Critical Thinking Questions

1 . Chances are that the school you are attending is currently undergoing some sort of change to adapt more closely with its environment. Discuss the external forces that are driving the change. What internal drivers for change also exist?

2. Use Lewin's force field analysis to describe the dynamics of organizational change at Blueshore Financial, the subject of the opening case study for this chapter. The vignette provides some information, but think about other forces for and against change beyond the information provided here.

3 . Employee resistance is a symptom, not a problem, in the change process. What are some of the real problems that may cause employee resistance?

4. Senior management of a large multinational corporation is planning to restructure the organization. Currently, the organization is decentralized around geographic areas so that the executive responsible for each area has considerable autonomy over manufacturing and sales. The new structure will transfer power to the executives responsible for different product groups; the executives responsible for each geographic area will no longer be responsible for manufacturing in their area but will retain control over sales activities. Describe two types of resistance senior management might encounter from this organizational change.

5. Discuss the role of reward systems in organizational change. Specifically, identify where reward systems relate to Lewin's force field model and where they undermine the organizational change process.

6. Web Circuits is a Malaysian-based custom manufacturer for high-technology companies. Senior management wants to introduce lean management practices to reduce production costs and remain competitive. A consultant has recommended that the company start with a pilot project in one department and, when successful, diffuse these practices to other areas of the organization. Discuss the advantages of this recommendation, and identify three ways (other than the pilot project's success) to make diffusion of the change effort more successful.

7. What is the role of formal and informal networks in organizations interested in undergoing change?

8. Suppose that you are vice-president of branch services at the Kelowna Credit Union. You notice that several branches have consistently low customer service ratings even though there are no apparent differences in resources or staff characteristics. Describe an appreciative inquiry process in one of these branches that might help to overcome this problem.

Case Study:

TRANSACT INSURANCE CORPORATION

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada) and Terrance J. Bogyo

TransAct Insurance Corporation (TIC) provides automobile insurance in parts of Canada that allow private insurers. Last year, a new CEO was hired by TIC's board of directors to improve the company's competitiveness and customer service. After spending several months assessing the situation, the new CEO introduced a strategic plan to improve TIC's competitive position. He also replaced three vice-presidents. Jim Leon was hired as vice-president of Claims, TIC's largest division with 1,500 employees, 50 claims centre managers, and 5 regional directors.

Jim immediately met with all claims managers and directors, and visited employees at TIC's 50 claims centres. As an outsider, this was a formidable task, but his strong interpersonal skills and uncanny ability to remember names and ideas helped him through the process. Through these visits and discussions, Page 443Jim discovered that the claims division had been managed in a relatively authoritarian, top-down manner. He could also see that morale was very low and employee-management relations were guarded. High workloads and isolation (adjusters working in tiny cubicles) were two other common complaints. Several managers acknowledged that the high turnover among claims adjusters was partly due to these conditions.

Following discussions with TIC's CEO, Jim decided to make morale and supervisory leadership his top priority. He initiated a divisional newsletter with a tear-off feedback form for employees to register their comments. He announced an open-door policy in which any Claims Division employee could speak to him directly and confidentially without going first to the immediate supervisor. Jim also fought organizational barriers to initiate a flex-time program so that employees could design work schedules around their needs. This program later became a model for other areas of TIC.

One of Jim's most pronounced symbols of change was the "Claims Management Credo" outlining the philosophy that every claims manager would follow. At his first meeting with the complete claims management team, Jim presented a list of what he thought were important philosophies and actions of effective managers. The management group was asked to select and prioritize items from this list. They were told that the resulting list would be the division's management philosophy and all managers would be held accountable for abiding by its principles. Most claims managers were uneasy about this process, but they also understood that the organization was under competitive pressure and that Jim was using this exercise to demonstrate his leadership.

The claims managers developed a list of 10 items, such as encouraging teamwork, fostering a trusting work environment, setting clear and reasonable goals, and so on. The list was circulated to senior management in the organization for their comment and approval, and sent back to all claims managers for their endorsement. Once this was done, a copy of the final document was sent to every claims division employee. Jim also announced plans to follow up with an annual survey to evaluate each claims manager's performance. This concerned the managers, but most of them believed that the credo exercise was a result of Jim's initial enthusiasm and that he would be too busy to introduce a survey after settling into the job.

One year after the credo had been distributed, Jim announced that the first annual survey would be conducted. All claims employees would complete the survey and return it confidentially to the human resources department where the survey results would be compiled for each claims centre manager. The survey asked the extent to which the manager had lived up to each of the 10 items in the credo. Each form also provided space for comments.

Claims centre managers were surprised that a survey would be conducted, but they were even more worried about Jim's statement that the results would be shared with employees. What "results" would employees see? Who would distribute these results? What happens if a manager gets poor ratings from his or her subordinates? "We'll work out the details later," said Jim in response to these questions. "Even if the survey results aren't great, the information will give us a good baseline for next year's survey."

The claims division survey had a high response rate. In some centres, every employee completed and returned a form. Each report showed the claim centre manager's average score for each of the 10 items as well as how many employees rated the manager at each level of the five-point scale. The reports also included every comment made by employees at that centre.

No one was prepared for the results of the first survey. Most managers received moderate or poor ratings on the 10 items. Very few managers averaged above 3.0 (on a 5-point scale) on more than a couple of items. This suggested that, at best, employees were ambivalent about whether their claims centre manager had abided by the 10 management philosophy items. The comments were even more devastating than the ratings. Comments ranged from mildly disappointed to extremely critical of their claims manager. Employees also described their long-standing frustration with TIC, high workloads, and isolated working conditions. Several people bluntly stated that they were skeptical about the changes that Jim had promised. "We've heard the promises before, but now we've lost faith," wrote one claims adjuster.

The survey results were sent to each claims manager, the regional director, and employees at the claims centre. Jim instructed managers to discuss the survey data and comments with their regional manager and directly with employees. The claims centre managers were shocked to learn that the reports included individual comments. They had assumed the reports would exclude comments and only show averaged scores for all employees at the centre. Some managers went to their regional director, complaining that revealing the personal comments would ruin their careers. Many directors sympathized, but the results were already available to employees.

When Jim heard about these concerns, he agreed that the results were lower than expected and that the comments should not have been shown to employees. After discussing the situation with his directors, he decided that the discussion meetings between claims managers and their employees should proceed as planned. To delay or withdraw the reports would undermine the credibility and trust that Jim was trying to develop with employees. However, the regional director attended the meeting in each claims centre to minimize direct conflict between the claims centre manager and employees.

Although many of these meetings went smoothly, a few created harsh feelings between managers and their employees. Sources of some comments were easily identified by their content, and this created a few delicate moments in several sessions. A few months after these meetings, two claims centre managers quit and three others asked for transfers back to nonmanagement positions in TIC. Meanwhile, Jim wondered how to manage this process more effectively, particularly since employees expected another survey the following year. Discussion Questions

1 What symptom(s) exist in this case to suggest that something has gone wrong?

2 What are the main causes of these symptoms?

3 What actions should the company take to correct these problems?