Describe and discuss the difficulties encountered when managing organisation wide change in a hierarchical organisation. Your answer should refer to appropriate theories and concepts a

• Specialisation hierarchy – Each functional area has a clearly defined set of competencies, where the lower ranks are supervised and dictated by the higher ranks.
• Rules – There are general guidelines established and they are stable.
• Specialisation of labour – Jobs and tasks are broken into well-defined routines.
• Centralized decision making – Decisions are made at the top by a few group of high ranking people and passed down the chain. Ideas are not flown up the hierarachy.

Organisation culture can be defined as the set of key values, beliefs, understandings and norms shared by members of an organization (Daft, Management, 2003, p88). In a bureaucratic culture, the organisation does not encourage innovation and employees are not rewarded for it. The following is observed in a typical bureaucratic culture that inhibits the ability to change:

• Employees are satisfied with average levels of performance and they wont strive for higher performance since there are no incentives as well, for it.
• Too mechanical, no incentives for innovation or experimentation.

Implementing Change in a Hierarchical Organisation

Earlier we discussed the two types of change: evolutionary and revolutionary in nature. We first take the example of implementing evolutionary change in a hierarchical organisation. Such change is an incremental and should blend with the people and processes. Therefore it is necessary to consider the organisation structure, culture and

High

Low                

        Low                Group Strength                 High

Figure 3: Group-Grid Matrix

how they affect such a change programme. The Group-Grid model shown below is a means of analysing how the relative strength of the group and grid factors constrain and enable organisation change. The group dimension indicates the extent by which the people in the organisation are controlled by the social unit. The grid dimension indicates the extent by which the behaviour of people is controlled by work role and structure. If we take a hierarchical organisation it would fit into the top-left portion of this matrix: Strong Grid and Weak Group.

Revolutionary change is associated with creating a new type of alignment and is such that it transforms the organisation. Firms are complex and there are many elements that potentially can change. The major organisational change levers are:

• Organisational structures
• Organisational culture
• Organisational processes
• Organisational systems

Such changes are those that do not build on the status quo but overthrow it. Thus revolution leads to a clear break with the past. Such a ‘big bang’ approach is needed when organisational rigidity is so deeply rooted that smaller pushes do not bring any result. The types of resistance that can be found in a hierarchical organisation when implementing such change can be categorised into the following.

Psychological resistance to change

Many employees resist changing due to the uncertainty and ambiguity that is associated with the old ways of doing business. According to Chris Argyris: organisations that are usually hierarchical and control-centred and one of the tasks of managers is to impose limits on the actions of those below them. People, however, are independent, active entities, and they tend to become more independent and active as they grow older and wiser. The paradox of organisations is that the most knowledgeable and experienced employees are those who are likely to feel most inhibited and frustrated. This sense of inhibition leads to disbelief and distrust. As employees become accustomed to formal routines, their ability to learn recedes. New job descriptions are not seen as a challenging opportunity to learn but as unwelcome interference.

Especially in hierarchical organisations, when there are multiple departments involved in the change process, certain departments might have the misconception that change is being pushed by a group of people for their own personal benefits.  

Employees lose their commitment to their work, seeing it as merely a means to a personal end. All change is regarded as threatening. Employees develop what Argyris calls "defensive routines", which impede or prevent change. Many of these routines are selfish, as people try to protect their status and power.

Alvin Zander, who was a close colleague of Kurt Lewin and leaned heavily on his work, offered six primary reasons for resistance to surface:

• If the nature of the change is not made clear to the people who are going to be influenced by the change.
• If the change is open to a wide variety of interpretations
• If those influenced feel strong forces deterring them from changing.
• If the people influenced by the change have pressure put on them to make it instead of having a say in the nature or the direction of the change.
• If the change is made on personal grounds
• If the change ignores the already established institutions in the group

Cultural Resistance to Change

In most hierarchical organisations culture is such that it is bureaucratic and with no incentives for change. The organisational shared values and beliefs could form the ‘genetic code’ of the company. A research at Harvard on 207 US firms have shown the relationship between corporate culture and external environments. The study found that a strong culture itself was not responsible for business success unless the culture encouraged adaptation to the external environment. In a bureaucratic organisation, the following could be observed:

• Employees become too rigid, relying to procedures and routines, having an adverse effect, for example on customer service or new product development
• When its necessary to react to changes in the external environment, it is too slow and inflexible.
• Employees tend to be satisfied with average levels of performance. They wont strive for higher levels of performance or to learn new technology
• Too mechanical, no incentives for innovation or experimentation. Therefore hinders experimentation and learning

Figure 4: Effects of Corporate Culture

The figure 4 above shows how strong and weak cultures affect organisation change. In a typical hierarchical organisation I would expect the culture to be strong and not up to date giving rise to the fossilisation effect. 

Political Resistance to Change

In a hierarchical organisation the decision making power lies only within a certain level of management. By implementing change there is the prospect of losing power, prestige or pay. Certain departments themselves could run the risk of losing power to other departments. This is sufficient for them to block the change.

Field Force Analysis

In order to analyse change and the leadership strategy Kurt Lewin developed a model called Force-field analysis. Driving forces can be though of as problems or opportunities that provide motivation for change. Restraining forces are the barriers to change such as middle management resistance, lack of resources etc. Such barriers to change have been explained in the previous sections under the sub-headings of: psychological resistance, cultural resistance and political resistance. When change is to be introduced the top management should analyse both the pressures for change and the restraining forces. The following diagram illustrates how a typical Force-field analysis for a hierarchical organisation would like.

                

Figure 5: Force-field Analysis

In this example the driving forces are the external or internal factors that cause the change. Eg. Change due to competitive forces, customer demands or economic situation. The restraining forces are the organisation structure, people, culture and processes.

Insert

Business system and organisation structure, culture, process

Figure 6: Organisational System

A classic example of an organisation whose market leadership position was lost due to not adapting to market changes is British retail giant Marks & Spencer. This company had a bureaucratic culture where a hierarchical organisation structure was being enforced. The roots of the culture can be traced back to the founder himself who enforced a top-down approach to management and there was one-way communication. The management had no idea as to what the customers wanted as they were closer to the employees who had no decision making power. There was a clear separation of roles and learning was not encouraged.

Structure, culture and organisation change strategy are inter-related. When Marks & Spender wanted to change due to increased competition it found that the organisation culture and structure did not support it. It would

Implementing Change in a Hierarchical Organisation

Types of People

Kurt Lewin has categorised people into 3 segments based on their change orientations:

• Functional - These are the people who anticipate change, have problem solving skills and make things happen. They are quick to adapt to changes.
• Non-functional – This is the type of people who will agree to change but without commitment or support. They will be sitting on the fence without actively getting involved in the change process and moan and groan when change takes place.
• Dysfunctional – This is the type of people who will try to sabotage the change process. They will provide utmost resistance to any type of changes and blame the management for implementing something not useful.

I would expect in a hierarchical organisation to have majority of Non-functional and Dysfunctional type of employees.

Overcoming Barriers to Change

 In order to determine the best approach for overcoming change, it is necessary to understand certain critical factors such as:

• Amount, type and source of resistance to change
• The power of the resisters
• Time frame for the change
• The need for commitment of others
• The short and long term effects

Based on the answers to these questions various methods could be adopted to overcome the forces of change.

In order to illustrate a situation where a hierarchical organisation implemented change by successfully overcoming barriers, I would like to take the example of my own company, say ‘CA’. CA is a large software company based in the US with over 120 branches in 48 countries. Due to external factors such as competitive forces and customer demands, the following change was necessary:

• To make the Technology Services department of ‘CA’, a more services oriented arm, which will offer value added services such as consulting and project management in addition to traditional product implementation.
• To align the consultants from Technology Services arm to 4 different types of practises and to develop a comprehensive training plan
•  Develop a proper methodology for technology implementation and consulting services to be performed.

I would consider this to be an evolutionary change meant to ensure that the organisation could stay competitive in a changing environment. Shown below is a Force-field analysis of the driving forces of change and the factors restraining change.

Insert diagram of Field-force analysis.

Most of the resistance is of a personal nature. Following are some:

• Fear of unable to learn new skills
• Fear of new challenges to be encountered
• Fear of inability to achieve new goals set by management
• Fear of complying with new standards and processes
• Fear of the managers, taking added responsibility

Being a hierarchical organisation, each consultant would be under a particular brand focus. There was no cross brand training for the consultants. There were no proper processes followed in implementing solution or to measure the success of projects.  

Key Elements in a Change Plan

In implementing the proposed changes, I would say that a carefully crafted plan was used. Since there was no real sense of urgency (i.e. revolutionary type of change), the plan was to be executed over a period of time. I would like to comment on some of the elements that I found to be important in implementing such change:

1. Strong leader

The leader appointed to spearhead the change had sufficient authority and power to push the changes down the hierarchy. She also had the power to gather necessary support from other relevant departments.

Figure 7: Leadership Styles

The leadership style adopted was similar to ‘coaching’ as based on the diagram above. There was a few top managers who were involved in the decision making process but the ultimate decision was with the leader. Since the leader already had a strategy in mind and the solutions to the existing problems were uncovered beforehand, this type of style was successful. The crucial aspect was that the leader was able to sustain the change programme over a period of time until the overall objectives were achieved. Some of her characteristics for success included:

• Creating awareness of the crisis involved
• Showing a need for change

• Developing a clear vision, charting the roadmap and winning everybody’s commitment to it

• Establishing common shared goals

• Being visible, credible and responsible as a leader of change

2. Communication

The leader was able to communicate the vision of the Technology Services unit to the team members and to educate them of the benefits of the proposed changes. There were quarterly web-casts organised that was compulsory to all team members. During these web-casts the accomplishments of the previous quarter were highlighted and the plans for the coming quarter were detailed. This would prevent any misunderstanding of the goals or to create any kind of ambiguity. It was also mentioned the countries and individuals who contributed most to the change initiative. This was an effective tool for getting everybody to participate and be part of the success.

3. Quick Wins

The overall change management initiative was long drawn and the results were gradual. The changes were to be implemented over a period of years. This could have potentially deteriorated the motivation of the people concerned. The change leader was careful in her plan to include ‘quick wins’ so that outcomes of their efforts were visible in the short term and the appropriate people were rewarded handsomely. This created motivation among the rest of the staff to strive for better performance, which would ultimately help the organisation achieve desired results. The ‘quick wins’ also helped to look at areas of refinement and improvement, which were taken into consideration in the future phases of the project.

We have looked at how a hierarchical organisation implemented change and what were the critical success factors. As mentioned in the previous sections, there are some major challenges when implementing change in such an organisation. Depending on the external environment, change may have to be continuous. Uncertain environments need changes to be implemented rapidly and it is continuous.  

Organisation Structure and Environment

In uncertain environments change is rapid and complex. The following are things that happen in such an environment:

• Increased differences among departments – Each department has its own unique goals, tasks and time horizons. These create barriers among departments.
• Increased co-ordination to keep departments working together – Horizontal co-ordination to link departments and overcome differences in departmental goals and orientations.
• Adapt to changes – Flexibility and the ability to change to environment changes is crucial. Changes in products and technology require co-ordination among departments, which could be achieved with horizontal information processing and project teams.

The relationship between environment and structure is shown in the diagram below. This illustrates that vertical structures fit stable environments and horizontal structures fit uncertain environments.

Insert diagram here

 

Figure 8: Relationship between Environment & Structure

In order to determine the right structure, it is necessary to look at the contingency factors such as organisation strategy, environment, production technology and departmental interdependencies. The structure should fit these contingency factors as shown the diagram below.

Insert diagram

Figure 9: Relationship of Strategic Goals to Structure

It is important that organisation structure and culture support changes, as it is the only way organisations in a volatile world can survive and that’s the only method for continuous improvement.

Change and the Learning Organisation

Learning results in new knowledge, understand and insights. As Argyris explained, it can be defined as “Organisational learning is a process of detecting and correcting error”. However, there is no single view of what the learning organisation looks like. It could be thought of as one in which everyone is engaged in identifying and solving problems, enabling the organisation to continuously experiment, change and improve, thus increasing its capacity to grow, learn and achieve its purpose. To create such an organisation, there are 3 important factors:

• Team based structure – In order to facilitate horizontal communication and collaboration self-directed teams could be formed. People within the team have responsibility and authority to make decisions to various challenges or opportunities that arise. This is a clear deviation from the hierarchical structures.

• Employee Empowerment – The creativity and talents of the employees can be uncovered by giving them freedom and skills to make effective decisions and be responsible or them.

• Open Information – Information sharing is important so that all employees are well aware of organisation strategy and even daily tasks.

Conclusion

In this coursework I have described what is change and how change is implemented in hierarchical organisations with emphasis on some of the difficulties encountered in that process. It is mentioned that such organisations fit into the strong grid-weak group. In such hierarchical organisations, the following can be observed that inhibit flexibility in implementing change:

• Employees become too rigid, relying on standard procedures and routines.
• Employees tend to be satisfied with average levels of performance. They wont strive for higher levels of performance or to learn new technology
• Too mechanical, no incentives for innovation or experimentation. Therefore hinders experimentation and learning.

There is no right or wrong structure. If the external environment is volatile then the structure has to be adaptable to cater for the necessary changes. In such environments change is continuous. Therefore traditional models such as unfreezing the old culture, changing and refreeze for stability, may not be applicable in modern days where change is continuous.

This gives rise to learning organisations where everyone is engaged in identifying and solving problems. There are certain adjustments that need to be made in order to develop a learning organisation:  team based structure (where hierarchical structures are replaced with horizontal ones), empowering employees and information sharing. Such organisations are according to Gavin, skilled at: systematic problem solving, experimenting with new ideas, learning from own experience and history and transferring knowledge quickly through the organisation to others.

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