Fluent Essays

Cohesive response  based on your analysis ...See attachment for detailed instructions   Cohesive response No plagiarism  APA citing 3-4 paragraphs  ** Due 48 hours or ASAP **** Discussion 1: Class Café The Class Café may be used on an ongoing basis throughout your course for discussions with your peers that do not necessarily relate to the formal content of this course. Review this week’s Learning Resources, especially: Mathur, A. Employee motivation, adjustment and values as correlates of organizational change. Review of HRM, 2, 35-60 Beer, M., & Nohria, N. (2000). Cracking the codes of change. Harvard Business Review, 78(3), 133-141. Appelbaum, S. H., Profka, E., Depta, A.M., & Petrynski, B (2018). Assignment: Post  a 3-4 paragraph introducing yourself to your peers. Your introduction must include the following: · Describe the type of organization (Assisting Living) for which you work, an organization at which you (Lexington Medical center as a Chaplin) volunteer, or even a larger community of which you are a part. · Have you ever experienced a major change within this organization or community? · How well do you think the change was implemented? Any thoughts on what could have been done differently? · · No plagiarism · APA citing Cracking the Code of Until now, change in business has been an either-or proposition: either quickly create economic value for shareholders or patiently develop an open, trusting corporate culture long term. But new research indicates that combining these "hard"and "soft"approaches can radically transform the way businesses change. T \ HE NEW ECONOMY has ushered in great businessopportunities -and great turmoil. Not since the IndustrialRevolution have the stakes of dealing with change heen so high. Most traditional organizations have accepted, in theory at least, that they must either change or die. And even Internet companies such as eBay, Amazon.com, and America Online recognize that they need to manage the changes associated with rapid entrepreneurial growth. Despite some individual successes, however, change remains difficult to pull off, and few companies manage the process as well as they would like. Most of their initiatives-installing new technology, downsiz- ing, restructuring, or trying to change corporate culture-have had low success rates. The hrutal fact is that about 70% of all change initiatives fail. In our experience, the reason for most of those failures is that in their rush to change their organizations, managers end up immersing themselves in an alphabet soup of initia- tives. They lose focus and become mesmerized by all the advice available in print and on-line about why companies should change, what they should try to accomplish, and how they should do it. This proliferation of recommendations often leads to muddle when change is attempted. The result is that most change efforts exert a heavy toll, both human and eco- nomic. To improve the odds of success, and to reduce the hu- man carnage, it is imperative that executives understand the nature and process of corporate change much hetter. But even that is not enough. Leaders need to crack the code of change. by Michael Beer and Nit±i Nohria HARVARD BUSINESS REVIEW May-func 2000 133 Cracking the Code of Change For more than 40 years now, we've been studying the nature of corporate change. And although every busincss's change initiative is unique, our research suggests there are two archetypes, or theories, of change. These archetypes are based on very differ- ent and often unconscious assumptions by senior executives- and the consultants and academics who advise them- about why and how changes should be made. Theory E is change based on eco- nomic value. Theory O is change based on organi- zational capability. Both are valid models; each theory of change achieves some of management's goals, either explicitly or implicitly. But each the- ory also has its costs -often unexpected ones. Theory E change strategies are the ones that make all the headlines. In this "hard" approach to change, shareholder value is the only legiti- mate measure of corporate success. Change usually involves heavy use of economic in- centives, drastic layoffs, downsizing, and restructuring. E change strate- gies are more common than O change strategies among companies in the United States, where financial markets push cor- porate boards for rapid turnarounds. For instance, when William A. Anders was brought in as CEO of General Dynamics in 1991, his goal was to maxi- mize economic value-however painful the reme- dies might be. Over the next three years, Anders reduced the workforce hy 71,000 people-44,000 through the divestiture of seven husinesses and 27,000 through layoffs and attrition. Anders em- ployed common E strategies. Managers who subscrihe to Theory O helieve that if they were to focus exclusively on the price of their stock, they might harm their organiza- tions. In this "soft" approach to change, the goal is to develop corporate culture and human capability through individual and organizational learning- the process of changing, obtaining feedback, reflect- ing, and making further changes. U.S. companies Theory E change strategies usually involve heavy use of economic incentives, drastic layoffs, down- sizing, and restructuring. Shareholder value is the only legitinnate measure of corporate success. that adopt O strategies, as Hewlett-Packard did when its performance flagged in the 1980s, typically have strong, long-held, com- mitment-hased psychological contracts with their employees. Managers at these companies are likely to see the risks in breaking those contracts. Because they place a high value on employee commitment, Asian and European businesses are also more likely to adopt an O strategy to change. Few companies subscribe to just one the- ory. Most companies we have studied have used a mix of hoth. But all too often, man- agers try to apply theories E and O in tandem without resolving the inherent tensions he- tween them. This impulse to comhinc the strategies is directionally correct, but theo- ries E and O are so different that it's hard to manage them simultaneously-employees distrust leaders who alternate hetween nur- turing and cutthroat corporate behavior. Our research suggests, however, that there is a way to resolve the tension so that husinesses can satisfy their shareholders while building viable institutions. Companies that effec- tively comhine hard and soft approaches to change can reap hig payoffs in profitahility and productivity. Those companies are more likely to achieve a sustainable competitive 134 HARVARD BUSINESS REVIEW May-Tune 2000 Cracking the Code of Change advantage. They can also reduce the anxiety that grips whole societies in the face of cor- porate restructuring. In this article^ we will explore how one company successfully resolved the tensions hetween E and O strategies. But before we do that, we need to look at just how different the two theories are. A Tale of Two Theories To understand how sharply theories E and O differ, we can compare them along several key dimensions of corporate change: goals, leadership, focus, process, reward system, and use of consultants. (For a side-by-side comparison, see the exhibit "Comparing Theories of Change.") We'll look at two com- panies in similar businesses that adopted almost pure forms of each archetype. Scott Paper successfully used Theory E to en- hance shareholder value, while Champion International used Theory O to achieve a complete cultural transformation that in- creased its productivity and employee com- mitment. But as we will soon observe, both paper producers also discovered the limi- tations of sticking with only one theory of change. Let's compare the two companies' initiatives. Theory O change strategies are geared toward building up the corporate culture: employee behaviors, attitudes. champion's reform effort couldn't have been more dif- capabilities, and commitment.The organization's ability ferem. CEO Andrew sigler ac- to learn from its experiences is a legitimate yardstick of knowiedged that enhanced eco- corporate success. Goals. When Al Dunlap assumed leadership of Scott Paper in May 1994, he immediately fired 11,000 employees and sold off several businesses. His determination to restructure the heleaguered company was almost monomaniacal. As he said in one of his speeches: "Shareholders are the num- ber one constituency. Show me an annual report that lists six or seven constituencies, and I'll show you a mismanaged company." From a shareholder's perspective, the results of Dunlap's actions were stunning. In just 20 months, he managed to triple shareholder returns as Scott Paper's market value rose from about $3 biUion in 1994 to about $9 bil- lion by the end of 1995. The fmancial community applauded his efforts and hailed Scott Paper's ap- proach to change as a model for improving share- holder returns. nomic value was an appropriate target for management, but he believed that goal would be best achieved hy trans- forming the behaviors of management, unions, and workers alike. In 1981, Sigler and other managers launched a long-term effort to restructure corporate culture around a new vision called the Champion Michael Beer is the Cahners-Robb Professor of Business Administration at Harvard Business School in Boston. He can be reached at [email protected] Nitin Nohria is the Richard P. Chapman Professor of Business Admin- istration at Harvard Business School and chairs the school's Organizational Behavior Unit. He can be reached at [email protected] The authors' book Breaking the Code of Change will be published by Harvard Business School Press in October 2000. To discuss this article, join HBR's authors and readers in the HBR Forum at www.hhr.org/forum. HARVARD BUSINESS REVIEW May-June 2000 135 Cracking the Code of Change Way, a set of values and principles designed to build up the competencies of the workforce. By improv- ing the organization's capabilities in areas such as teamwork and communication, Sigler believed he could hest increase employee productivity and thereby improve the bottom line. Leadership. Leaders who subscribe to Theory E manage change the old-fashioned way: from the top down. They set goals with little involvement from their management teams and certainly without in- put from lower levels or unions. Dunlap was clearly the commander in chief at Scott Paper. The execu- tives who survived his purges, for example, had to agree with his philosophy that shareholder value was now the company's primary objective. Nothing made clear Dunlap's leadership style better than the nickname he gloried in: "Chainsaw Al." By contrast, participation (a Theory O trait) was the hallmark of change at Champion. Every effort was made to get all its employees emotionally committed to improving the company's perfor- mance. Teams drafted value statements, and even the industry's unions were hrought into the dia- logue. Employees were encouraged to identify and solve prohlems themselves. Change at Champion sprouted from the bottom up. Focus. In E-type change, leaders typically focus immediately on streamlining the "hardware" of the organization-the structures and systems. These are the elements that can most easily be changed from the top down, yielding swift financial results. For instance, Dunlap quickly decided to outsource many of Scott Paper's corporate functions - hene- fits and payroll administration, almost all of its man- agement information systems, some of its tech- nology research, medical services, telemarketing, and security functions. An executive manager of a Scott Paper's CEO trebled shareholder returns but failed to build the capabilities needed for sustained competitive advantage -commitment, coordination, communication, and creativity. glohal merger explained the E rationale: "I have a [profit] goal of $176 million this year, and there's no time to involve others or develop organizational capability." By contrast. Theory O's initial focus is on huild- ing up the "software" of an organization-the cul- ture, behavior, and attitudes of employees. Through- out a decade of reforms, no employees were laid off at Champion. Rather, managers and employees Comparing Theories of Change Our research has shown that all corporate transformations can be compared along the six dimensions shown here. The table outlines the differences between the E and 0 archetypes and illustrates what an integrated approach might look like. were encouraged to col- lectively reexamine their work practices and be- haviors with a goal of in- creasing productivity and quality. Managers were replaced if they did not conform to the new phi- losophy, but the overall firing freeze helped to cre- ate a culture of trust and commitment. Structural change followed once the culture changed. Indeed, hy the mid-1990s. Cham- pion had completely reor- ganized all its corporate functions. Once a hierar- chical, functionally orga- nized company. Cham- pion adopted a matrix structure that empow- ered employee teams to focus more on customers. Process. Theory E is ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ predicated on the view that no battle can be won without a clear, compre- hensive, common plan of action that encourages in- ternal coordination and inspires confidence among customers, suppliers, and investors. The plan lets leaders quickly motivate and mohiiize their busi- nesses,- it compels them to take tough, decisive ac- tions they presumahly haven't taken in the past. The changes at Scott Paper unfolded like a military battle plan. Managers were instructed to achieve specific targets by specific dates. If they didn't ad- here to Dunlap's tightly choreographed marching orders, they risked being fired. Meanwhile, the changes at Champion were more evolutionary and emergent than planned and pro- grammatic. When the company's decade-long re- form hegan in 1981, there was no master blueprint. The idea was that iimovative work processes, val- ues, and culture changes in one plant would he adapted and used hy other plants on their way through the corporate system. No single person, not even Sigler, was seen as the driver of change. In- stead, local leaders took responsibility. Top man- agement simply encouraged experimentation from the ground up, spread new ideas to other workers, and transferred managers of innovative units to lag- ging ones. Reward System. The rewards for managers in E-type change programs are primarily financial. Em- ployee compensation, for example, is linked with 136 HARVARD BUSINESS REVIEW May-June 2000 Cracking the Code of Change Dimensions of Change Goals Leadership Focus Process Reward System Use of Consuitants Theory E maximize shareholder vaiue manage change from the top down emphasize structure and systems pian and establish programs motivate through financial incentives consultants analyze problems and shape solutions Theory 0 develop organizational capabilities encourage participation from the bottom up buiid up corporate culture: employees' behavior and attitudes experiment and evolve motivate through commitment-use pay as fair exchange consultants support management in shaping their own solutions Theories E and 0 Combined explicitly embrace the paradox between economic value and organizational capability set direction from the top and engage the people below focus simultaneously on the hard (structures and systems) and the soft (corporate culture) pian for spontaneity use incentives to reinforce change but not to drive it consultants are expert resources who empower empioyees financial mcentives, mainly stock options. Dun- lap's own compensation package-which ultimately netted him more than $ioo million-was tightly linked to shareholders' interests. Proponents of this system argue that financial incentives guarantee that employees' interests match stockholders' in- terests. Financial rewards also help top executives feel compensated for a difficult job-one in which they are often reviled hy their onetime colleagues and the larger community. The O-style compensation systems at Champion reinforced the goals of culture change, hut they didn't drive those goals. A skills-hased pay system and a corporatewide gains-sharing plan were in- stalled to draw union workers and management into a community of purpose. Financial incentives were used only as a supplement to those systems and not to push particular reforms. While Champion did offer a companywide bonus to achieve husiness goals in two separate years, this came late in the change process and played a minor role in actually fulfilling those goals. Use of Consultants. Theory E change strategies often rely heavily on external consultants. A SWAT team of Ivy League-educated MBAs, armed with an arsenal of state-of-the-art ideas, is brought in to find new ways to look at the business and manage it. The consultants can help CEOs get a fix on urgent issues and priorities. They also offer much-needed political and psychological support for CEOs who are under fire from financial markets. At Scott Pa- per, Dunlap engaged consultants to identify many of the painful cost-savings initiatives that he subse- quently implemented. Theory O change programs rely far less on con- sultants. The handful of consultants who were in- troduced at Champion helped managers and work- ers make their own husiness analyses and craft their own solutions. And while the consultants had their own ideas, they did not recommend any cor- porate program, dictate any solutions, or whip any- one into line. They simply led a process of discov- ery and learning that was intended to change the corporate culture in a way that could not be fore- seen at the outset. In their purest forms, hoth change theories clearly have their limitations. CEOs who must make diffi- cult E-style choices understandably distance them- selves from their employees to ease their own pain and guilt. Once removed from their people, these CEOs begin to sec their employees as part of the problem. As time goes on, these leaders become less and less inclined to adopt O-style change strategies. They fail to invest in building the com- pany's human resources, which inevitably hollows out the company and saps its capacity for sustained performance. At Scott Paper, for example, Dunlap trebled shareholder returns but failed to build the HARVARD BUSINESS REVIEW May-June 2000 137 Cracking the Code of Change capabilities needed for sustained competitive ad- vantage-commitment, coordination, communica- tion, and creativity. In 1995, Dunlap sold Scott Pa- per to its longtime competitor Kimberly-Clark. CEOs who embrace Theory O find that their loyalty and commitment to their employees can prevent them from making tough decisions. The temptation is to postpone the bitter medicine in the hopes that rising productivity will improve the business situation. But productivity gains aren't enough when fundamental structural change is re- quired. That reality is underscored by today's global financial system, which makes corporate perfor- mance instantly transparent to large institutional CEOs who embrace Theory O find that their loyalty and commitment to their employees can prevent them from making tough decisions. shareholders whose fund managers are under enor- mous pressure to show good results. Consider Champion. By 1997, it had become one of the lead- ers in its industry based on most performance mea- sures. Still, newly instated CEO Richard Olsen was forced to admit a tough reality: Champion share- holders had not seen a significant increase in the economic value of the company in more than a decade. Indeed, when Champion was sold recently to Finland-based UPM-Kymmene, it was acquired for a mere 1.5 times its original share value. Managing the Contradictions clearly, if the objective is to build a company that can adapt, survive, and prosper over the years. The- ory E strategies must somehow be combined with Theory O strategies. But unless they're carefully handled, melding E and O is likely to bring the worst of both theories and the benefits of neither. Indeed, the corporate changes we've studied that arbitrarily and haphazardly mixed E and O tech- niques proved destabilizing to the organizations in which they were imposed. Managers in those com- panies would certainly have been better off to pick either pure E or pure O strategies - with all their costs. At least one set of stakeholders would have benefited. The obvious way to combine E and O is to se- quence them. Some companies, notably General Electric, have done this quite successfully. At GE, CEO Jack Welch began his sequenced change by imposing an E-type restructuring. He demanded that all GE businesses be first or second in their in- dustries. Any unit that failed that test would be fixed, sold off, or closed. Welch followed that up with a massive downsizing of the GE bureaucracy. Between 1981 and 1985, total employment at the corporation dropped from 412,000 to 299,000. Sixty percent of the corporate staff, mostly in planning and finance, was laid off. In this phase, GE people began to call Welch "Neutron Jack," after the fa- bled bomb that was designed to destroy people but leave buildings intact. Once he had wrung out the redundancies, however, Welch adopted an O strat- egy. In 1985, he started a series of organizational initiatives to change GE culture. He declared that the company had to become "boundaryless," and unit leaders across the corporation had to submit to being challenged by their subordinates in open fo- rum. Feedback and open communication eventually eroded the hierarchy. Soon Welch applied the new order to GE's global businesses. Unfortunately for companies like Champion, sequenced change is far easier if you begin, as Welch did, with Theory E. Indeed, it is highly unlikely that E would successfully follow O be- cause of the sense of betrayal that would involve. It is hard to imagine how a draconian program of layoffs and downsizing can leave intact the psy- chological contract and culture a company has so patiently built up over the years. But whatever the order, one sure problem with sequencing is that it can take a very long time; at GE it has taken almost two decades. A sequenced change may also require two CEOs, carefully chosen for their con- trasting styles and philosophies, which may create its own set of problems. Most turnaround man- agers don't survive restructuring-partly because of their own inflexibility and partly because they can't live down the distrust that their ruthlessness has earned them. In most cases, even the best- intentioned effort to rebuild trust and commitment rarely overcomes a bloody past. Welch is tbe excep- tion that proves the rule. So what should you do? How can you achieve rapid improvements in economic value while si- multaneously developing an open, trusting corpo- rate culture? Paradoxical as those goals may appear, our research shows that it is possible to apply theo- ries E and O together. It requires great will, s k i l l - and wisdom. But precisely because it is more diffi- cult than mere sequencing, the simultaneous use of O and E strategies is more likely to be a source of sustainable competitive advantage. One company that exemplifies the reconciliation of the hard and soft approaches is ASDA, the UK grocery chain that CEO Archie Norman took over 138 HARVARD BUSINESS REVIEW May-June 2000 Cracking the Code of Change in December 1991, when the retailer was nearly bankrupt. Norman laid off employees, flattened the organization, and sold off losing businesses-acts that usually spawn distrust among employees and distance executives from their people. Yet during Norman's eight-year tenure as CEO, ASDA also became famous for its atmosphere of trust and openness. It has been described by executives at Wal-Mart-itself famous for its corporate culture-as being "more ^ ^ ^ ^ ^ H like Wal-Mart than we are." Let's look at how ASDA resolved the conflicts of E and O along the six main dimensions of change. Explicitly confront the tension between E and O goals. With his opening speech to ASDA's execu- tive team - none of whom he had met-Norman indicated clearly that he intended to apply both E and O strategies in his change ef- fort. It is doubtful that any of his listeners fully understood him at the time, but it was important that he had no conflicts about recog- nizing the paradox between the two strategies for change. He said as much in his maiden speech: "Our number one objective is to secure value for our shareholders and secure the trading future of the business. I am not coming in with any magical solutions. I intend to spend the next few weeks listen- ing and forming ideas for our pre- cise direction.... We need a culture huilt around common ideas and goals that include listening, learn- ing, and speed of response, from the stores upwards. iBut] there will be management reorganization. My objective is to establish a clear focus on the stores, shorten lines of communication, and build one team." If there is a contradiction between building a high-involve- ment organization and restructur- ing to enhance shareholder value, Norman embraced it. Set direction from the top and engage people below. From day one, Norman set strategy without expecting any participation from below. He said ASDA would adopt an everyday-low-pricing strategy, and Norman unilaterally determined that change would begin by having two experimental store formats up and running within six months. He de- cided to shift power from the headquarters to the stores, declaring: "I want everyone to be close to the stores. We must love the stores to death; that is our business." But even from the start, there was an O quality to Norman's leadership style. As Change Theories in the New Economy Historically, the study of change has been restricted to mature, large companies that needed to reverse their competitive declines. But the arguments we have advanced in this article also apply to entrepreneurial companies that need to manage rapid growth. Here, too, we believe that the most successful strategy for change will be one that combines theories E and O. Just as there are two ways of changing, so there are two kinds of entrepreneurs. One group subscribes to an ideology akin to Theory E. Their primary goal is to prepare for a cash-out, such as an IPO or an acquisition by an established player. Maximizing market value before the cash-out is their sole and abiding purpose.These entrepreneurs emphasize shaping the firm's strategy, structure, and systems to build a quick, strong market presence. Mercurial leaders who drive the company using a strong top-down style are typically at the helm of such companies.They lure others to join them using high-powered incentives such as stock options.The goal is to get rich quick, Other entrepreneurs, however, are driven by an ideology more akin toTheoryO-the building of an institution. Accumulating wealth is important, but it is secondary to creating a company that is based on a deeply held set of values and that has a strong culture. These entrepreneurs are likely to subscribe to an egalitarian style that invites everyone's participation. They look to attract others who share their passion about the cause-though they certainty provide generous stock options as well.The goal in this case is to make a difference, not just to make money. Many peopie fault entrepreneurs who are driven by a Theory E view of the world. But we can think of other entrepreneurs who have destroyed businesses because they were overly wrapped up in the Theory O pursuit of a higher ideal and didn't pay attention to the pragmatics of the market. Steve Jobs's venture. Next, comes to mind. Both types of entrepreneurs have to find some way of tapping the qualities of theories E and Cjust as large companies do. HARVARD BUSINESS REVIEW May-June 2000 139 Cracking the Code of Change he put it in his first speech: "First, I am forthright, and I like to argue. Second, I want to discuss issues as intelligence and business acumen. Leighton, who is warmer and more people oriented, worked on em- ployees' emotions with the power of his person- ality. As one employee told us, "People respect Archie, but they love Al- lan." Norman was the first to credit Leighton with having helped to create emotional com- mitment to the new ASDA. While it might be possible for a single in- dividual to embrace op- posite leadership styles, accepting an equal part- ner with a very different personality makes it eas- ier to capitalize on those styles. Leighton certainly helped Norman reach out to the organization. Together they held quar- terly meetings with store managers to hear their ideas, and they supple- mented those meetings with impromptu talks. Focus simultaneously on the hard and soft .sides of the organization. Nor- man's immediate actions To thrive and adapt in the new economy, companies must simultaneously build up their corporate cultures and enhance shareholder value; the O and E theories colleagues I am looking for your of business change must be in perfect step. advice and your disagreement." Norman encouraged dialogue with employees and customers through colleague and customer circles. He set up a "Tell Archie" program so that people could voice their concerns and ideas. Making way for opposite leadership styles was also an essential ingredient to Norman's-and ASDA's-success. This was most clear in Norman's willingness to hire Allan Leighton shortly after he took over. Leighton eventually hecame deputy chief executive. Norman and Leighton shared the same E and O values, but they had completely different personalities and styles. Norman, cool and reserved, impressed people with the power of his mind-his followed both the H goal of increasing economic value and the O goal of transforming culture. On the E side, Norman focused on structure. He re- moved layers of hierarchy at the top of the organiza- tion, fired the financial officer who had been part of ASDA's disastrous policies, and decreed a wage freeze for everyone - management and workers alike. But from the start, the O strategy was an equal part of Norman's plan. He hought time for all this change by warning the markets that financial recovery would take three years. Norman later said that he spent 75% of his early months at ASDA as the company's human resource director, mak- 140 HARVARD BUSINESS REVIEW May-|une 201X) Cracking the Code of Change ing the … Review of HRM, Vol. 2, April 2013 35 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 Employee Motivation, Adjustment and Values as Correlates of Organizational Change Anurakti Mathur Amity Institute of Psychology and Allied Sciences, Amity University, Noida E-mail: [email protected] Abstract Change is inevitable in any organization. Every one fears the unknown before the change takes place, however after the change event there is a severe problems that the employees may face with regards to adjustment to the disturbances that the change has created. The present research sets out with an aim to understand the effect of organizational change on Employee Motivation, Adjustment and Values in an organization that has recently undergone massive organizational change. This research was conducted on a sample of 50 employees who are working in an organization which has experienced a major change in the recent past. Data was obtained through questionnaires devised for the purpose of this research keeping in mind the above mentioned variables. The findings show that the respondents have revealed the tendency to try and maintain moderate levels of motivation after the change. They also try to make the desired adjustments that are required in order to cope with the multiple roles in the organization. The values shift from achievement to personal survival ones to maintain ones existence in the organization and to function as a well-balanced individual. Keywords: Motivation, Values, Organizational Change Introduction Changing organisations involves building a network of relationships between organisational entities that are defined and shaped (against various resistances) to contribute towards some particular goal of change (Law, 2000). Or, as Brunsson and Sahlin-Andersson (2000) suggest, the construction of entities so that they come to resemble some general or abstract concept of organisation – perhaps one that is perceived to be somehow more “complete”. In the context of recent public sector reform in a number of Western countries, much organisational change can be seen as representing attempts to reconstruct public sector organisations as more consistent with popular notions of “modern management” taken from the private sector. mailto:[email protected] Review of HRM, Vol. 2, April 2013 36 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 An operational definition of ‘organisational change’ While the phrase ‘organisational change’ is much used in management discourse it is a phrase, like the word ‘management’, that is rarely defined at a conceptual level. It is clearly not a unitary concept as organisational change can be implemented using a variety of instruments either in series or, as our data show, more often in parallel. Change may be further explained in terms of its various types that the researchers have divided it into. Planned versus emergent change Sometimes change is deliberate, a product of conscious reasoning and actions. This type of change is called planned change. In contrast, change sometimes unfolds in an apparently spontaneous and unplanned way. This type of change is known as emergent change. An important (arguably the central) message of recent high-quality management of change literature is that organisation-level change is not fixed or linear in nature but contains an important emergent element. Episodic versus continuous change Another distinction is between episodic and continuous change. Episodic change, according to Weick and Quinn (1999), is ‘infrequent, discontinuous and intentional’. Sometimes termed ‘radical’ or ‘second order’ change, episodic change often involves replacement of one strategy or programme with another. Continuous change, in contrast, is ‘ongoing, evolving and cumulative’ (Weick and Quinn, 1999). Also referred to as ‘first order’ or ‘incremental’ change, continuous change is characterised by people constantly adapting and editing ideas they acquire from different sources. At a collective level these continuous adjustments made simultaneously across units can create substantial change. The distinction between episodic and continuous change helps clarify thinking about an organisation’s future development and evolution in relation to its long-term goals. Few organisations are in a position to decide unilaterally that they will adopt an exclusively continuous change approach. They can, however, capitalise upon many of the principles of continuous change by engendering the flexibility to accommodate and experiment with everyday contingencies, breakdowns, exceptions, opportunities and unintended consequences that punctuate organisational life (Orlikowski, 1996). Developmental, transitional and transformational change Change can also be understood in relation to its extent and scope. Ackerman (1997) has distinguished between three types of change: developmental, transitional and transformational. Review of HRM, Vol. 2, April 2013 37 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 1. Developmental change may be either planned or emergent; it is first order, or incremental. It is change that enhances or corrects existing aspects of an organisation, often focusing on the improvement of a skill or process. 2. Transitional change seeks to achieve a known desired state that is different from the existing one. It is episodic, planned and second order, or radical. The model of transitional change is the basis of much of the organizational change literature (see for example Kanter, 1983; Beckhard and Harris, 1987; Nadler and Tushman, 1989). It has its foundations in the work of Lewin (1951) who conceptualised change as a three-stage process involving: • unfreezing the existing organisational equilibrium • moving to a new position • refreezing in a new equilibrium position. 3. Transformational change is radical or second order in nature. It requires a shift in assumptions made by the organisation and its members. Transformation can result in an organisation that differs significantly in terms of structure, processes, culture and strategy. It may, therefore, result in the creation of an organisation that operates in developmental mode – one that continuously learns, adapts and improves. Systems thinking and change Many of the approaches to organisational change found in the literature give the impression that change is (or can be) a rational, controlled, and orderly process. In practice, however, organisational change is chaotic, often involving shifting goals, discontinuous activities, surprising events, and unexpected combinations of changes and outcomes (Cummings et al., 1985; Dawson, 1996). Accordingly, change can be understood in relation to the complex dynamic systems within which change takes place. Systems are described as closed or open. Closed systems are completely autonomous and independent of what is going on around them. Open systems exchange materials, energy and information with their environment. The systems of interest in managing change can all be characterised as open systems. In terms of understanding organisations, systems thinking suggest that issues, events, forces and incidents should not be viewed as isolated phenomena but seen as interconnected, interdependent components of a complex entity. Areas of Change Organizations typically respond to the challenges of new technologies, new competitors, new markets, and demands for greater performance with various programs, each designed to overcome obstacles and enhance business performance. Generally, these programs fall into one of the following categories: Review of HRM, Vol. 2, April 2013 38 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 • Structural change.–These programs treat the organization as a set of functional parts— the “machine” model. During structural change, top management, aided by consultants, attempts to reconfigure these parts to achieve greater overall performance. Mergers, acquisitions, consolidations, and divestiture of operating units are all examples of attempts at structural change. • Cost cutting.–Programs such as these focuses on the elimination of nonessential activities or on other methods for squeezing costs out of operations. Activities and operations that get little scrutiny during profitable years draw the attention of cost cutters when times are tough. • Process change.–These programs focus on altering how things get done. Examples include reengineering a loan approval process, the company’s approach to handling customer warranty claims, or even how decisions are made. Process change typically aims to make processes faster, more effective, more reliable, and/or less costly. • Cultural change.–These programs focus on the “human” side of the organization, such as a company’s general approach to doing business or the relationship between its management and employees. A shift from command-and-control management to participative management is an example of cultural change. Two Different Approaches to Change While there are many types of change programs, two very different goals typically drive a change initiative: near-term economic improvement or an improvement in organizational capabilities. Harvard Business School professors Michael Beer and Nitin Nohria coined the terms “Theory E” and “Theory O” to describe these two basic goals. Theory E: An Economic Approach The explicit goal of Theory E change is to dramatically and rapidly increase shareholder value, as measured by improved cash flow and share price. Popular notions of employee participation and the “learning organization” take a back seat to this overarching goal. Financial crisis is usually the trigger for this approach to change. Driven to increase shareholder value, Theory E proponents rely heavily on mechanisms likely to increase short-term cash flow and share price: performance bonuses, headcount reductions, asset sales, and strategic reordering of business units. According to Theory E, all implicit contracts between the company and its employees, such as lifetime employment, are suspended during the change effort. Individuals and units whose activities fail to demonstrate tangible value creation The CEO and the executive team drive Theory E change from the top Review of HRM, Vol. 2, April 2013 39 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 Theory O: An Organizational Capabilities Approach The goal of Theory O change is to develop an organizational culture that supports learning and a high performance employee base. Companies that follow this approach attempt to invigorate their cultures and capabilities through individual and organizational learning. And that requires high levels of employee participation, flatter organizational structure, and strong bonds between the organization and its people. Because employee commitment to change and improvement are vital for Theory O change to work, implicit contracts with employees are considered too important to break. The leaders of Theory O change are less interested in driving the success themselves than in encouraging participation within the ranks, and in fostering employee behaviors and attitudes that will sustain such change. Employee Psychological Dynamics during Organisational Change A debate exists over the reactions that individual employees have towards change. While there has been a long tradition of researchers who argue that employees tend to resist organisational change in general (e.g. Judson 1991; Odiorne 1981; Strebel 1996), Dent and Goldberg (1999) argue that the term ‘resistance’ should be removed from the literature as it does not reflect the complex interactions that occur during change. Piderit (2000) takes a more conciliatory view suggesting that the ambivalence that employees feel towards change does not always produce resistance, but generally produces confusion. Regardless of what term is used, there is a wealth of literature that shows that employee ambivalence to management change initiatives is often linked to dysfunctional conflict during organizational change and associated with negative outcomes such as job dissatisfaction and expressed grievances (Kirkman, Jones & Shapiro 2000). Employees who are expending their energy on these types of reactions to change have less energy for participating or contributing to that change. Therefore, identifying factors that moderate this change resistance would be beneficial to both the individuals involved in the change process and the organisation. Examining organisational behaviour, researchers have identified change as having the potential to elicit a broad range of emotion whether the transformation is a major restructure or minor re-organisation (Mossholder et al., 2000). Change can be perceived as a challenge or an opportunity and triggers positive emotions such as excitement, enthusiasm and creativity (Goleman, Boyatzis & McKee 2002). Change can also, however, be threatening and create negative emotions such as anger, fear, anxiety, cynicism, resentment, and withdrawal (French 2001). Clearly change poses significant challenges, both to those who implement and those who are affected by the change (O’Neill & Lenn 1995). Management theory, however, tends to focus on cognitive issues such as cognitive dissonance during change (Bacharach, Bamberger & Sonnenstuhl 1996). The result of this focus is consideration of solutions in dealing with attitudes to Review of HRM, Vol. 2, April 2013 40 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 change, rather than emotional reactions (e.g. Brockner 1988; Brockner, Grover, Reed & DeWitt 1992). A small body of research that has examined the role of emotion during organisational change has largely focused on emotional responses such as stress (Terry & Jimmieson 2003), and behaviours such as withdrawal and low organisational commitment (Begley & Czajka 1993), thereby ignoring the emotive/cognitive processes that engender such outcomes (O’Neill & Lenn 1995). Work Motivation Work motivation may be defined as the internal or external force that compels an individual to perform optimally in the organization where he is employed. Work motivation has been found to be positively related to job satisfaction, performance and organizational commitment. The motives may be extrinsic or intrinsic in nature. Extrinsic motives are tangible or visible to others. They are distributed by other people. In the workplace extrinsic motives include pay, benefits, promotions etc. extrinsic motives also include the drive to avoid punishment, such as termination or being transferred. In each situation an external agent distributes these items. Furthermore, extrinsic rewards are usually contingency based. That is, the extrinsic motivator is contingent on improved performance, or performance that is superior to others in the same workplace. Extrinsic motivators are necessary to attract people into the organization and keep them on the job. They are also used to inspire workers to achieve at higher levels or to reach new goals, as additional payoffs are contingent on improved performance. They do not, however, explain every effort made by an individual employee. Intrinsic motives are internally generated. In other words, they are motivators that the person associates with the task or job itself. Intrinsic reward include feeling of responsibility, achievement, accomplishment, that something was learned from experience, feeling of being challenged or competitive, or that something was an engaging task or goal. Performing meaningful work has also been associated with intrinsic motivation. The two types of motivators are not completely distinct from one another. Many motivators have both extrinsic and intrinsic components. Cognitive Evaluation Theory suggests a more complicated relationship. This theory says that a task may be intrinsically motivating, but when an extrinsic motivator becomes associated with that task, the actual level of motivation may decrease. In other words, extrinsic motivation may actually undermine intrinsic motivation. But there is considerable research evidence that extrinsic reward may not detract from intrinsic motivation and at least for interesting, challenging tasks, extrinsic reward may increase the level of intrinsic motivation. Review of HRM, Vol. 2, April 2013 41 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 According to David McClelland there are three major types work motivators need for achievement (n-ach), need for power (n power) and the need for affiliation (n aff). These set of needs are said to guide and direct employee motivation in the organizational setting. The Power Motive: Winter (1973) has defined social power as “the ability or capacity of a person to produce (consciously or unconsciously) intended effects on the behaviour and emotions of another person”. The goal of power motivation are to influence, control, cajole, persuade, lead, charm others and to enhance ones own reputation in the eyes of other people. People with strong power motivation derive satisfaction from achieving these goals. The leading advocate of the power motive was the psychologist, Alfred Adler. To explain the need for power- the need to manipulate others or drive for being in charge of others- Adler developed the concept of inferiority complex and compensation. He felt that every small child experiences a sense of inferiority. When this feeling of inferiority is combined with what he sensed as an innate need for superiority, the two rule all behaviour. The person’s lifestyle is characterized by striving for compensation for the feeling of inferiority, which are combined with the innate need for power. Power motivation varies in strength from person to person and situation to situation in the same person. It may be expressed in many ways; the manner of expression depends greatly on the person’s socioeconomic status, sex, level of maturity, and the degree to which the individual fears his or her own power motivation. There are five categories of power:  Reward Power: This source of power is based on a person’s ability to control resources and reward others. In addition, the target of this power must value these rewards. If the managers offer their people what they think are rewards, but the people do not value them, then managers do not really have reward power. By the same token, the managers may not think that they are giving rewards to their people, but if they perceive this to be rewarding, the managers nevertheless have reward power. Also managers may not really have the rewards to dispense, but as long as people think they have it, they do indeed have reward power.  Coercive Power: This source of power depends on fear. The person with coercive power has the ability to inflict punishment or aversive consequences on another person or, at least make threats that the other person believes will result in punishment or undesirable outcomes. Managers frequently have coercive power in that they can fire or demote people who work for them or dock their pay. A Review of HRM, Vol. 2, April 2013 42 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 manager can also directly or indirectly threaten an employee with these punishing consequences.  Legitimate Power: This power source, identified by French and Raven, stems from the internalized values of the other person that give the legitimate right to the agent to influence them. The others feel that they have the obligation to accept this power. It is closely aligned with both reward and coercive power because the person with legitimacy is also in a position to reward and punish. But unlike reward and coercive power it does not depend on the relationships with others rather on the position or role that the person holds. Managers generally have legitimate power because employees believe in the value of private property laws and in the hierarchy where higher positions have been designated to have power over lower positions. People can obtain legitimate power from accepted social structure or from being designated as the agent or representative of a powerful person or a group.  Referent Power: This type of power comes from the desire on the part of the other person to identify with the agent wielding power. They want to identify with the powerful person, regardless of the outcome. The others grant the person power because he or she is attractive and has desirable resources or personal characteristics. Managers with referent power must be attractive to their people so that they will want to identify with them, regardless of whether the managers later have the ability to reward or punish or whether they have legitimacy. The manager who depends on referent power must be personally attractive to the subordinates. Expert Power: This source of power is based on the extent to which others attribute knowledge and expertise to the power holder. Experts are perceived to have knowledge or understanding only in certain well defined areas. The target must perceive the agent to be credible, trustworthy, and relevant before expert power is granted. Staff specialists have expert power in their functional areas but not outside them. Expert power is highly selective, and, besides credibility the agent must also have trustworthiness and relevance. Managers and staff specialists, who seldom have the other sources of power available to them, often have to depend on their expertise as their only source of power. As organizations become increasingly technologically complex and specialized, the expert power of the organization members at all levels has become more and more important. This is formally recognized by some companies that deliberately include lower level staff members with expert power in top level decision making Research Objectives The research has been conducted with an objective of understanding the psychological after-effects of organisational change on the employees of that organisation. For this Review of HRM, Vol. 2, April 2013 43 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 purpose few aspects of the human psyche such as motivation (extrinsic and intrinsic), adjustment(personal and professional), and values have been incorporated, though many other aspects have been left out due to the constraints faced by the researcher and in order to narrow down the scope of the study. Thus the research has been carried out keeping the following aims in mind:  To study the level of professional adjustment of employees after a change event.  To study the personal adjustments that the employees make to fit into their organisations after change has occurred.  To study the level of motivation in employees after a change event with respect to need for power, affiliation and achievement.  To study the job related value system in-place in the employees after the change process. Review of Literature The present research is aimed to develop a theoretical understanding of psychological dynamics of the employee during the organisational change, informed by a perspective on employee work values, motivation and adjustment. This chapter provides a literature review that introduces the issue of employee’s psychological aspect during organisational change. The review draws primarily on the psychological literature focusing on aspects of the human psyche like motivation, values and adjustment. Research on Nature of Organisational Change The increasing pace of global, economic and technological development makes change an inevitable feature of organisational life (Cummings & Worley, 1997). Organisations are often ineffective at managing the psychological components of organisational change (Bennett & Durkin, 2000) and it has been noted that there is considerable room for improving the effectiveness of change efforts (Porras & Robertson, 1992). Kotter (1995) noted that as many as 90% of initiatives fail to achieve their strategic objectives mainly due to human factors such as change related responses, attitudes and behaviours. Organisations cannot achieve their strategic change objective until a critical mass of employees has successfully completed their individual transitions (St Amour, 2001). Armenakis, Harris and Mossholder (1993) argued that employee attitude towards organisational change affect not only the success of the change process but other important organisational outcomes such as job satisfaction, productivity, morale, absenteeism and turnover (Eby, Adams, Russell & Gaby, 2000). The costs involved with such consequences may be directly attributable to the distress that is created when an organisation’s employees encounter constant change (Mack, Nelson & Quick, 1998). Review of HRM, Vol. 2, April 2013 44 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 Large scale organisational change is defined as change that encompasses the entire organisation, has occurred over a number of years, and involves fundamental modifications in ways of thinking about the business, the organisation, and how the organisation is managed (Nadler, 1988). This type of change has important and often underestimated psychological implications for the employees. The necessary adjustments can foster enthusiasm and opportunities for learning and growth or, alternatively, can lead to frustration and alienation (Thompson & Van de Ven, 2001). Judge, Thoresen and Welbourne (1999) argued that organisational change research has been dominated largely by macro systems oriented focus and that a limited number of studies of organisational have taken a micro level, psychological approach. Hence assessing the impact of organisational change on employee attitudes and behaviours is identified as an important research direction. Despite widespread research on why and how organisations change, what constitutes change is often taken for granted. Its definition is avoided. Studies based on individuals' rational choice imply that change flows from purposive actions in accordance with an objective, external reality whereas contextualism argues that change results from institutional pressures, isomorphism, and routines. But both depict change as the passage of an entity, whether an organisation or accounting practices, from one identifiable and unique status to another. Despite their differences over whether reality is independent, concrete and external, or socially constructed, both assume that actors (or researchers) can identify a reality to trace the scale and direction of changes. This reflects modernist beliefs that organisational space and time are unique and linear. Many organisations are implementing major changes in the way they do business in response to growing international competition, a significantly changing workforce, increasingly complex and changing work environments, and other pressures (Lawler, 1986, Manz, 1992). As an organisation strives to maintain their competitive edge they are reorganising, downsizing and implementing new technology. Ultimately, new and additional job demands are placed on individuals within these organisations. These changes are inevitable inn today’s work environment. Also inevitable is the fact that employees must adapt to these constantly changing environments in order to survive and prosper. Development of a body of knowledge about managing change is an important body of knowledge for both academics and for general managers (Beer, 1987). The need for adaptive workers has become increasingly important due to the fact that today’s organisations are characterised by changing, dynamic environments (Pulakos, Arad, Donovan, & Palmondon, 2000, Ilgen &Pulakos, 1999). In a recent article stressing the attributes graduates need to enter the workforce, adaptability to the changing work environment was at the top of the list (Gow & Mc Donald, 2000). Review of HRM, Vol. 2, April 2013 45 Proceedings of 3 rd National Conference on Human Resource Management, NCHRM 2013 In today's turbulent, often chaotic, environment, commercial success depends on employees using their full talents. Yet in spite of the myriad of available theories and practices, managers often view motivation as something of a mystery. In part this is because individuals are motivated by different things and in different ways. In addition, these are times when delayering and the flattening of hierarchies can create insecurity and lower staff morale. Moreover, more staff than ever … Impact of business model change on organizational success Steven H. Appelbaum, Edmiela Profka, Aleksandra Monika Depta and Bartosz Petrynski Abstract Purpose – The purpose of this paper is to investigate the impact of organizational change, more specifically business model change, on corporate employees’ motivation and, consequently, performance. Design/methodology/approach – The main approaches and managerial frameworks on organization change implementation, as well as the assessment methods on whether the company is ready to implement the change, were identified by reviewing the current literature on the subject between 1940 and 2016. Findings – Reviewed individual behavioral reactions and provided steps to encourage favorable individual employee perceptions. Research limitations/implications – Existing gaps in supporting empirical data on the subject and a limited number of direct case studies and real-life scenarios. The research was primarily focused on employee motivation during the initial planning phase of organizational change, with lesser focus on motivation throughout and especially after the change process. Practical implications – To benefit from the change, organizations must avoid improvising and should follow specific and formal change management procedures which take employee motivation and individual response towards change under consideration. Social implications – By providing real-life illustrations of successful business model change implementations, current and future companies facing this type of change in the future can learn from these specific scenarios. Originality/value – The distinction of business model change as a sub-type of organizational change and the study of employee motivation under a business model change specifically is the novel contribution of the paper. Keywords Performance, Change management, Business model change, Employee motivation, Organizational change Paper type General review Background and objective To survive and grow in today’s economic climate, organizations need to react quickly to changes occurring on a national or global level. They are forced to make changes by updating their technology, remodeling strategies or, in certain cases, even changing their business model. Per Womack et al. (1990), the demands for organizational change grow mainly due to the increasing speed of technological development and international competition (Antoni, 2004). Edmonds (2011) states that change takes time and effort, leaving employees and managers unsure on how to adapt to new working practices. Adapting to change is not an easy transition; moreover, organizations failing to meet their stated objectives can pay a high price. “Failure can lead to loss of market position and credibility with stakeholders as well as decreased morale among management and staff resulting in a demotivated workforce, or worse still, the loss of key employees” (Edmonds, 2011). Porras and Robertson (1992) recognized the organizational member involvement as the most commonly mentioned factor for successful change (Antoni, 2004). Employees are more likely to support change if they tend to agree with the objectives set and the anticipated outcome, which should be clearly defined to rightly emphasize the impact on those involved. Even though most aspects of the foreseen change can be managed, the capability for change can only be fully developed once a strategy is in place. As Edmonds (2011) states, “A conscious approach to Steven H. Appelbaum is a Professor of Management at the John Molson School of Business, Department of Management, Concordia University, Montreal, Canada. Edmiela Profka is based at the John Molson School of Business, Department of Management, Concordia University, Montreal, Canada. Aleksandra Monika Depta is based at the Reckitt Benckiser, Lublin, Poland. Bartosz Petrynski is an Entrepreneur at the Institute of Enterprise, Warsaw School of Economics, Warsaw, Poland. DOI 10.1108/ICT-07-2017-0058 VOL. 50 NO. 2 2018, pp. 41-54, © Emerald Publishing Limited, ISSN 0019-7858 j INDUSTRIAL AND COMMERCIAL TRAINING j PAGE 41 getting ready for change leads to a greater probability of success, so planning needs to start long before the change is going to take place.” A change in business model, a more fundamental type of organizational change, is “one of the most arduous and risky changes an organization can undergo” (van den Oever and Martin, 2015). In this paper, we will pay particular attention to the relationship between employee motivation and business model change specifically. There are many factors, such as internal revisions or trend changes in the industry, which result in organizational change. The research will be focused on how this drastic change affects motivation. Companies need to embrace change and see it as an opportunity to advance – how should they motivate their employees in order to develop and benefit from the change. Literature review and analysis Organizational change Defining organizational change. Over the years, there were many definition attempts, but the one that most clearly conceptualizes the phenomenon was coined by Struckman and Yammarino (2003): “Organizational change is a managed system, process, and/or behavioural response over time to a trigger event.” This definition, based on extensive and interdisciplinary literature review, provides a comprehensive approach to the subject. In general, organizational change can apply to a wide variety of processes in the organization, including, among others, technology improvements, mergers and acquisitions, structural changes, top management changes, cultural changes or downsizing (Struckman and Yammarino, 2003; Gilley et al., 2009). Aspects of organizational change. Due to the magnitude of the subject, many authors attempted to categorize characteristics of organizational change and consequently a wide variety of models emerged. In essence, the following six dimensions of categorization were most widely used in the reviewed literature: ■ Type of the change activity, e.g., peripheral vs core (Struckman and Yammarino, 2003); ■ Process in which the change and implementation occur, e.g., planned and programmatic in theory E vs emergent, less planned and programmatic in theory O (Beer and Nohria, 2000) or grow vs drive vs hybrid approach (Sugarman, 2007); ■ Inertia, describing barriers in the organization, e.g., organizational resistance (Dent and Goldberg, 1999); ■ Time in which the change occurs and how long it lasts, e.g., continuous vs discontinuous (Struckman and Yammarino, 2003); ■ Depth to describe to what degree the organization changes, e.g., transitional: minor and incremental adjustments, transformational: fundamental and multilevel, developmental: growth based (Gilley et al., 2009); and ■ Readiness of the organization undergoing change (Palmer, 2004). Armenakis and Bedeian (1999), in their attempt to review literature of organizational change, distinguished five other research themes on the subject: ■ content issues, which treat the substance and nature of a change; ■ contextual issues, which focus on forces and conditions in the organization’s environment; ■ process issues, which treat implementation actions; ■ criterion issues, which treat outcomes of organizational change; and ■ affective and behavioral reactions to change. Of the above-mentioned research themes, for the substance of this study (employee motivation throughout a business model change) we will focus specifically on the theme on affective and behavioral reactions, although it can be considered as a specific type of criterion issues as well. PAGE 42 j INDUSTRIAL AND COMMERCIAL TRAINING j VOL. 50 NO. 2 2018 The research on monitoring affective and behavioral reactions to organizational change has led to various conclusions. “In addition to traditional affective criteria (e.g. organizational commitment, job satisfaction, and cynicism), less-used criteria (e.g. depression, anxiety, and exhaustion) offer alternative insights into affective reactions to change. […] research employing a situated perspective casts doubt on the notion that radical change should always occur rapidly and discontinuously” (Armenakis and Bedeian, 1999). Foster (2010) points to another aspect, i.e. the organizational change models. He fittingly argues that “many change models have roots in Lewin’s three-phase conceptualization of change. Lewin’s (1951) conceptualization includes unfreezing, moving, and refreezing. […] resistance to change is typically included as part of the unfreezing phase, justice is typically a component of the unfreezing or moving phases, and commitment is typically a component of the refreezing phase.” This study will relate to the first two Lewin’s stages of implementation. Business model vs organizational change. Before we move on, it is important that we specify the difference between an organizational change and a business model change. A change in business models, as an example of organizational change with transformational depth, is strategic and fundamental to the company’s core business operations, often rejecting current paradigms or questioning underlying assumptions (Gilley et al., 2009). According to van den Oever and Martin (2015), there are three main aspects in which business model changes may differ from “ordinary” organizational changes. First, changes in the business model are assumed to be more fundamental in economic terms than most other types of changes. Teece (2010) recognized that “changing the business model unsettles a whole series of elements within and across the firm’s external boundaries that are foundational to its economic logic, which follows plainly from the fact that business models pertain to the very logic of how organizations create, deliver, and capture value” (van den Oever and Martin, 2015). Second, the number and diversity of critical economic partners engaged in the change effort is likely to be greater for the business model change than for other types of change (van den Oever and Martin, 2015). Third, the complexity of the process is expected to be higher in a business model change. As it is described by Salomon and Martin (2008), the level of complexity is higher due to an increase both in number of system’s components and in unpredictability of the interactions between them. “Business models encompass an unusually large number and diversity of organizational elements and interfaces (e.g. a value proposition, revenue model, and distribution channels)” (van den Oever and Martin, 2015). Based on these three characteristics – fundamental economic impact, the number of components involved, and complexity of their interactions – van den Oever and Martin (2015) deem “business model change to be one of the most arduous and risky changes an organization can undergo.” Based on this, we will review aspects of how business model change affects employees, focusing specifically on employee motivation in the organization. Motivation Employee motivation in organization Motivation is a widely explored subject. Various articles have been written and a wide array of studies have been done in order to determine motivation significance and implementation (Conrad et al., 2015). Therefore, it is important to define what the motivation is and how it is applied in the workplace. Lewis et al. (2001) define motivation as, “the forces and expenditure of effort acting on or within a person that cause that person to behave in a specific, goal-directed manner.” Daft et al. (2003) adds “the dimension of “enthusiasm” to the definition of motivation by referring to motivation as the forces either within or external to a person that stimulates enthusiasm and causes a person to persist in the pursuit of a particular course of action” (Conrad et al., 2015). VOL. 50 NO. 2 2018 j INDUSTRIAL AND COMMERCIAL TRAINING j PAGE 43 Theories of motivation Theories of motivation are generally divided into two categories: needs theories and process theories, and whereas needs theories describe the types of needs that must be met to motivate individuals, process theories help understand the actual ways in which we and the others can be motivated (Langton et al., 2010). According to Conrad et al. (2015), the leading motivation theories come from the work of Herzberg (1966), Maslow (1954) and McClelland (1985), who “discuss the basic needs model of motivation, referred to as content theory of motivation, highlighting the specific factors that motivate an individual.” Herzberg’s et al. (1959) work categorized motivation into two factors: motivators and hygienes. Motivator or intrinsic factors, such as achievement and recognition, produce job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job dissatisfaction and become demotivators if not met to the expectations of workers. As stated by Maslow (1943), employees have five levels of needs: physiological, safety, social, ego, and self-actualizing. Maslow (1943) suggested that lower-level needs had to be satisfied before the next higher-level need motivated employees (Conrad et al., 2015). Impact of motivation on employee performance Kappelman and Richards (1996) describe motivated and satisfied employees as more productive employees, since “organizational research shows there are positive relationships between employee satisfaction and such productivity measures as performance, turnover, and absenteeism. Even small improvements in employee attitudes like motivation and satisfaction can produce meaningful economic benefits.” This statement is supported by Clark (2003) who explained that the many gaps between current performance and the levels required to fulfill business objectives are created by a lack of motivation, not a lack of knowledge or skills as “motivation leads us to invest more or less cognitive effort to enhance both the quality and quantity of our work performance.” Therefore, in order for the transitioning company to achieve successful performance throughout and following the organizational change, employee motivation needs to be a main consideration. We will discuss how to best manage organizational change in the following section. Managing organizational change Risk in organizational change Gilley et al. (2009) suggest that “although transformational change is disruptive in nature, its successful execution has been identified as leading to increased competitiveness, to the extent that an organization can clearly differentiate itself in the market” (Denning, 2005). Nevertheless, research and empirical results underline how rare it is for the organizations to implement successful transformational change (Gilley et al., 2009). Studies suggest that many of the organizational change initiatives fail to be implemented or are not sustainable in the long term. There are no official statistics available on the subject, but Beer and Nohria (2000) estimate that about two-thirds of change initiatives fail. Gilley et al. (2009) referred to other authors (Burnes, 2004; Cope, 2003) who suggest that the rate may reach even 80-90 percent. They reveal that it is a resistance by change agents themselves that considerably contributes to the inability of organizations to successfully exercise a change project (Ford et al., 2008). One of the reasons why that happens is that “practitioners who always follow specific and formal change management procedures had a 52 percent project success rate, compared to a 36 percent success rate for practitioners who improvise according to the situation” (Jørgensen et al., 2009). This is an approach supported by Davenport (1992), who believed that successful implementation of business process transformation requires a fundamental organizational change not only in terms of management processes but also organizational structure and culture. These changes in management processes and organizational structure decidedly affect the human aspect of management as they require a reconstruction of employees’ work and relationships. PAGE 44 j INDUSTRIAL AND COMMERCIAL TRAINING j VOL. 50 NO. 2 2018 Keeping these studies in mind, in the next sections of this paper we investigate ways to mitigate risks, ameliorate chances of successful organizational change implementation by positively affecting employee motivation and helping managers make more tailored decisions on planning, strategies, and tactics so that employees remain enthusiastic about organizational change. Role of employees in organizational change […] the inherent conundrum of organizational change: that people, the human resources of organizations, are both an essential factor in organizational change and, at times, the biggest obstacles to achieving change. (Smith, 2005) The success of any change is contingent on the willingness of employees to welcome it. Reis and Peña (2001) emphasize that business changes at times are introduced without understanding how the human element influences the success or failure of a project as too often, management neglects human resistance issues and the need to consider them in the implementation plan. This is an idea supported in “Business process re-engineering”: “without new leadership skills, involvement, systems alignment and the right people with the right skills in the right jobs, even the best technically re-engineered process is doomed to failure. The processes are only as good as the people who make them work and the environment in which they work” (Business process re-engineering, 1995). Church et al. (1996) recognized that in relation to the process of change, the focus should be on two important areas: the fundamental aspects of change that concentrate on the general nature of change, and human aspects of the change process that include individual responses to change and managing the people side of change. Implementation practices on employees’ motivation management Excellent implementation of organizational change is crucial, because, as Guimaraes and Armstrong (1998) prove in their empirical study, there is a strong direct correlation between the effectiveness in implementing business change and business success. However, “it is interesting to note that above average focus on the change process is no guarantee of effective implementation of change” (Guimaraes and Armstrong, 1998). Nonetheless, awareness of the following determinants could be helpful for change agents, managers, and academic researchers to better understand the organization and employee readiness for the change process. According to Smith (2005), with regard to successful management of organizational change “these key steps are salient”: ■ creating a sense of need and urgency for change; ■ communicating the change message and ensuring participation and involvement in the change process; and ■ providing anchoring points and a base for the achievement of change.” Other steps discussed here are employee engagement and empowerment (Jørgensen et al., 2009), and filling the gap between hard and soft factors (Sikdar and Payyazhi, 2014). Creating a sense of need and urgency for change The first step – creating a felt need for change – is crucial. Harvard Business School Professor J.P. Kotter (1995) argued that in order to overcome an organizational tendency towards stability, the organization needs to create destabilisation and a certain deliberate unsettlement. This move must be handled delicately, as there needs to be “sufficient disequilibrium to create dynamism for change, while not exceeding the capacity of organizations, and the people in them, to handle the stress so engendered” (Smith, 2005). It is important to find a balance in the introduced unsettlement so that it does not cause adverse consequences to the organization. The right balanced dissatisfaction will facilitate the exhibition of differences between the current situation and the intended state, injecting a motivation for change to employees. This is a subject supported by Edmonds (2011), who argued that “you need to create a buzz, engender a sense of urgency around the need for change by talking to the whole company, explain your position in the VOL. 50 NO. 2 2018 j INDUSTRIAL AND COMMERCIAL TRAINING j PAGE 45 marketplace, your competition and why ‘now is the right time’. Get people talking about the reason for change, allow them the opportunity to express their views and ask questions about the company’s vision.” Communicating change messages The second step to successfully managing organizational change – communicating change messages and ensuring participation and involvement – helps create a positive social energy in the organization, which is a “major factor in the success or failure of many organizational renewal initiatives” (Smith, 2005). A variety of perceptions and emotions will be displayed by employees before the change period, and it is important to create an inclination towards excitement and enthusiasm. This positive social environment will affect the degree of employee involvement, confidence in the process, and willingness to change, hence it is crucial that the message communicated to the company is honest and genuine (Smith, 2005). Such a message and attitude will create a foundation of mutual trust, and the leaders should work on creating and solidifying that foundation. Appelbaum et al. (1998) point out another important consideration is leaders’ communication coherence, by advising that “management should avoid giving mixed signals to the organization by promoting managers who do not support the change effort.” Providing anchoring points Providing anchoring points in order to build a base for change entails the process of assisting employees clearly perceive their role after the change. According to Smith (2005), if employees understand “the nature and reasons for change in the early stages of such an initiative can provide a sound base for subsequent changes and a greater willingness to take risks and extend beyond current boundaries.” Examples of anchoring points would be employee training, team buildings, as well as role modeling. Nurturing employee engagement, empowerment and commitment As Jørgensen et al. (2009) argue on the topic of employee engagement and empowerment, “engaging employees through involvement and two-way communication is a powerful combination: 72 percent of practitioners believe employee involvement is crucial and 70 percent believe honest and timely communication is important. Better communications and employee involvement enable and empower people, and then change happens through them – not just to them.” “Empowered employees are more able to adapt to change and less likely to resist it, because their need for control is being met through their empowerment, rather than by their resistance. In these times of continuous changes in the world around us, an organization which fosters empowered employees is an organization ready to handle change, planned or not. The ability to cope with change is a survival skill no organization can do without” (Kappelman and Richards, 1996). On the topic of employee engagement, an empirical study conducted by Shaha et al. (2016) on more than 500 academic staff in public organizations undergoing a major restructuring process suggests that “salary and promotion benefits (i.e. extrinsic motivators) may lead to a greater initial attachment with the organization change process – but that longer term engagement with change efforts continue to be based upon attitudinal behaviors in terms of job satisfaction (i.e. intrinsic motivators).” For example, in successful organizations managers engage workers by creating work-group environment to set mutually agreeable performance goals (Vecchio and Appelbaum, 1995). When it comes to commitment, in a study done on 463 managers and employees from three telecom companies in China that were undergoing large-scale organizational change, Ning and Jing (2012) demonstrated that expectation on the change’s outcome was positively correlated with some type of commitment. Thus, it is important to understand the complex nature of commitment to change, as only affective and normative commitments to change can mitigate the emotional exhaustion caused by organizational change, while continuance commitment can enforce the emotional exhaustion. PAGE 46 j INDUSTRIAL AND COMMERCIAL TRAINING j VOL. 50 NO. 2 2018 Filling the gap between hard and soft factors Finally, when it comes to aligning technical aspects of business model change with the changes in human resources management, Sikdar and Payyazhi (2014) argued that “there exists a distinct knowledge gap in how to integrate the technical perspective of process redesign with the human and strategic perspective of managing organizational change,” therefore most of the failures in organizational change implementation are a result of no linkage between hard and soft factors. In order to avoid these failures Sikdar and Payyazhi (2014) suggest addressing these fundamental questions: “How to institute organizational change to support the business process? How should the organizational change be managed? How to create and manage the alignment? How the business process work flow is aligned with the organizational elements – structure, HR, culture, etc.? How to link the organizational factors with the process work flow? How should the organizational factors be implemented?” Following the implementation of the suggested practices above to manage employees’ motivation, the company shall assess how successful the implementation has been and whether employees are prepared for the change. We will discuss assessment of readiness for change below. Assessment of readiness for change After taking into consideration the above-mentioned steps, an assessment of whether the company is ready for change is crucial. How can we assess readiness? Palmer (2004) suggests a simple assessment method with three basic steps. “The first step is a compilation of a list of all the major activities that are underway and which compete for budget, staff time and attention. Second, comes an estimation of the level of effort which each of these activities will require; this compared with an estimation of the level of effort that will be required by the particular change project which is under consideration. Finally, these factors are put together to enable consideration of the overall load on the organization and its capability to take on the additional effort imposed by any planned changes” (Smith, 2005). Armenakis and Harris (2002) suggest a more structured method, which includes “auditing the thoroughness of communication about the why, when, and how of change; observing the behaviour of employees in order to gain indications of likely reactions to change; directly soliciting employee reaction via interviews and group discussions; and applying structured survey methods” (Smith, 2005). The company can choose to implement one strategy over the other or a combination of both, however, whichever assessment approach is selected will help evaluate the company’s capacity to achieve a successful organizational change. It is critical that an assessment is made before implementing the change as it can reveal any possible upcoming problems or the right path towards success (Smith, 2005). Resistance to change The concept of resistance to change is used often in the research and practitioner literature on organizational change as an explanation as to why efforts to introduce large-scale changes in production methods, management practices, and technology fall short of expectations or fail altogether (Oreg, 2006). Piderit (2000) defines resistance as “a tridimensional (negative) attitude towards change, which includes affective, behavioural, and cognitive components.” These components reflect three different explanations of people’s interpretations of an object or situation. “The affective component regards how one feels about the change (e.g. angry, anxious); the cognitive component involves what one thinks about the change (e.g. Is it necessary? Will it be beneficial?); and the behavioral component involves actions or intention to act in response to the change (e.g. complaining about the change, trying to convince others that the change is bad)” (Oreg, 2006). Moreover, it is stressed by Oreg (2006) that these three components are not independent of one another as what people feel about the change will often correspond with their thoughts as well as with their behavioral intentions. How do we determine whether employees are prone to change? According to Oreg (2006), “one of the first determinants of whether employees will accept or resist change is the extent to which the change is perceived as beneficial vs detrimental to them”, therefore the factors which VOL. 50 NO. 2 2018 j INDUSTRIAL AND COMMERCIAL TRAINING j PAGE 47