Culture change of the magnitude at GE is not easy. Indeed, executives routinely report that improving people and corporate culture is their most difficult job.51 Two specific tools for changing people and culture are training and development programs, and organiza- tional development (OD).
1. TRAINING AND DEVELOPMENT
Training is one of the most frequently used approaches to changing people’s mind-sets. A company might offer training programs to large blocks of employees on subjects such as teamwork, diversity, emotional intelligence, quality circles, communication skills, or par- ticipative management. General Electric, for example, initiated new courses in marketing and idea generation to help shift attitudes and values. Training and development programs aimed at changing individual behavior and interpersonal skills are a big business for con- sultants, universities, and training firms.
Some companies particularly emphasize training and development for managers, with the idea that the behavior and attitudes of managers will influence people throughout the organi- zation and lead to culture change. A number of Silicon Valley companies, including Intel, Ad- vanced Micro Devices (AMD), and Sun Microsystems, regularly send managers to the Growth and Leadership Center (GLC), where they learn to use emotional intelligence to build better relationships. Nick Kepler, director of technology development at AMD, was surprised to learn how his emotionless approach to work was intimidating people and destroying the rap- port needed to shift to a culture based on collaborative teamwork.53
Leading companies also want to provide training and development opportunities for everyone. An excellent example of training is First Data Corp., which uses a multifaceted, team-based approach first initiated by CFO Kim Patmore to boost morale among finance personnel.54 First Data’s “Extreme Teams”
bring together employees from all hierar- chical levels to organize departmental training and development programs for each of First Data’s six regional finance units. One team is charged with organizing a mentoring program that pairs less- experienced personnel with seasoned managers who support and encourage them to make changes needed to further their own and the organization’s well-being. Another team focuses on a program called Fast Tracks, an annual two-day seminar that brings people from all areas and levels of the company together to learn skills such as communication or conflict resolution.
2. ORGANIZATION DEVELOPMENT
Organization development (OD) is a planned, systematic process of change that uses behavioral science knowledge and tech- niques to improve an organization’s health and effectiveness through its ability to adapt to the environment, improve internal relation-ships, and increase learning and problem-solving capabilities.55 OD focuses on the human and social aspects of the organization and works to change attitudes and relationships among em- ployees, helping to strengthen the organization’s capacity for adaptation and renewal.56
OD can help managers address at least three types of current problems:57
- Mergers/acquisitions. The disappointing financial results of many mergers and acquisitions are caused by the failure of executives to determine whether the administrative style and corporate culture of the two companies fit. Executives may concentrate on potential syner- gies in technology, products, marketing, and control systems but fail to recognize that two firms may have widely different values, beliefs, and practices. These differences create stress and anxiety for employees, and these negative emotions affect future performance. Cultural differences should be evaluated during the acquisition process, and OD experts can be used to smooth the integration of two firms.
- Organizational decline/revitalization. Organizations undergoing a period of decline and revitalization experience a variety of problems, including a low level of trust, lack of in- novation, high turnover, and high levels of conflict and stress. The period of transition requires opposite behaviors, including confronting stress, creating open communication, and fostering creative innovation to emerge with high levels of productivity. OD tech- niques can contribute greatly to cultural revitalization by managing conflicts, fostering commitment, and facilitating communication.
- Conflict management. Conflict can occur at any time and place within a healthy organization.For example, a product team for the introduction of a new software package was formed at a computer company. Made up of strong-willed individuals, the team made little progress because members could not agree on project goals. At a manufacturing firm, salespeople promised delivery dates to customers that were in conflict with shop supervisor priorities for assembling customer orders. In a publishing company, two managers disliked each other intensely. They argued at meetings, lobbied politically against each other, and hurt the achievement of both departments. Organization development efforts can help resolve these kinds of conflicts, as well as conflicts that are related to growing diversity and the global nature of today’s organizations.
Organization development can be used to solve the types of problems just described and many others. However, to be truly valuable to companies and employees, organization de- velopment practitioners go beyond looking at ways to settle specific problems. Instead, they become involved in broader issues that contribute to improving organizational life, such as encouraging a sense of community, pushing for an organizational climate of open- ness and trust, and making sure the company provides employees with opportunities for personal growth and development.58 At Great Britain’s General Communications Head- quarters, OD specialists helped managers transform a rigid, insular culture into a flexible and collaborative one designed for the twenty-first century, as described next. Specialized techniques have been developed to help meet OD goals.
3. OD ACTIVITIES
A number of OD activities have emerged in recent years. Three of the most popular and effective are the following:
- Team-building activities. Team building enhances the cohesiveness and success of organi- zational groups and teams. For example, a series of OD exercises can be used with members of cross-departmental teams to help them learn to act and function as a team. An OD expert can work with team members to increase their communication skills, facilitate their ability to confront one another, and help them accept common goals.
- Survey-feedback activities. Survey feedback begins with a questionnaire distributed to employees on values, climate, participation, leadership, and group cohesion within their organization. After the survey is completed, an OD consultant meets with groups of employees to provide feedback about their responses and the problems identified. Employees are engaged in problem solving based on the data.
- Large-group interventions. In recent years, the need for bringing about fundamental organi- zational change in today’s complex, fast-changing world prompted a growing interest in applications of OD techniques to large group settings.59 The large-group intervention approach brings together participants from all parts of the organization—often includ- ing key stakeholders from outside the organization as well—to discuss problems or opportunities and plan for change. A large-group intervention might involve 50 to 500 people and last several days. The idea is to include everyone who has a stake in the change, gather perspectives from all parts of the system, and enable people to create a collective future through sustained, guided dialogue.
Large-group interventions reflect a significant shift in the approach to organizational change from earlier OD concepts and approaches. Exhibit 8.5 lists the primary differences between the traditional OD model and the large-scale intervention model of organiza- tional change.60 In the newer approach, the focus is on the entire system, which takes into account the organization’s interaction with its environment. The source of information for discussion is expanded to include customers, suppliers, community members, and even competitors, and this information is shared widely so that everyone has the same picture of the organization and its environment. The acceleration of change when the entire system is involved can be remarkable. In addition, learning occurs across all parts of the organiza- tion simultaneously, rather than in individuals, small groups, or business units. The result is that the large-group approach offers greater possibilities for fundamental, radical trans- formation of the entire culture, whereas the traditional approach creates incremental change in a few individuals or small groups at a time.
Large-group interventions represent a significant shift in the way leaders think about change and reflect an increasing awareness of the importance of dealing with the entire system, including external stakeholders, in any significant change effort.
4. OD STEPS
OD experts acknowledge that changes in corporate culture and human behavior are tough to accomplish and require major effort. The theory underlying OD proposes three distinct stages for achieving behavioral and attitudinal change: (1) unfreezing, (2) changing, and (3) refreezing.61
The first stage, unfreezing, means that people throughout the organization are made aware of problems and the need for change. This stage creates the motivation for people to change their attitudes and behaviors. Unfreezing may begin when managers present informa- tion that shows discrepancies between desired behaviors or performance and the current state of affairs. In addition, managers need to establish a sense of urgency to unfreeze people and create an openness and willingness to change. The unfreezing stage is often associated with di- agnosis, which uses an outside expert called a change agent. The change agent is an OD spe- cialist who performs a systematic diagnosis of the organization and identifies work-related problems. He or she gathers and analyzes data through personal interviews, questionnaires, and observations of meetings. The diagnosis helps determine the extent of organizational problems and helps unfreeze managers by making them aware of problems in their behavior.
The second stage, changing, occurs when individuals experiment with new behavior and learn new skills to be used in the workplace. This process is sometimes known as intervention, during which the change agent implements a specific plan for training man-agers and employees. The changing stage might involve a number of specific steps.62 For example, managers put together a coalition of people with the will and power to guide the change, create a vision for change that everyone can believe in, and widely communicate the vision and plans for change throughout the company. In addition, successful change involves using emotion as well as logic to persuade people and empowering employees to act on the plan and accomplish the desired changes.
The third stage, refreezing, occurs when individuals acquire new attitudes or values and are rewarded for them by the organization. The impact of new behaviors is evaluated and reinforced. The change agent supplies new data that show positive changes in perfor- mance. Managers may provide updated data to employees that demonstrate positive changes in individual and organizational performance. Top executives celebrate successes and reward positive behavioral changes. At this stage, changes are institutionalized in the organizational culture, so that employees begin to view the changes as a normal, integral part of how the organization operates. Employees may also participate in refresher courses to maintain and reinforce the new behaviors.
Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.