STRATEGIC CHANGE:Flow of Information, Recruitment, SOC Process

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Change Management MGMT625

Lesson # 31

STRATEGIC CHANGE

This lesson will be in continuity with the previous theme that is to discuss the Strategic Organizational

Change (SOC) Model.. Before going forward I want to recap the last lecture in which we have

discussed:

1. Context of Management Theories

2. Sources of Change

3. Key change management variables in the context of organization or SOC (Strategic

Organizational Change Management paradigm)

Previously we have opened-up our discussion on SOC by highlighting some key variables that

configure the change. First variable discussed was restructuring of vision, mission, goals and in fact

whole strategy of the organization. Whenever as a result of change the restructuring of the organization

occurs that produces a strategic reorientation or resetting of direction for the organization

Further variables of the SOC models are followings:

1. Organizational design and technology

An important note is whenever there is change in organizational strategy that instantly changes the

organization design and follows a new technological logic. So the question is what type of changes is

required in organization design as a result of change in organizational strategy. The important point is

that the change processes progress better only when the organizational structure is `organic' rather then

`mechanistic'.

Organizational design consists of the decisions about ...

· Formal structures

· Processes

· Systems

· Roles and

· Relationships

For instance we have two scenarios for change in strategy and organization design and

technology:

1. Change in strategy (goals and objectives of growth or of technology acquisition) will lead to

change in structure functional, divisional or matrix type of structures, hierarchical levels,

degree of centralization and delegation, formal planning and control systems, job

specialization, education and training

2. Flexibility of structure is an important variable comprises - flow of information (old paradigm-

that top managers are most informed), rewards (performance linkage) and recruitment (internal

or external. The point here is here what Prof. Stevens suggested for incorporating any change in

organizational strategy is that the organization must have a flexible or organic unit in terms of:

A) Flow of information

B) Performance-Reward Linkage

C) Recruitment

Therefore the point whole focus here is that "Change in strategy goals will lead to change in

Organizational Design." Now if we classify various organizational designs then broadly we have

two sets of organizational design:

Change Management MGMT625

(a) Tangible Designs

Functional Design

Divisional Design

Matrix Design

(b) Intangible Designs

Hierarchical Levels

Degree of Centralization

Control systems and Formal Planning

Job Specialization

Flow of Information:

For instance, if we go for growth strategy then the nature of information flow could not be control

oriented or bureaucratic which is the only top-to-bottom arrangement in communication between

hierarchical levels. The top-to-bottom information flow arrangement is historically oldest or traditional

arrangement and practiced until 1960s, 70s and in early 80s in consonance with the OD model. It is a

highly conservative, single channel and mechanistic approach. On the other hand, modern researches on

information flows and on organizational modelling revealed that information intrude or invade in an

organization from multiple channels and its sources just can not be restricted to limited number of top

executive. Therefore the modern structures belief rather more on information sharing and consultancy

and valued as the critical success factor or competitive edge over the others. The Knowledge

Management Paradigm is the example of highly successful, real time and more informed models which

believe on lower level and more operational segment of information of an organization particularly in

job creation and implementations processes.

Performance-Reward Linkage

Similarly, if we want to implement a revised strategy then it is evidently necessary to account the

micro-level structure of an organization by creating, for instance, the performance-reward linkage and

other motivational tools. The reason for this linkage is the direct relationship of organizational

productivity with the motivation or incentives.

Recruitment

Recruitment is the next phenomena which can cause a change in organizational strategy. In recruitment

two sorts of policies normally practiced in organizations:

· whether to hire from within

· or hire from without (from market or industry)

Hire from within is a policy best fit when the nature of the organization is quite conservative or cultural

sensitivities are involved in organizational functioning. These things make an organizational structure

stagnant in terms of learning, mechanistic and more bureaucratic. On the other hand hiring from market

policy opens horizon of creativity, new values, and styles and, of course, new conventions. Therefore

we see that structure-strategy compatibility depends on choices which possess both the advantages and

the disadvantages.

Extent of readiness

Within the context of design we have to see people's behaviour towards technology, because in today's

world technology plays a decisive role in the design of job. Therefore it is important to see how people

use technology and willing to learn newer production technologies is crucial in the job design because

readiness for change depends on this(or readiness of change). Extents of technology promotion itself

depend on how people are socially linked to each other and to the technical system of an organization.

Of particular interest is how the knowledge of work procedures (software) are synchronized with the

Change Management MGMT625

mode of production (e.g. small batch process), the physical layout of the facilities (e.g. line activities

versus station layout) and means of transformation (e.g. specialized versus multipurpose)

3. Management Practices and Organization Culture

How day to day practices are conducive for making organization's mission and vision effective for

organization change and productivity. Therefore routines, procedures, rules, principles and SOPs, and

how people do work provide a connect to organizations long term efficacy and health. There will be

system disconnect if practices are not related with mission of organization. Or in other words people are

unable to give meanings to rules and regulations of organizations and larger goals of the organizations.

If this is the case then people turn out to be least motivated to do their jobs. And hence there will be no

perceived linkage between performance and reward linkage.

In practice the imperative is to strike an appropriate relationship amongst the three variable of job

design; authority, responsibility and accountability. The failure to do so can lead to either over-

organization or under-organization. Authority but not accountability is built in job-design most of the

time which is problematic for good management. Some other personal sorts of reason that can cause an

organizational disconnect. One is people are least motivated to their jobs. Second, there might not be a

practical linkage between organization performance and reward.

Unwritten rules, conventions and other psychologically implied things or organization culture in any

organization can cause distrust and anarchy because of the lack of trust-deficit, indiscipline, and

intolerance for ambiguity, which also leads to culture-strategy compatibility. On the other hand

innovative, trustworthiness and socially acceptable environment can produce efficient results in

improving organizational efficiency

SOC Process

Two types of models are generally there within the context of strategic change:

· OD models

· Behavioural modifications

1. OD model - OD is a distinct area within the field of organizational science that focuses on the

planned and controlled change of organizations in desired directions. In essence, OD attempts to change

an organization as a totality by changing the organization's structure, technology, people, and/or tasks

(changing people or changing tasks, structure and technology to be focused) Organizational

Development is a distinct subject with in the field of organizational science that focuses on the planned

and controlled change of organizations in desired directions. It is based on close system and only

focuses on the internal aspects and mostly ignores the external aspect of environmental studies. One

such popular model is Kurt Lewin's model and force field analysis

2. The behavior modification (BM) intervention is the normative essence of the wider concepts of

motivation, reward, learning and organizational culture (Wilson, 1992). It is an attempt to understand

and reduce complex change processes in the organizations to explicit rules, procedures and strategic

actions to deal with all possible contingencies.

This second school of thought has its roots in the practices of behavior modification and is an attempt to

understand and reduce complex change processes in the organization to explicit rules, procedures, and

strategic actions to deal with all possible contingencies

Leadership and Strategic Organizational Change

It is the leadership which mediates between the two change management models cited above.

Leadership is the only element which can bridge the gap between desired change and the behavior

aspect of the organization According to Hitt, "senior management must articulate a clear vision of the

Change Management MGMT625

future "ideal" organization in order to successfully implement organizational change.

Leadership is also considered responsible for the creation of an organizational identity (who we are? &

for what we exist) which leads to build up of organizational commitment then culminates in better

organization communication. By and large change management or organizational transformation is

considered the responsibility of senior leadership.

References:

Appelbaum, Steven H. Normand, St-Pierre and William, Glavas, "Strategic organizational Change: The

Role of Leadership, Learning, Motivation and Productivity," and published in the journal Management

Decision Vol. 36 No 5, (1998), pp: 289-301

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