WORETA HEALTH SCIENCE AND BUSINESS COLLEGE

DEPARTMENT OF MANAGEMENT

Distance Module for the Course Leadership and Change

Management

Course Code: MGMT 3082

Credit Hours: 3
Prepared By
Course Instructor

sep, 2022
Woreta, Ethiopia

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 Chapter One: Introduction to Leadership
Introduction
The discipline of management is giving way to the discipline of leadership. Another obvious
point concerns performance. There has been growing interest on the issue of leadership among
the private, public, non-governmental organizations, and academic institutions that they are
creating programs in leadership studies. And the concepts of leadership will continue to evolve
in the future as the needs of organizations change is must to survive let alone continued growth
and prosperity. Many people are interested by the idea of leadership and are very keen to know
how to become effective leaders. Organizations are also aware that effective leaders can bring
about desired outcome in their organizations and they seek people who have leadership abilities.
Most organizations now realize that they must embark on this unusual journey – searching and
understanding leadership.
1.1 Leadership Definitions
The term leadership is a word taken from the common vocabulary and incorporated into the
technical vocabulary of a scientific discipline without being precisely redefined. There exist
numerous definitions of leadership, almost as many as there are scientists who work on the
concept of leadership (Stogdill, 1974), trying to narrow this concept down in terms of traits,
behaviors, influence, interaction patterns, role relationships, occupation of an administrative
position, or attributions.
Leadership is
“the behavior of an individual … directing the activities of a group toward a shared goal”
(Hemphill & Coons, 1957, p. 7)
“exercised when persons… mobilize…institutional, political, psychological, & other
resources so as to arouse, engage, & satisfy the motives of followers” (Burns, 1978, p.18)
“the process of influencing the activities of an organized group toward goal achievement”
(Rauch & Behling, 1984, p. 46)
“a process of giving purpose (meaningful direction) to collective effort, and causing
willing effort to be expended to achieve purpose” (Jacobs & Jaques, 1990, p. 281)
“the ability of an individual to influence, motivate, and enable others to contribute toward
the effectiveness and success of the organization…” (House et al., 1999, p. 184)
Variation in definitions comes from the perspectives where writers see. Despite the multitude of
ways in which leadership has been conceptualized, the following components can be identified
as central to the phenomenon. (1) Leadership is a process; (2) Leadership involves influence; (3)
Leadership involves in a group context (in leadership exercise there are the leader, the follower
and situation) and (4) leadership involves goal attainment. Hence, Leadership can be taken as a
process of influencing, inspiring and working with and through people to accomplish
organizational goals.

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1.2 Leadership vs. Management
An essential part of management is co-coordinating the activities of people and guiding their
efforts towards the goals and objectives of the organization. This involves the process of
leadership and the choice of an appropriate form of action and behavior. Leadership is a central
feature of organizational performance. The manager must understand the nature of leadership
influence and factors which determine relationships with other people, and the effectiveness of
the leadership relationship.
Leadership theorists say that “all leaders can be a manager but not vice versa. On the other hand,
management theorists put their own statement in the opposite way. Others see leadership and
management from the viewpoints of different activities. This means, one person can be a leader
and manager at the same time depending on the nature of activity.
Here is a quick list that highlights some of the differences:

Managing… Leading…
 Values results  Values relationships
 Relates to positions  Low regard for positions
 Takes few risks  Takes large risks
 Somewhat impersonal  Personal and caring
 Conforms to rules of others  Not receptive to the rules of others
 Status quo – low innovation  New ideas – high innovation
 Functional – analyze, evaluate, solve  Non Functional – inspire, motivate
If you review this list, you can clearly see that the path of a leader is considerably more difficult
than the manager. This is one of the reasons why we see so few leaders in most organizations.
Additionally, organizations tend to impede leadership – hierarchies that constrain information
flows, internal politics, conflicting agendas, pressure to conform, and a host of other attributes
that make leadership incredibly difficult. One of the most important values of a leader is to
provide overall direction. Only leaders can shape and change the context of vision – articulating
passion, candor, and integrity – providing a curious and daring exploration of what should be.
Good leaders invent themselves and the future for others.
However, in addition to vision and strategy, Useem suggests that they have been joined by new
critical capabilities – leading out and leading up. With the increasing use of outsourcing,
managers need the skill to lead out: not just to send work downwards to subordinates but also to
have a talent for lateral leadership in arranging work with colleagues. And as organizations
decentralize authority managers must be able to lead their own bosses, to have the capacity to
lead up and muster support from above as well as below.

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Unlike management, leadership does not produce consistency, but change. Leadership is about
generating movements and currents within the organization. Leaders produce change through the
processes of establishing direction through vision and strategy, aligning people whose
cooperation is needed to achieve the vision, and motivating and inspiring them to overcome the
barriers to change. Management and leadership are both important in an organization. Effective
managers have to be leaders, too, because there are distinctive qualities associated with
management and leadership that provide different strengths for the organization. (Richard L,
2003) Management and leadership reflect two different sets of qualities and skills that frequently
overlap within a single individual. A person might have more of one set of qualities than the
other, but ideally a manager develops a balance of both manager and leader quality.
1.3 What makes Effective Leader?
The American James M. Kouzes and Barry (2000) have done research on 550 leaders to find out
what they do when they are at their best as leaders. The research uncovered the following five
leadership practices common to successful leaders:
1) Model the way: titles are granted, but it is your behavior that wins you respect. Leaders
model the way. Exemplary leaders know that if they want to gain commitment and achieve
the highest standards, they must be models of the behavior they expect from others. To
effectively model the behavior they expect of others, leaders must first be clear about their
guiding principles. Lindsay Levin says, “You have to open up your heart and let people know
what you really think and believe. This means talking about your values.”
2) Inspire a shared vision: every organization, every social movement, begins with a dream.
The dream or vision is the force that invents the future. Leaders inspire shared vision. They
gaze across the horizon of time, imagining the attractive opportunities that are in store when
they and their constituents arrive at a distant destination. Leaders have a desire to make
something happen, to change the way things are, to create something that no one else has
ever created before. In some ways, leaders live their lives backward. They see pictures in
their minds eye of what the result will look like even before they’ve started their project,
much as an architect draws a blueprint or an engineer builds a model. Yet visions seen only
by leaders are insufficient to create an organized movement or a significant change in a
company.
3) Challenge the process: leaders are pioneers- people who are willing to step out into the
unknown. They search for opportunities to innovate, grow, and improve. But leaders aren’t
the only creators or originators of few products, services, or processes. In fact, it’s more
likely that they’re not: innovation comes more from listening than from telling. Product and
service innovations tend to come from customers, clients, vendors, people in the labs, and
people on the front lines; process innovations, from the people doing the work. Sometimes a
dramatic external event thrusts an organization into a radically new condition. The leader’s
primary contribution is in the recognition of good ideas, the supports of those ideas, and the
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 willingness to challenge the system to get new products, processes, services, and systems
adopted.
4) Enable others: leadership is a team effort. Exemplary leaders enable others to act. They
foster collaboration and build trust. This sense of teamwork goes far beyond a few direct
reports to close confidants. They engage all those who must make the project work and in
some way, all who must live with the results. In today’s “virtual” organization, cooperation
can’t be restricted to a small group of loyalists; it must include peers, managers, customers
and clients, suppliers, citizens-all those who have a stake in the vision. Leaders make it
possible for others to do good work. They know that those who are expected to produce the
results must feel a sense of personal power and ownership.
5) Encourage the Heart: to show appreciation for people’s contribution and to create a culture
of celebration is part of the leader’s job. Effective leaders motivate and inspire people to
want to do what needs to be done. Encouragement is curiously serious business. Leaders
visibly and behaviorally link rewards with performance. When striving to raise quality,
recover from disaster, start up a new service, or make dramatic change of any kind, leaders
make sure people see the benefit of behavior that’s aligned with cherished values. And
leaders also know that celebrations and rituals, when done with authenticity and from the
heart, build a strong sense of collective identity and community spirit that can carry group
through extraordinarily tough times.
The most important and common factors that distinguish effective and ineffective leadership are
presented as follows:
Ineffective Leadership Effective Leadership
 Workers don’t feel valued and  Workers at all levels feel needed
 Creates negative attitudes  Promotes positive attitudes
 Not developing all employees  Utilize all resources
 Higher absenteeism  Reduce complaints
 Low productivity/poor quality  Workers share Ideas
 Miscommunication  Less confusion
 Inability to develop or adapt  Shared goals
 Poor working relations  Fosters team building
 Inability to build and lead a team
 Authoritarian and poor performance
 Too ambitious
1.4 Importance of Leadership for Good Governance and Development
The well-known indicators of the existence of good governance are: Participation, Rule of law,
Effectiveness and efficiency, Accountability, Transparency, Consensus oriented, Responsiveness
and Equitability and inclusiveness. This indicators are commonly refereed the principle of good

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governance. And if we see the qualities of good leadership, they are aligned with the indicators
of good governance. Therefore, it is possible to note that leadership is very important to bring
about good governance. The existence of good governance in turn will help to ensure economic,
social, cultural and political development.
‘Thirty years ago it was very much about what you knew the technicalities of things. Managers
now are leaders of their groups, their departments. Although they may well need some specialist
knowledge, the human relations part of the management job is more important than ever. People
have more flexibility and more choice in their careers, which are themselves more fluid, so
keeping people motivated is very important.’ Leadership is also important in attempting to
reduce employee dissatisfaction.
Good leadership involves the effective process of delegation and empowerment. The leadership
relationship is not limited to leader behavior resulting in subordinate behavior. Leadership is a
dynamic process. The leader–follower relationship is reciprocal and effective leadership is a two-
way process which influences both individual and organizational performance.
Good management leadership helps to develop teamwork and the integration of individual and
group goals. It aids intrinsic motivation by emphasizing the importance of the work that people
do. The changing nature of work organizations, including flatter structures and recognition of the
efficient use of human resources, coupled with advances in social democracy, have combined to
place growing importance on leadership.
The nature of management is moving away from an emphasis on getting results by the close
control of the workforce and towards an environment of coaching, support and empowerment.
‘The maxim that: “there is nothing you cannot achieve if you don’t mind who gets the credit”
should be the watchword for all team leaders … The view that is beginning to emerge, is that if
teams are to come up with the goods, the leaders need to step out of the limelight and let others
take a bow.’ Hooper and Potter discuss the importance of leadership in times of change and
uncertainty, and that good leaders are sensitive to the impact of the change process on people.
‘Never is leadership more sought after than in times of change and uncertainty. Effective change
leadership is the key to shifting people’s perceptions from seeing change as a threat to seeing it
as an exciting challenge.’
CHAPTER TWO: LEADERSHIP THEORIES AND STYLES
2.1 Leadership Theories
The broad and varied body of work on leadership suggests that there are many appropriate ways
to lead or styles of leadership. While many different leadership theories have emerged, the
prominent leadership theories are presented below. After we discuss the early theories of
leadership and the contemporary approaches to leadership we discuss the styles of leadership
where it is mainly affected by the prevailing situations.
2.1.1 “Great Man" Theories

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Great man theories assume that the capacity for leadership is inherent – that great leaders are
born not made. These theories often portray great leaders as heroic, mythic and destined to rise to
leadership when needed. The term "Great Man" was used because, at the time, leadership was
thought of primarily as a male quality, especially in terms of military leadership.
History of the Great Man Theory of Leadership
The great man theory of leadership became popular during the 19th-century. The mythology
behind some of the world's most famous leaders such as Abraham Lincoln, Julius Caesar,
Mahatma Gandhi, and Alexander the Great helped contribute to the notion that great leaders are
born and not made. In many examples, it seems as if the right man for the job seems to emerge
almost magically to take control of a situation and lead a group of people into safety or success.
Historian Thomas Carlyle also had a major influence on this theory of leadership, at one point
stating that, “The history of the world is but the biography of great men.” According to Carlyle,
effective leaders are those gifted with divine inspiration and the right characteristics.
Some of the earliest research on leadership looked at people who were already successful
leaders. These individuals often included aristocratic rulers who achieved their position through
birthright. Because people of a lesser social status had fewer opportunities to practice and
achieve leadership roles, it contributed to the idea that leadership is an inherent ability. Even
today, people often describe prominent leaders as having the right qualities or personality for the
position, implying that inherent characteristics are what make these people effective leaders.
Arguments against the Great Man Theory of Leadership
Sociologist Herbert Spencer suggested that the leaders were products of the society in which they
lived. In The Study of Sociology, Spencer wrote, "you must admit that the genesis of a great man
depends on the long series of complex influences which has produced the race in which he
appears, and the social state into which that race has slowly grown.... before he can remake his
society, his society must make him."
2.1.2 Trait Theories
Throughout history, strong leaders – Buddha, Napoleon, Mao, Churchill, and Roosevelt – have
all been described in terms of their traits. For example, when Margaret Thatcher was prime
minister of Great Britain, she was regularly described as confident, iron willed, determined and
decisive.
Trait theories, a continuation of the ‘Great Man’ theories, assume that people inherit certain
qualities and traits that make them better suited to leadership. The trait theory of leadership
derived from the great man theory. It suggests that you can identify a potential leader by
examining the personality traits of the person and matching them to the characteristics “real”
leaders possess. Part of being a leader is working with what is around you. Be aware that many
people still hold to the trait school even if they don't realize it, and they may not see you as
leadership material if you don't fit their particular view of a leader. You can still lead; it just
takes additional care and planning.
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Research efforts at isolating leadership traits resulted in a number of dead ends. For instance, a
review in the late 1960s of 20 different studies identified nearly 80 leadership traits, but only five
of these traits were common to four or more of the investigations. By the 1990s, after numerous
studies and analysis, about the best things that could be said was the most ‘leaders are not like
other people’, but the particular traits that were isolated varied a great deal from review to
reviews. It was a pretty confusing state of affairs.
The Development of Trait Theory
Unlike many other theories of personality, such as psychoanalytic or humanistic theories, the
trait approach to personality is focused on differences between individuals. The combination and
interaction of various traits forms a personality that is unique to each individual. Trait theory is
focused on identifying and measuring these individual personality characteristics.
2.1.3 Behavioral Theories of Leadership
The failure of early trait studies led researchers in the late 1940s through 1960s to go in a
different direction. They began looking at the behaviors exhibited by specific leaders. They
wondered if there was something in unique in the way that effective leaders behave. In this
section, we look at three different behavioral theories of leadership. First, however, let’s consider
the practical implications of the behavioral approach.
If the behavioral approach to leadership were successful, it would have implications quite
different from the great man and trait approach. Trait research provides a basis for selecting the
‘right’ persons to assume formal positions in groups and organizations requiring leadership. In
contrasts, if behavioral studies were to turn up critical behavioral determinants of leadership, we
could train people to be leaders. The difference between great man and trait theories, in terms of
application, lies in underlying assumptions. Great man and trait theories assume that that leaders
are born to lead rather made. However, if there were specific behaviors that identified leaders,
then we could teach leadership; we could design programmes that implanted these behavioral
patterns in individuals who desired to be effective leaders. This was surely a more exciting
avenue, for it meant that the supply of leaders could be expanded. If training worked, we could
have an infinite supply of effective leaders.
2.1.3.1 Ohio State Studies
The most comprehensive and replicated behavioral theories resulted from research that began at
Ohio State University in the late 1940s. Researchers at Ohio State sought to identify independent
dimensions of leader behavior. Beginning with 1,000 dimensions, they eventually narrowed the
list into two categories that substantially accounted for most of the leadership behavior described
by employees. They called these dimensions initiating structure and consideration.
Initiating structure refers to the extent to which a leader is likely to define and structure his or
her role and those of employees in search for goal attainment. It includes behavior that attempts
to organize work, work relationships and goals. A leader characterized as high in initiating
structure could be described someone who ‘assigns group members to particular tasks’, ‘expects
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workers to maintain definite standards of performance’ and ‘emphasizes the meeting of
deadlines’.
Consideration is described as the extent to which a person is likely to have job relationships that
are characterized by mutual trust, respect for employees ideas, and regard for their feelings. We
could describe a leader high in consideration as one who helps employees with personal
problems, is friendly and approachable, and treats all employees as equals, and express
appreciation and support. A recent survey of employees revealed that when asked to indicate the
factors that most motivated them at work, 66% mentioned appreciation. This speaks to the
motivating potential of considerate leadership behavior.
At one time, the results of the Ohio State studies were thought disappointing. One 1992 review
concluded, ‘Overall, the research based on a two-factor conceptualization of leadership behavior
has added little to our knowledge about effective leadership.’ However, a more recent review
suggests that this two-factor conceptualization was given a premature burial. A review of 160
studies found that both initiating structure and consideration were associated with effective
leadership. Specifically, consideration was more strongly related to the individual. In other
words, the followers of leaders who were high in consideration were more satisfied with their
jobs and more motivated and also had more respect for their leader. Initiating structure, however,
was more strongly related to higher levels of group and organization productivity and more
positive performance evaluations.
2.1.3.2 The University of Michigan Studies
Leadership studies undertaken at the University of Michigan’s Survey Research Center at about
the same time as those being done at Ohio State had similar research objectives: to locate
behavioral characteristics of leaders that appeared to be related to measures of performance
effectiveness.
The Michigan group also came up with two dimensions of leadership behavior that they labeled
employee - oriented and production - oriented. The employee – oriented leaders were described
as emphasizing interpersonal relations; they took a personal interest in the needs of their
employees and accepted individual differences among members. The production – oriented, in
contrast, tended to emphasize the technical or task aspects of the job; their main concern was in
accomplishing their group’s tasks, and the group members were a means to that end. These
dimensions - employee - oriented and production – oriented – are closely related to the Ohio
State dimensions. Employee - oriented leadership is similar to consideration, and production –
oriented leadership is similar to initiating structure. In fact, most leadership researchers use the
terms synonymously.
The conclusions that Michigan researches arrived at strongly favored the leaders who were
employee oriented in their behavior. Employee – oriented leaders were associated with higher
group productivity and greater job satisfaction. Production – oriented leaders tended to be
associated with low group productivity and lower job satisfaction.
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2.1.3.3 Black and Mouton Leadership /Managerial/ Grid
Drawing from the Ohio State and Michigan Studies, Blake and Mouton (1985) proposed a
managerial grid (sometimes called the leadership grid) based on the styles of ‘concern for
people’ and ‘concern for production’, which essentially represent the Ohio State dimensions of
consideration and initiating structure or the Michigan dimensions of employee-oriented and
production oriented.
The grid, depicted in figure consisting of the concern for task on the ‘X’ axis and the concern for
people on the ‘Y’ has nine possible positions along each axis, creating 81 different positions in
which the leader’s style may fall. The grid does not show results produced; rather, it shows the
dominating factors in a leader’s thinking in regard to getting results. The notion that just two
dimensions can describe a managerial behavior has the attraction of simplicity. These two
dimensions can be drawn as a graph or grid (see Figure 2.1).
Most people fall somewhere near the middle of the two axis - middle of the road. But, by going
to the extremes, that is, people who score on the far end of the scales, we come up with four
types of leaders:
 Authoritarian - strong on tasks, weak on people skills
 Country Club - strong on people skills, weak on tasks
 Impoverished - weak on tasks, weak on people skills
 Team Leader - strong on tasks, strong on people skills
The goal is to be at least in the Middle of the Road but preferably a Team Leader - that is, to
score at least between a 5, 5 to 9, 9. In addition, a good leader operates at the extreme ends of the
two scales, depending upon the situation.
 Authoritarian Leader (high task, low relationship) (9, 1)
Leaders who get this rating are very much task oriented and are hard on their workers (autocratic).
There is little or no allowance for cooperation or collaboration. Heavily task oriented people display
these characteristics: they are very strong on schedules; they expect people to do what they are told
without question or debate; when something goes wrong they tend to focus on who is to blame rather
than concentrate on exactly what is wrong and how to prevent it; they are intolerant of what they see as
dissent (it may just be someone's creativity), so it is difficult for their subordinates to contribute or
develop.
High
9 1:9 9:9
8
Concern for People/Consideration

7
6
5
4 5:5
3
Low 2

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 1:1 9:1

Concern for Production/task High

Figure 2.1: The Leadership/Management/ Grid (Black and McCanse, 1991)
 Team Leader (high task, high relationship) (9, 9)
These leaders lead by positive example and endeavor to foster a team environment in that all
team members can reach their highest potential, both as team members and as people. They
encourage the team to reach team goals as effectively as possible, while also working tirelessly
to strengthen the bonds among the various members. They normally form and lead some of the
most productive teams.
 Country Club Leader (low task, high relationship) (1, 9)
These leaders predominantly use reward power to maintain discipline and to encourage the team
to accomplish its goals. Conversely, they are almost incapable of employing the more punitive
coercive and legitimate powers. This inability results from fear that using such powers could
jeopardize relationships with the other team members.
 Impoverished Leader (low task, low relationship) (1, 1)
These leaders use a “delegate and disappear” management style. Since they are not committed to
either task accomplishment or maintenance; they essentially allow their team to do whatever it
wishes and prefer to detach themselves from the team process by allowing the team to suffer
from a series of power struggles.
2.1.3.4 Scandinavian Studies
The three behavioral approaches we've just reviewed were essentially developed between the late
1940s and early 1960s. These approaches evolved during a time when the world was a far more
stable and predictable place. In the belief that these studies fail to capture the more dynamic
realities of today, researchers in Finland and Sweden have been reassessing whether there are
only two dimensions that capture the essence of leadership behavior." Their basic premise is that
in a changing world, effective leaders would exhibit development-oriented behavior. These are
leaders who value experimentation, seek new ideas, and generate and implement change.
For instance, these Scandinavian researchers went back and looked at the original Ohio State
data. They found that the Ohio State people included development items such as "pushes new
ways of doing things," "originates new approaches to problems," and "encourages members to
start new activities," But these items, at the time, didn't explain much toward effective
leadership. It could be, the Scandinavian researchers proposed, that this was because developing
new ideas and implementing change wasn't critical in those days. In today's dynamic
environment, this may no longer be true. So the Scandinavian researchers have been conducting
new studies looking to see if there is a third dimension-development orientation-that is related to
leader effectiveness. The early evidence is positive, Using samples of leaders in' Finland and

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Sweden, the researchers-have found strong support for development-oriented leader behavior as
a separate and independent dimension. That is, the previous behavioral approaches that focused
in on only two behaviors may not appropriately capture leadership in the 1990s. Moreover, while
initial conclusions.

2.1.4 Contingency Theories

The realization that there isn't one correct type of leadership led to theories that the best
leadership style is contingent on, or depends on, the situation. These theories try to predict which
leadership style is best in which circumstance. One style of leadership is not suitable for all
occasions. When a decision is needed fast, which style is preferred? When the leader needs the
full support of the team, is there a better way to lead? Should a leader be more people oriented or
task oriented? These are all examples of questions that contingency leadership theories try to
address.
Contingency theories of leadership are really a development of style theories. The difference is
that they do not assume that there is one universal best style of leadership; but that an appropriate
style will depend or be contingent on the context. Early and influential advocates of a
contingency approach were Tannenbaum and Schmidt (1973). They suggest that an appropriate
style will be contingent on four variables:
The leader – his or her personality and preferred style;
The led -the needs, attitudes & skills of the subordinates or colleagues;
The task- the requirements and goals of the job to be done; and
The context- the organization and its values & prejudices.
Let us look at each of the four variables which are mentioned above in a little more detail in
order to develop a deeper understanding.
The Leader- most people are capable of some flexibility but would probably find it difficult to
move confidently over the whole range of styles. The range of styles that we adopt is influenced
by several factors, includes our values and beliefs; our confidence in colleagues & subordinates;
our tolerance of uncertainty; and our personal contribution.
The Led- the people with whom you work will have implicit or explicit preferences for an
autocratic or a democratic style of leadership. These preferences will be influenced by at least
four factors.
 Their expectations;
 Their interest in the problem or situation;
 Their tolerance of uncertainty; and
 Their experience and expertise.

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The Task-it is important to understand how the task may affect, or conversely, be modified to fit
a particular leadership style. Three factors are important in understanding this relationship. These
are:
 The nature of the task;
 Time-scale; and
 Room for error.
The Context - no-one in an organization is a completely free agent. The leader, the led & the
task will all be constrained and influenced by the wider organizational context.
Fitting the variables together-contingency theory suggests that, in any leadership situation, you
need to look at all four of the variables discussed above-you, as leader, the led, the task & the
context-to see how they fit together. If there is no fit, then you should try to change those
variables, which can most readily be changed in order to secure a better fit.
Hersey & Blanchard (1988) developed a “two dimensional” model where it is possible to be high
or low in both task and relation behavior. The framework of H&B is a function of three
variables.
1. Task Behavior: Amount of direction demonstrated by the leader and guidance a leader
gives-task behavior.
2. Relationship Behavior: Amount of emotional support demonstrated by the leader-
relations behavior.
2.2 Leadership Style
Leadership style is the way in which the functions of leadership are carried out, the way in which
the manager typically behaves towards members of the group. The development of behavioral
science has drawn attention to the processes of interpersonal behavior in the work situation and
to the effects of leadership on those being led. The attention given to leadership style is based on
the assumption that subordinates are more likely to work effectively for managers who adopt a
certain style of leadership than they will for managers who adopt alternative styles.
There are many dimensions to leadership and many possible ways of describing leadership style,
such as, for example, dictatorial, unitary, bureaucratic, benevolent, charismatic, consultative,
participative and abdicatorial.The style of managerial leadership towards subordinate staff and
the focus of power can however be classified within a broad three-fold heading.
 The authoritarian (or autocratic) style is where the focus of power is with the manager,
and all interactions within the group move towards the manager. The manager alone
exercises decision-making and authority for determining policy, procedures for achieving
goals, work tasks and relationships, control of rewards or punishments.
 The democratic style is where the focus of power is more with the group as a whole and
there is greater interaction within the group. The leadership functions are shared with
members of the group and the manager is more part of a team. The group members have

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 a greater say in decision-making, determination of policy, implementation of systems and
procedures.
 A laissez-faire (genuine) style is where the manager observes that members of the group
are working well on their own. The manager consciously makes a decision to pass the
focus of power to members, to allow them freedom of action ‘to do as they think best’,
and not to interfere; but is readily available if help is needed. There is often confusion
over this style of leadership behavior. The word ‘genuine’ is emphasized because this is
to be contrasted with the manager who could not care, who deliberately keeps away from
the trouble spots and does not want to get involved. The manager just lets members of the
group get on with the work in hand. Members are left to face decisions which rightly
belong with the manager. This is more a non-style of leadership or it could perhaps be
labeled as abdication.
2.3 Transformational, Transactional, and Servant Leadership
Based on the work of writers such as Burns (1978) this has given rise to a distinction between
two fundamental forms of leadership: transformational or transactional.
2.3.1 Transformational Leadership
Northouse (2007) stated that transformational leaders lead followers by raising the consciousness
of followers about the significance of specific outcomes. Leaders under transformational
leadership are focused on the intrinsic needs of their followers and they express the value and
significance of the common goals in order to enhance their followers’ intrinsic motivation. Bass
and Riggo (2006) confirmed that transformational leaders motivate their followers by
articulating a vision and persuade their followers to become part of the vision. They challenge
their followers to find new ways in which those outcomes might be achieved. Followers under
the transformational leadership are encouraged to go beyond the required expectations.
Why a need for Transformational Leadership?
Transformational leadership is that which: … facilitates a redefinition of a people’s mission and
vision, a renewal of their commitment and the restructuring of their systems for goal
accomplishment. It is a relationship of mutual stimulation and elevation that converts followers
into leaders and may convert leaders into moral agents. Hence, transformational leadership must
be grounded in moral foundations. (Leithwood, as cited in Cashin et al., 2000)
Ahadi, (2002) explain that the managerial world is in constant change phenomena and nowadays
it is operating in a turbulent environment. Rapid changes in science and technology, economy,
political and social affairs, worldwide relationships among countries and inter relationship of
organizations exemplify the current managerial environment. Globalization along with the key
driving forces of change such as fundamental change in the nature of customer, competition,
technology, etc has created tough environment for organizations. Today, change becoming
constant, thus, the process and nature of change is also changing. The nature of change becomes

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fast and flexible. Nothing is constant or predictable. Technology, the customer demand and
competition are continuously changing
These reasons pressurize organizations to undergo continuous change process to cope up with
the challenges and to be competitive. These increasing and continuous environmental and
organizational changes have made a tremendous impact on capabilities of leaders for successful
implementation of change initiatives.
Bass and Riggio (2006) introduced the following four components of transformational
leadership:
Charismatic leadership: Transformational leaders are exemplary and considered as role models
by their followers. Followers gave respect admiration to the transformational leaders. These
leaders are visionary, they have a clear sense of purpose and they are risk takers. They consider
the moral and ethical values of the employees that followers want to emulate their leaders
because of the strong emotional attachment and personal identification with the leader.
Inspirational Motivation: Transformational leaders behave in ways that motivate others, and
generate enthusiasm. These leaders talk optimistically and enthusiastically. They clearly
communicate expectations and demonstrate commitment to goals and a shared vision.
Intellectual Stimulation: Intellectual stimulating leaders challenge the status quo by questioning
assumptions, reframing problems, and approaching old situation in new ways.
Individual Consideration: Individual considerate leaders gave individual consideration and
spent time to teach and coach followers needed for growth and achievement of common goal.
These leaders understand their followers’ strengths and weaknesses while they provide coaching
and mentoring.
2.3.2 Transactional Leadership
Transactional leadership is based on legitimate authority within the bureaucratic structure of the
organization. The emphasis is on the clarification of goals and objectives, work task and
outcomes, and organizational rewards and punishments. Transactional leadership appeals to the
self-interest of followers. It is based on a relationship of mutual dependence and an exchange
process of: ‘I will give you this, if you do that’.
Northouse (2007) explained transactional leaders are those who lead their followers by exchange
tangible rewards for the work of followers. Leaders under transactional leadership are based on
exchanges through which followers are rewarded for the achievement of specific outcome.
Northouse (ibid) contend that a successful transactional leader clarifies rewards before the
followers engaged on the activities and finally able to give a suitable credit and reward to
followers’ deeds. Transactional leaders are those who guide their followers to reach on the
established goals by providing the direction; by clarifying the roles and tasks required from
followers. However, the followers under this leadership behavior are not essentially required to
find new ways of doing business and not encouraged going beyond the expectations.
2.3.3 Servant Leadership
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The words servant and leader are usually thought of as being opposites. When two opposites are
brought together in a creative and meaningful way, a paradox emerges and so the words servant
and leader have been brought together to create the paradoxical idea of servant-leadership. The
basic idea of servant-leadership is both logical and intuitive. Since the time of the industrial
revolution, managers have tended to view people as objects; institutions have considered workers
as cogs within a machine. In the past few decades, we have witnessed a shift in that long-held
view. Standard practices are rapidly shifting toward the ideas put forward by Robert Greenleaf,
Stephen Covey, Peter Senge, Max DePree, Margaret Wheatley, Ken Blanchard, and many others
who suggest that there is a better way to manage our organizations in the twenty first century.
Who is a servant-leader? Greenleaf said that the servant-leader is one who is a servant first. In
The Servant as Leader he wrote, “It begins with the natural feeling that one wants to serve, to
serve first. Then conscious choice brings one to aspire to lead. The difference manifests itself in
the care taken by the servant-first to make sure that other people’s highest-priority needs are
being served. The best test is: Do those served grow as persons; do they, while being served,
become healthier, wiser, freer, more autonomous, more likely themselves to become servants?”
Ten Characteristics of the Servant-Leader
Servant leadership deals with the reality of power in everyday life-its legitimacy, the
ethical restraints upon it and the beneficial results that can be attained through the
appropriate use of power.
The New York Times
After some years of carefully considering Greenleaf’s original writings, the following 10
characteristics of the servant-leader are identified and these characteristics are central to the
development of servant-leaders:
1) Listening: Leaders have traditionally been valued for their communication and decision-
making skills. These are also imp ortant skills for the servant-leader, but they need to be
reinforced by a deep commitment to listening intently to others. The servant-leader seeks
to identify the will of a group and to help clarify that will. He or she seeks to listen
receptively to what is being said (and not said!).
2) Empathy: The servant-leader strives to understand and empathize with others. People
need to be accepted and recognized for their special and unique spirits. The most
successful servant leaders are those who have become skilled empathetic listeners.
3) Healing: Learning to heal is a powerful force for transformation and integration. One of
the great strengths of servant-leadership is its potential for healing oneself and others.
4) Awareness: General awareness, especially self-awareness, strengthens the servant-
leader. Making a commitment to foster awareness can be scary-you never know what you
may discover! Awareness also aids one in understanding issues that involve ethics and
values. It lends itself to being able to view most situations from a more integrated,
holistic position.

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 5) Persuasion: Another characteristic of servant-leaders is reliance on persuasion, rather
than on one’s positional authority, in making decisions within an organization. The
servant-leader seeks to convince others, rather than to coerce compliance. This element
offers one of the clearest distinctions between the traditional authoritarian model and that
of servant-leadership. The servant-leader is effective at building consensus within groups.
This emphasis on persuasion over coercion probably has its roots within the beliefs of
The Religious Society of Friends (Quakers), the denomination with which Robert
Greenleaf himself was most closely allied.
6) Conceptualization: Servant-leaders seek to nurture their abilities to “dream great
dreams.” The ability to look at a problem (or an organization) from a conceptualizing
perspective means that one must think beyond day-to-day realities. For many managers,
this is a characteristic that requires discipline and practice. The traditional manager is
focused on the need to achieve short-term operational goals. The manager who wishes to
also be a servant-leader must stretch his or her thinking to encompass broader based
conceptual thinking. Within organizations, conceptualization is also the proper role of
boards of trustees or directors.
7) Foresight: Closely related to conceptualization, the ability to foresee the likely outcome
of a situation is hard to define but easy to identify. One knows it when one sees it.
Foresight is a characteristic that enables the servant-leader to understand the lessons from
the past, the realities of the present, and the likely consequence of a decision for the
future. It is also deeply rooted within the intuitive mind.
8) Stewardship: Peter Block (author of Stewardship and The Empowered Manager) has
defined stewardship as “holding something in trust for another.” Robert Greenleaf’s view
of all institutions was one in which CEOs, staffs, and trustees all played significant roles
in holding their institutions in trust for the greater good of society. Servant-leadership,
like stewardship, assumes first and foremost a commitment to serving the needs of others.
It also emphasizes the use of openness and persuasion rather than control.
9) Commitment to the growth of people: Servant-leaders believe that people have an
intrinsic value beyond their tangible contributions as workers. As such, the servant leader
is deeply committed to the growth of each and every individual within his or her
institution. The servant leader recognizes the tremendous responsibility to do everything
within his or her power to nurture the personal, professional, and spiritual growth of
employees. In practice, this can include (but is not limited to) concrete actions such as
making available funds for personal and professional development; taking a personal
interest in the ideas of and the suggestions from everyone; encouraging workers’
involvement in decision making; and actively assisting laid-off workers to find other
employment.

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 10) Building community: The servant-leader senses that much has been lost in recent human
history as a result of a shift in which large institutions, rather than local communities,
have become the primary shapers of human lives. This awareness causes the servant-
leader to seek to identify some means for building community among those who work
within a given institution. Servant-leadership suggests that true community can be created
among those who work in businesses and other institutions. Greenleaf said: “All that is
needed to rebuild community as a viable life form for large numbers of people is for
enough servant leaders to show the way, not by mass movements, but by each servant-
leader demonstrating his own unlimited liability for a quite specific community-related
group.”
2.4 Leadership Skills and Competencies
The competencies that leaders need to have depended on different factors, including:
a) Whether that person is leading one individual, a group or a large organization;
b) The extent of leadership skills that person already has;
c) That person’s basic nature & values;
d) Whether the group or organization is for profit or not-profit, new or long-established, and
large or small;
e) The particular culture of whoever is being led.
One of the competencies that leaders need to develop in order to be effective leader is: Leading
yourself. To lead others firstly, we have to lead ourselves as Adair (2003) writes: ‘An important
aspect of leadership knows you’. In addition to his quotation above, Adair states: “If a blind man
leads a blind man they will both falls into a ditch”. Do you agree with this statement? Why?
Competencies required in this regard are the basic one, which other competencies rely on. Such
competencies relate to the inner world dimension of a leader on which he/she stands on to
energize others.
Essential Skills and Qualities of Leadership
Great Leadership (By Teresa Gilbert) – Discover and explain six essential qualities of leadership
listed as follows:
1) Know your own leadership style: Are you a take-charge person who can get things done
regardless of barriers? A planner who is skilled with the details of a large project?
Spontaneous and creative, but struggle with deadlines and timetables? If we are spontaneous
and not a planner, we will do things spur of the moment; some people cannot thrive in that
environment. If we are a take-charge person and fast-paced, we'll find some people need
more processing time than we will give. So we must know what our own leadership style is
and how to adjust it to create a culture where all can thrive.
2) Understand whether you're a manager or a leader: What's the difference? An analogy
from Stephen Covey asks you to imagine there is a large group of people on the ground, and
a ladder leaning against a tall building. Everyone must climb the ladder to get to the top of
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 the building. The MANAGER makes sure the ladder is secured, rungs are in good repair,
people ascend safely, etc. The LEADER makes sure the ladder is leaning against the right
building - so the group ends up where they need to be. The LEADER determines what the
goal is - why the people need to be at the top of the building.
3) Promote Succession Planning: Until recently, it has been defined as identifying and planning
for the next CEO. But today, succession planning has a whole new meaning as we anticipate
a mass exodus of leadership - as the Baby Boomers are retiring, it is estimated that by 2018,
60% of current leadership will be gone. So even if you're a new leader, you need to already
begin to develop new leadership right alongside you. It's a great time in history for new
leaders, because promotional possibilities are much greater than ever before. You may not
stay in your leadership role very long, and you need to be intentional about preparing
someone to step in.
4) Understand that "It's All about Relationships": This is so fundamental, and yet one area
that leaders neglect the most. There are 3 reasons why everything in the marketplace really is
all about relationships:
5) Promote Effective Communication: An organization knows when they do not have effective
communication, but often doesn't know how to create it. Traditional communication methods
are important, and should be used effectively.
6) develop an Effective Professional Image: How others perceive you is how you are in their
mind; their perception is their reality. If they perceive you as trustworthy, to them you are.
And if they perceive that you are not, you are not. The critical link here is that your
professional effectiveness with that person is directly linked to their perception.
2.5 Good versus Bad Leaders
Whereas some of the leadership studies literature offers descriptive accounts of
ethics, other parts of the literature treat ethics as an exhortation rather than an in-depth
exploration of the subject. Researchers often tell us that leaders should be honest, have
integrity, and so forth.
Good Leaders Bad Leaders
o Have integrity & learn from others o Do not give feedback
o Lead by example & the ability to listen o Not making time for their team
o Need for achievement o Being too "hands-off"
o Proactive and visionary o Being too friendly
o The ability to communicate o Fail to define goals
o Manage failure & self confidence o Misunderstand motivation
o Emotional maturity o Hurry recruitment & not "walk the talk"
o Ethical & develop themselves o Do not delegate & misunderstand their role
o Develop their followers

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CHAPTER THREE: OVERVIEW OF CHANGE MANAGEMENT
Introduction
Change may be regarded as one of the few constants of recorded history. Often society’s
‘winners’, both historically and contemporary, can be characterized by their common ability to
effectively manage and exploit change situations. Individuals, societies, nations and enterprises
who have at some time been at the forefront of commercial, and/or technological expansion,
have achieved domination, or at least competitive advantage, by being innovative in thought
and/or action. They have been both enterprising and entrepreneurial. Thus, effective change
management is crucial to any organization’s ability to survive and thrive; good change
management is a key driver of success.
3.1 Meaning and Implications of Change Management
Change management is used to ensure business success. Change management has grown
tremendously to encompass more skills and knowledge from different fields of study. Change
management can be defined as the process of planning, organizing, coordinating and controlling
the compositions of the environment, internal and external; to ensure that the process changes are
implemented according to approved plans and the overall objectives of introducing the changes
are achieved with as little disruption as possible. It may be impossible to effect change without
any inconvenience to the existing processes and processors. In effect, change management is
intended to prevent disruptions and any other deliberate or inadvertent acts that would frustrate
the process change, and to resolve any disruptions and their causes promptly.
In thinking about what is meant by change management, at least four basic definitions come to
mind: the task of managing change, area of professional practice, body of knowledge, and
control mechanisms which are stated separately.
 The Task of Managing Change
The first and most obvious definition of change management is that the term refers to the task of
managing change. The obvious is not necessarily unambiguous. Managing change is itself a term
that has at least two meanings.
One meaning of managing change refers to the making of changes in a planned and managed or
systematic fashion. The aim is to more effectively implement new methods and systems in an on-
going organization. The changes to be managed lie within and are controlled by the organization.
However, these internal changes might have been triggered by events originating outside the
organization, in what is usually termed - the environment. Hence, the second meaning of
managing change, namely, the response to changes over which the organization exercises little
or no control (e.g., legislation, social and political upheaval, the actions of competitors, shifting
economic tides and currents, and so on). Researchers and practitioners alike typically distinguish
between a knee-jerk or reactive response and an anticipative or proactive response.

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The task of managing change also includes managing its impact on people. For many managers,
this aspect of the task of managing change is complicated by the fact that they have to help their
people cope with change and the managers also face their own coping challenges.
 An Area of Professional Practice
The second definition of change management is "an area of professional practice." There are
dozens, if not hundreds, of independent consultants who will quickly and proudly proclaim that
they are engaged in planned change, that they are change agents, that they manage change for
their clients, and that their practices are change management practices. There are numerous small
consulting firms whose principals would make these same statements about their firms. And, of
course, most of the major management consulting firms have a change management practice
area.
Some of these change management experts claim to help clients manage the changes they face –
the changes happening to them. Others claim to help clients make changes. Still others offer to
help by taking on the task of managing changes that must be made. In almost all cases, the
process of change is treated separately from the specifics of the situation. It is expertise in this
task of managing the general process of change that is laid claim to by professional change
agents.

 A Body of Knowledge
Stemming from the view of change management as an area of professional practice there arises
yet a third definition of change management: the content or subject matter of change
management. This consists chiefly of the models, methods and techniques, tools, skills and other
forms of knowledge that go into making up any practice.
The content or subject matter of change management is drawn from psychology, sociology,
business administration, economics, industrial engineering, systems engineering and the study of
human and organizational behavior. For many practitioners, these component bodies of
knowledge are linked and integrated by a set of concepts and principles known as General
Systems Theory (GST). It is not clear whether this area of professional practice should be termed
a profession, a discipline, an art, a set of techniques or a technology. For now, suffice it to say
that there is a large, reasonably cohesive albeit somewhat eclectic body of knowledge underlying
the practice and on which most practitioners would agree — even if their application of it does
exhibit a high degree of variance.
 A Control Mechanism
For many years now, Information Systems groups have tried to rein in and otherwise ride herd
on changes to systems and the applications that run on them. For the most part, this is referred to
as - version control and most people in the workplace are familiar with it. In recent years,
systems people have begun to refer to this control mechanism as - change management.
Moreover, similar control mechanisms exist in other areas. Chemical processing plants, for

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example, are required by OSHA to satisfy some exacting requirements in the course of making
changes. These fall under the heading of Management of Change or MOC.
To recapitulate, there are at least four basic definitions of change management:
 The task of managing change (from a reactive or a proactive posture);
 An area of professional practice (with considerable variation in competency and skill
levels among practitioners);
 A body of knowledge (consisting of models, methods, techniques, and other tools); and
 A control mechanism (consisting of requirements, standards, processes and procedures).
In a nutshell, change management helps ensure that predetermined objectives of introducing the
process change are achieved, and it also helps prevent and resolve conflicts, service disruption,
and culture clashes and other problems associated with process change. Change management is
not restricted to one level of management; instead, it cuts across the lower, middle and top levels
of management, depending on the circumstances and the level of authority at each level.
The Importance of Change
Change will not disappear nor dissipate. Technology, civilizations and creative thought will
maintain their ever-accelerating drive onwards. It could be argued that a state of continuous
change has almost become routine (Luecke, 2003). Managers, and the enterprises they serve, be
they public or private, service or manufacturing will continue to be judged upon their ability to
effectively and efficiently manage change. Unfortunately, for the managers of the early twenty-
first century their ability to handle complex change situations will be judged over ever
decreasing time scales.
Businesses and managers are faced with highly dynamic and ever more complex operating
environments. Technologies and products, along with the industries they support and serve, are
converging. Is the media company in broadcasting, or telecommunications, or data processing, or
indeed all of them? Is the supermarket chain in general retail, or is it a provider of financial
services? Is the television merely a receiving device for broadcast messages or is it part of an
integrated multimedia communications package? Is the airline a provider of transport or the
seller of wines, spirits and fancy goods, or the agent for car hire and accommodation?
As industries and products converge, along with the markets they serve, there is a growing
realization that a holistic approach to the marketing of goods and services is required, thus
simplifying the purchasing decision. Strategic alliances, designed to maximize the ‘added value’
throughout a supply chain, while seeking to minimize costs of supply, are fast becoming the
competitive weapon of the future. Control and exploitation of the supply chain makes good
commercial sense in fiercely competitive global markets. The pack aging of what were once
discrete products (or services) into what are effectively ‘consumer solutions’ will continue for
the foreseeable future (Paton and McLaughlin, 2008).
The above, combined with the general ability to replicate both ‘hard’ and ‘soft’ innovations
within ever diminishing time scales, places the creative and effective management of change
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well towards the top of the core competencies required by any public or private enterprise. The
woreta health science and businessed age supported by integrated supply chains, distributed
manufacturing and integrated product offerings is here to stay.
This new world is a fragile one. Old traditions, conventions and belief systems are being
challenged. Regulatory pressures, as one would expect, are increasing as those deemed to be in
control (governments, civil services, politicians, managers and social leaders) attempt to both
direct and manage in an increasingly dramatic and dynamic environment. In this new age staying
marginally ahead of the game could be considered not only an achievement but also a
prerequisite for survival.
3.2 Forces for Organizational Change
We live in an "age of discontinuity." In the 1950s and 1960s, the past was a fairly good prologue
to the future. Tomorrow was essentially an extended trend line from yesterday. That's no longer
true. Beginning in the early 1970s, with the overnight quadrupling of world oil prices, economic
shocks have continued to impose changes on organizations. The forces for change are of two
types:

A. External forces
B. Internal forces
3.2.1 External Forces
An organization can only perform effectively through interactions with the broader external
environment of which it is part. The structure and functioning of the organization must reflect,
therefore, the nature of the environment in which it is operating. There are factors which create
an increasingly volatile environment, such as:
 uncertain economic conditions;
 globalization and fierce world competition;
 the level of government intervention;
 political interests;
 scarcity of natural resources; and
 Rapid developments in new technology and the information age among others.
In order to help ensure its survival and future success the organization must be readily adaptable
to the external demands placed upon it. The organization must be responsive to change. Other
major forces of change include increased demands for quality and high levels of customer
service and satisfaction; greater flexibility in the structure of work organizations and patterns of
management; the changing nature and composition of the workforce; and conflict from within
the organization.
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3.2.2 Internal Forces
Change also originates within the organization itself. Much of this change is part of a natural
process of ageing – for example, as material resources such as buildings, equipment or
machinery deteriorate or lose efficiency; or as human resources get older, or as skills and
abilities become outdated. Some of the internal forces of change are outlined as follows:
 Change in the top management: Change in the top management and consequent change
in the ideas to run the organization also leads to change in the system, structure and
processes.
 Change in size of the organization: Change in the organization’s size leads to change in
the internal structure and complexity of the operations in the organization.
 Performance gaps: When a gap between set target and actual results (in terms of market
share, employee productivity and profit) is identified, organizations face the forces to
change and reduce the gap.
 Employee needs and values: With changing needs and values of the employees,
organizations change their policies. For example, attractive financial incentives,
challenging assignments, vertical growth opportunities and autonomy at work may be
provided in an organization to attract and retain its effective employees.
Some of this change can be managed through careful planning – for example, regular repairs and
maintenance; choice of introducing new technology or methods of work; effective human
resource planning to prevent a large number of staff retiring at the same time; management
succession planning - training and staff development. The organization must be properly
prepared to face the demands of a changing environment. It must give attention to its future
development and success and this includes public sector organizations and the armed forces.
3.3 Planned and Unplanned Change
3.3.1 Planned Changes
Planned change is the result of specific efforts by a change agent. It is a direct response to
someone’s perception of a performance gap-a discrepancy between the desired and actual state
of affairs. Performance gaps may represent problems to be resolved or opportunities to be
explored. Most planned changes may be regarded as efforts intended to deal with performance
gaps in ways that benefit an organization and its members. The processes of continuous
improvement require constant vigilance to spot performance gaps-both problems and
opportunities-and to take action to resolve them.
There are two goals of planned change. First, it seeks to improve the ability of the organization
to adapt to changes in its environment. Second, it seeks to change employee behavior. If an
organization is to survive, it must respond to changes in its environment. When competitors
introduce new products or services, government agencies enact new laws, important sources of
supply go out of business, or similar environmental changes take place, the organization needs to
adapt.
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There are a number of techniques that organizations can use to get people to behave differently
in the tasks they perform and in their interactions with others. It also helps to think of planned
change in terms of order of magnitude. First-order change is linear and continuous. It implies no
fundamental shifts in the assumptions that organizational members hold about the world or how
the organization can improve its functioning. In contrast, second-order change is a
multidimensional, multilevel, discontinuous, radical change involving reframing of assumptions
about the organization and the world in which it operates. Mikio Kitano, director of all
production engineering at Toyota, is introducing first-order change in his company.' He's
pursuing slow, subtle, incremental changes in production processes to improve the efficiency of
Toyota's plants. In contrast, Boeing's top executives have recently committed themselves to
radically reinventing their company. Responding to a massive airline slump, aggressive
competition from Airbus, and the threat of Japanese competitors, this second-order change
process at Boeing includes, slashing costs by up to 30 percent, reducing the time it takes to make
a 737 from 13 months to 6 months, dramatically cutting inventories, putting the company's entire
work force through a 4-day course in "competitiveness," and bringing customers and suppliers
into the once secret process of designing new planes.
3.3.2 Unplanned Changes
Not all change in organizations is the result of a change agent’s direction (note that the change
agent is the person who takes leadership responsibility to implement planned change). Many
changes in organizations are like the one that occurred in the retail clothing store-they just
happen. Some organizations treat all change as an accidental occurrence. Unplanned changes
occur spontaneously or randomly. They may be disruptive, such as a wildcat strike that ends in a
plant closure, or beneficial, such as an interpersonal conflict that results in a new procedure
designed to smooth the flow of work between two departments. When the forces of unplanned
change begin to appear, the appropriate goal is to act quickly to minimize any negative
consequences and maximize any possible benefits. In many cases, unplanned changes can be
turned into good advantage.
However, we're concerned with change activities that are proactive and purposeful. In this
chapter, we address change as an intentional, goal-oriented activity.
3.4 Driving and Restraining Forces
Lewin (1951) also theorized that people maintain a state of status quo or equilibrium by the
simultaneous occurrence of both driving and restraining forces operating within any field. The
forces that push the system toward the change are driving forces, whereas the forces that pull the
system away from the change are called restraining forces. Lewin’s model maintained that for
change to occur, the balance of driving and restraining forces must be altered. The driving forces
must be increased or the restraining forces decreased.

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Driving forces may include a desire to please one’s boss, to eliminate a problem that is
undermining productivity, to get a pay raise, or to receive recognition. Restraining forces include
conformity to norms, an unwillingness to take risks, and a fear of the unknown.
Likewise, some greatly needed changes are never implemented because the change agent lacks
sensitivity to timing. If the organization or the people within that organization have recently
undergone a great deal of change or stress, any other change should wait until group resistance
decreases.
3.5 Process of Organizational Change
Organizational change may be defined as the adoption of a new idea or behavior by an
organization (Daft, 1995). It is a way of altering an existing organization to increase
organizational effectiveness for achieving its objectives. Successful organizational change must
continually focus on making organizations responsive to major developments like changing
customer preferences, regulatory norms, economic shocks and technological innovations. Only
those organizations that is able to undertake suitable change programs, can sustain and survive in
a changing and demanding economic order in their bid to remain ahead of others in the race.
3.5.1 Three Stage Model of the Change Process
Psychologist Kurt Lewin (1951) recommends that any change effort be viewed as a process with
three distinct phases - unfreezing, changing, and refreezing, all of which must be well handled
for a change to be successful. He also suggests that we may become easily preoccupied with the
changing phase and neglect the importance of the unfreezing and refreezing stages.

Unfreezing Changing Refreezing

Figure 3.2: The Three-stage Model of Change (Lewin, 1951)

Stage One: Unfreezing
In Lewin’s model, unfreezing is the managerial responsibility of preparing a situation for
change. It involves disconfirming existing attitudes and behaviors to create a felt need for
something new. Unfreezing is facilitated by environmental pressures, declining performance,
recognition of a problem, or awareness that someone else has found a better way, among other
things. Many changes are never tried or they fail simply because situations are not properly
unfrozen to begin with.
Large systems seem particularly susceptible to what is sometimes called the boiled frog
phenomenon (Tichy and Devanna, 1986). This refers to the notion that a live frog will
immediately jump out when placed in a pan of hot water. When placed in cold water that is then
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heated very slowly, however, the frog will stay in the water until the water boils the frog to
death. Organizations, too, can fall victim to similar circumstances. When managers fail to
monitor their environments, recognize the important trends, or sense the need to change, their
organizations may slowly suffer and lose their competitive edge. Although the signals that
change may be needed are available, they aren’t noticed or given any special attention-until it is
too late. In contrast, the best organizations are led by people who are always on the alert and
understand the importance of “unfreezing” in the change process.
Stage Two: Changing/Movement
The changing or movement stage involves taking action to modify a situation by changing
things, such as the people, tasks, structure, or technology of the organization. Lewin believes that
many change agents are prone to an activity trap. They bypass the unfreezing stage and start
changing things prematurely or too quickly. Although their intentions may be correct, the
situation has not been properly prepared for change. This often leads to failure. Changing
something is difficult enough in any situation, let alone having to do so without the proper
foundations.
In the changing/movement, the change agent identifies, plans, and implements appropriate
strategies, ensuring that driving forces exceed restraining forces. Whenever possible, change
should be implemented gradually. Because change is such a complex process, it requires a great
deal of planning and intricate timing. Recognizing, addressing, and overcoming resistance may
be a lengthy process. Any change of human behavior, or the perceptions, attitudes, and values
underlying that behavior, takes time. Therefore, any change must allow enough time for those
involved to be fully assimilated in that change.
Stage Three: Refreezing
The final stage in the planned change process is refreezing. Designed to maintain the
momentum of a change and eventually institutionalize it as part of the normal routine, refreezing
secures the full benefits of long-lasting change. During the refreezing phase, the change agent
assists in stabilizing the system change so it becomes integrated into the status quo. If refreezing
is incomplete, the change will be ineffective and the pre-change behaviors will be resumed. For
refreezing to occur, the change agent must be supportive and reinforce the individual adaptive
efforts of those affected by the change. Because change needs at least three to six months before
it will be accepted as part of the system, change should never be attempted unless the change
agent can make a commitment to be available until the change is complete.
Refreezing involves positively reinforcing desired outcomes and providing extra support when
difficulties are encountered. It involves evaluating progress and results, and assessing the costs
and benefits of the change. And it allows for modifications to be made in the change to increase
its success over time. When all of this is not done and refreezing is neglected, changes are often
abandoned after a short time or incompletely implemented. It is important to realize that
refreezing does not eliminate the possibility of further improvements to the change.

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3.5.2 The Seven Phases of Planned Change
Lippitt, Watson, and Westley (1958) built on Lewin’s theories in identifying seven phases of
planned change:
1) The patient must feel a need for change. Unfreezing occurs.
2) A helping relationship begins between the change agent and his or her patients.
Movement begins.
3) The problem is identified and clarified. Data are collected.
4) Alternatives for change are examined. Resources are assessed.
5) Active modification or change occurs. Movement is complete.
6) Refreezing occurs as the change is stabilized.
7) The helping relationship ends, or a different type of continuing relationship is formed.
Murphy (1999), in a more contemporary model, suggests that there are four predictable stages
that people pass through when exposed to any change: resistance, confusion, exploration, and
commitment. There are predictable behaviors associated with each of these stages, and the most
effective managers study these behaviors and are able to respond appropriately to get their team
back on track toward the goals.
3.5.3 Ten Emotional Phases of the Change Process
Perlman and Takacs (1990), building on Lewin’s work, identified 10 such behaviors or
emotional phases in the change process outlined as follows:
1) Equilibrium: Characterized by high energy and emotional and intellectual balance.
Personal and professional goals are synchronized.
2) Denial: Individual denies reality of the change. Negative changes occur in physical,
cognitive, and emotional functioning.
3) Anger: Energy is manifested by rage, envy, and resentment.
4) Bargaining: In an attempt to eliminate the change, energy is expended by bargaining.
5) Chaos: Characterized by diffused energy, feelings of powerlessness, insecurity, and loss
of identity.
6) Depression: Defense mechanisms are no longer operable. No energy left to produce
results. Self-pity apparent.
7) Resignation: Change accepted passively but without enthusiasm.
8) Openness: Some renewal of energy in implementing new roles or assignments that have
resulted from the change.
9) Readiness: Willful expenditure of energy to explore new event. Physical, cognitive, and
emotional reunification occurs.
10) Reemergence: Person again feels empowered and begins initiating projects and ideas.
The phases of equilibrium, denial, anger, and bargaining reflect Lewin’s unfreezing phase;
chaos, depression, and resignation, the movement phase; and openness, readiness, and
reemergence, the refreezing phase. Regardless of the number of phases or their names, it is
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critical that the manager recognizes that organizations must consciously and constructively deal
with the human emotions associated with all phases of planned change.
3.6 Resistance to Change
Resistance to change does not necessarily surface in standard ways. Resistance can be overt,
implicit, immediate, or deferred. It is easiest for management to deal with resistance when it is
overt and immediate. For instance, a change is proposed, and employees respond immediately by
voicing complaints, engaging in work slowdowns, threatening to go on strike, or the like. The
greater challenge is managing resistance that is implicit or deferred. Implicit resistance efforts
are more subtle-loss of loyalty to the organization, loss of motivation to work, increased errors or
mistakes, increased absenteeism due to “sickness” - and hence more difficult to recognize.
Similarly, deferred actions cloud the link between the source of resistance and the reaction to it.
A change may produce what appears to be only a minimal reaction at the time it is initiated, but
then resistance surfaces weeks, months, or even years later. Or a single change that in and of
itself might have little impact becomes the straw that breaks the camel’s back. Reactions to
change can build up and then explode in some response that seems totally out of proportion to
the change action it follows. The resistance, of course, has merely been deferred and stockpiled.
What surfaces is a response to the accumulation of previous changes. Let’s look at the sources of
resistance.
3.6.1 Individual Resistance
Individual sources of resistance to change reside in basic human characteristics such as
perceptions, personalities, and needs.
 Habit: To cope with life’s complexities, we rely on habits or programmed responses. But
when confronted with change, this tendency to respond in our accustomed ways becomes
a source of resistance.
 Security: People with a high need for security are likely to resist change because it
threatens their feelings of safety.
 Economic factors: Changes in job tasks or established work routines can arouse economic
fears if people are concerned that they will not be able to perform the new tasks or
routines to their previous standards, especially when pay is closely tied to productivity.
 Fear of the unknown: Change substitutes ambiguity and uncertainty for the known. This
is also referred to as the “status quo bias,” in which individuals assume that their current
state is better than whatever the changed state might be.
 Selective information processing: Individuals are guilty of selectively processing
information in order to keep their perceptions intact. They hear what they want to hear,
and they ignore information that challenges the world they have created.
 Cynicism: In addition to simple resistance to change, employees often feel cynical
(pessimistic) about the change process, particularly if they have been through several

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 rounds of change, and nothing appears (to them) to have changed. The major elements
contributing to the cynicism were as follows:
 Feeling uninformed about what was happening
 Lack of communication and respect from one’s manager
 Lack of communication and respect from one’s union representative
 Lack of opportunity for meaningful participation in decision making

Economic Reasons
Selective
information Individual
processing
Resistance
Security
Fear of Unknown
Habit

Figure 3.3: Sources of Individual Resistance to Change

The researchers also found that employees with negative personalities were more likely to be
cynical about change. While organizations might not be able to change an individual’s
personality, they certainly have the ability to provide greater communication and respect, as well
as opportunities to take part in decision making. The researchers found that cynicism about
change led to such outcomes as lower commitment, less satisfaction, and reduced motivation to
work hard.
3.6.2 Group Resistance
Resistance for organizational change might be seen at the group level for the following major
reasons:
 Nature of group dynamics: It includes the group cohesiveness, group attitudes and
values, group prestige, and the kind of relationship of the group results the acceptance or
rejection of change held in an organization.
 Vested interests: some members of group may become very influential in decision
making process of the group and they may try to manipulate the decision the group in
either supporting the change or in opposing it.
 Threat to expertise: change on organizational pattern may threaten the expertise of
specialized groups. For example, a decentralized information access by managers using
their personal computer has faced great resistance from information system departments
who were responsible for processing centralized information. To sum up, Changes in
organizational patterns may threaten the expertise of specialized groups.
 Threat for established power relations or resource allocation: any redistribution of
decision-making authority can threaten long-established power relationships within the
organization. Similarly, a change may threaten some units of the organization to
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 distribute their resources (manpower or other resources) to other units. Groups with this
suspicion resist change. On the other hand, groups in the organization that control sizable
resources often see change as a threat. They tend to be content with the way things are.
 Group inertia: Even if individuals want to change their behavior, group norms may act
as a constraint.
3.6.3 Organizational Resistance
Organizations, by their very nature, are conservative. They actively resist change. You do not
have to look far to see evidence of this phenomenon. Government agencies want to continue
doing what they have been doing for years, whether the need for their service changes or remains
the same. Organized religions are deeply entrenched in their history. Attempts to change church
doctrine require great persistence and patience. Educational institutions, which exist to open
Six major sources of organizational resistance to change have been identified as follows:
 Structural inertia: Organizations have built-in mechanisms - such as their selection
processes and formal regulations - to produce stability. When an organization is
confronted with change, this structural inertia acts as a counterbalance to sustain stability.
 Past successes: organizations which were successful in the past times resist changing
assuming that they will miss the secret (the management philosophy, group cohesiveness,
business secrecy, etc.) that makes them so successful in the past.
 Limited resources: since change results a huge investment in infrastructure, training and
development, etc. though the managers want change they may not realize it due to
shortage of resources (i.e. low investment for change).
 Sunk costs: is the expenditure that had already been incurred in purchase of assets,
machinery and in establishing and strengthening the organization. In case of change all or
most of the cost incurred earlier may have to be written off, which most of the
organization are unwilling to do.
 Inter-organizational agreements: in these days of heightened competition most of the
organizations enter into agreements with other organizations regarding the output, types
of product to manufacture or the markets to target, if the organization tries for a change
that violates these agreements then it may have to face some kind of problem from the
other organizations. Hence, the organization resists change.
 Limited focus of change: Organizations are made up of a number of interdependent
subsystems. One cannot be changed without affecting the others. So limited changes in
subsystems tend to be nullified by the larger system.
3.7 Strategies for Planned Organizational Change
Three commonly used strategies for effecting change in others were described by Bennis, Benne,
and Chinn (1969). The appropriate strategy for any situation depends on the power of the change
agent and the amount of resistance expected from the subordinates. One of these strategies is to
give current research as evidence to support the change. This group of strategies is often referred
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 to as rational– empirical strategies. The change agent using this set of strategies assumes that
resistance to change comes from ignorance or superstition (Quinn, Spreitzer, & Brown, 2000)
and those humans are rational beings who will change when given factual information
documenting the need for change. This type of strategy is used when there is little anticipated
resistance to the change or when the change is perceived as reasonable.
Because peer pressure is often used to effect change, another group of strategies that uses group
process is called normative–re-educative strategies. These strategies use group norms to
socialize and influence people so change will occur. The change agent assumes humans are
social animals, more easily influenced by others than by facts. This strategy does not require the
change agent to have a legitimate power base. Instead, the change agent gains power by skill in
interpersonal relationships. He or she focuses on non-cognitive determinants of behavior, such as
people’s roles and relationships, perceptual orientations, attitudes, and feelings, to increase
acceptance of change.
The third group of strategies, power–coercive strategies, are based on the application of power
by legitimate authority, economic sanctions, or political clout of the change agent. These
strategies include influencing the enactment of new laws and using group power for strikes or
sit-ins. Using authority inherent in an individual position to effect change is another example of a
power-coercive strategy. These strategies assume that people often are set in their ways and will
change only when rewarded for the change or are forced by some other power-coercive method.
Resistance is handled by authority measures; the individual must accept it or leave.
Often the change agent uses strategies from each of these three groups. An example would be the
change agent who wants someone to stop smoking. The change agent might present the person
with the latest research on cancer and smoking (the rational-empirical approach); at the same
time, the change agent might have friends and family educates the person socially (normative–re-
educative approach). The change agent also might refuse to ride in the car if the person smokes
while driving (power-coercive approach). By selecting from each set of strategies, the manager
increases the chance of successful change. In the next page, Table 3.1 depicts the summarized
strategies for overcoming resistance to change.

Table 3.1: Strategies for Overcoming Resistance to Change

Approach Commonly used in Advantages Drawbacks
Situations
Where there is a lack of Once persuaded, people will Can be very time-
Education + information or inaccurate often help with the consuming if lots of
Communication information and analysis. implementation of the people are involved.
change.

Where the initiators do People who participate will Can be very time-
Participation + not have all the be committed to consuming if

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Involvement information they need to implementing change, and participants design an
design the change, and any relevant information inappropriate change.
where others have they have will be integrated
considerable power to into the change plan.
resist.
Where someone or some Sometimes it is a relatively Can be too expensive
Negotiation + group will clearly lose out easy way to avoid major in many cases if it
Agreement in a change, and where resistance. alerts others to
that group has negotiate for
considerable power to compliance.
resist.
Where other tactics will It can be a relatively quick Can lead to future
Manipulation + not work, or are too and inexpensive solution to problems if people
Co-optation expensive. resistance problems. feel manipulated.
Explicit + Where speed is essential It is speedy and can Can be risky if it
Implicit coercion and the change initiators overcome any kind of leaves people angry
possess considerable resistance. with the initiators.
power.
Source: Methods for dealing with resistance to change, J. P. Kotter and L. A. Schlesinger, “Choosing
Strategies for Change,” Harvard Business Review, March–April 1979, p. 111, Exhibit 1.
CHAPTER FOUR: TYPES OF CHANGE
Introduction
Research has shown that organizations change primarily in two ways: through drastic action and
through evolutionary adaption. In the former case, change is discontinuous and often forced on
the organization or mandated by top management in the wake of major technological
innovations, by a scarcity or abundance of critical resources, or by sudden changes in the
regulatory, legal, competitive, or political landscape. Under such circumstances, change may
happen quickly and often involves significant pain. Evolutionary change, by contrast, is gentle,
incremental, decentralized, and over time produces a broad and lasting shifting with less
upheaval.

4.1 Theories of Change

This section describes the four process theories in their pure ideal-type forms. Scholars often
combine elements of these ideal types to explain observed processes of change in specific areas
or contexts. However, in such cases it is very easy for the conceptual basis of specific theories to
become obscure. As Kaplan (1964) warned, borrowing concepts from different theories without
understanding the theoretical "roots" of these concepts can produce confounded explanations.
4.1.1 Life-Cycle Theory

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Many management scholars have adopted the metaphor of organic growth as a heuristic device
to explain development in an organizational entity from its initiation to its termination. Witness,
for example, often-used references to the life cycle of organizations, products, and ventures, as
well as stages in the development of individual careers, groups, and organizations: startup births,
adolescent growth, maturity, and decline or death. Life-cycle theories include developmentalism
(Nisbet, 1970), bio-genesis (Featherman, 1986), ontogenesis (Baltes, 1986), and a number of
stage theories of child development (Piaget, 1975), human development (Levinson, 1978), moral
development (Kohlberg, 1969), organizational development (Kimberly & Miles, 1980), group
decision-making stages (Bales & Strodtbeck, 1951), and new venture development (Burgelman
& Sayles, 1986). Next to teleology, life cycle is perhaps the most common explanation of
development in the management literature.
According to life-cycle theory, change is imminent: that is, the developing entity has within it an
underlying form, logic, program, or code that regulates the process of change and moves the
entity from a given point of departure toward a subsequent end that is prefigured in the present
state. Thus, the form that lies latent, premature, or homogeneous in the embryo or primitive state
becomes progressively more realized, mature, and differentiated. External environmental events
and processes can influence how the entity expresses itself, but they are always mediated by the
immanent logic, rules, or programs that govern the entity's development (Van de Ven & Poole,
1988).
The typical progression of change events in a life-cycle model is a unitary sequence (it follows a
single sequence of stages or phases), which is cumulative (characteristics acquired in earlier
stages are retained in later stages) and conjunctive (the stages are related such that they derive
from a common underlying process). There is such a progression because the trajectory to the
final end state is prefigured and requires a specific historical sequence of events. Each of these
events contributes a piece to the final product, and they must occur in a prescribed order, because
each piece sets the stage for the next. Each stage of development is seen as a necessary precursor
of succeeding stages.
Life-cycle theory parallels the approach of the gross anatomist in biology, who observes a
sequence of developing fetuses, concluding that each successive stage evolved from the previous
one. Hence, Nisbet (1970) claimed that organizational development is driven by some genetic
code or prefigured program within the developing entity. Flavell (1982) expanded Nisbet's
interpretation by discussing a number of historically driven processes of cognitive development,
in which each stage logically presupposes the next, such as when the development of
manipulative skills precedes writing. There is no reason to suppose organizational systems could
not have such processes as well.
Life-cycle theories of organizational entities often explain development in terms of institutional
rules or programs that require developmental activities to progress in a prescribed sequence. For
example, the U.S. Food and Drug Administration regulate a sequence of steps that all firms must

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follow to develop and commercialize a new drug or biomedical product. Other life-cycle theories
rely on logical or natural sequences in the development of organizational entities. For example,
Rogers (1983) posited five stages of innovation: need recognition, research on problem,
development of idea into useful form, commercialization, and diffusion and adoption. The order
among these stages is necessitated both by logic and by the natural order of Western business
practices.
4.1.2 Teleological Theory
Another school of thought explains development by relying on teleology or the philosophical
doctrine that purpose or goal is the final cause for guiding movement of an entity. This approach
underlies many organizational theories of change, including functionalism (Merton, 1968),
decision making (March & Simon, 1958), epigenesis (Etzioni, 1963), voluntarism (Parsons,
1951), social construction (Berger & Luckmann, 1966), adaptive learning (March & Olsen,
1976), and most models of strategic planning and goal setting (Chakravarthy & Lorange, 1991).
According to teleology, development of an organizational entity proceeds toward a goal or an
end state. It is assumed that the entity is purposeful and adaptive; by itself or in interaction with
others, the entity constructs an envisioned end state, takes action to reach it, and monitors the
progress. Thus, proponents of this theory view development as a repetitive sequence of goal
formulation, implementation, evaluation, and modification of goals based on what was learned or
intended by the entity. The theory can operate for an individual or for a group of individuals or
organizations who are sufficiently like-minded to act as a single collective entity. Teleology
inherently affords creativity because the entity, consisting of an individual or group, has the
freedom to enact what-ever goals it likes.
Unlike life-cycle theory, teleology does not prescribe a necessary sequence of events or specify
which trajectory development of the organizational entity will follow. However, this theory
implies a standard for judging change: development is something that moves the entity toward its
final state. Some teleological models incorporate the systems theory assumption of equi-finality
(i.e., there are several equally effective ways to achieve a goal). In this theory, there is no
prefigured rule, logically necessary direction, or set sequence of stages in a teleological process.
Instead, proponents of this theory focus on the prerequisites for attaining the goal or end state:
the functions that must be fulfilled, the accomplishments that must be achieved, or the
components that must be built or obtained for the end state to be realized. These prerequisites
can be used to assess if an entity is developing; that is, it is growing more complex or more
integrated, or it is filling a necessary set of functions. We are able to make this assessment
because teleological theory posits an envisioned end state for an entity, and we are able to
observe movement toward the end state vis-à-vis this standard.
4.1.3 Dialectical Theory
A third school, dialectical theory, begins with the Hegelian assumption that the organizational
entity exists in a pluralistic world of colliding events, forces, or contradictory values that
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compete with each other for domination and control. These oppositions may be internal to an
organizational entity because it may have several conflicting goals or interest groups competing
for priority. Also, oppositions may be external to the organizational entity as it pursues directions
that collide with the direction of other organizations. In any case, a dialectical theory requires
two or more distinct entities that embody these oppositions to confront and engage one another
in conflict.
In a dialectical process theory, stability and change are explained by reference to the balance of
power between opposing entities. Struggles and accommodations that maintain the status quo
between oppositions produce stability. Change occurs when these opposing values, forces, or
events gain sufficient power to confront and engage the status quo. The relative power of an
antithesis may mobilize an organizational entity to a sufficient degree to challenge the current
thesis or state of affairs and set the stage for producing a synthesis. So, for example, an entity
subscribing to a thesis (A) may be challenged by an opposing entity with an antithesis (Not-A),
and the resolution of the conflict produces a synthesis (which is Not Not-A). Over time, this
synthesis can become the new thesis as the dialectical process continues. By its very nature, the
synthesis is a novel construction that departs from both the thesis and antithesis.
However, there is no assurance that dialectical conflicts produce creative syntheses. Sometimes
an opposition group mobilizes sufficient power to simply overthrow and replace the status quo.
Thus, also, many organizations persist by maintaining sufficient power to suppress and prevent
the mobilization of opposition groups. In the bargaining and conflict management literature, the
desired creative synthesis is one that represents a win-win solution, whereas either the
maintenance of the thesis or its replacement with an antithesis is often treated as a win-lose
outcome of a conflict engagement (Neal & Northcraft, 1991).
4.1.4 Evolutionary Theory
Although evolution is sometimes equated with change, we use evolution in a more restrictive
sense to focus on cumulative changes in structural forms of populations of organizational entities
across communities, industries, or society at large (Aldrich, 1979). As in biological evolution,
change proceeds through a continuous cycle of variation, selection, and retention. Variations, the
creations of novel forms of organizations, are often viewed to emerge by blind or random
chance; they just happen. Selection of organization occurs principally through the competition
for scarce resources, and the environment selects entities that best fit the resource base of an
environmental niche (Hannan & Freeman, 1977). Retention involves forces (including inertia
and persistence) that perpetuate and maintain certain organizational forms. Retention serves to
counteract the self-reinforcing loop between variations and selection. Weick (1979) noted that
variations stimulated the selection of new organizational forms, but retention maintained
previous forms and practices. Thus, evolution explains change as a recurrent, cumulative, and
probabilistic progression of variation, selection, and retention of organizational entities. This
motor is prescribed in the sense that one can specify the actuarial probabilities of the changing
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demographic characteristics of the population of entities inhabiting a niche. Although one cannot
predict which entity will survive or fail, the overall population persists and evolves through time,
according to the specified population dynamics.
In organization and management applications, evolutionary theory often depicts global changes
in organizational populations adopted the evolutionary model to explain strategy making within
organizations, and Weick (1979) and Gersick (1991) applied parts of evolutionary theory at a
microlevel to explain the social-psychological processes of organizing. Whatever the
organizational level, an evolutionary model can be used to focus on processes of variation,
selection, and retention among numerous organizational entities.
Alternative theories of organizational evolution can be distinguished in terms of how traits are
inherited, the rate of change, and the unit of analysis. Organizational scholars who adopt
Darwinian evolution (e.g., Hannan & Freeman, 1977, 1989; McKelvey, 1982) argue that traits
are inherited through intergenerational processes, whereas those who follow Lamarck
(Burgelman, 1991 and Weick, 1979) argue that traits are acquired within a generation through
learning and imitation. A Lamarckian view on the acquisition of traits appears more appropriate
than strict Darwinism for organization and management applications. As McKelvey (1982)
pointed out, strict Darwinists have developed no adequate solutions to operationally identify an
organizational generation.
Darwinian theorists emphasize a continuous and gradual process of evolution. In The Origin of
Species, Darwin (1936) wrote, "as natural selection acts solely by accumulating slight,
successive, favorable variations, it can produce no great or sudden modifications; it can act only
by short and slow steps." Other evolutionists posit a saltation theory of evolution, such as
punctuated equilibrium (Arnold & Fristrup, 1982; Gould & Eldridge, 1977). Whether change
proceeds at gradual versus saltation rates is an empirical matter. Thus, the rate of change does
not fundamentally alter the theory of evolution (as it has been adopted by organization and
management scholars).
The paleontologist Gould (1989) argued that another basic distinction between Darwinian
evolution and his punctuated equilibrium theory is hierarchical level. Gould (1989) pointed out
that classical Darwinism locates the sorting of evolutionary change at a single level of objects.
This sorting is natural selection operating through the differential births and deaths of organisms,
as exemplified in many studies on organizational birth and death rates by population ecologists.
Gould's punctuated equilibrium model adds a hierarchical dimension to evolutionary theory by
distinguishing this sorting (the growth or decline of organisms of a given species through
differential birth and death rates) from speciation (the process by which new species or a
subgenus is formed). "Speciation is a property of populations [adaptation is a property of
organisms within a population] . . . while extinction [a sorting process] is often a simple
concatenation of deaths among organisms" (Gould, 1989).
4.2 Planned versus Unplanned Change
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Most organizations today find themselves undertaking a number of projects as part of change
efforts directed at organizational restructuring, quality improvement, and employee
empowerment. Regardless of the type of change, all major change brings feelings of
achievement, loss, pride, and stress. What differentiates a successful change effort from an
unsuccessful one is often the ability of a change agent-a person skilled in the theory and
implementation of planned change-to deal appropriately with these very real human emotions
and to connect and balance all aspects of the organization that will be affected by that change.
It becomes clear, then, that initiating and coordinating change requires well developed leadership
and management skills. Dye (2000) goes so far as to say that one of the most fundamental values
that differentiate effective leaders from average leaders is the desire to “make a difference.” This
value encourages effective leaders (change agents) to become high achievers, to seek out and
address flaws and to implement positive change to improve the organizations in part and society
as a whole.
Being an effective change agent requires expert planning skills. This includes planning for
changing needs. The failure to reassess goals proactively and initiate these changes results in
misdirected and poorly used fiscal and human resources. Not only must leader-managers be
visionary in identifying where change is needed in the organization, but they also must be
flexible in adapting to change they have directly initiated or by which they have been indirectly
affected.
Planned change, in contrast to accidental change or change by drift, is change that results from a
well thought-out and deliberate effort to make something happen. Planned change is the
deliberate application of knowledge and skills by a leader to bring about a change. This type of
planning requires the leadership skills of problem solving and decision making and interpersonal
and communication skills. Planned change occurs because of an intended effort by a change
agent to deliberately move the system. A change agent is the person responsible for moving
others who are affected by the change through its stages. Changes are implemented slowly after
consultation with others. In planned change, the manager is often the change agent. In some large
organizations today, multidisciplinary teams of individuals, representing all key stakeholders in
the organization, are assigned the responsibility for managing the change process. In such
organizations, this team manages the communication between the people leading the change
effort and those who are expected to implement the new strategies. In addition, this team
manages the organizational context in which change can occur and the emotional connections
essential for any transformation.
4.3 Revolutionary versus Evolutionary change
In Goldsmith and Clutterbuck’s study, one of the critical issues of the high-performance
companies is evolutionary versus revolutionary change. Although recognizing that occasionally
radical change is necessary and sometimes it is necessary to push through tough measures with

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urgency, the companies tend to be cautious but deliberate innovators, and balance the need for
continuous change against the need to conserve core values.
They have a very strong preference for evolutionary change, for a whole variety of reasons. It
enables you to identify wrong turnings before too much damage is done; it gives time for both
employees and customers to adapt; and it is less likely to disrupt people’s attention to the core
activities and values. They can, however, take rapid action when it is needed in response to
unpredictable changes in their environment, because they usually have an in-built nimbleness.
4.4 Business Process Reengineering
The present political and business environment has been very much orientated towards efficiency
with its implications for cost cutting and by further implication to downsizing. Business process
re-engineering (BPR) has been viewed widely as a means to this end. Whilst cost is obviously
important a major emphasis needs to be put on performance improvement as the main way of
increasing effectiveness.
BPR demands that old assumptions, values and rules, are challenged and superseded. For
example, BPR encourages a fundamental questioning of conventional wisdoms - such as the
assumption that merchandising decisions are best made at headquarters; or that customers don’t
(and perhaps won’t) make even straightforward repairs to their own electrical equipment. It is by
exposing and overthrowing assumptions that lock companies into existing paradigms of
production and distribution that BPR promises to accomplish the quantum leaps in processes of
service delivery, product development cycles, etc.
Instead of striving to make incremental improvements to existing processes, BPR urges the
radical reexamination of current practice in order to ‘determine which of its steps really add
value and search for new ways to achieve the result’ (Hammer, 1990). To take the analogy of
new product development, the BPR approach favors the development of a completely new
product rather than one that improves marginally upon existing products.
The definition contains four key elements: fundamental, radical, processes, and dramatic.
Fundamental: Understanding the fundamental operations of business is the first step before
reengineering. We should ask ourselves the most basic questions about our company and how it
operates. Basic questions include; why do we do what we do? Why do we do it the way we do?
Answers to these and other similar questions make us to understand fundamental operations of
our company.
Radical: Radical redesign means disregarding all existing structures and procedures, and
inventing completely new ways of accomplishing work. Reengineering is about business
reinvention, begins with no assumptions and takes nothing for granted.
Dramatic: Reengineering is not about making small incremental changes or improvements but
about achieving dramatic improvements in performance.
Process: Process is the most important concept in reengineering. Process is a structured,
measured set of activities designed to produce a specified output for a particular customer or
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market. It implies a strong emphasis on how work is done within an organization (Davenport,
1993a). (Hammer & Champy, 1993) define process as “a set of activities that, taken together,
produces a result of value to a customer’’. In traditional business structure, organizations are
divided into departments such as finance, sales, production, purchasing. A typical problem with
processes in vertical organizational structure is that customers must speak with various staff
members for different inquiries. Process is separated into simplest tasks distributing across the
departments.
In a recent Harvard Business Review article that reviews the experience of BPR in 100
companies, with detailed consideration to its application in 20 companies, a rather less sanguine
conclusion is reached. Once again, it is assumed that ‘strong leadership from management’ is
necessary if BPR projects are not to be sabotaged by ‘the psychological and political disruptions
that accompany such radical change’
In many of the cases of BPR that have been judged successful the organization started without
considering the human and organizational issues, but then, after making a start, realized that
success would only be possible if they were taken into account. Ideally they should be part of the
whole process.
4.4.1 The BPR Process
Before a company decides to adopt BPR for their functional reshuffling, they usually answer the
following questions:
 Who are our customers? What values are we offering them?
 Are the current processes delivering expected values?
 Do the processes need to be redefined or redesigned?
 Are the processes in sync with our long-term mission and goals?
 How would we handle the existing processes if we were a new company?
If a company concludes that it is, in fact, operating on complacent grounds, it has to identify the
right kind of solution to address the problem or consider BPR for a total overhaul. Done well,
BPR’s radical approach yields dramatic results for a company in terms of improved cycle times,
product quality, productivity, and so on. The BPR process is composed of seven steps outlined as
follows:
STEP ZERO - Preparation and Coordination of the Project
Objectives:
 To establish a strong management support
 To explain to the members of the BPR implementation team the implementation details
of the project and their role in the successful outcome in the BPR effort.
Actions taken:
o Explain to the top-level management the necessity to commit to the BPR project.
o Allocate the most capable employees to the BPR implementation team and assign roles
for each one of them.
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Step One - Business Diagnosis & Measurements
Objectives:
 To diagnose & identify problematic areas in the current processes
 To measure the performance characteristics of the current processes based on measurable
factors such as average cycle time, delays, number of mistakes or number of customer
complaints.

Actions taken:
o Diagram each process using a process management tool such as OPTIMA, ADONIS or
BONAPART.
o Record physical on the site measurements for each step of a process related to time,
resources spent or efficiency.
o Input all measurements in the process management tool for further evaluation and
analysis.
o Identify added value processes that have a major impact on customer service.
Step Two - Selection of Processes for Change and Modeling
Objectives:
 To identify the strategic processes those are feasible to change
 To redesign and model the selected processes
Actions taken:
o Set the characteristics of the processes that are more important to the organizational goals
o Based on the characteristics identify the processes that will change based on the added
value they provide and their feasibility for change.
o Redesign processes based on the characteristics that serve the organizational goals
o Simulate the processes in running environment using the process management tool
o Model the new process using the diagramming tool of the process management tool
Step 3 - Technical Design of the Solution
Participants: BPR team, BPR consultants, IT experts.
Objectives:
 To automate modeled business processes (step 2) using woreta health science and
businesss and workflow tools
 To redesign and model the selected processes

Actions taken:
o Establish woreta health science and business connections between process team
members.
o Prepare intranet applications to exchange forms and documents between team members

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 o Prepare workflow application that will implement each step in the redesigned process
automatically.
Step 4 - Personnel Adjustment & Training
Participants: Process team members, process coordinator, trainers.
Objectives:
 To train personnel in the new ways of working using IT in the redesigned processes.
 To redesign and model the selected processes
Actions taken:
o Adjust each position according to skills needed in the new process.
o Provide training in the operation of new processes, so employees will feel comfortable in
the changing job environment
Step 5 - Management of Change & Employee Empowerment
Participants: BPR team, BPR consultants, process team, executive management.
Objectives:
 To establish a positive attitude for the change between employees
 To minimize the resistance to change between employees by empowering their position
based on performance appraisal and bonus systems.
Actions taken:
o Establish executive management determination for change and determinate any
attempts of resistance to change.
o Facilitate the change process outlining the positive effects of change

Step 6 - Introduction of New Processes into Business Operations

Participants: The whole business organization
Objectives:
o To set the time and date of operating under the new processes, emphasizing the
fact that working under the old processes is not an acceptable practice.
Actions taken:
o Prepare and test all background resources (IT, documents, equipment)
o Set time and date for operating under the new processes.
o Do not allow any non-conformities in the operations of new processes
Step 7 - Continuous Improvement
Participants: BPR implementation team
Objectives:
o To capitalize from the BPR project and develop internal experts for other BPR
projects
Actions taken:

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 o Periodically evaluate the performance of business processes
o Plan the time and the resources for the next reengineering project.
4.4.2 Major BPR Techniques and Tools
The BPR techniques consist of many different topics, such as By using tools, the BPR team
expects to improve productivity, finish projects faster, produce higher-quality results, and
eliminate boring, time-taking work in order to concentrate on value-adding work (Klein, 1994).
To produce these benefits, BPR tools should:
 Enhance the clarity of the BPR team's vision.
 Enforce consistency in analysis and design.
The following are major categories of BPR tools and techniques (Klein, 1994).
Project Management: These tools are used for planning, scheduling, budgeting, reporting, and
tracking projects. Project management tools include Harvard Project Manager and Microsoft
Project for Windows.
Coordination: These tools are used to distribute plans and to communicate updated details of
projects. The primary subcategories are E-mail, scheduling applications, shared spreadsheets,
bulletin boards, and groupware. Some of these tools, such as Microsoft Excel or Lotus 1-2-3,
support a single subcategory. Others, such as Lotus Notes or WordPerfect Office, support
multiple subcategories.
Modeling: These tools are used to make a model of something in order to understand its
structure and workings. Most of the tools in this category are integrated Computer-Aided
Software Engineering (ICASE) toolsets for integrated analysis, design, and development of
computer systems. There are also useful partial solution tools, including spreadsheets.
Business Process Analysis: These tools are used for the systematic reduction of a business into
its constituent parts and the examination of the interactions among those parts. In general, the
same tools used for modeling are used for business process analysis. Indeed, analysis is
necessary for modeling, although not vice versa.
Human Resources Analysis and Design: Tools used to design and establish the human or
social part of reengineered processes are mostly standalone, partial solutions for specific,
sometimes overlapping applications. One subcategory of these tools is used for
requisition/candidate tracking and position history. Examples include skills assessment
(Performance Mentor), team building (Supersynch), compensation planning (Hi-Tech Employee
Evaluation and Salary Manager), and organization charting (Corel Draw, Harvard Graphics).
Systems Development: These tools automate the reengineered business processes.
Subcategories include the Integrated CASE tools as well as visual programming (Microsoft
Visual Basic).
Benchmarking: Benchmarking forms an integral part of reengineering, since it allows the
visualization and development of processes which are known to be in operation in other

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organizations. Using benchmarking, an organization learns from other organizations be it in its
industry or outside the industry.
4.4.3 Implementation of BPR
Dear students we have discussed the strategies and activities performed during the
implementation of BPR as the last step of the BPR process. In this section, you will learn the
factors that determine successful implementation of BPR and its long period sustainability.
Change Management Systems and Culture: Implementation of a newly designed processes
and structures into working practice and dealing effectively with resistance to change requires
management to devise human and social-related changes and cultural adjustment techniques.
Revision of reward systems, communication, empowerment, people involvement, training and
education, creating a culture for change, and stimulating receptivity of the organization to change
are the most important factors related to change management and culture.
Management Competence: Most effective BPR implementation requires sound management
processes. The most noticeable managerial practices that directly influence the success of BPR
implementation are top management support and commitment, championship and sponsorship,
and effective management of risks. Leadership has to be effective, strong, visible and creative in
thinking and understanding in order to provide a clear vision of the future. Champions of the
change play a major role in overcoming political, economic, and organizational barriers during
implementation. Anticipating and planning for risk handling is vital.
Organizational Structure: BPR creates new processes that define jobs and responsibilities
across the existing organizational functions. Creating a new organizational structure is necessary
that determines how BPR teams are going to look, how human resources are integrated, and how
the new jobs and responsibilities are formalized.
BPR Project Management: Successful BPR implementation is highly dependent on an
effective BPR project management. Proper planning for the BPR project with adequate time
frame and effective use of project management techniques and managing people-related issues
are key factors in delivering a successful BPR project on time. Other project management related
factors include adequate resources, appropriate use of methodology, external orientation and
learning, effective use of consultants, building process vision, effective process design,
integrating BPR with other improvement techniques, and adequate identification of the BPR
value.
IT Infrastructure: IT related infrastructure have been increasingly considered by many
researchers and practitioners as a vital component of successful BPR efforts. Effective alignment
of IT infrastructure and BPR strategy, building an effective Infrastructure, adequate IT
infrastructure investment decision, adequate measurement of IT infrastructure effectiveness,
increasing IT function competency, and effective use of software tools are the most important
factors that contribute to the success of BPR projects.
4.5 Other Kinds of Change
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Dear students BPR is only one of several change management programs. Successful
implementation of BPR requires among other things installing performance measurement tools
such as balanced scorecard (BSC) and benchmarking. BSC translates an organization's mission
and strategy into a comprehensive set of performance measures to provide the necessary
framework for a strategic measurement and management system (Kaplan & Norton,1996). It
reflects the necessity of balance between the traditional financial perspective and the three non-
financial elements of customers, internal business processes and innovation/improvement.
Benchmarking is systematically learning from others. The common question in benchmarking is
what is the best practice for a particular activity or process?
This section introduces other change management programs that companies may choose
depending on their need and the forces of change both internal and external to their boundaries.
A) Performance Based Management
Performance-based management (PBM) is a systematic approach to performance improvement
through an ongoing process of establishing strategic performance objectives, measuring
performance through collecting, analyzing, reviewing and reporting performance data, and using
that data to drive performance improvement.
B) Result Oriented Performance Management System (ROPMS)
ROPMS is a systematic process of Planning work and setting expectations, Continually
Monitoring performance, developing the capacity to perform, periodically rating performance in
a summary fashion, and rewarding good performance
C) Management-By-Objectives (MBO)
Management by objective is a systematic and organized approach that allows management to
focus on achievable goals and to attain the best possible results from available resources. It aims
to increase organizational performance by a lining goals and subordinate objectives throughout
the organization. Ideally, employees get strong input to identify their objectives, time lines for
completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives
(Drucker, 1999).
D) Total Quality Management (TQM)
Total Quality Management (TQM) is a customer-focused management system that provides
customer satisfaction through improvement of the work processes of all employees in an
organization that produces goods or services for customers. Total quality encompasses
performance of services, reliability of the service, durability of the service, and availability of the
service, all within the terms of customer expectations.
Organizations that incorporate the TQM concept adhere to three underlying tenets: focusing on
customer satisfaction, seeking continuous and long-term improvements, and ensuring full
involvement of the entire organizational work force in improving quality. In order to ensure that
customer expectations are known and that satisfaction is accomplished and is continuous, it is

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necessary to systematically collect and analyze performance data with attention to the
circumstances in which the data are gathered (U.S. Office of Personnel Management, 1991).
Total Quality Management is a set of systematic activities carried out by the entire organization
to effectively and efficiently achieve company objectives so as to provide products and services
with a level of quality that satisfies customers, at the appropriate time and prices. TQM Stands
for:
 Total = Quality involves everyone and all activities in the company.
 Quality = Conformance to Requirements (Meeting Customer Requirements).
 Management = Quality can and must be managed.
Total Quality Management (TQM) is a comprehensive and structured approach to organizational
management that seeks to improve the quality of products and services through ongoing
refinements in response to continuous feedback. TQM can be applied to any type of
organization; it originated in the manufacturing sector and has since been adapted for use in
almost every type of organization.
Implementation of TQM
Deming's influence in Japan has served as evidence that the mental acuity and creativity of
workers are an organization's most valuable resources (Rhodes, 1992). The quality-circle
approach in Japan represents employees' participation in problem solving and productivity
improvement. The quality circle consists of small groups of employees who meet on a volunteer
basis to identify and solve productivity problems. Decentralized decision making, collective
decision making, and responsibility for the decisions made are authorized through these small
groups of employees. Membership and attendance are voluntary and members naturally share a
common job or work area. Circles meet approximately an hour a week on company time when a
production problem involving quality performance is evident. Members identify, analyze, and
recommend solutions to work-related problems (Huse & Cummings, 1985).
Each circle has a leader, a facilitator, and a steering committee. The leader facilitates the
problem-solving process among members of the circle. Facilitators may coordinate the activities
of several circles. They help circles obtain needed inputs from support groups, while informing
upper management of the progress being made. The steering committee is usually comprised of
the manager of major functional departments in the organization and the facilitators. The steering
committee determines the policies and procedures of the program (Huse & Cummings, 1985).
The leader determines a regular meeting time for fellow employees to express ideas for
improving performance. Problems in productivity are determined from customer satisfaction
data. Customers may be employees from other units within the organization or they may be
people who purchase the organization's product or service. For sport managers, this may be
employees with problems or sport participants and spectators. Targeted time lines are set for
improvement to be observed and the problem to be reevaluated. There is never a point when the

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desired quality will be achieved because employees are always encouraged to establish higher or
different performance goals.
E) Quality Management System (QMS)
QMS refers to the activities you carry out within an organization to satisfy the quality related
expectations of customers. The core of ISO 9000 quality system standard consists of four
international standards that provide guidance in the development and implementation of an
effective QMS. These core standards are;
 ISO 9000 : 2000 = Guidelines - QMS principles
 ISO 9001 : 2000 = Requirements - QMS
 ISO 9004 : 2000 = Guidelines - QMS beyond ISO 9001
 ISO 19011 = Guidelines - QMS quality audit
Companies that satisfy standards obtain certificates from the international standard organization
for their quality achievement. The certificate often serves as a promotion tool by signalling
customers about the high standard of the products and services of the certified company.
F) Kaizen
In the decade of 1980, management techniques focusing on employee involvement, and
empowerment through teamwork approach and interactive communications and on improving
job design were not new, but Japanese companies seemed to implement such techniques much
more effectively than others .The business lesson of the 1980’s was that Japanese firms, in their
quest for global competitiveness, demonstrated a greater commitment to the philosophy of
continuous improvement than Western companies did. For such a philosophy the Japanese used
the term Kaizen.
Kaizen means improvement, continuous improvement involving everyone in the organization
from top management, to managers then to supervisors, and to workers. In Japan, the concept of
Kaizen is so deeply engrained in the minds of both managers and workers that they often do not
even realize they are thinking Kaizen as a customer-driven strategy for improvement (Imai,
1986). This philosophy assumes according Imai (ibid) that ‘’our way of life – be it our working
life, our social life or our home life – deserves to be constantly improved’’. There is a lot of
controversy in the literature as well as the industry as to what Kaizen signifies.
The Essence of Kaizen
Kaizen is not only an approach to manufacturing competitiveness but also everybody's business,
because its premise is based on the concept that every person has an interest in improvement.
The premise of a Kaizen workshop is to make people's jobs easier by taking them apart, studying
them, and making improvements. The message is extended to everyone in the organization, and
thus everyone is a contributor. So, when Kaizen for every individual could be an attitude for
continuous improvement, for the company also is a corporate attitude for continuous
improvement. Kaizen is also an umbrella concept that embraces different continuous
improvement activities on an organization like customer orientation, Total Quality control,
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Robotics, QC circles, suggestion System, automation, discipline in the workplace, TPM,
Kamban, quality improvement, Just in time, Zero defects, small group activities, productivity
improvement, and new product development
Another key aspect of kaizen is that it is an on-going, never-ending improvement process. As the
reader may already know, it is not too difficult to introduce something new into an organization.
The difficult part is how to keep it going and maintain the momentum once it has been
introduced. Many companies have tried to introduce such projects as quality circles,
reengineering, and lean production. While some of them have been successful, most have failed
to make such a project a going concern. For instance, many Western companies introduced
quality circles by involving employees but most companies have simply given up the idea of
quality circle activities by now as a way to improve quality, cut cost and speed products to
market.
The message of the Kaizen philosophy is that not one single day should go by in the firm without
some type of improvement being made in some process in the company. Kaizen is everyone's
job; it requires sophisticated problem-solving expertise as well as professional and engineering
knowledge and involves people from different departments working together in teams to solve
problems.
Kaizen deals with the management of change and is a methodology in the right direction to
improve manufacturing operations, on a continual and incremental basis following the following
four steps:
Step One: Establish a plan to change whatever needs to be improved,
Step Two: Carry out changes on a small scale,
Step Three: Observe the results, and
Step Four: Evaluate the results and the process and determine what has been learned.
The starting point for improvement is to recognize the need. So Kaizen principles emphasis
problem-awareness and provide clues to identifying problems. When identified, problems must
be solved, so Kaizen is also a problem-solving process. But, most of all, Kaizen is a management
philosophy that forces higher standards at all levels of the organization by encouraging
continuous improvement in all processes. Kaizen approach is based on the premise that there is
no perfection in a process, because no structure, product, or system ever achieves the ideal stage
and where it can be improved by further reducing waste.
CHAPTER FIVE: CONFLICT AND CONFLICT MANAGEMENT
Introduction
Conflict occurs whenever disagreements exist in a social situation over issues of substance or
whenever emotional antagonisms create frictions between individuals or groups. Managers and
team leaders can spend considerable time dealing with conflict, including conflicts in which the
manager or leader is directly involved as one of the principal actors. In other situations, the

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manager or leader may act as a mediator, or third party, whose job it is to resolve conflicts
between other people. In all cases, a manager and team leader must be comfortable with the
interpersonal conflict. This includes being able to recognize situations that have the potential for
conflict and to deal with these situations in ways that will best serve the needs of both the
organization and the people involved. In this chapter, we will define what conflict is, identify the
types of conflict and sources of conflict, and define on conflict management and articulate the
conflict management strategies and techniques, etc. among others.
5.1 Meaning and Nature of Conflict
The term conflict has many meanings and has been used to refer to events ranging from the inner
turmoil produced by competing needs or desires (inner conflict) to open violence between entire
societies (warfare). In the context of OB, however, conflict refers primarily to instances in which
units or individuals within an organization work against rather than with one another. More
formally, according to one widely accepted definition, conflict is a process in which one party
perceives that another party has taken some action which will exert negative effects on its major
interests, or is about to take such action. In other words, the key elements in conflict seem to
include: (1) opposing interests between individuals or groups, (2) recognition of such opposition,
(3) the belief by each side that the other will thwart (or has already thwarted) these interests, and
(4) actions that actually produce such thwarting (Robert A. Baron & Jerald Greenberg, 1990)
Conflict, then, can be regarded as a reality of management and organizational and can be related
to power and politics.
5.2 Sources of Conflict
Much has been written about the implications of conflict as a social process. Whilst recognizing
the importance of this debate, it is not the intention here to enter into a detailed discussion of the
ideologies of conflict. The important point is not so much whether competing sub-groups and
conflict are seen as inevitable consequences of organization structure, but how conflict, when
found to exist, is handled and managed. There are many potential sources of organizational
conflict including the main ones summarized below.
 Differences in perception. We all see things in different ways. We all have our own,
unique picture or image of how we see the ‘real’ world. Differences in perception result
in different people attaching different meanings to the same stimuli. As perceptions
become a person’s reality, value judgments can be a potential major source of conflict.
 Limited resources. Most organizational resources are limited, and individuals and
groups have to fight for their share; for example, at the time of the allocation of the next
year’s budget or when cutbacks have to be made. The greater the limitation of resources,
then usually the greater the potential for conflict. In an organization with reducing profits
or revenues the potential for conflict is likely to be intensified.
 Departmentalization and specialization. Most work organizations are divided into
departments with specialized functions. Because of familiarity with the manner in which
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 they undertake their activities, managers tend to turn inwards and to concentrate on the
achievement of their own particular goals. When departments need to cooperate with
each other this is a frequent source of conflict. Differing goals and internal environments
of departments are also a potential source of conflict.
 The nature of work activities. Where the task of one person is dependent upon the work
of others there is potential for conflict; for example, if a worker is expected to complete
the assembly of a given number of components in a week but the person forwarding the
part-assembled components does not supply a sufficient number on time. If reward and
punishment systems are perceived to be based on keeping up with performance levels,
then the potential for conflict is even greater. If the work of a department is dependent
upon the output of another department a similar situation could arise, especially if this
situation is coupled with limited resources; for example, where the activities of a
department, whose budget has been reduced below what is believed necessary to run the
department efficiently, are interdependent with those of another department, who appear
to have received a more generous budget allocation.
 Role conflict. A role is the expected pattern of behaviors associated with members
occupying a particular position within the structure of the organization. In practice, the
manner in which people actually behave may not be consistent with their expected
pattern of behavior. Problems of role incompatibility and role ambiguity arise from
inadequate or inappropriate role definition and can be a significant source of conflict.
 Inequitable treatment. A person’s perception of unjust treatment, such as in the
operation of personnel policies and practices, or in reward and punishment systems, can
lead to tension and conflict. For example, according to the equity theory of motivation the
perception of inequity will motivate a person to take action to restore equity, including
changes to inputs or outputs, or through acting on others.
 Violation of territory. People tend to become attached to their own ‘territory’ within
work organizations; for example, to their own area of work, or kinds of clients to be dealt
with; or to their own room, chair or parking space. Jealousy may arise over other people’s
territory – for example, size of room, company car, allocation of a secretary or other
perks – through access to information; or through membership of groups. A stranger
walking into a place of work can create an immediate feeling of suspicion or even
resentment because people do not usually like ‘their’ territory entered by someone they
do not know, and whose motives are probably unclear to them.
 Environmental change. Changes in an organization’s external environment, such as shifts in
demand, increased competition, government intervention, new technology or changing social
values, can cause major areas of conflict. For example, a fall in demand for, or government
financial restrictions on, enrolments for a certain discipline in higher education can result in

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conflict for the allocation of resources. If the department concerned is a large and important one,
and led by a powerful head, then there could be even greater potential for conflict.
There are many other potential sources of organizational conflict, including:
 individual – such as attitudes, personality characteristics or particular personal needs,
illness or stress;
 group – such as group skills, the informal organization and group norms;
 organization – such as communications, authority structure, leadership style, managerial
behavior;
5.3 Views of Conflict
It is entirely appropriate to say there has been “Conflict” over the role of conflict in groups and
organizations. One school of thought has argued that conflict must be avoided, that it indicates a
malfunctioning within the group. We call this the traditional view. Another school of thought,
the human relations view, argues that conflict is a natural and inevitable outcome in any group
and that it need not be evil, but rather has the potential to be a positive force in determining
group performance. The third, and most recent, perspective proposes that conflict can be a
positive force in a group but explicitly argues that some conflict is absolutely necessary for a
group to perform effectively. We label this third school the interactions approach. Let’s take a
closer look at each of these views.
5.3.1 The Traditional View
The early approach to conflict assumed all conflict was bad. Conflict was viewed negatively, and
it was used synonymously with such terms as violence, destruction, and irrationality to reinforce
its negative connotation. Conflict, by definition, was harmful and was to be avoided. The
traditional view was consistent with the attitudes that prevailed about group behavior in the
1930s and 1940s. Conflict was seen as a dysfunctional outcome resulting from poor
communication, a lack of openness and trust between people, and the failure of managers to be
responsive to the needs and aspirations of their employees.
5.3.2 The Human Relations View
The human relations position argued that conflict was a natural occurrence in all groups and
organizations. Since conflict was inevitable, the inhuman relations school advocated acceptance
of conflict. They rationalized its existence: It cannot be eliminated, and there are even times
when conflict may benefit a group’s performance. The human relations view dominated conflict
theory from the late 1940s through the mid-1970s.
5.3.3 The Interactions View
While the human relations approach accepted conflict, the interactions approach encourages
conflict on the grounds that a harmonious, peaceful, tranquil, and cooperative group is prone to
becoming static, apathetic, and no responsive to needs for change and innovation. The major
contribution of the interactions approach, therefore, is encouraging group leaders to maintain an
ongoing minimum level of conflict-enough to keep the group viable, self-critical, and creative.
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5.4 Conflict Outcomes
Conflict in organizations can be upsetting both to the individuals directly involved and to others
affected by its occurrence. It can be quite uncomfortable, for example, to work in an environment
in which two co-workers are continually hostile toward each other. Conflict has two outcomes:
the functional or constructive side, and the dysfunctional or destructive side.
Functional conflict: alternatively called constructive conflict, results in positive benefits to
individuals, the group, or the organization. On the positive side, conflict can bring important
problems to the surface so that they can be addressed. It can cause decisions to be considered
carefully and perhaps reconsidered to ensure that the right path of action is being followed. It can
increase the amount of information used for decision making. And it can offer opportunities for
creativity that can improve individual, team, or organizational performance. Indeed, an effective
manager is able to stimulate constructive conflict in situations in which satisfaction with the
status quo inhibits needed change and development.
Dysfunctional conflict: also known as destructive conflict, works to the individual’s, group’s, or
organization’s disadvantage. It diverts energies, hurts group cohesion, promotes interpersonal
hostilities, and overall creates a negative environment for workers. This occurs, for example,
when two employees are unable to work together because of interpersonal differences (a
destructive emotional conflict) or when the members of a committee fail to act because they
cannot agree on group goals (a destructive substantive conflict). Destructive conflicts of these
types can decrease work productivity and job satisfaction and contribute to absenteeism and job
turnover. Managers must be alert to destructive conflicts and be quick to take action to prevent or
eliminate them or at least minimize their disadvantages.
5.5 Conflict Management
Conflict management refers to the use of resolution and stimulation techniques to achieve the
desired level of conflict. Conflict can be addressed in many ways, but the important goal is to
achieve or set the stage for true conflict resolution-a situation in which the underlying reasons for
a given destructive conflict are eliminated. The process begins with a good understanding of
causes and recognition of the stage to which conflict has developed. In a nutshell, for conflict to
be managed, the manger must first play the role of the analyst to determine the following factors:
5.5.1 Analysis of the Conflict Situation
Conflict analysis can be defined as an assessment of the context, causes, consequences, actors
and dynamics of conflict as well as the sources and actors supporting peace and resilience.
Conflict analysis can be undertaken for various reasons: as a tool for quick context assessment of
the conflict situation, as a first step towards programme development, as preparation for working
with parties to a conflict, as a conflict resolution/ transformation tool, or as a tool for
mainstreaming conflict sensitivity.
In its most comprehensive shape, a conflict analysis is a thorough long-term and ongoing
process, requiring engagement of various actors, triangulation of data, validation, consensus, etc.
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The reality and practical requirements are usually different from the ideal situation and so the
scope, methodology and approach will need to be flexible and adjusted to the budget, time,
capacity and other constraints with the focus on essential or minimum standards. A viable
strategy for conflict management begins with an analysis of the conflict situations and then
moving to the development of strategy options. Management can analyze a conflict situation by
identifying:-
1) The conflicting parties – the conflict may be between individuals, between individuals
and groups, or between departments.
2) The source of conflict – competition, personal difference, inadequate communication
and the like.
3) The level of conflict – the situation may be at a stage where the manager must deal with
it immediately or the conflict may be at a moderate level of intensity.
5.5.2 Conflict Stimulation Techniques
Conflict improves group and organizational effectiveness. The stimulation of conflict initiates
the search for new means and goals and provides the stimulus for innovation. The successful
solution of a conflict leads to greater effectiveness, to more trust and openness, to greater
attraction of members for each other, and to depersonalization of future conflicts. The followings
can be used to simulate conflicts in an organization:
o Communication: when mangers require/wish to increase the level of conflict the might
use ambiguous or threatening messages. The may encourage functional conflict among or
between group members through offering bonuses, incentives, and pay increase, etc.
o Bringing in outsiders: - adding employees whose backgrounds and values, attitudes or
managerial styles differ from the present employees.
o Restructuring the organizations: - redesigning the work relationship, altering rules and
regulations, increasing interdependence, and making similar structure changes to disrupt
the statuesque. A conflict raised from restructuring an organization may bring a better
way of doing things.
o Appointing a devil’s advocate: - designing a critic to purposefully argue against the
majority position held by the group. Such a role can help to prevent group thinking –
phenomenon in which the norm for consensus overrides the realistic appraisal or
alternative courses of action.
5.5.3 Conflict Resolution Techniques
Managing conflict means you need to develop several styles and decide which is valuable at any
given point of conflict. The followings are used to resolute conflict:
Integrating: this style assumes confrontation of attitudes, joint identification of the problem and
proposing a potential solution. This style is appropriate for complex problems, which are not
always clearly understood. In the long run, this style is effective. However, it is not appropriate

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for conflicts emerging from different values. Despite the positive sides of this style, managers
should know that it takes a lot of time.
Obliging: this style assumes reduction of differences and focusing on common interests. Its
advantage is encouragement of cooperation, but it does not solve the cause of the problem. This
style is not appropriate for escalating problems.
Dominating: this style is common for people who are more focused on personal, than on
common interests. By using this style, managers force employees to obey. This style is
appropriate when unpopular working solutions must be applied, when the deadline is tight, as
well as in case of small issues. It does not take a lot of time to be implemented, but it is
associated with disapproval and resistance of employees.
Avoiding: this is passive style, characterized by distancing from problems and hiding them. It is
appropriate for trivial problems, rather than for difficult and escalating problems, as it cannot
solve the essence of the problem.
Compromising: this style requires achieving of balance between personal and common
interests. All participants must change some attitudes through interventions, negotiations and
voting. This style is appropriate, when a balance of forces exists, but it should be avoided, if it
results in something negative such as a delay in production, etc. It leads to democratic solution,
but may prevent arriving to a creative solution of the problem.
Note:
 Competition (win-lose situation)
 Accommodation (win-win situation)
 Avoidance (lose-lose situation)
 Compromise (lose-lose situation)
 Collaboration (win-win situation)
5.5.4
Interpersonal Relations Management
Interpersonal relationship refers to a strong association among individuals working together in
the same organization. Employees working together ought to share a special bond for them to
deliver their level best. It is essential for individuals to be honest with each other for a healthy
interpersonal relationship and eventually positive ambience at the workplace. Interpersonal
relationship is also defined as a strong association between individuals sharing common interests
and goals. Attraction between individuals brings them close to each other and eventually results
in a strong interpersonal relationship.
Forms of Interpersonal Relationship
An interpersonal relationship can develop between any of the following:
 Individuals working together in the same organization;
 People working in the same team;
 Relationship between a man and a woman (Love, Marriage);

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  Relationship with immediate family members and relatives;
 Relationship of a child with his parents; and
 Relationship between friends, etc.
5.5.4
.2 The Importance of International Relationship
A sense of trust, loyalty and commitment is essential in a relationship. Individuals need to trust
and respect their partners to avoid misunderstandings and conflicts in relationship. The
followings are some of the importance of interpersonal relationship at workplace:
 An individual spends around eight to nine hours in his organization and it is
practically not possible for him to work all alone. Human beings are not machines who
can work at a stretch. We need people to talk to and share our feelings. Imagine yourself
working in an organization with no friends around! We are social animals and we need
friends around.
 A single brain alone can’t take all decisions alone. We need people to discuss various
issues, evaluate pros and cons and reach to solutions benefiting not only the employees
but also the organization on the whole. Employees can brainstorm together and reach to
better ideas and strategies. Strategies must be discussed on an open platform where every
individual has the liberty to express his/her views.
 Interpersonal relationship has a direct effect on the organization culture.
Misunderstandings and confusions lead to negativity at the workplace. Conflicts lead you
nowhere and in turn spoil the work environment.
 We need people around who can appreciate our hard work and motivate us from
time to time. It is essential to have some trustworthy coworkers at the workplace who not
only appreciate us when we do some good work but also tell us our mistakes. A pat on
the back goes a long way in extracting the best out of individuals. One needs to have
people at the workplace who are more like mentors than mere colleagues.
 It always pays to have individuals around who really care for us. We need colleagues to
fall back on at the times of crisis. If you do not talk to anyone at the workplace, no one
would come to your help when you actually need them.
 An individual needs to get along with fellow workers to complete assignments within
the stipulated time frame. An Individual working all alone is overburdened and never
finishes tasks within deadlines. Support of fellow workers is important. You just can’t do
everything on your own. Roles and responsibilities must be delegated as per
specialization, educational qualification and interests of employees. An individual needs
help of his fellow workers to complete assignments on time and for better results.
Individual Tutor Marked Assignment
Total Mark:60%
Name: ___________________________ID.NO:____________Year:_______Term:____
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Part I: True-False Items: Write “True” for correct statements or “False” for incorrect
ones.
1. The traits theory of leadership assumed that people were born to be leaders and would excel
by virtue of their personality alone.
2. In an organization, employees are only the recipient of change plan.
3. Planned change is the deliberate application of knowledge and skills by a leader to bring
change in a given organization.
4. Kaizen is a radical change which bases itself on continuous improvement.
5. Conflict is a process that begins when one party perceives that another party has negatively
affected something the first party cares about.
6. Constructive conflict results in positive benefits to individuals, the group, or the organization.
7. Functional conflicts can decrease work productivity and job satisfaction and contribute to
absenteeism and job turnover.
Part II: Multiple Choice Questions: Read each of the following questions carefully and
select the correct answer from the given alternative.
1. Which of the following is not considered to be an effective communicative competency for
discussion leaders?
A) Effective group leaders inspire team members' confidence in themselves
B) Effective group leaders express individual-centered concern
C) Effective group leaders respect and support others
D) Effective group leaders promote celebration of diversity
2. One among the following statements is not true about the difference between leadership and
management.
A) Leadership creates thought; management creates action
B) Leadership sees the final goal; management supervises the journey towards the goal
C) Leadership strives for efficiency; management strives for results
D) Leadership values relationships; management values results
3. According to the Five Factor model, 'extraversion' as a personality type is characterized by
what type of people?
A) Good natured C) Sensitive and curious
B) Calm and self-confident D) Assertive and sociable
4. What does situational theory of leadership emphasize?
A) Personality traits B) Environment C) Events D) Political situation
5. What do you call a style of leadership that takes account of others' views, opinions and ideas?
A) Laissez-faire B) People-oriented C) Democratic D) Autocratic
6. Theorists have identified two main styles of leadership. These are transformational leadership
and_____________.
A) Transgression leadership C) Transcendental leadership

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 B) Transparent leadership D) Transactional leadership
7. Which of the following contexts would most suit a transformational leader?
A) An organization that is in trouble C) An organization in a mature industry
B) An organization in a stable environment D) An organization that is performing well
8. What are the two main dimensions of the Ohio Studies into leadership?
A) Starting position and end position C) Organizational structure and conditioning
B) Initial environment and changed environment D) Initiating structure and considerations
9. _______approaches to the study of leadership emphasis the personality of the leader.
A) Group theories B) Inspirational theories C) Trait theories D) Contingency theories
10. ____________ involves relatively small adjustments required by changes in the business
environment.
A) Planned change B) Discontinuous change C) Unplanned change D) Incremental change
11. What is the term used when an organization makes proactive changes in order to improve its
efficiency or to create a business advantage?
A) Reactive change C) Organizational change
B) Just-in-time change D) Anticipatory change
12. Which of the following is normally the cause of organizational change?
A) Technological development D) Mergers and acquisitions
B) Change in labor characteristics D) All of the above
13. Which of the following is not one of the stages in Kurt Lewin's famous three-stage
prescriptive model of change developed in the 1950s?
A) Unfreezing current attitudes C) Refreezing attitudes at the new level
B) Melting resistance D) Moving to a new level E) None of them
14. The conflict resolution technique that emphasizes on the areas of agreement, common goals,
and de-emphasizes disagreements is known as:
A) Avoidance C) Smoothing
B) Forcing D) Problem Solving E) Compromise
15._____ approach to conflict assumed all conflict was bad.
A) The interactions view C) The traditional view
B) The human relations view D) Conflict stimulation
16. ______style requires achieving of balance between personal and common interests.
A) Obliging B) Dominating C) Compromising D) Avoiding
Part III: Short Answer Items: Write your answer clearly and neatly.
1. Articulate the similarity and difference between ‘Great Man’ and trait theories of leadership.
2. What is transformational leadership? Identify and discuss the characteristics of
transformational leaders.
3. Define change management.
4. Identify and explain the forces of change.

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5. Discuss the role of business process reengineering in organizational change and critically
evaluate its significance.
6. Elaborate the difference between planned change and emergent change.
7. Elaborate the three views of conflict.
8. What makes leadership is different from management. Write at least four differences and
explain briefly

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