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Types of Internal Organizational Change: Structural, Strategic, People, and Process Dimensions
Business Essentials · Chapter 5: Management Functions and Strategic PlanningSection 5.5 · lesson 28 of 10512 min · free with a free account
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In this lesson
Structural, strategic, people, and process dimensions.
- Identify the 4 targets of organizational change
- Explain how change in one target spreads to the others
- Describe the change process and why changes revert
- Match responses to the sources of resistance
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Management Functions and Strategic Planning
Types of Internal Organizational Change
Every organization changes. The forces in its environment make sure of that. So the management question isn't whether to change. It's what to change, and when. This section identifies four targets of change, and shows why changing one presses on all the others. We'll look at why organizations so often change the wrong thing, and how change actually unfolds. And we'll take a fresh look at resistance, treating it less as an obstacle, and more as information.
Change As Management
What to Change, and When
Organizational change is any alteration in an organization's strategy, structure, people, or processes. The forces described in chapter one ensure that every organization must change. So the management question is what to change, and when. Change is driven from two directions. External drivers are forces in the environment. New competitors, shifts in technology, and new regulation. Also changes in customer expectations, and events abroad. Internal drivers arise inside the organization. Poor performance is one. Growth that has outstripped the existing arrangements is another. A new leader can drive change. So can the failure of a previous change. This section treats change as a management activity. The design of structure itself belongs to chapter seven.
Four Targets
Where Change Can Be Aimed
Change can be aimed at four targets. Strategic change alters the organization's direction, and the markets it serves. Entering a new market is strategic change. So is dropping a product line. Structural change alters reporting lines, and the way work is grouped. For example, functional departments are regrouped into product teams. Chapter seven develops this. People change alters skills, behavior, and incentives. It works through training, selection, and the way people are rewarded. Chapter ten covers it in depth. Process or technology change alters the methods and systems by which work gets done. Think of a new information system, or a redesigned order process. And notice one detail that matters later. Process change includes the measures by which performance is tracked.
Figure 5.5.1
The Interdependence Principle
Here's the central principle of this section. The four targets are interdependent. A change to one creates pressure on the others. So a change designed in isolation will either spread into them, or be reversed. Take a regional insurer that regroups its staff from functional teams into product teams. That's a structural change. Now trace the pressure it creates. The product teams need their own goals and priorities. That's pressure on strategy. Their managers need skills in working across functions. And the pay system must reward product results, not functional output. That's pressure on people. The handoffs between the former functions must be redesigned, and so must the measures of performance. That's pressure on process. One change, three loose ends. Left unplanned, they spread in ways nobody intended, or quietly reverse the change.
A Failure Of Isolation
The Target Left Alone Wins
A failure shows the principle at work. An organization redraws its structure, to make teams responsible for customer outcomes. It announces the new teams. But it keeps rewarding individuals by the volume of work they personally complete. Employees respond to what's rewarded. So they keep protecting their own volume. The teams exist on the chart, but not in behavior. Within a year, the old ways have returned. The structure changed, and the reward system didn't. The target that was left alone reversed the one that was changed.
The Diagnosis Problem
Changing the Easiest Target
Organizations often change the target that's easiest to change, not the one causing the problem. Structure is the classic example. A new chart can be drawn in an afternoon, announced in a week, and seen as a decisive act. But suppose the real problem is unclear objectives, weak skills, or a broken process. Then it can persist, unchanged, after the reorganization. The reorganization addressed something else. The remedy is diagnosis, the disciplined identification of a problem's cause before choosing the change. Diagnosis asks three questions. Where does the problem actually arise? What evidence shows it? And which target would remove it? It's the stage most often skipped. That's because action feels more like progress than inquiry does.
The Change Process
Five Stages of Change
The change process is commonly divided into five stages. Recognizing the need means seeing that the present arrangement is failing, or will fail. Diagnosis identifies the cause, and the target. Planning defines what will change, and in what order. It also sets the resources, and who is responsible. Implementation puts the change into effect. And embedding makes the new way the normal way. That happens through the systems, measures, and habits that support it. Notice that embedding is a stage in its own right. A change isn't finished when it's launched.
A Three-Stage Framing
Unfreeze, Change, Refreeze
A widely used framing describes change in just three stages. Unfreezing is creating readiness for change. It helps people see that the present state is no longer acceptable, or adequate. Changing is the move to the new state. Refreezing stabilizes that new state, so it becomes the new routine. It works through reinforcement, in rewards, measures, and procedures. Managers most often skip unfreezing. They launch the change before people understand why it's needed. So it meets resistance that better preparation would have reduced. Managers also often neglect refreezing, and that's why changes revert. The pressure of the change project eventually eases. If nothing has fixed the new behaviors in the organization's ordinary systems, the old habits return.
Resistance Reframed
Resistance as Information
Resistance to change is opposition to, or reluctance about, a proposed change. It's usually treated as an obstacle to be overcome. A more useful view treats it as information about what the change costs someone. People who resist are telling the organization something. They may stand to lose something. They may not understand, or trust, the reason. They may judge the situation differently, or believe the change is a mistake. Treat resistance as obstruction, and that information is guaranteed to be lost. And if the objection was sound, the organization finds the fault later, at greater cost. Five sources of resistance are commonly distinguished. Loss of something valued arises when a change threatens status, relationships, skills, or security. Misunderstanding and lack of trust arise when people don't see the reason, or don't believe the people proposing it. A different assessment arises when people have information or views that lead them to another conclusion. Low tolerance for change is a preference for stability. It varies from person to person, and over time. And the fifth is the rational judgment that the change is bad. Here, the objector is right. That source is named explicitly, because managers are tempted to assume all resistance is a defect of the resister.
Table 5.5.1
Match the Approach to the Source
Each source calls for a different approach. And the approach that suits one can make another worse. Where the source is loss, the change really does cost someone status, skill, relationships, or security. Acknowledge the loss, and offer support, retraining, or negotiated terms. Denying that anything is lost makes it worse. Where it's misunderstanding, the reason hasn't been explained, or hasn't been believed. Communicate clearly and repeatedly, with evidence, and involve trusted people. An instruction with no explanation backfires. Where people assess the situation differently, they may hold information the planners lack. Invite participation. Ask for their analysis, and test it against the evidence. Overruling them without examining their view is the response that makes it worse. Where tolerance for change is low, change has overwhelmed someone's capacity. Pace the change, and give time, support, and predictability. Piling on several changes without warning makes it worse. And where the objection may be correct, listen, test it, and change the plan if it holds. Labeling the objector as resistant, and pressing on, is the costly mistake. One response for everything, like more communication, fails wherever the source is loss, disagreement, or a sound objection.
Responding Well
Approaches, and Communicating During Change
Approaches to resistance form a range. It runs from education and communication, through participation and support, to negotiation and agreement. Manipulation and coercion also exist. They may produce compliance. But they damage trust, and they hide the information that resistance carries. So they're used at high cost. The real point is matching the approach to the source. That requires listening first, enough to know the source. Communication during change follows three rules. It must be frequent, because people fill gaps with speculation. It must be consistent, because contradictory messages destroy trust. And it must recognize that silence is read as bad news. When management has nothing decided to say, it should say so. And it should say when more will be known. That beats saying nothing at all.
Case Vignette (Composite)
The Structure That Changed and the Measures That Did Not
We'll close with a case, a composite constructed for instruction. Imani is operations director of a regional insurance company. Its claims are slow, and passed between departments. After a review, leadership regroups staff into teams that each handle a claim from start to finish. Those teams replace the old departments of intake, assessment, and payment. The new chart is announced with an event, and the teams are formed within a month. A year later, claims are no better. Investigation shows each employee is still measured and rewarded on the number of items personally processed, exactly as before. And the information system still routes work by department. People do what they're measured on. So they process their own items quickly, and pass on whatever is complicated. The teams exist, but the behavior the structure was meant to produce hasn't appeared. The untouched targets were the performance measures and the reward system, which belong to people and process. The trade-off was the speed of a structural announcement, against the longer work of redesigning measures and systems. And leadership wanted a visible change. Imani's reasoning is that the diagnosis stopped at structure, the easiest target. The two targets left in place reversed the change. So she proposes team-level measures for claim time and customer outcome, and a change to the routing system.
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