CHAPTER 4

The Organization System and

Dynamics
Chapter contents
4.1 Foundations of organization structure
4.2 Stress and stress management
4.3 Organizational culture
4.4 Organizational change and development
4.1 Foundations of organization structure
 An organizational structure defines how job tasks are
formally divided, grouped, and coordinated.
 Managers need to address six key elements when they
design their organization’s structure:
o work specialization
o departmentalization,
o chain of command,
o span of control,
o centralization and decentralization, and
o formalization.
cont’d…
 Work specialization
 We use the term work specialization, or division of
labor, to describe the degree to which activities in
the organization are subdivided into separate jobs.
 The essence of work specialization is to divide a job
into a number of steps, each completed by a
separate individual.
 In essence, individuals specialize in doing part of an
activity rather than the entirety.
cont’d…
 Departmentalization
 Once jobs have been divided through work
specialization, they must be grouped so common
tasks can be coordinated.
 The basis by which jobs are grouped is called
departmentalization.
 One of the most popular ways to group activities is
by functions performed. A manufacturing manager
might organize a plant into engineering,
accounting, manufacturing, personnel, and supply
specialists departments.
cont’d…
 The major advantage of this type of functional
departmentalization is efficiencies gained from
putting like specialists together
 We can also departmentalize jobs by the type of
product or service the organization produces
 The major advantage here is increased
accountability for performance, because all
activities related to a specific product or service
are under the direction of a single manager.
cont’d…
 When a firm is departmentalized on the basis of
geography, or territory, the sales function, for
instance, may have western, southern,
midwestern, and eastern regions, each, in effect, a
department organized around geography.
 This form is valuable when an organization’s
customers are scattered over a large geographic
area and have similar needs based on their
location.
cont’d…
 Process departmentalization works for processing
customers as well as products.
 A final category of departmentalization uses the
particular type of customer the organization seeks
to reach.
 Microsoft, for example, is organized around four
customer markets: consumers, large corporations,
software developers, and small businesses.
Customers in each department have a common set
of problems and needs best met by having
specialists for each.
cont’d…
 Chain of Command
 While the chain of command was once a basic
cornerstone in the design of organizations, it has
far less importance today.
 But contemporary managers should still consider
its implications.
 The chain of command is an unbroken line of
authority that extends from the top of the
organization to the lowest echelon and clarifies
who reports to whom.
Cont’d…
 We can’t discuss the chain of command without
also discussing authority and unity of command.
 Authority refers to the rights inherent in a
managerial position to give orders and expect
them to be obeyed.
 To facilitate coordination, each managerial
position is given a place in the chain of command,
and each manager is given a degree of authority
in order to meet his or her responsibilities.
Cont’d..
 The principle of unity of command helps preserve
the concept of an unbroken line of authority.
 It says a person should have one and only one
superior to whom he or she is directly
responsible.
 If the unity of command is broken, an employee
might have to cope with conflicting demands or
priorities from several superiors.
Cont’d..
 Span of Control
 How many employees can a manager efficiently and
effectively direct?
 This question of span of control is important because it
largely determines the number of levels and managers an
organization has.
 All things being equal, the wider or larger the span, the
more efficient the organization.
 Obviously, wider spans are more efficient in terms of cost.
However, at some point when supervisors no longer have
time to provide the necessary leadership and support, they
reduce effectiveness and employee performance suffers.
Cont’d..
 Narrow or small spans have their advocates. By
keeping the span of control to five or six employees, a
manager can maintain close control.
 But narrow spans have three major drawbacks. First,
they’re expensive because they add levels of
management.
 Second, they make vertical communication in the
organization more complex. The added levels of
hierarchy slow down decision making and tend to
isolate upper management.
 Third, narrow spans encourage overly tight
supervision and discourage employee autonomy.
cont’d…
 The trend in recent years has been toward wider spans
of control.
 They’re consistent with firms’ efforts to reduce costs,
cut overhead, speed decision making, increase
flexibility, get closer to customers, and empower
employees.
 However, to ensure performance doesn’t suffer
because of these wider spans, organizations have been
investing heavily in employee training.
 Managers recognize they can handle a wider span best
when employees know their jobs inside and out or can
turn to co-workers when they have questions.
cont’d…
 Centralization and Decentralization
 Centralization refers to the degree to which
decision making is concentrated at a single point in
the organization.
 In centralized organizations, top managers make all
the decisions, and lower-level managers merely
carry out their directives.
 In organizations at the other extreme,
decentralized decision making is pushed down to
the managers closest to the action.
cont’d…
 The concept of centralization includes only formal
authority—that is, the rights inherent in a position.
An organization characterized by centralization is
inherently different structurally from one that’s
decentralized.
 A decentralized organization can act more quickly
to solve problems, more people provide input into
decisions, and employees are less likely to feel
alienated from those who make decisions that
affect their work lives.
cont’d…
 Management efforts to make organizations more
flexible and responsive have produced a recent
trend toward decentralized decision making by
lower level managers, who are closer to the action
and typically have more detailed knowledge about
problems than top managers.
cont’d…
 Formalization
 Formalization refers to the degree to which jobs within the
organization are standardized.
 If a job is highly formalized, the incumbent has a minimal
amount of discretion over what to do and when and how to
do it.
 Employees can be expected always to handle the same
input in exactly the same way, resulting in a consistent and
uniform output. There are explicit job descriptions, lots of
organizational rules, and clearly defined procedures
covering work processes in organizations in which there is
high formalization.
cont’d…
 Where formalization is low, job behaviors are
relatively unprogrammed, and employees have a
great deal of freedom to exercise discretion in their
work.
 Standardization not only eliminates the possibility
of employees engaging in alternative behaviors,
but it even removes the need for employees to
consider alternatives.
Common organizational designs
1. The Simple Structure
The simple structure is not elaborate.
It has a low degree of departmentalization, wide spans of
control, authority centralized in a single person, and little
formalization.
It is a “flat” organization; it usually has only two or three
vertical levels, a loose body of employees, and one
individual in whom the decision-making authority is
centralized.
The simple structure is most widely adopted in small
businesses in which the manager and owner are one and
the same.
cont’d…
 The strength of the simple structure lies in its
simplicity. It’s fast, flexible, and inexpensive to
operate, and accountability is clear.
 One major weakness is that it becomes increasingly
inadequate as an organization grows, because its low
formalization and high centralization tend to create
information overload at the top.
 As size increases, decision making typically becomes
slower and can eventually come to a standstill as the
single executive tries to continue making all the
decisions.
cont’d…
 The simple structure’s other weakness is that it’s risky—
everything depends on one person. One illness can
literally destroy the organization’s information and
decision-making center.
2. The bureaucracy
 The bureaucracy is characterized by highly routine
operating tasks achieved through specialization, very
formalized rules and regulations, tasks grouped into
functional departments, centralized authority, narrow
spans of control, and decision making that follows the
chain of command.
 Bureaucracy is a dirty word in many people’s minds.
However, it does have advantages.
cont’d…
 Its primary strength is its ability to perform
standardized activities in a highly efficient manner.
 Putting like specialties together in functional
departments results in economies of scale, minimum
duplication of people and equipment, and employees
who can speak “the same language” among their
peers.
 Bureaucracies can get by with less talented—and
hence less costly—middle- and lower-level managers
because rules and regulations substitute for
managerial discretion.
cont’d…
 Standardized operations and high formalization
allow decision making to be centralized. There is
little need for innovative and experienced decision
makers below the level of senior executives.
 The weakness of a bureaucracy is something
we’ve all witnessed: obsessive concern with
following the rules. When cases don’t precisely fit
the rules, there is no room for modification. The
bureaucracy is efficient only as long as employees
confront familiar problems with programmed
decision rules.
cont’d…
3. The Matrix Structure
This combines two forms of departmentalization: functional
and product.
The strength of functional departmentalization is putting like
specialists together, which minimizes the number necessary
while allowing the pooling and sharing of specialized
resources across products. Its major disadvantage is the
difficulty of coordinating the tasks of diverse functional
specialists on time and within budget.
Product departmentalization has exactly the opposite
benefits and disadvantages.
Cont’d…
 It facilitates coordination among specialties to
achieve on time completion and meet budget targets.
It provides clear responsibility for all activities related
to a product, but with duplication of activities and
costs.
 The matrix attempts to gain the strengths of each
while avoiding their weaknesses.
 The most obvious structural characteristic of the
matrix is that it breaks the unity-of-command
concept. Employees in the matrix have two bosses:
their functional department managers and their
product managers
Cont’d…
 For example, a professor of accounting teaching an
undergraduate course may report to the director of
undergraduate programs as well as to the chairperson of
the accounting department.
 The strength of the matrix is its ability to facilitate
coordination when the organization has a number of
complex and interdependent activities.
 A matrix also achieves economies of scale and facilitates
the allocation of specialists by providing both the best
resources and an effective way of ensuring their efficient
deployment.
Cont’d…
 The major disadvantages of the matrix lie in the
confusion it creates, its tendency to foster power
struggles, and the stress it places on individuals.
 Without the unity-of-command concept,
ambiguity about who reports to whom is
significantly increased and often leads to conflict.
It’s not unusual for product managers to fight
over getting the best specialists assigned to their
products.
Cont’d…
 Bureaucracy reduces the potential for power grabs by
defining the rules of the game. When those rules are
“up for grabs” in a matrix, power struggles between
functional and product managers result.
 For individuals who desire security and absence from
ambiguity, this work climate can be stressful.
Reporting to more than one boss introduces role
conflict, and unclear expectations introduce role
ambiguity.
 The comfort of bureaucracy’s predictability is
replaced by insecurity and stress.
4.2 Stress and stress management
 Work stress and its management
 Stress is a dynamic condition in which an individual
is confronted with an opportunity, demand, or
resource related to what the individual desires and
for which the outcome is perceived to be both
uncertain and important.
 Although stress is typically discussed in a negative
context, it is not necessarily bad in and of itself; it
also has a positive value. It’s an opportunity when
it offers potential gain.
Cont’d…
 Many professionals see the pressures of heavy
workloads and deadlines as positive challenges
that enhance the quality of their work and the
satisfaction they get from their job.
 Stress is a fact of life, wherever you are and
whatever you are doing. You cannot avoid stress,
but you can learn to manage it so it doesn’t
manage you.
 Changes in our lives—such as going to college,
getting married, changing jobs, or illness—are
frequent sources of stress.
Cont’d…
 Keep in mind that changes that cause stress can
also benefit you. Moving away from home to
attend college, for example, creates personal-
development opportunities—new challenges,
friends, and living arrangements.
 That is why it’s important to know yourself and
carefully consider the causes of stress. Learning to
do this takes time, and although you cannot avoid
stress, the good news is that you can minimize the
harmful effects of stress, such as depression or
hypertension.
Cont’d…
 Stress is the way human beings react both
physically and mentally to changes, events, and
situations in their lives.
 People experience stress in different ways and for
different reasons. The reaction is based on your
perception of an event or situation.
 If you view a situation negatively, you will likely
feel distressed—overwhelmed, oppressed, or out
of control. Distress is the more familiar form of
stress.
Cont’d…
 The other form, eustress, results from a “positive”
view of an event or situation, which is why it is
also called “good stress.
Cont’d…
 Recently, researchers have argued that challenge
stressors—or stressors associated with workload,
pressure to complete tasks, and time urgency—
operate quite differently from hindrance stressors
—or stressors that keep you from reaching your
goals (for example, red tape, office politics,
confusion over job responsibilities). Although
research is just starting to accumulate, early
evidence suggests challenge stressors produce
less strain than hindrance stressors.
Cont’d…
• More typically, stress is associated with demands
and resources.
• Demands are responsibilities, pressures,
obligations, and uncertainties individuals face in
the workplace.
• Resources are things within an individual’s control
that he or she can use to resolve the demands.
Causes of Stress
 The most frequent reasons for “stressing out” fall into three
main categories:
1. The unsettling effects of change
2. The feeling that an outside force is challenging or
threatening you
3. The feeling that you have lost personal control.
 Life events such as marriage, changing jobs, divorce, or the
death of a relative or friend are the most common causes
of stress.
 Although life-threatening events are less common, they can
be the most physiologically and psychologically acute.
Symptoms of Distress
 Symptoms of stress fall into three general, but
interrelated, categories—physical, mental, and
emotional.
 If you find yourself frequently experiencing these
symptoms, you are likely feeling distressed:
•Headaches
•Fatigue
•Gastrointestinal problems
•Hypertension (high blood pressure)
Cont’d…
• Heart problems, such as palpitations
• Inability to focus/lack of concentration
• Sleep disturbances, whether it’s sleeping too
much or an inability to sleep
• Sweating palm
• Anxiety/nervousness
• Sexual problems
Managing Stress
 As noted in the Introduction, you can learn to manage
stress. The first step is understanding your self better—
how you react in different situations, what causes you
stress, and how you behave when you feel stressed.
 Once you’ve done that, take the following steps:
1. Set priorities. Use time-management. Make a To-Do list.
 Decide what is really important to get done today, and
what can wait. This helps you to know that you are
working on your most immediate priorities, and you don’t
have the stress of trying to remember what you should be
doing.
Cont’d…
2. Practice facing stressful moments.
Think about the event or situation you expect to face and
rehearse your reactions. Find ways to practice dealing
with the challenge.
If you know that speaking in front of a group frightens
you, practice doing it, perhaps with a trusted friend or
fellow student.
3. Examine your expectations.
Try to set realistic goals. It’s good to push yourself to
achieve, but make sure your expectations are realistic.
Watch out for perfectionism. Be satisfied with doing the
best you can.
Cont’d…
4. Live a healthy lifestyle.
Get plenty of exercise. Eat healthy foods. Allow time
for rest and relaxation. Find a relaxation technique that
works for you—prayer, yoga, meditation, or breathing
exercises. Look for the humor in life, and enjoy yourself.
5. Learn to accept change as a part of life.
Nothing stays the same. Develop a support system of
friends and relatives you can talk to when needed.
Believe in yourself and your potential. Remember that
many people from disadvantaged backgrounds have
gone on to enjoy great success in life.
Cont’d…
 Here are some other strategies for dealing with stress:
o Schedule time for vacation, breaks in your routine,
hobbies, and fun activities.
o Try to arrange for uninterrupted time to accomplish tasks
that need your concentration. Arrange some leisure time
during which you can do things that you really enjoy.
o Avoid scheduling too many appointments, meetings, and
classes back-to-back. Allow breaks to catch your breath.
Take a few slow, deep breaths whenever you feel stressed.
Breathe from the abdomen and, as you exhale, silently say
to yourself, “I feel calm
Cont’d…
o Become an expert at managing your time. Read books,
view videos, and attend seminars on time management.
Once you cut down on time wasters, you’ll find more time
to recharge yourself.
o Learn to say “no.” Setting limits can minimize stress. Spend
time on your main responsibilities and priorities rather
than allowing other people’s priorities or needs to dictate
how you spend your time.
o Exercise regularly to reduce muscle tension and promote a
sense of well-being.
o Tap into your support network. Family, friends, and social
groups can help when dealing with stressful events
4.3 Organizational Culture
 Organizational Culture: A common perception held
by the organization’s members; a system of shared
meaning.
 Seven primary characteristics of OC:
1. Innovation and risk taking
2. Attention to detail
3. Outcome orientation
4. People orientation
5. Team orientation
6. Aggressiveness
7. Stability
E X H I B I T 17-1
Do Organizations Have Uniform Cultures?
 Culture is a descriptive term: it may act as a substitute
for formalization
 Dominant Culture
– Expresses the core values that are shared by a majority
of the organization’s members
 Subcultures
– Mini-cultures within an organization, typically defined
by department designations and geographical
separation
 Core Values
– The primary or dominant values that are accepted
throughout the organization
 Strong Culture
– A culture in which the core values are intensely held
and widely shared
What Do Cultures Do?
 Culture’s Functions
1. Defines the boundary between one
organization and others
2. Conveys a sense of identity for its members
3. Facilitates the generation of commitment to
something larger than self-interest
4. Enhances the stability of the social system
5. Serves as a sense-making and control
mechanism for fitting employees in the
organization
Culture as a Liability
 Institutionalization
– A company can become institutionalized where it is valued
for itself and not for the goods and services it provides
 Barrier to change
– Occurs when culture’s values are not aligned with the values
necessary for rapid change
 Barrier to diversity
– Strong cultures put considerable pressure on employees to
conform, which may lead to institutionalized bias
 Barrier to acquisitions and mergers
– Incompatible cultures can destroy an otherwise successful
merger
How Culture Begins
 Stems from the actions of the founders:
– Founders hire and keep only employees who think and
feel the same way they do.
– Founders indoctrinate and socialize these employees to
their way of thinking and feeling.
– The founders’ own behavior acts as a role model that
encourages employees to identify with them and
thereby internalize their beliefs, values, and
assumptions.
Stages in the Socialization Process
 Prearrival
– The period of learning prior to a new employee joining the
organization
 Encounter
– When the new employee sees what the organization is really like and
confronts the possibility that expectations and reality may diverge
 Metamorphosis
– When the new employee changes and adjusts to the work, work
group, and organization

E X H I B I T 16-2
Socialization Program Options
 Choose the appropriate alternatives:
– Formal versus Informal
– Individual versus Collective
– Fixed versus Variable
– Serial versus Random
– Investiture versus Divestiture
 Socialization outcomes:
– Higher productivity
– Greater commitment
– Lower turnover
Source: Based on J. Van Maanen, “People Processing: Strategies of Organizational Socialization,” Organizational Dynamics, Summer 1978, pp. 19–
36; and E. H. Schein, Organizational Culture,” American Psychologist, February 1990, p. 116.

E X H I B I T 16-3
Summary: How Organizational Cultures Form
 Organizational cultures are derived from the founder
 They are sustained through managerial action

E X H I B I T 16-4
How Employees Learn Culture
 Stories
– Anchor the present into the past and provide explanations
and legitimacy for current practices
 Rituals
– Repetitive sequences of activities that express and reinforce
the key values of the organization
 Material Symbols
– Acceptable dress, office size, wealth of the office
furnishings, and executive incentives that convey to
employees who is important in the organization
 Language
– Jargon and special ways of expressing one’s self to indicate
membership in the organization
Creating an Ethical Organizational Culture
 Characteristics of Organizations that Develop High
Ethical Standards
– High tolerance for risk
– Low to moderate in aggressiveness
– Focus on means as well as outcomes
 Managerial Practices Promoting an Ethical Culture
– Being a visible role model
– Communicating ethical expectations
– Providing ethical training
– Rewarding ethical acts and punishing unethical ones
– Providing protective mechanisms
Creating a Positive Organizational Culture
 Positive Organizational Culture
– A culture that:
• Builds on employee strengths
– Focus is on discovering, sharing, and building
on the strengths of individual employees
• Rewards more than it punishes
– Articulating praise and “catching employees
doing something right”
• Emphasizes individual vitality and growth
– Helping employees learn and grow in their jobs
and careers
 Limits of Positive Culture:
– May not work for all organizations or everyone within them
 Global Implications
 Organization cultures, while strong, can’t ignore local
culture
 Managers should be more culturally sensitive by:
– Adjusting speech to cultural norms
– Listening more
– Avoiding discussions of controversial topics
 All global firms (not just U.S. firms) need to be more
culturally sensitive
Culture as an Intervening Variable
 Employees form an overall subjective perception of the
organization based on these objective factors:

 The opinions formed affect employee performance and

satisfaction.
E X H I B I T 16-6
Summary and Managerial Implications
 Strong cultures are difficult for managers to change
– In the short run, strong cultures should be
considered fixed
 Selecting new hires that fit well in the organizational
culture is critical for motivation, job satisfaction,
commitment, and turnover
 Socialization into the corporate culture is important
 As a manager, your actions as a role model help create
the cultural values of ethics, spirituality, and a positive
culture
 4.4 Organizational change and
development

It is not the strongest of the species that survives, nor

the most intelligent, but the one most responsive to
change. —Charles Darwin
 Definition of Change
 Change is the process of alteration or transformation
that individuals, groups and organizations undergo in
response to internal and external factors.
 In other words, change implies disruption in regular
functioning of an organization.

Present How? Future

Aweke A. (2014)
60
Cont’d…
 It is a transition from where we are to where we want
to be.

Where Where we
we are want to be

Chapter 6 Management of Strategic Change 61

Cont’d…
 Organizational Change refers to "the movement of
an organization away from its present state towards
some desired future state to increase its
effectiveness” (Broome: 1998).
 The question is how to bring about that desired
change?

16/01/23 Aweke, A. (PhD)

62
Cont’d…
 The “how?” of the change can simply be handled and
how organizational change modifies
- organization structure
- procedures or processes of the organization
which focuses on the
- particular job of the organization, or
- individuals working in the organization, or
- work groups which are made up of individuals, or
- organization as a whole.

Aweke A. (2016)
63
Cont’d…
 Here what one can understand is that for change to come,
there is a possibility of seeing a change in the structure of the
organization, or the procedures that follows to get something
done and that change of structure, process or procedure
might focus on the work that individuals do or the individuals
who are employed to do the jobs or groups of two or more
individuals working on certain jobs.
 And the change also may focus on the organization as a
whole, which actually implies that the change that has stated
on jobs on individuals or workgroups as the implication of
changing the whole organizations process, structure, or
procedure.

16/01/23 Aweke, A. (PhD)

64
Cont’d…

 “Change management is the process of managing

transformational changes, which affect the culture,
structure and performance of an organization.’”
Neil Crawford, BPIR.com Limited
 Change management is an important issue in all
industries and organizations. It is of relevance to a
wide range of situations at all levels, from individual,
team and organization to leadership.

Aweke A. (2014)
65
The need/purpose of Change
 What Charles Darwin wrote in the 19th century may
be very important for our discussion here.
“It is not the strongest species that survive, nor the
most intelligent, but the one most responsive to
change.”
Charles Darwin

 “Change is the law of life. And those who look only to

the past or present are certain to miss the future.”
John F. Kennedy

Aweke A. (2014)
66
Cont’d…

 Why is change necessary or important to

organizations?
 No matter where we work and whether we are in
public sector or private sector, change has become a
fact of life in today’s workplace.
 Stated simply, organizations must change because
their environments change.
 They must continually change and adapt.
 Organizations that do not adapt to change in a
timely way are unlikely to survive.
67
Cont’d…
 Change is endemic and all around us.
 Organizations need to change in order to respond to
the many pressures they face from their
environment. These pressures include:
- global competition
- changes in customer demand
- technological advances
- new legislation.
 Often these pressures require organizations to
change the way they operate.

Aweke A. (2016)
68
Cont’d…
 This can include small incremental changes that
redefine roles, eliminate ineffective processes or
initiate new ways of working.
 At other times, these pressures require a major
disruption within the organization. This transforms
the culture, reorganizes people, process and systems,
and radically changes the organization's strategy
(Transformation).

Aweke A. (2014)
69
Cont’d…
 To justify what Charles Darwin said, we have to see
some practical necessities of change.
 Why change?
 Some of the reasons:
1. Environmental Stimulus
- Environment in general is the surrounding issues. It
may imply that kind of customers or citizens we have,
the global situations, the need to integrate with
other countries in the world .
- Even the climatic change that is taking place in our
surrounding and customers’ demand on us is also
changing.

Aweke A. (2014)
70
 Cont’d…
 Many thing can be mentioned about how the
environmental stimulus can bring about the need to
change.
 Over and above the environmental stimulus, there
come the question of survival.
2. Survival
 Public sectors and Government as a Government has
to change so as to survive. Meaning every thing from
behind is changing. Between these two changing
bodies, if you stay as you were it becomes a kind of
becoming unfit.

Aweke A. (2014)
71
Cont’d…
 Between two changing bodies if keep the status quo,
it becomes hard for you to survive. Then, survival
sometimes can be taken for granted as the purpose
for change .
3. Customer needs
- Customer needs are dynamic. It changes over a very
short period of time. In the case of changing
customers needs, if you think to keep quiet and
continue to deliver the kind and quality of services
that you have been delivering before, customers do
not actually stay customers. They rather want
alternative sources of service you deliver.
Aweke A. (2014)
72
Cont’d…
 If customers do not have any alternative to get such
a service, especially citizens do depend on the quality
of service that the public delivers so as to give their
vote to government. And we as government
employees, if we want to stay in power and serve the
citizens, customers needs must be addressed very
well.
 So, the moment customers needs change,
organizations also needs to change their structure,
procedures, policies , processes and so on.

Aweke A. (2014)
73
Cont’d…
4. Market conditions
- Supply of d/t materials, we use for delivering
services to the citizens, may be declining, or
- may be no supply of the materials at all, or
- we may keep supply constant, but demand for those
items may be increased
- their prices , their inflation ratios, global economic
issues.
 Generally, the marketing condition is dynamic as
customers needs do.
Aweke A. (2014)
74
Cont’d…
 Then in the case of dynamic market condition, we
still can’t keep quiet to continue with the status quo.
There is a need to change to cope up with the
change in market conditions.
5. Internal pressures
- Innovative ideas may come from employees. Not
only innovations, employees need us to change our
processes. For example, they may force the
organization to change the working conditions, or to
invest more on making the environment conducive,
to increase salary, and so on.
Aweke A. (2014)
75
Cont’d…
 In general, internal pressures could be a very good
source of the need for change from both positive and
negative perspectives.
- innovative ideas and good ideas of how to deliver
best service to our customers are positive pressures;
- employees need for better salary, better working
conditions, etc are examples of negative
perspectives.
6. New opportunities
- Opportunities are favorable conditions towards our
organization, or department or process that is
outside in the market.
Aweke A. (2014)
76
Cont’d…
 Whenever we see some sort of opportunities, we
may also find out shape as presently exist, not to
allow us to take that advantage .
 So, as to take advantage of new opportunities,
organizations have to change one way or the other
by just correcting some weaknesses in existing
structures, procedures or processes.
7. Competitive pressure
 Where there is no competition, it may be possible to
survive even if you do not implement changes.

Aweke A. (2014)
77
Cont’d…
 Now we are living in a kind of fiercely competitive
world from global perspective. Even when it comes
down to our situation, things are becoming very
much competitive.
 Example: Take the competition among different
Universities in Ethiopia.
-All universities are serving the same purpose, i.e.,
producing qualified graduates in different fields of
study. If any one of these universities are proved to
be not performing well the other universities will
take the task over and do it.

Aweke A. (2014)
78
Cont’d…
 In general, changes in organization are stimulated by a number
of internal and external forces, often interacting to reinforce
one another.
External forces/Pressures
 Technological factors
 Intense competition
 Customer demand
 Human resources
 Socio-cultural factors
 Political factors
 Government Policy
 Public mind
 Economic factors
Chapter 6 Management of Strategic Change 79
Cont’d…
Internal Pressures
Changes in the Managerial Personnel
Certain deficiencies in the existing system
Need for new structure
New approaches and projects/programs
The domino effect (due to a repercussion of an act or event
under which every associated or connected entity is affected
to a more or less the same degree).
So, all have to show still they are capable of doing the same
thing through improving their curriculum, teachers
qualifications, ways of doing things in producing qualified
graduates.

80
Cont’d…
 Competitive in a sense that where, two or more
sellers or providers of service exist in the supply
market, they compete each other in terms of price,
quality, accessibility, timeliness and so on.
 In general, change is needed for the following
purposes:
o To meet changing customer needs
o To meet changing market conditions
o To respond to internal pressures
o To take advantage of new opportunities
o To respond to competitive pressure
Aweke A. (2014)
81
The Nature of Change
Change has always been part of our life
Change is a process and not a destination.
It never ends, regardless of how successful you are this year, there is
always a next year
The only constant is change
Change can involve virtually at any aspect of an organization:
 work schedules,
 bases for departmentalization,
 span of management,
 machinery,
 organization design,
 people themselves, and so on

82
Effectiveness of Change
 Not all changes are actually effective. Some changes
may fail.
 Effectiveness of change is going to be seen when the
following points are achieved.
 Change is achieved when the organization is moved
from a less desired state to a more desired one; and
the indicators for this are:
 Organization meets planned expectation (e.g.
reducing customers’ waiting time by 10’).

Aweke A. (2014)
83
Cont’d…
 No undue costs to the organization
- Change is not going to come without expense but the
expense must be reasonable.
- No unnecessary cost to the organization in terms of
both monetary or non-monetary losses
- While an organization is under change, it may not
produce as much of the quantity of product as it was
producing before. However, that lose of production
or down time must not be unnecessarily high.

Aweke A. (2014)
84
Cont’d…
 No undue costs to the individuals who are involved in
the change
- Meaning, employees should not suffer unnecessary
costs when change takes place.
So, in general, when we say effectiveness of change,
customers, organizations and individuals in the
organization must feel comfortable about the change
that is taking place.

Aweke A. (2014)
85
 Resistance to Change
 Changes meet with varying degrees of resistance.
 It is necessary to understand what factors create
resistance and how they can be effectively dealt
with.
 Resistance can be:
– Overt (open; known; observable)
– Implicit
– Immediate
– Deferred (delayed)
Chapter 6 Management of Strategic
86
Change
Resistance to Change…
Group Exercise
What do you think are the reasons that make
people as well as organizations resist change?

Chapter 6 Management of Strategic

87
Change
Sources of resistance to Change
 Individual Resistance to Change
– Threat of loss of power
– Fear of the unknown
– Habit & inertia
– Changed social relationships
– Lack of skills required to change
– Disruption of cultural reality of the organization
– Previous failed change efforts
– The summation of perceived personal loss & gains
– Peer group pressure

88
Cont’d...
– Forced conformity of powerful others
– Forced change and lack of participation
– When the purpose of the change is not made clear
– Poor communication
– Vested interests
– Limited resources
– •Threat to self-image
– •Loss of rewards and privileges
– Prejudice towards the change agent

89
Cont’d...
 Organizational Resistance to Change
–Group Inertia
–Limited Focus of Change
–Structural Inertia
–Past contacts or agreements
–Threat to established resource allocations
–Threat to established power relationships
–Threat to expertise

Chapter 6 Management of Strategic

90
Change
Cont’d...
Group Exercise
What actions do recommend in order to handle
change resistors?

Chapter 6 Management of Strategic

91
Change
How to Handle Resistance to Change?
 The secret is to make people feel part of change!
o Create a clear vision of where and why the
organization needs to go
o Share the vision, and explain very clearly why they
have to go in this direction
o Develop and share a blue print so that everyone can
understand the journey and can start to plan their
own part

92
 Strategies to deal with Resistance to
Change
 Kotter and Schlesinger have put foreword six concrete ways
of overcoming resistance to change.
 Education and Communication
o Communicating the logic of a change can reduce employee
resistance on two levels.
o First, it fights the effects of misinformation and poor
communication: if employees receive the full facts and clear
up misunderstandings, resistance should subside.
o Second, communication can help “sell” the need for change
by packaging it properly

Chapter 6 Management of Strategic Change 93

Cont’d…
 Participation
o It’s difficult to resist a change decision in which
we’ve participated.
o Assuming participants have the expertise to
make a meaningful contribution, their
involvement can reduce resistance, obtain
commitment, and increase the quality of the
change decision.
o However, against these advantages are the
negatives: potential for a poor solution and great
consumption of time.
Cont’d…
 Building Support and Commitment
o When employees’ fear and anxiety are high, counseling
and therapy, new-skills training, or a short paid leave of
absence may facilitate adjustment.
o When managers or employees have low emotional
commitment to change, they favor the status quo and
resist it.
o Employees are also more accepting of changes when they
are committed to the organization as a whole.
o So, firing up employees and emphasizing their
commitment to the organization overall can also help them
emotionally commit to the change rather than embrace
the status quo.
Cont’d…
 Develop Positive Relationships
o People are more willing to accept changes if they
trust the managers implementing them.
o Those who had a more positive relationship with
their supervisors, and who felt that the work
environment supported development, were much
more positive about the change process.
 Implementing Changes Fairly
o One way organizations can minimize negative
impact is to make sure change is implemented
fairly.
Cont’d…
o Procedural fairness is especially important when
employees perceive an outcome as negative, so it’s crucial
that employees see the reason for the change and
perceive its implementation as consistent and fair.
 Manipulation and Co-potation
o Manipulation refers to covert influence attempts. Twisting
facts to make them more attractive, withholding
information, and creating false rumors to get employees
to accept change are all examples of manipulation.
o If management threatens to close a manufacturing plant
whose employees are resisting an across-the-board pay
cut, and if the threat is actually untrue, management is
using manipulation.
Cont’d…
 Selecting People Who Accept Change
o Research suggests the ability to easily accept and adapt to
change is related to personality—some people simply have
more positive attitudes about change than others.
o Such individuals are open to experience, take a positive
attitude toward change, are willing to take risks, and are
flexible in their behavior.
o Besides selecting individuals who are willing to accept
changes, it is also possible to select teams that are more
adaptable.
o Studies have shown that teams that are strongly motivated
by learning about and mastering tasks are better able to
adapt to changing environments.
Cont’d…
 Explicit and Implicit Coercion
• Last on the list of tactics is coercion, the application of
direct threats or force on the resisters.
• If management really is determined to close a
manufacturing plant whose employees don’t accept to a
pay cut, the company is using coercion.
• Other examples are threats of transfer, loss of promotions,
negative performance evaluations, and a poor letter of
recommendation.
• The advantages and drawbacks of coercion are
approximately the same as for manipulation and
cooptation.
Cont’d…
o Cooptation, on the other hand, combines
manipulation and participation. It seeks to “buy off”
the leaders of a resistance group by giving them a key
role, seeking their advice not to find a better solution
but to get their endorsement.
o Both manipulation and cooptation are relatively
inexpensive ways to gain the support of challengers,
but they can backfire if the targets become aware
they are being tricked or used.
o Once that’s discovered, the change agent’s credibility
may drop to zero.
 Minimizing Resistance to Change

Communication
Coercion

Training
Manipulation & co-operation Minimizing
Resistance
to Change Employee
Involvement
Negotiation
Stress
Management

101