Research in Organizational Change and Development, Volume 16

PREFACE Volume 16 of Research in Organizational Change and Development highlights several emerging trends in our ﬁeld an...

Author: PASMORE W. A.

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PREFACE Volume 16 of Research in Organizational Change and Development highlights several emerging trends in our ﬁeld and in the world within which our research takes place. The papers that make up this volume hit on some familiar topics, all related to the challenge of invoking, supporting, or measuring organizational change but they also go farther than that. In Volume 16, we see evidence that the issues of concern to leaders and researchers are becoming increasingly global in nature. In order to understand these issues, we must pay attention to cultural differences, and the language that is used during change interventions to set expectations and deal with the myriad issues that threaten to undermine success. In this volume too we see that different types of organizations approach change in ways that reﬂect their unique cultures and contexts. Rather than a one size ﬁts all approach, authors of papers in this volume call for an understanding of these differences among organizational types and their implications for how we approach organizational change. The role of the leader in change is also examined in several papers here. We have known for a long time that leadership is essential during change, but these papers give us a fresh look at what it is that leaders do and say that affects the outcomes achieved. Finally, as always, we see included in Volume 16 some excellent contributions to methodology and research on the topic of change. Each of the papers in Volume 16 is well-crafted, thoughtful and very much worth the time to read. In the opening chapter, James D. Ludema and Marie E. Di Virgilio treat us to an exploration on how narratives used by leaders can create energy for change. Using a case study of successful IT change in a large insurance company, Ludema and Di Virgilio help us understand how the leader used narratives to create a case for change, inspire people in the organization to view the change positively and deal with the many stakeholders who had the ability to inﬂuence the outcome of the effort. Using a social constructionist perspective, the authors examine narrative on three levels: conversations, speech acts and metanarrative structures which people use to shape the reality of change. More speciﬁcally, they examine the types of conversation that produce positive energy, which is the lifeblood of successful change efforts. vii

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Just as leaders can create positive or negative energy related to change efforts through their use of language, leaders may also inﬂuence the way change unfolds due to their conscious or unconscious beliefs. In the next chapter, Barry Sugarman contrasts two approaches to organizational transformation based on very different belief systems. Sugarman begins by carefully deﬁning organizational transformation as opposed to less comprehensive change. Then, he discusses two contrasting approaches to transformation, which he calls ‘‘grow’’ and ‘‘drive’’. Grow approaches, like Theory Y, begin with a belief in people’s ability to learn, develop, and contribute in a positive way to change if given the opportunity to become meaningfully involved. Drive approaches, more like Theory X, are based on the assumption that change must be directed and forced upon people who would otherwise resist or ignore the changes they are being asked to make. Using ﬁve case studies, Sugarman explores the application of these approaches and their consequences, and points out that efforts involving a combination of both approaches, or a ‘‘hybrid’’ as he calls them, can be especially difﬁcult to execute. Since both perspectives are important to successful change in modern organizations, Sugarman proposes a ‘‘bi-focal formula’’ and ‘‘partnership proposition’’ to manage the inherent tension between the two. Assumptions underlying approaches to transformation may inﬂuence the behaviors leaders exhibit and the sensitivity leaders demonstrate for the informational needs of organizational members. Organizational members use behavioral cues to estimate the importance and seriousness of support leaders provide during change, and they need information to understand clearly what they are supposed to do differently. In the next chapter in the volume, Feirong Yuan and Richard W. Woodman explore the ‘‘social’’ and ‘‘informational’’ components of leaders’ behaviors that shape expectations regarding speciﬁc changes. Yuan and Woodman note that both the social and informational components are important to shaping expectations that will support successful change but point out that one or both of these is often overlooked. Moreover, the authors examine in detail how the social and informational approaches should be integrated to produce the most powerful impact on shaping positive expectations. In the next chapter, Jacqueline Fendt continues the focus on leadership shaping the outcomes of change efforts in her examination of CEO behaviors during merger and acquisition efforts. Using data from her years of extensive personal observations as an executive as well as interviews and case study data from 10 cases, Fendt draws fascinating insights regarding the role CEOs play in narrowing the gap between the promise of what

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different stakeholders expect from a merger or acquisition and the reality they experience, which is typically less. Not surprisingly, Fendt concludes that the social aspects of post-merger integration are the largest factor in determining the eventual success or failure of the deal. Executives who pay attention to the social issues are therefore more likely to close the ‘‘promiserealities gap’’ than those who are not. Fendt notes that executives can be classiﬁed by their approach to discourse and also that cultural diversity can make the challenge of addressing the promise-reality gap even more daunting. Fendt concludes that executives must be aware of the fact that they are managing a perceptual reality and not reality itself. Success lies not in the hands of the CEO exclusively, but in the eyes of the individual stakeholder. Mergers and acquisitions are also the focus of the next chapter by Mary S. Logan and Anne M. O’Leary-Kelly. Logan and O’Leary-Kelly examine the important issue of how one’s identity is affected by organizational change. Since one’s identity is central to feelings of connectedness, commitment and energy in being part of an organizational system, threats to identity must be taken seriously. Often, those leading mergers or acquisitions fail to take into account the threat that participants feel to their ‘‘achieved identity’’, or how people have come to see themselves as a result of their investments in work and relationships over time. Logan and O’Leary-Kelly studied employees going through a merger to explore the effects that strong previous achieved identity had on acceptance of change and also how one’s ability to reestablish a positive work identity affected adjustment to the organization later on. As Fendt pointed out in her chapter, global diversity can make the challenge of relating to internal and external stakeholders even more difﬁcult, as actors from different backgrounds expect leaders to behave in culturally appropriate ways. In the next chapter in the volume, Lichia Yiu and Raymond Saner examine the need for cultural diversity training for leaders and OD consultants who must interact with stakeholders from diverse backgrounds to achieve successful change. Yiu and Saner employ Witkin’s work on cognitive styles and human perception as a jumping-off point to examine this important issue in an increasingly global world. After reviewing the literature on cross-cultural management, the authors conclude that a certain set of competencies and skills are indeed required to function in a globally diverse setting, and that individuals must have a certain level of cognitive complexity to develop these competencies and skills. Cultures also exist in organizations and the differences among types of organizations often produce sharply contrasting cultures. These different cultures demand different acts of leadership, especially as far as change

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efforts are concerned. These points are driven home in the next two chapters in this volume. The ﬁrst of these chapters focuses on the professional service ﬁrm. David M. Brock, Michael J. Powell and C.R. (Bob) Hinings point out that advanced economies are becoming more and more dominated by professional service ﬁrms, as traditional work migrates offshore. Moreover, the authors note that professional service ﬁrms are interesting in their own right, in that they have historically operated by a set of cultural guidelines that are much less hierarchical and structured than other types of organizations. After reviewing the evolving professional service context, the authors introduce the power of archetypes for understanding organizational transformation. They argue that to change a professional service ﬁrm requires delegitimation and de-institutionalization of the traditional professional archetype and the emergence of an alternative archetype to take its place. The authors examine the forces behind a number of emerging archetypes and suggest several that they predict will become more dominant as the global context for professional services continues to evolve. In contrast to the professional service ﬁrm, which is almost unlimited in its ability to deﬁne itself within its context, Paul Nutt explores the nature of change in public organizations, which are often constrained by a number of regulatory, membership and budgetary issues. Nutt offers a framework that helps to predict when public organizations are most susceptible to change and then goes on to discuss how the capacity of the organization to embrace change will determine how responsive to stakeholder requests for renewal the organization will be. Nutt classiﬁes public organizations into ﬁve categories based on how responsive they are to change and then examines what happens when these organizations are confronted by demands to improve. Successful change efforts in this context often require what Nutt calls ‘‘mutualist’’ leadership, which goes beyond the boundary of the organization to form coalitions with other groups and agencies that help provide the needed capacity for change. Moving on to methodology, Daniel T. Holt, Achilles A. Armenakis, Stanley G. Harris and Hubert S. Feild provide a comprehensive review of measures of change readiness, which generally break down into four areas of concern: the change content, the change process, the organization’s context and the attributes of individuals. The authors then propose an overall model that can be used to guide the integration of these ideas and subsequent empirical efforts to further develop theories and measures of readiness. Finally, an integrated deﬁnition of change readiness is offered in the hope that future research efforts can be undertaken with a clear reference point in mind.

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In the ﬁnal chapter in Volume 16, Barry A. Macy, Gerard Farias, JeanFrancois Rosa and Curt Moore provide a detailed report on a 5 year quasiexperimental ﬁeld study of high performance work systems in a consumer products company. Since the company was already high performing at the beginning of the study, the authors were forced to ask a ‘‘good to great’’ kind of question; ‘‘what effect does state of the art organization design and development have on an exemplar organization?’’ After extensive analysis using a variety of subjective and objective measures, the authors conclude that the design of an organization is fundamental to its ability to change, and that the high-performance systems they studied were an integral part of the long term success of the organization as it responded to numerous challenges. Overall, the chapters making up Volume 16 represent some of the ﬁnest theory and research we have had the pleasure to bring to you over the past 20 years. We hope you enjoy reading them as much as we did. William A. Pasmore Richard W. Woodman Editors

LIST OF CONTRIBUTORS Achilles A. Armenakis

College of Business, Auburn University, Auburn, AL, USA

David M. Brock

School of Management, Ben-Gurion University, Beer-Sheva, Israel

Marie E. Di Virgilio

Benedictine University College of Business, Lisle, IL, USA

Gerard F. Farias

Silberman College of Business, Fairleigh Dickinson University, Madison, NJ, USA

Hubert S. Feild

College of Business, Auburn University, Auburn, AL, USA

Jacqueline Fendt

ESCP-EAP European School of Management, Paris, France

Stanley G. Harris

College of Business, Auburn University, Auburn, AL, USA

C. R. (Bob) Hinings

School of Business, University of Alberta, Edmonton, Alberta, Canada

Daniel T. Holt

Air Force Institute of Technology, Wright Patterson AFB, Dayton, OH, USA

Mary S. Logan

Department of Management, London School of Economics and Political Science, London, UK

James D. Ludema

Benedictine University College of Business, Lisle, IL, USA

Barry A. Macy

Jerry S. Rawls College of Business Administration, Texas Tech University, Lubbock, TX, USA xiii

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Curt Moore

M.J. Neeley School of Business, Texas Christian University, Fort Worth, TX, USA

Paul C. Nutt

Fisher College of Business, The Ohio State University, Columbus, OH, USA

Anne M. O’LearyKelly

Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR, USA

Michael J. Powell

Grifﬁth Business School, Grifﬁth University, Queensland, Australia

Jean-Francois Rosa

Jerry S. Rawls College of Business, Texas Tech University, Lubbock, TX, USA

Raymond Saner

Centre for Socio-Eco-Nomic Development, Geneva, Switzerland

Barry Sugarman

The Society for Organizational Learning, Cambridge, MA, USA

Richard W. Woodman

Mays Business School, Texas A&M University, College Station, TX, USA

Lichia Yiu

Centre for Socio-Eco-Nomic Development, Geneva, Switzerland

Feirong Yuan

School of Business, The University of Kansas, Lawrence, KS, USA

THE ROLE OF ENERGY-INCONVERSATION IN LEADING ORGANIZATIONAL CHANGE James D. Ludema and Marie E. Di Virgilio ABSTRACT In this paper, we offer a model of how leaders and managers can create energy for change by influencing patterns of conversation across the organization. We develop the model by linking social constructionist thought with theory from the field of positive psychology. We propose that effective leaders work with others to co-author persuasive narratives of change that generate energy by providing people (including themselves) with a sense of autonomy, competence, and relatedness. Energy is expressed in the form of support, time, money, and resources, which contribute to the success of the work. Continuous attention to crafting persuasive narratives in a collaborative way creates upward spirals of energy, and increases the probability of successful change over time. We illustrate these ideas with a case study of a successful IT change initiative in a Fortune 100 insurance company, and conclude by discussing implications for research and practice.

Research in Organizational Change and Development, Volume 16, 1–41 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16001-2

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INTRODUCTION Organizational scholars have long recognized the importance of communication in organizations and in the process of organizational change. March and Simon (1958) characterized decision-making as a nonrational, social, and political process of inﬂuence accomplished through communication. Lawrence and Lorsch (1967) argued that communication is the means by which organizations unify subsystems and achieve integration. Thompson (1967) proposed that organizations use processes of communication to remove uncertainty and ensure effective operation in contexts of interrelatedness. Mintzberg (1973) showed how the 10 major roles of a manager – ﬁgurehead, leader, liaison, monitor, disseminator, spokesman, entrepreneur, disturbance handler, resource allocator, and negotiator – are all performed through communication. Yet, with a few notable exceptions (Berger & Luckmann, 1966; Gergen, 1974; Weick, 1979), it was not until the early 1990s that theorists and organizational researchers began to make a case that organizations and everything about them (e.g., their purposes, identities, cultures, structures, strategies, systems, processes, procedures, rituals, routines) are constituted and given meaning through language. In this article, we build on this social constructionist perspective and show how people use language to constitute organizations in three ways. First, by talking with one another on a regular basis, they build networks of conversation that are embodied in systems, structures, strategies, processes, procedures, and cultures, and thereby become background conversations that deﬁne organizational reality. Second, at a micro level within conversations, people use speech acts to exchange discursive ‘‘objects,’’ which they interpret to give their actions meaning. The ways in which people interpret these texts deﬁne organizational reality by enabling certain patterns of action while constraining others. Third, at a macro level beyond conversations, people adopt narrative and metanarrative structures that have been created and sustained within their organizations and cultures. These story lines delimit what is right, real, and possible, and thereby deﬁne the range of options available for action. In the next section of this article, we provide a logic for understanding organizations as networks of conversations, and show how, within this linguistic framework, the focus and unit of work in producing and managing organizational change are conversations themselves (Ford, 1999). Drawing from the ﬁeld of positive psychology and from Quinn and Dutton’s (2005) concept of energy-in-conversation, we explain how leaders can use conversations to promote organizational change and why certain kinds of

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conversations generate energy. We illustrate these ideas with a case study of an information technology department within a property and casualty insurance company. The company (here called ‘‘P&C’’) centralized its hardware, software, and data communication budgets to create an enterprisewide view of these expenses. This led to a new way of tracking and managing technology assets – an initiative known as ‘‘IT Asset Management (ITAM)’’ – which resulted in better asset lifecycle management and signiﬁcant cost savings. The case study shows how the change leader worked closely and persistently with others to co-author narratives of change that generated energy – expressed in the form of support, time, money, and resources – which contributed to the success of the work. We argue that co-creating persuasive narratives allow organization members to increase their sense of autonomy, competence, and belonging, which in turn elicits positive emotions, such as interest, joy, hope, and pride. Positive emotions enhance thought–action repertoires by broadening the scope of attention, cognition, and action, and building physical, intellectual, and social resources, which lead to increased energy for action. A change leader’s continuous attention to shaping empowering narratives in a collaborative way can create upward spirals of energy and increase people’s investment in change processes over time. We conclude by discussing the implications of our model for research and practice.

THE ORGANIZING PROPERTY OF CONVERSATIONS Gergen (1999) provides a comprehensive explanation of a social constructionist view of organizations. He argues that words do not gain their truthvalue by accurately describing the world (picture theory of language); rather, they gain knowledge-bearing power by virtue of their function within sets of relationships. A way of saying or describing things is considered to constitute knowledge when it ﬁts appropriately or congenially into certain social rituals or understandings. What people know and believe about the world is not a direct product of empirical observation or individual cognition; rather, it is a social artifact, a product of agreement among persons in relationship. This implies that what people know about how best to organize is not determined by any external ‘‘law of nature,’’ but rather is a product of their collective values, beliefs, theories, frames of reference, choices, and commitments. This socially constituted knowledge is of critical importance in organizational life because it serves to sustain and support certain patterns of activity to the exclusion of others. It delimits what it real,

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‘‘right,’’ and possible, and thereby deﬁnes the limits of available options for action. The source of this knowledge is language. It is through language communicated in conversation that people share their experiences, ideas, hopes, and aspirations with others. Over time, these conversations determine what a group claims to know and believe. They become the tools people use to construct their theories, models, and rules of thumb for organizing. This perspective is shared by Berger and Luckmann (1966), who propose that human social order is produced through interpersonal negotiations and implicit understandings that are built up via shared history and shared experience. Institutions are sustained when a group of people share at least partial consensus about how things are perceived to be and the meanings for which they stand. The language used to understand organizations is not ‘‘real’’ in an objective sense; it is instead the product of people’s beliefs, which are invented and sustained in order to understand the world. Similarly, with his theory of enactment, Weick (1979) shows how the phenomenon one seeks can be created by the concepts one uses. By stating an interest in an organization and establishing a language for talking about it, people make the phenomenon real by speaking and acting in ways that give it tangibility. Weick (1979) argues that the environment of an organization is constructed from the activities of collecting and analyzing information about the environment and from decisions taken on the basis of analysis, which lead to various activities, including further constructions of the environment. While the environment is assumed to have generated the analysis, it is actually the analysis that forms the environment to which the organization responds.

Organizations as Networks of Conversations Ford (1999) builds on Berger and Luckmann (1966), Gergen (1999), and Weick (1979) by demonstrating the mechanisms by which language constitutes organizations. He argues that organizations can be understood as networks of conversations – multiple layers of conversations that are embedded in other conversations. He deﬁnes conversations a ‘‘complex, information-rich mix of auditory, visual, olfactory and tactile events’’ (Capella & Street, 1985). This includes not only what is spoken, but also the sum total of communicative relations in action, such as symbols, actions, artifacts, written texts, facial expressions, body movements, and so forth that are used in conjunction with or as substitutes for what is spoken (Berger

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& Luckmann, 1966). Though themselves momentary utterances, individual conversations create and support what people take to be organizational reality by forming a network of background conversations. These background conversations are ‘‘already and always there’’ (Harre´, 1980) and are referred to in everyday dealings as a taken-for-granted reality that deﬁnes organizational identity and is presupposed in every conversation. Two important constructs in Ford’s (1999) model are recurrent conversations and structural coupling. Recurrent conversations are those that happen over and over again. They are important because they become embodied in ofﬁces, departments, processes, and procedures, and thereby become background conversations for the entire organization. Ford (1999) uses the example of recurrent requests for travel reimbursements. They create a relatively predictable pattern of conversations called ‘‘travel reimbursement,’’ which include all attendant forms and protocols. Although other people may not be engaged in fulﬁlling travel reimbursements, they nevertheless refer to, use, or in some other way rely on these conversations in their own conversations. Recurrent conversations contribute to structural coupling between people when these people become habituated to and naturalized in (Fairclough, 1995) the patterns of action that the conversations support, a process Berger and Luckmann (1966) call ‘‘reiﬁcation.’’ These recurrent conversations give people their identities (Gergen & Thatchenkery, 1996), and people work to maintain the coupling in the face of environmental perturbation (Maturana & Varela, 1987) so as to keep their identities in tact. For example, the person assigned to coordinate conversations around travel reimbursements, will be given a job title, an ofﬁce, equipment, resources, reporting relationships, and so on all of which deﬁne their identity. Others in the organization will become structurally coupled to them as they become habituated to the recurring conversation of travel reimbursement. In this way, structural coupling holds conversations in place, and contributes to persistence of existing background conversations that deﬁne organizational reality. In this sense, the state of an organization at any point can be deﬁned by its network of conversations and the actions, behaviors, and practices associated with those conversations. What we construct when we construct the reality of organizations are linguistic products, that is, conversations that are interconnected with other linguistic products to form a network. Organizations exist in the words, phrases, and sentences that have been combined to create descriptions, reports, explanations, understandings, and so forth, that in turn create what is described, reported, explained, and understood (Ford, 1999).

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The Role of Speech Acts Quinn and Dutton (2005) help to explain at a micro level how conversations coordinate organizational action with their discussion of speech acts. Drawing on Cooren’s (2000) theory, they show how speech acts transfer discursive ‘‘objects,’’ how the exchange of objects creates narratives, and how narrative forms help people make sense of their situations. They deﬁne a speech act as ‘‘an action in language that creates a social reality that does not exist before the speech act is uttered’’ (Austin, 1975; Searle, 1969). Speech acts create new social realities through a process in which people exchange discursive objects. A discursive object is a noun or noun equivalent in a prepositional phrase that can refer to a physical entity (e.g., a person, place, or thing) or a symbolic entity (e.g., a role, commitment, or set of values). People use seven types of speech acts to transfer discursive objects (Cooren, 2000). 1. An assertive is a speech act in which propositional content is transferred (e.g., an assertion by an executive that ‘‘our goal this year is 25% growth’’). An assertive remains an assertive even if nobody is informed (i.e., even if nobody but the executive knows that the goal is 25%). 2. Informatives are assertives that not only give propositional content but also change realities for the people to whom they are addressed (e.g., a goal of 25% that is communicated by the executive to her direct reports). 3. Expressives are speech acts that people use to give objects of sanction, which add or subtract value from someone or something (e.g., thanks or recognition for achieving the 25% goal or disapproval for failing to achieve it). 4. Declaratives are speech acts that people can use to give institutional objects. Institutional objects, such as a title or a position, alter identities (e.g., a promotion to a person for exceeding the 25% goal or a demotion for failing to achieve it). 5. Directives are speech acts in which a person gives orders, instructions, commands, or makes a request of another person (i.e., a ‘‘having to do’’). For example, the executive instructs her direct reports to achieve the 25% goal without compromising the company’s ethical standards. 6. Accreditives are speech acts in which a person gives consent, permission, or authorization to another person (i.e., a ‘‘being able to do’’). For example, the executive gives permission to her direct reports to increase headcount in the pursuit of the 25% goal. 7. Commissives are speech acts in which a person gives a guarantee (e.g., promises, pledges, and assurances). For example, the executive promises big bonuses if the 25% goal is met.

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By claiming that speech acts transfer discursive objects, Cooren (2000) and Quinn and Dutton (2005) provide a mechanism for explaining how people use language to create organizational realities. The physical and discursive objects that people transfer in their conversations are ‘‘texts’’ to which they refer to give their actions meaning. The ways in which people interpret these texts enable certain patterns of action while constraining others (Goffman, 1974; Gergen, 1999).

The Narrative Structure of Organizational Life To understand organizations as networks of conversations built through an ongoing transfer of discursive objects (speech acts) and reiﬁed by means of recurring patterns and structural coupling is an invitation to see organizational life as a form of narration intelligible within ongoing relationships. As Weick (1995, p. 127) points out, most models of organizing are based on argumentation rather than narration (Weick & Browning, 1986, p. 246), yet most organizational realities are based on narration (e.g., Bantz, 1993; Boje, 1991; Orr, 1990). People have stories about their jobs, colleagues, organizations, and industries, and these stories shape their understandings, choices, identities, and actions. This is what White and Epston (1990) meant when they wrote ‘‘persons give meaning to their lives and relationships by storying their experience’’ (p. 13), and what Hardy (1968) intended when she wrote, ‘‘we dream in narrative, daydream in narrative, remember, anticipate, hope, despair, believe, doubt, plan, revise, criticize, construct, gossip, learn, hate, and love by narrative’’ (p. 5). Drawing on Barry and Elmes (1997), Quinn and Dutton (2005) deﬁne narratives as thematic, sequenced texts structured by a tension between subject and object, in which the subject desires the object (i.e., the goal; Greimas, 1988). Subjects can be either individual (‘‘I’’) or collective (‘‘we’’) subjects, but narratives provide the mechanism through which people arrange their conversations into a sequence that they believe will enable them to accomplish their goals. Narratives typically consist of four phases: manipulation, competence, performance, and sanction (Greimas, 1988). 1. The manipulation phase of a narrative often begins with a directive– commissive pair of speech acts (Cooren, 2000), providing the subject with a reason to seek the object. This ‘‘manipulation’’ creates an imbalance, and this imbalance must be restored to complete the story. For example, when our executive tells her direct reports that they will be responsible for

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a 25% growth goal and they explicitly or implicitly agree, it creates an imbalance (i.e., a tension between the subject and the object of the unattained goal) which must be restored to complete the story. 2. In the competence phase, the subject encounters ‘‘tests’’ and receives ‘‘gifts’’ that affect the subject’s ability to obtain the desired object. This phase often involves many informatives and directives to exchange information, but it also involves expressives to give objects of sanction, declaratives to transfer institutional objects, accreditives to give authorizations, and commissives to give guarantees. Over time the subject may use different combinations of these to overcome tests and receive gifts that help achieve the goal. For example, the executive may regularly exchange information with people inside and outside the organization, but she may also collaborate with her direct reports to design a new performance review process (expressives), hire and ﬁre to ‘‘get the right people on the bus’’ (Collins, 2001) (declaratives), reorganize departments (directives), encourage innovation (accreditives), and make new budgetary commitments (commissives), all in an effort to achieve the 25% goal. 3. Performance is the phase in which the subject obtains (or fails to obtain) the desired object. This phase often relies heavily on declaratives in which the subject redeﬁnes reality by afﬁrming the components and features it must have to incorporate the desired object. For example, the executive and her direct reports, after many experiments, may ﬁnally discover the right mix of leadership, strategies, systems, structures, and change processes that allow them to achieve or exceed the 25% goal. 4. The sanction phase is often accomplished through expressives (e.g., thanks, acknowledgment, disapproval, punishment), restoring the imbalance that was created in the manipulation phase. For example, the executive and her team may be recognized and rewarded by the CEO for reaching their goal. Thus, narratives are structures of exchange, in which people create and eliminate imbalances and transform themselves – and other relevant objects – by uttering speech acts that can be interpreted to transfer discursive objects (Quinn & Dutton, 2005). People use this structure to make sense of situations by imposing these phases onto the ‘‘ongoing stream’’ (Weick, 1995) of daily experience. They can do this because conversation enacts narrative structure onto situations (Cooren, 2000), and because the universal structure of narratives (Greimas, 1988) makes these conversations easy to understand. Without narrative structure to sequence the actions and texts, speech acts and conversations by themselves have little meaning.

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Yet to say that conversations enact narrative structure onto situations is only part of the story. As Gergen (1994) points out, there is also a signiﬁcant sense in which prevailing narrating structures determine the content of our conversations. As we live from day to day, we follow certain ‘‘story lines’’ that have been created and sustained within our particular culture. For example, to be called an ‘‘executive,’’ a person must follow a certain minimal story line. She is expected to go work, meet people, make decisions, set goals, communicate ideas, manage an enterprise, follow a code of conduct, and maintain a particular lifestyle. And there are certain things she is expected not to do. It would be inconceivable within the executive story line, for instance, to simply disappear, unannounced, for 15 years into the Alaskan wilderness. Of course an executive could make that choice, but to do so would be to exempt herself from the executive story line of contemporary Western culture. In this sense, our lives are as much products of our cultural and organizational stories as our stories are products of our lives. We live, organizationally and otherwise, deeply embedded in an a priori stream of storied meaning that conditions who we are and what we do. Gergen (1994) elaborates on this point: [N]arrative accounts are embedded within social action; they render events socially visible and typically establish expectations for future events. Because the events of daily life are immersed in narrative, they become laden with a storied sense: they acquire the reality of ‘‘a beginning,’’ ‘‘a low point,’’ ‘‘a climax,’’ ‘‘an ending,’’ and so on. People live out the events in this way and, along with others, they index them in just this way. This is not to say that life copies art, but rather, that art becomes the vehicle through which the reality of life is made manifest. In a signiﬁcant sense, then, we live by stories – both in the telling and the realizing of self (p. 186).

In this sense our narratives are forms of social accounting or public discourse; they allow us to negotiate our lives in an intelligible ways within the relational constructions of our culture. Organizational narratives are much the same as ‘‘personal’’ narratives. Organizational stories are products of social interchange, past, present, and future. In effect, to be an organization is not to be an independent, autonomous entity, but to be immersed in the relationships and language patterns of a particular time and place. Because organizations gain their meaning and coherence from the language patterns in which they are embedded, they take on an essentially narrative character. This is not to say that organizations are narratives as such, but rather that, in Gergen’s terms, narrative becomes the vehicle through which organizational reality is made manifest. For example, to call a particular organization ‘‘bureaucratic’’ or ‘‘entrepreneurial’’ in any given moment is fundamentally nonsensical unless it can somehow be

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linked to our shared experience with other organizations and to the common deﬁnitions of ‘‘bureaucratic,’’ ‘‘entrepreneurial,’’ and ‘‘organization’’ currently circulating in our particular culture. The ‘‘bureaucratic organization’’ is rendered intelligible by its place in an historical sequence or unfolding story. Organizations, then, can be understood not as structural representations of an objective external reality (things) or subjective constructions of the individual mind (images), but rather as patterns of collective action inspired by certain sensible and coherent story lines. Robichaud, Giroux, and Taylor (2004) advance a similar argument. Building on Bakhtin’s (1981) notion of heteroglossia, in which local vocabularies and forms of expression operate within larger linguistic communities that constitute a pluralized or ‘‘polyphonic’’ world, they argue that organizations are essentially metaconversations that simultaneously admit and reconstruct the local conversations of the organization into an encompassing conversation, where the identity of the organization as a whole is generated continually. The central process at work is the production of metanarratives that enfold and transcend the narratives of the diverse communities of practice composing an organization. It is the accumulated mass of these metanarratives that provide continuity and consistency and establish the context in which people act. These metanarratives can also serve to objectify organizational reality (Berger & Luckmann, 1966; Fairclough, 1992). When narratives become objectiﬁed, we grant them the same permanence as objects by assuming that they exist as some ‘‘thing’’ independent of our speaking them, despite the fact that they and the organizational patterns they support have no existence or permanence other than the continued consent and repeated agreement among people that they are true (Berquist, 1993; Ford, 1999).

Changing Organizations with Conversations Given the above analysis, we can deﬁne the state of an organization at any point by its network of conversations, and the actions, behaviors, and practices associated with those conversations. Accordingly, the goal of organizational change is to bring about an alteration in the distribution of actions, behaviors, and practices within the organization by changing the network of conversations (Ford, 1999). Weick and Quinn (1999) concur. They make a distinction between change that is episodic, discontinuous, and intermittent, and change that is continuous, evolving, and incremental, and in both cases, they suggest that the primary role of the change agent is one of

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11

managing language. Episodic change occurs as the result of a growing misalignment between an organization’s deep structure and perceived environmental demands. As adaptation lags, effectiveness decreases, pressures for change increase, and an episode of fundamental change ensues. In episodic change, Lewin’s (1951) three stage model – unfreeze, change, and refreeze – is of value because it is based on the assumption that inertia in the form of a quasi-stationary equilibrium is the main impediment to change (Schein, 1996). Lewin proposes that equilibrium would change more easily if restraining forces, such as personal defenses, group norms, or organizational culture were unfrozen. Schein (1996) adds that change occurs through cognitive restructuring in which words are redeﬁned to mean something other than had been assumed, concepts are interpreted more broadly, or new standards of judgment and evaluation are learned. Thus, when Lewin persuaded housewives during World War II to serve kidneys and liver, he cognitively redeﬁned their standards of what was acceptable meat by means of a process that mixed together identiﬁcation with positive role models, insight, and trial-and-error learning. Drawing on Rorty’s (1989) observation that ‘‘a talent for speaking differently rather than for arguing well, is the chief instrument of cultural change’’ (p. 7), Weick and Quinn (1999) suggest that the role of the change agent in episodic change is that of prime mover who creates change by engaging organizational members in language interventions (e.g., Bate, 1990; O’Connor, 1995) similar to those advanced by Lewin (1951) and Schein (1996). For example, Bartunek (1993) argues that to produce second-order change in a pre-existing shared schema requires a strong alternative schema, presented clearly and persistently. Barrett and Cooperrider (1990) propose that the creation of generative metaphors allow organizational members to generate fresh perceptions of one another, revitalize social bonds, and heighten the collective will to act. With large group interventions, such as open space technology (Owen, 1997), future search (Weisbord & Janoff, 1995), whole scale change (Dannemiller Tyson Associates, 2000), search conference (Emery & Purser, 1996), real-time strategic change (Jacobs, 1994), conference model (Axelrod, 2000), and the appreciative inquiry summit (Ludema, Whitney, Mohr, & Grifﬁn, 2003) change agents enable organizations to shift language patterns and create second-order change quickly and on a large scale (Bunker & Alban, 1997). Continuous change refers to organizational changes that are ongoing, evolving, and cumulative. It occurs as small continuous adjustments, created simultaneously across units, accumulate and create substantial change with ‘‘no beginning or end point’’ (Orlikowski, 1996; Wheatley, 1992; Barrett,

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1998; Brown & Eisenhardt, 1997; Weick, 1993). Organizations produce continuous change by means of repeated acts of improvisation, translation, and learning designed to strengthen response repertoires, and convert ideas into patterns of action that ﬁt purposes at hand (Weick & Quinn, 1999). Organizational change is seen as a series of fast mini episodes of change where ‘‘everything changes all the time’’ (Ford & Ford, 1994). Transformational change and the means to institutionalize it develop as micronarratives are enfolded into macronarratives that provide logics for action (Robichaud et al., 2004). In the face of continuous change, a change intervention sequence of unfreeze, transition, refreeze makes little sense (Weick & Quinn, 1999). The problem is not one of unfreezing but one of redirecting what is already under way. A more useful sequence is freeze, rebalance, unfreeze. To freeze continuous change is to make a sequence visible (e.g., Argyris, 1990) with things like cognitive maps (Fiol & Huff, 1992; Eden, Ackerman, & Cropper, 1992; Cossette & Audet, 1992), schemas (Bartunek, 1993; Tenkasi & Boland, 1993), or war stories (Boje, 1991; O’Connor, 1996). To rebalance is to reinterpret, relabel, and resequence the patterns by reframing issues as opportunities (Dutton, 1993), discovering strengths and potentials using appreciative inquiry (e.g., Cooperrider & Srivastva, 1987; Ludema, Cooperrider, & Barrett, 2001; Whitney & Trosten-Bloom, 2003; Barrett & Fry, 2005), or re-storying the organization (White & Epston, 1990; Boje, 1991; Barry & Elmes, 1997; Czarniawska, 1997; Ludema, 2001). To unfreeze after rebalancing is to resume improvisation, translation, and learning in ways that are now more mindful of sequences, more resilient to anomalies, and more ﬂexible in their execution (Weick & Quinn, 1999). The role of the change agent in continuous change, like that of episodic change, is one of managing language, dialogue, and identity. Change agents become important for their ability to help people make sense (Weick, 1995) of change dynamics already under way, make them more salient, and reframe them (Bate, 1990). They help people inquire into their current situation, envision possible futures, engage in creative redesign, and collaborate for improvisational action. Barrett, Thomas, and Hocevar (1995) and Dixon (1997) suggest that the most powerful change interventions occur at the level of everyday conversation, and Ford and Ford (1995) suggest that to create change, leaders engage four distinct types of conversation: (a) conversations for initiative; (b) conversations for understanding; (c) conversations for performance; and (d) conversations for closure. A conversation for initiative is the call or proposal that represents the ﬁrst phase of a change process. Through conversations for understanding,

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13

people seek to comprehend a situation, determine cause–effect relationships, work to make sense of the issue, and work to move matters forward. Conversations for performance focus on producing intended results, and conversations for closure are used to declare projects complete. Ford and Ford (1995) propose that what is said matters, and that rigor and consciousness in the communication of change are what differentiates a successful change from one derailed by resistance and uncertainty. Weick and Quinn’s (1999) conclude is that the trajectory of change is more often spiral or open-ended than linear, and that, particularly within the analytic framework of continuous change, change occurs through a logic of attraction (Ford & Ford, 1994) rather than a logic of replacement (Ford & Backoff, 1988). People change to a new position because they are attracted to it, drawn to it, or inspired by it. There is a focus on moral power, the freedom of the change target, and the role of choice in the transformational process. In this model, to lead change is to ‘‘pull’’ change by showing people what is possible (a logic of attraction) rather than ‘‘pushing’’ change by telling people what to do (a logic of replacement). Weick and Quinn (1999) recommend a shift in vocabulary from ‘‘change’’ to ‘‘changing,’’ which directs attention to actions of substituting one thing for another, of making one thing into another thing, or of attracting one thing to become other than it was through conversation. As a result, the focus and unit of work in producing and managing change in organizations are the conversations themselves. This means that change agents work with, through, and on conversations to generate, sustain, and complete new conversations to bring about an altered network of conversations that result in the accomplishment of speciﬁc commitments (Ford, 1999). While these authors (Berger & Luckmann, 1966; Ford, 1999; Ford & Ford, 1995; Gergen, 1999; Weick, 1979; Weick & Quinn, 1999) provide a case for understanding organizations as networks of conversations, and for understanding the role of change leaders as working with, through, and on conversations, they leave unanswered the questions of how and why changes in patterns of conversation lead to changes in patterns of enacting. What are the dynamics at play? What are the psychological and relational processes that allow new narratives to elicit new patterns of coordination, collaboration, and action? In the next two sections, we attempt to answer these questions. We share the ITAM case study to show how the change leader worked to create narratives of change that generated energy, which contributed the success of the work. We then explain Quinn and Dutton’s (2005) concept of energy-in-conversation, expand on it with ideas from the ﬁeld of positive psychology, show how and why the activities of the change

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leader and her team in the ITAM initiative produced energy for change. We provide a model for creating energy for action through conversation and conclude by discussing the implications of our model for research and practice.

THE ITAM CASE STUDY In 1999, P&C Insurance Company centralized its hardware, software, and data communication budgets to create an enterprise-wide view of these expenses. This led to a new way of tracking and managing technology assets – an initiative known as ‘‘IT Asset Management (ITAM)’’ – which resulted in better asset lifecycle management and signiﬁcant cost savings. The following case study shows how the change leader worked with others to co-author narratives of change that generated energy by providing people with a sense of autonomy, competence, and relatedness. This energy was expressed in the form of support, time, money, and resources, which contributed the success of the work. The change leader’s continuous attention to shaping empowering narratives in a collaborative way created upward spirals of energy and increased people’s investment in the ITAM change process over time. To build the case study, we used a process of grounded theory (Glaser & Strauss, 1967; Strauss & Corbin, 1998; Locke, 2001). We gathered data from ﬁve different sources: archival documents, e-mail logs, voice mail logs, the change leader’s ﬁeld journal, and individual interviews. The data were then coded and content analyzed using two tools: Strauss and Corbin’s (1998) text on grounded theory and scientiﬁc software development’s program, ATLAS.ti version 4.1 (Muhr, 1997). Based on our analysis, we developed two major categories, each with multiple subcategories, to explain how the ITAM change leader and her colleagues shaped conversations to enable change in the ITAM process. First, they gained support for ITAM by making a business case to senior leadership, doing their homework, and marketing the work to key stakeholders throughout the organization. Second, they dealt effectively with resistance to the ITAM process. The result was that people throughout the organization began to support ITAM with time, money, and other resources, which in turn contributed to its success. Next, we examine each category paying particular attention to the role change leader played. We use the name ‘‘Ellen’’ for our change leader. Her and all other names have been changed to maintain anonymity for the participants and for their organization. For a full explanation of our methods, see Di Virgilio (2005).

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Gaining Support for ITAM Three strategies were used to gain support for ITAM: (a) making a business case for the work to gain senior leadership agreement to proceed; (b) doing homework; and (c) marketing the work to key stakeholders throughout the organization. Each of these was a tool for inﬂuencing the corporate conversation about the project in a way that attracted the support of others. This process is shown in Fig. 1. Gaining support for ITAM in the section enclosed by the black dotted lines. Making a Business Case In 1999, P&C Insurance Company’s chief technology ofﬁcer (CTO) asked Ellen to implement an initiative known as Gross Spend. Gross spend represented a strategic shift in how the company would manage major expenses. Ellen’s speciﬁc task was to centralize expense management for the computer hardware, software, and data communication assets throughout the enterprise. This yearlong effort resulted in a new and somewhat startling view of the total dollars spent on technology-related assets. Ellen used this insight to begin making a business case for ITAM. Ellen’s ﬁrst step was to CL works to understand resistance

CL gathers facts to address issue, “packages” for resister

CL (or SCL) presents information to resister

Gaining Support for ITAM

No CL makes case for work, gets senior leadership okay to proceed

CL does “homework”

CL “markets” work to stakeholders

Check reaction, supportive?

No

Yes Work supported by others (time, $, resources)

CL demonstrates success

Collective support contributes to success

CL=Change Leader SCL=Secondary Change Leader

Fig. 1.

Gaining Support for ITAM.

Check reaction, supportive?

Yes

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JAMES D. LUDEMA AND MARIE E. DI VIRGILIO

work with her team to create an ITAM white paper, P&C’s IT Asset Management: Business Case for Improvement. In it, she described P&C’s existing policy for managing IT assets, provided background information, presented the business opportunity in ﬁnancial terms, posed critical questions for consideration, made recommendations, and estimated the beneﬁts to P&C of better tracking and managing technology assets. Ellen used the ITAM white paper to generate support among senior leaders for investigating new ways of tracking and managing technology assets. Although no funding was available initially, she received approval to begin working on ITAM from one of the IT senior leaders. I said to Ellen, go do it. We’ll worry about how we’re going to pay for it later, but let’s get the ball moving. Ultimately that worked. I was a sounding board for her, someone to talk to about what she wanted to do. I enabled her by saying, let’s go do it. Don’t worry about the funding. (Elliott, interview, 2004)

Elliott’s approval was critical to the success of ITAM. It created a ‘‘space’’ in the organization for coordinated action to take place. When people saw that the initiative was sponsored at the highest levels of the organization, they became more willing to invest their time and resources. Doing Homework Doing homework refers to reading and researching done throughout the project. It involves listening closely and trying to understand the stories, language, arguments, and concerns of others and then creating a thorough and persuasive story or argument that helps move intent and energy in a new direction. In the ITAM process, there were two intense periods of homework: (a) preparing the ITAM white paper and (b) responding to a challenge by the controller. We will deal with the ﬁrst here, and address the second in the section on dealing with resistance. The ITAM white paper, P&C’s IT Asset Management: Business Case for Improvement, was grounded in 4 months of research. It included compelling data about P&C’s existing system for tracking IT assets and about the signiﬁcant opportunities (ﬁnancial and otherwise) inherent in tracking and managing technology assets in new ways. I think the research Ellen did into asset management, helped her build a sound business case for ITAM. It also helped her build business practices and polices and some much needed process improvements. (Redﬁeld, interview, 2004)

Redﬁeld acknowledges the research behind the ITAM work. The business case helped launch the work and continued to be a touchstone for the project long afterward.

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Marketing to the Organization Marketing ITAM to the organization involved ﬁve things: (a) creating and communicating the ITAM vision; (b) controlling the timing and ﬂow of information; (c) demonstrating success; (d) ﬁnding new and novel ways of talking about the work; and (e) inﬂuencing through others. Creating and Communicating the ITAM Vision. The ITAM white paper was the basis for the ITAM vision. Ellen and her team prepared a presentation that summarized the vision and a communication strategy for marketing internally. To help people visualize the future and see how their work could eventually tie to ITAM, they created the ITAM conceptual model (Fig. 2). Once senior leadership approved the ITAM process, Ellen and her team held an ITAM kick-off meeting, hosted by P&C’s CTO. The audience for this meeting was cross-departmental and cross-level. Ellen asked the CTO to host the meeting since her presence would help to guarantee a good turn out. To make sure the CTO knew what to expect and what was required, Ellen created a prep sheet. This document contained the meeting purpose, agenda items, audience description, key messages, and concerns. It helped the CTO come up to speed quickly and effectively host the meeting. The meeting created visible enthusiasm for ITAM. At least 200 people came to the meeting. In closing I said, ‘‘I’ve come up with a new acronym, F-O-A-M, friends of asset management. You’re all friends of asset management. Thank you for your past and future support!’’ People came up to me later saying, ‘‘I’m a FOAM!’’ People still call themselves FOAMs. For some reason, a lot of energy was created in that meeting. (author interview, 2004)

The kick-off meeting was an important part of the marketing strategy for two reasons: (a) it brought all the people needed to make the work successful together in one room and (b) the CTO spoke to the importance of the work and asked everyone to support it. The meeting provided a common understanding of ITAM, making it easier to move the work forward. Controlling the Timing and Flow of Information. Controlling the timing and ﬂow of information was also important; it helped ensure the understanding and support of key people before talking with others. To help manage communication, Ellen and her team created a communication plan and strategy. They also created a relationship diagram, depicting their interfaces with other groups. They used the diagram to make sure they stayed linked and communicated with the right people and went through the right

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JAMES D. LUDEMA AND MARIE E. DI VIRGILIO ITAM Conceptual Model

CA AHD

HR / MDT

SAP B2B

Asset Management Application Suite

Contracts

Authorized

Active Directory

Reconciliation

SAP PO

SAP AP

SAP FA

Physical SAP GL

HR

NT Servers

Unix Servers

Fig. 2.

Desktops

Notebooks

Other Hardware and Software

ITAM Conceptual Model.

channels. For example, Ellen checked with the claim liaison before communicating with claim leaders. Ellen made a point of interacting with me before talking to our leaders. We kept each other in the loop. At one point, I told her, well, we’re not happy here. There were some delays and Kathy was very concerned. Ellen scheduled meetings to update our leaders. She answered their questions and that was good. I’m glad of the interaction we had in making these things happen. (Chen, interview, 2004)

Ellen’s team conducted over 38 ITAM system demos to help people see how they could use the information in ITAM. To ensure a consistent message, they created a presentation package and script. They also created materials for others to use. Demonstrating Success. Demonstrating success involves ﬁnding ways of keeping the organization informed about progress. Knowing ITAM would be ﬁnancially advantageous for the company, Ellen’s team kept a longitudinal view of the money spent each year on hardware, software, and data

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communication equipment. They plotted these trends and made them visible throughout the organization – a simple, powerful way of gaining support for the work (Fig. 3). Finding New and Novel Ways to Talk About the Work. Getting P&C to manage assets differently meant ﬁnding new ways of understanding what drives expenses. In 2001, Ellen and her team created a new measure called ‘‘PC to employee ratio.’’ It compares the number of PCs in the organization to the number of employees employed by the organization. They began publishing this statistic in December 2002 – it gave leaders new insight and got them to think differently about the company’s assets. Right now our ratio is too high. Some people are probably startled by their numbers. But it gives them something to manage from. (Serone, interview, 2004)

This observation by Serone shows how the new metric changed perspectives and got people to think differently. Without the metric, people would not have understood what was driving their PC expenses. By ﬁnding a new way to talk about PCs, Ellen and her team gave the organization a new language for understanding. As the ultimate sign of relevance, the PC to employee ratio was (and still is) included in the quarterly chairman’s update (Rendini, interview, 2004). Expense Trends Total Hardware Data Communications Software

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Fig. 3.

Computer Asset Expense Trends.

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Ellen and her team also developed visual methods for creating new conversations about ITAM. They implemented an annual process called Project Clean Sweep, where they picked up excess computer equipment from P&C facilities in blitzkrieg fashion, photographed the piles of old equipment, calculated the cubic footage of the assets, and translated it into the cubicle space it would occupy. This unique and fun way of talking about the work also made its way into the quarterly chairman’s update. Fig. 4 shows stacks of computer CPUs ‘‘swept’’ from P&C campuses. Pictures like this one were used to tell the Project Clean Sweep story. Influencing through Others. The success of ITAM required the cooperation of the entire organization. The ITAM team made extensive use of their relationships and the relationships of others to engage the organization. The following quote illustrates how the relationship between an ITAM project member, Jennifer, and the leader of a business area, Chen, helped market ITAM. Jennifer Kruger convinced me right off the bat about ITAM. I’ve worked with Jennifer a long time and hold her in high regard. If Jennifer says it’s a good product then I believe her. (Chen, interview, 2004)

Fig. 4.

Project Clean Sweep.

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Kruger’s credibility with Chen moved him to believe in the value of ITAM and to support the project. Once onboard, Chen used his position to help engage the claim ﬁeld leaders. Field leaders – Claims is the ITAM pilot. Some [ofﬁces] are late turning in their updated inventories. Please make sure your [ofﬁce] has submitted their inventory. We need all inventories to complete the data load. (Chen, e-mail, 2004)

Chen used his relationship with the ﬁeld leaders to get people to respond in a timely manner. Without his support, the pilot might have been delayed, possibly jeopardizing the entire project. Checking Reactions Organizational change occurs in an on-going ﬂow of conversations. It involves checking the reaction of others and understanding resistance. In the context of ITAM, Ellen and her team were involved in multiple and continuous cycles of communication in which they worked to understand the impact of ITAM on other areas; develop appropriate communication vehicles and messages for impacted areas; deliver messages; check reaction to messages; and provide more information when needed. For example, one of the goals of ITAM was to improve the accuracy of P&C’s Enterprise Resource Planning (ERP) records by keeping them current. This required a mechanical interface between the two systems. The controller’s group was reluctant to create this interface. Ellen and her team worked to understand their reluctance and ﬁnd a way to move forward. Ellen set up a meeting/demo for the ERP team. The intent of the meeting was to show the value of ITAM and to create a forum for asking questions, expressing concerns, and having them addressed. Topics: system demo, process walk-through, discussion of pilot experience. A lot of questions were asked and answered during the meeting. (author journal, 2004)

After the meeting, members of the ITAM team talk with their counterparts on the ERP team individually to understand any unspoken concerns. Ellen discovered that ‘‘[the ERP team wants] to ensure that ERP remains the authoritative source of asset information and that if ITAM is more current that this will no longer be true’’ (author journal, 2004). Based on this information, she and her team developed a plan ‘‘to build architectural controls to ensure that ERP remains the system of record’’ (author journal, 2004) and presented it to the ERP team. The ERP team agreed with the solution and eventually became advocates for the ITAM work.

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Work Supported by Others (Time, Money, Resources) The result of gaining senior leadership support, doing homework, and marketing the work effectively was that people began to support the ITAM process. That support came in the form of allocating resources, providing funding, and speaking positively about the work. Allocating Resources Shortly after senior leadership approved the ITAM work, the CTO gave Ellen line authority over the Technology Asset Services (TAS) team. This was a signiﬁcant resource for the ITAM work because the TAS team managed most of the transactional processes associated with technology assets and also because the TAS manager had a deep, rich understanding of these processes and a broad network of relations across the organization. In the same month, the CTO allowed Ellen to add a person to the TAS team to enhance its capacity and advance the work. Providing Funding Unlike most technology initiatives, the ITAM work was self-funding. This essentially means that ITAM saved more than it cost the company. However, there were still times when money had to be spent. Following is an excerpt of e-mail from an IT senior leader, approving contract funding for a software product needed for ITAM. Harry, I am satisﬁed the proper due diligence has been done to purchase the Technology Tracker asset management tool rather than the AC or ERP solution. They both fall way short of what functionality is needed and require too much integration work. I am prepared to sign tomorrow! M Rice. (Rice, e-mail, 2002)

Rice supported the work at a very critical juncture – by saying she was ‘‘satisﬁed that the proper due diligence had been done,’’ ITAM resisters went away. Had she not stepped in, the project would have been canceled or delayed. Neither happened. Instead the work became more important because Rice gave her approval to purchase the Technology Tracker tool. Speaking Positively About the Work There are many instances in the data of people supporting the work by speaking positively about ITAM. The excerpts below represent both crossfunctional and cross-level appreciation for the work. The ﬁrst quote is from

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23

a sales manager who, wanting to know more about ITAM and how it could beneﬁt the sales department, invited himself to a demo given to another department. Jennifer and Rob y I just want to say thank you for allowing me to attend the ITAM overview. Very insightful and an EXTREMELY valuable tool for all kinds of reasons! I took scrupulous notes, but you said I could get a soft copy of the presentation. If that’s possible, I would appreciate it. Jim (Casada, e-mail, 2004)

This quote shows how Casada acted as an ITAM ambassador, using the presentation materials to spread the word about ITAM throughout the sales department. He brought energy to the work and helped create energy in others by speaking positively about ITAM. He helped set the stage for implementing ITAM in sales. Without his input, the ITAM team would have had a tougher time getting the attention and buy in of sales leadership. Technology senior leaders included ITAM in their quarterly meeting with the chairman and the president of the P&C Insurance Company. We updated the chairman and president on the ITAM work. They were excited and had a lot of questions. It was interesting to them and I think they see the long-term beneﬁts of ITAM. (Elliott, interview, 2004)

Elliott took the ITAM message to the top of the organization. The positive reaction of the chairman and the president made ITAM important to all employees and helped ensure the support needed to make it successful.

Dealing with Resistance Even though there was a lot of support for the work, there were numerous occasions on which people resisted or tried to block parts of it. At times like these, Ellen and her team had to alter their approach. This is captured in Fig. 5 in the section enclosed by the black dotted lines. Working to Understand Resistance In September 2001, the controller challenged Ellen’s decision to bring in a vended solution for ITAM and not to customize the existing ERP system. First, Ellen arranged a face-to-face meeting with him where she presented the ITAM strategy and vision. This meeting was also used to understand his concerns, which were documented afterward (Raith, e-mail, 2001).

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CL gathers facts to address issue, “packages” for resister

CL works to understand resistance

Dealing with Resistance

CL (orSCL) presents information to resister No

CL makes case for work, gets senior leadership okay to proceed

CL does “homework”

CL “markets” work to stakeholders

Check reaction, supportive?

No

Check reaction, supportive?

Yes

Yes

Work supported by others (time, $, resources)

CL=Change Leader SCL=Secondary Change Leader

Fig. 5.

CL demonstrates success

Collective support contributes to success

Dealing with Resistance.

Gathering and Packaging Facts to Address Concerns Once Ellen and her team understood the controller’s concerns, they engaged in an intense round of research to address the challenge. [Ellen] did three months of research in part because she went to present it to the controller, and he, who has always been an advocate for ERP, rightly so in his position, he started asking a bunch of questions. She said, ‘‘okay, I hate that my project is being delayed because I’ve been asked all these questions, because I really believe in my head and my heart it’s the right thing to do, but I understand that the powers that be say I’ve got to go answer all these questions before I can move forward.’’ She did all the advisory service research and visited companies. They talked to companies who had tried to do the very same thing with ERP, and after a year and a halfysaid ‘‘it’s not worth spending another dime on because it’s not going to be able to do what we want it to do.’’ So she did all this research and then had all those facts to then help carry it forward. (Hanlon, interview, 2004)

In a similar manner to when they created the initial ITAM white paper, Ellen and her team ‘‘did their homework’’ by listening closely to the concerns of the controller and gathering data to help persuade him to approve the strategic direction of the ITAM solution.

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Presenting Information to Resisters To present their research, Ellen shared the controller’s concerns and her homework ﬁndings with Hanlon and Rice, two inﬂuential people in the organization and supporters of ITAM. I sat down with her, and she proceeds to pull out three binders of research data. She went out and talked to all these companies and advisory services. They talked to companies that tried to use ERP, and learned that was not the best solution. I was able to carry the message to my boss y the controller, that this was the right thing to do, and he agreed. (Hanlon, interview, 2004)

Similarly, Elliot describes how Mary Rice went to bat for ITAM. As the controller’s equal, Rice was critical to ITAM surviving this disagreement over direction. I know Mary and the controller went at it. It was a perfect time for that style and what took place. Ellen stepped up to the plate and Mary supported her by pushing the ball across. Those are the kinds of things that happen when you have senior leaders really helping and supporting the change leader. (Elliott, interview, 2004)

This example shows how Ellen and her team worked to overcome resistance by creating a persuasive argument and working through others to get the controller to see things differently. In the end, the controller agreed with ITAM’s direction. Once the project was ‘‘unstuck’’ it moved forward with a heightened sense of energy and support. Summary When implementing Gross Spend, Ellen saw an opportunity to better track and manage the company’s computer assets. She took her idea to senior leadership and received approval to move forward. Next, she and her team ‘‘did their homework’’ and created the ITAM white paper. They used the white paper and their network of relationships to market ITAM throughout the organization. They also made sure people understood the value of the work and got their questions answered – essentially checking the reaction of others. Where resistance arose, the ITAM team worked to understand the reasons behind it, gathered data to address the concerns, and used relationships to inﬂuence listening. This process led to support for the work, which in turn, contributed to its success. Every conversation was an opportunity to share and reﬁne the ITAM vision, check reactions, and garner support. In the next section, we draw on perspectives from social constructionism and positive psychology to explain how and why this kind of process energizes action and enables organizational change.

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DISCUSSION Here, we argue that co-creating persuasive narratives allows organization members to increase their sense of autonomy, competence, and relatedness, which in turn elicits positive emotions such as interest, joy, hope, and pride. Positive emotions enhance thought–action repertoires by broadening the scope of attention, cognition, and action and building physical, intellectual, and social resources, which lead to increased energy for action. In other words, persuasive narratives create energy for action by boosting positive emotions and increasing the organization’s overall intelligence, creativity, resilience, and cooperative capacity.

Conversations and the Creation of Energy Quinn and Dutton (2005) describe ‘‘energy’’ as an affective experience, variously deﬁned as energetic arousal (Thayer, 1989), emotional energy (Collins, 1993), subjective energy (Marks, 1977), positive affect (Watson, Clark, & Tellegen, 1988), positive sentiment (Homans, 1951), vitality (Ryan & Frederick, 1997), and zest (Miller & Stiver, 1997). Energy has three important characteristics. First, it is an indicator of a person’s affective state. In any given moment, a person’s level of energy signals the extent to which they are having a positive experience and the extent to which they feel a sense of personal well-being (Ryan & Frederick, 1997). Second, it is a reinforcing experience. People try to enhance, prolong, or repeat circumstances they perceive as increasing their energy, and diminish, stop, or avoid the circumstances that they perceive as decreasing their energy (Collins, 1993). Third, it is a motivating experience. Because people who feel high levels of energy tend to view events positively and to expect that positive events will occur (Arkes, Herren, & Isen, 1988), energy can increase a person’s expectancy (Vroom, 1964). Energy, in conjunction with expectancy, affects the effort that people invest in activities. This motivational dimension of energy is supported by the early work of Homans (1951), who, during the Hawthorne studies of the 1950s showed how positive sentiment increases effort at work. He proposed that in all social systems there is some form of required activity, which in most cases requires interaction. Every interaction, in turn, causes some kind of emotional reaction. Sentiment is the recollection of that emotional reaction and is always positive or negative, never neutral. The next time a person goes

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into the same or a similar required activity, they carry their sentiment with them. If it is negative, they decrease the effort they invest in the task; if it is positive, they increase it. This increased effort, claimed Homans (1951), cannot be explained from a rational perspective alone. It is driven by the energy-producing effect of positive sentiment. Following Quinn and Dutton’s (2005) ‘‘energy-in-conversation’’ model, we propose that energy is created in the context of conversation. When a person experiences an increase or decrease in energetic arousal, the change creates two ‘‘texts’’ they can ‘‘read’’ as a conversation unfolds: their own energy as a indicator of how desirable they perceive a situation to be (Thayer, 1989) and others’ expressions as an indicator of how much energy others feel. Thus, energy-in-conversation is (1) a person’s energy level, which they interpret automatically as a reﬂection of how desirable a situation is, (2) a person’s interpretation of their conversational partners’ energy based on the partners’ expressive gestures, and (3) a feeling of being eager to act and capable of acting, which affects how much effort a person will invest into the conversation and into subsequent, related activities (Marks, 1977). Drawing on the self-determination theory (Ryan & Deci, 2000), Quinn and Dutton (2005) propose that energy increases when people interpret speech acts to increase their autonomy, competence, or relatedness, and it decreases if they interpret a speech act to decrease their autonomy, competence, or relatedness. Autonomy suggests an inner endorsement of one’s actions. The more autonomous the behavior, the more it is endorsed by the whole self and is experienced as action for which one is responsible. A context that supports autonomy encourages people to make their own choices and gives them freedom to express themselves, to create, and to lead. Competence is having the skills, abilities, and capacity to be successful. Contextual events that contribute to feelings of competence during action can enhance intrinsic motivation for that action. Ryan and Deci (2000) propose that feelings of competence will not enhance intrinsic motivation unless accompanied by a sense of autonomy. Relatedness is the need people have to feel a sense of belonging and connectedness with others. When people have a sense of relatedness, they feel like they are making a contribution to the greater whole and that the greater whole is making a contribution to them. Ryan and Deci (2000) claim that autonomy, competence, and relatedness are basic human needs, and Quinn and Dutton (2005) argue that changes in feelings of autonomy, competence, and relatedness affect a person’s energy because they signal an increase or decrease in the satisfaction of those needs.

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How Interpretations of Speech Acts Affect Energy Interpretations of speech acts affect the energy of both the speaker and the receiver, and the interpretation of energy ‘‘texts’’ affects subsequent speech acts (Quinn & Dutton, 2005). Interpretations of speech acts affect the energy of the speaker to the extent that he or she offers the information freely, perceives that the hearers believe the propositional content, or perceives that the hearers are grateful for the information. The speaker will experience decreased energy if he or she feels forced to share the information, perceives that the hearers do not believe the propositional content, or perceives that the hearers are not grateful for the information. The receiver is likely to feel an increase in energy if he or she perceives new opportunities (increased autonomy), believes he or she is more able to accomplish the goal(s) relevant to the conversation (increased competence), or perceives that the speaker gave this information with the intent of being helpful (increased relatedness). This person will experience a decrease in energy if he or she perceives fewer opportunities, believes he or she is less able to accomplish the relevant goal, or perceives that the speaker gave the information with the intent of hindering. Reciprocally, the energy people feel creates ‘‘texts’’ (e.g., one’s own physiological changes and feelings and others’ expressions or gestures) that can affect the content of subsequent speech acts (Quinn & Dutton, 2005). By interpreting these texts, individuals can get a sense of how positively people in the conversation – including themselves – interpret the circumstances (Arkes et al., 1988), and how much energy people are likely to invest in the proposed activities (Marks, 1977). If, based on their interpretation of these ‘‘energy texts,’’ a person considers it worth the effort to create a more energizing arrangement of activities (for self or for others), they will produce additional speech acts to increase the autonomy, competence, or relatedness of the person or people whose energy they are trying to increase.

How Interpretations of Narrative Structure Affect Energy Conversational participants also experience changes in the energy they feel based on how they interpret the narrative structure in which they are participating. Gergen (1999) identiﬁes three rudimentary forms of narrative. The ﬁrst is the stability narrative, that is, one that links events so that the trajectory remains essentially unchanged in relation to a goal or outcome. The stability narrative may be contrasted with two others, the progressive

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narrative, which links together events so that the movement along the evaluative dimension over time is incremental, and the regressive narrative, in which movement is decremental. These three rudimentary forms of narrative give rise to several narrative structures prominent in contemporary Western culture. First is the tragic narrative, which tells the story of the rapid downfall of someone or something that has achieved high position: a progressive narrative is followed by a rapid regressive narrative. In contrast, in the comedy–romance sequence, a regressive narrative is followed by a progressive narrative. Life events become increasingly difﬁcult until they ascend from their nadir and happiness is restored. When a progressive narrative is followed by a stability narrative, they combine to form the happily-everafter myth, and a series of progressive–regressive phases comprises the heroic saga. Gergen (1999) also points out that a story with a rapid acceleration of the narrative slope will be more inspiring than a progressive narrative of more gradual ascent because it commands more dramatic engagement. Similarly, if the progressive movement is preceded by signiﬁcant difﬁculty or tragedy, this ‘‘turn of events’’ will contribute to a high degree of dramatic engagement. This conforms to Robinson’s (1981) suggestion that unusual organizational struggles and heroic efforts to overcome them are primary components of inspirational stories in organizational life. These narrative forms impact energy differently; progressive narratives produce energy, while regressive narratives reduce energy. Building on Ryan and Deci’s (2000) work, we propose that progressive narratives generate energy because they offer a sense of autonomy, competence, and relatedness. Quinn and Dutton (2005) point out two additional characteristics of narratives that can affect energy: the perspective from which they are told and their goal. When one person takes the subject role, other people in the story play supporting or subordinate roles (Cooren, 2000). People who perceive themselves to be adopting a subordinate role in a conversation tend to experience decreased energy, while people who perceive themselves to be adopting a superordinate role (the role of the subject) often experience increased energy (Collins, 1990). Quinn and Dutton (2005) propose that this is because people perceive that power (a superordinate role) increases their autonomy and competence (Ryan & Deci, 2000). Thus, people playing the role of the subject in organizational narratives tend to have more energy than those playing supporting roles. This idea is supported by the vast organizational literature on participation and employee involvement (e.g., Lawler, Mohrman, & Ledford, 1992; Pfeffer, 1998).

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People can create collective subjects and are likely to do so when they perceive that members of the collective are willing to make collective goals, a higher priority than individual goals (Quinn & Dutton, 2005). The level of energy members of the collective subject feel will depend on (1) how autonomous and capable they perceive the collective to be, (2) how much they feel they belong (relatedness), and (3) how sincere they perceive other members to be in advancing collective goals. The more sincerity they experience, the more likely they are to reciprocate, beginning a positive feedback cycle that generates energy. Building on theories of emotional contagion (Hatﬁeld, Rapson, Oatley, & Manstead, 1994), Quinn and Dutton (2005) propose that when people act as collective subjects, their energy will show in their facial expressions, postures, tone of voice, and other nonverbal expressions, as well as in words, and these ‘‘energy texts’’ will act as feedback, generating high and even exhilarating levels of energy. Quinn and Dutton (2005) suggest that goals boost energy to the extent that the subject of the narrative (individual or collective) appraises the goal to be autonomously chosen (i.e., valued) and appraises himself, herself, or themselves to be able to accomplish the goal. This is consistent with work on hope theory. For example, Snyder, Cheavens, and Michael (1999) propose that hope has three interrelated components, referred to as goals, pathways, and a sense of agency. Goals are the targets of mental action sequences. To motivate, they must be sufﬁciently important and attainable, yet contain some inherent uncertainty. Pathways entail appraisals of capabilities for ﬁnding one or more effective routes to the desired goal. Although pathways typically involve the perceived ability to imagine one principal avenue to the desired end point, high-hope persons often believe that they can come up with many ways to reach their goals (Irving, Snyder, & Crowsen, 1998; Snyder et al., 1991) and actually produce more alternative routes when blocked (Irving et al., 1998; Snyder, 1994; Snyder et al., 1991). The third component of Snyder’s theory is a sense of agency, or the perceived capacity to begin and sustain movement along the envisioned pathways to a desired goal. A sense of agency often appears in such self-afﬁrming statements as ‘‘I (we) know I (we) can do this’’ and ‘‘I (we) will get this done.’’ An additional characteristic of such agentic thoughts is that it allows people to channel their positive mental energies to alternative pathways when impediments are encountered (Irving et al., 1998; Snyder, 1994; Snyder et al., 1991). Considerable research by Snyder and his colleagues indicates that hope has a positive impact on academic achievement, athletic accomplishment, emotional health, and the ability to cope with illness and other hardships. Higher as compared to lower hope people have a greater number of goals;

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have more difﬁcult goals; have success at achieving their goals; perceive their goals as challenges; have greater happiness and less distress; have superior coping skills; recover better from physical injury; enjoy interacting with people and readily adapt to new and collaborative relationships; are less anxious, especially in evaluative, stressful situations; are more adaptive to environmental change; and report less burnout at work (for reviews, see Elliott, Witty, Herrick, & Hoffman, 1991; Snyder, Rand, & Sigmon, 2002). Hope can typically predict these outcomes even when one controls for the effects of intelligence and other psychological motives (e.g., optimism, locus of control, positive and negative affect, etc.). In other words, hope is not synonymous with intelligence, nor is it the same as being optimistic. It is energy for action that comes from having meaningful goals, conﬁdence in one’s capacities, and clear pathways forward. Thus, narratives and speech acts affect the energy that conversational participants feel, which affects the speech acts they produce. The cumulative effect of this interplay among speech acts, narrative, and energy is an arrangement of activities that participants feel more or less energized about performing and in which they invest more or less effort (Marks, 1977).

The Power of Positive Emotions Fredrickson (1998, 2003) provides an explanation of how narratives that generate a sense of autonomy, competence, and relatedness produce energy. As people join in creating the narratives in which they can ‘‘see’’ and anticipate their basic needs of autonomy, competence, and relatedness being met, positive emotions are activated such as interest, joy, hope, and pride in one’s association with others, the work, and the organization. These in turn lead to the enhanced thought–action repertoires associated with them. For example, interest leads to investigation, exploration, becoming involved, having new experiences, and incorporating new information, all characteristics associated with learning. Joy leads to play, imagination, invention, and experimentation, all characteristics associated with innovation. Hope leads to seeing adversity as a challenge, transforming problems into opportunities, maintaining conﬁdence, rebounding quickly after setbacks, putting in hours to reﬁne skills, and persevering in ﬁnding solutions, all characteristics associated with achievement and goal accomplishment. Pride leads to supporting others, expressing gratitude and appreciation, connecting, and relating, all characteristics associated with cooperation, coordination, collaboration, and pro-social behavior. Thus, positive emotions generate energy by equipping

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people with the enhanced thought–action repertoires that enable them to feel ‘‘eager to act and capable of action’’ (Quinn & Dutton, 2005). These perspectives (Berger & Luckmann, 1966; Ford, 1999; Ford & Ford, 1995; Fredrickson, 1998, 2003; Gergen, 1999; Hardy, Lawrence, & Grant, 2005; March & Simon, 1958; Quinn & Dutton, 2005; Ryan & Deci, 2000; Weick, 1979) help us see that organizations are created in conversations and that the stories we tell have the potential to create different kinds of energy. The key challenge for change leaders is to create an organizational story at multiple levels of embeddedness that produces positive energy by strengthening people’s sense of autonomy, competence, and relatedness. By doing so, change leaders can boost people’s positive emotions, leading to more creative, effective behavior and higher levels of performance. Creating Energy for Action through Conversation Based on the above perspectives, we suggest that gaining support for ITAM can be understood as a process of creating energy for action through conversation – conversations that were embedded at multiple levels of the organization and overlapped in many ways. Mini Cycles of Conversational Activity As can be seen in box 1 of the ‘‘energy for action through conversation’’ model (Fig. 6), in the ﬁrst stage of the cycle, the change leader listened to each constituency to discover what was important to them and to understand their language. Through this process, the change leader discovered that: (a) senior leaders were interested in reducing expense and growing the business and that their primary language was the language of ﬁnance; (b) leaders of technology were interested in using technology assets effectively and used the language of technology. For example, the change leader checked with the claim department liaison before meeting with claim leaders. Ellen made a point of interacting with me before talking to our leaders. We kept each other in the loop. At one point, I told her, ‘‘well, we’re not happy here.’’ There were some delays and Kathy was very concerned. Ellen scheduled meetings to update to our leaders. She answered their questions and that was good. I’m glad of the interaction we had in making these things happen. (Chen, interview, 2004)

Ellen used her relationship with Chen to discover what was important to the claim leaders. This allowed her to prepare a narrative that would address their interests and concerns.

Role of Energy-in-Conversation in Leading Organizational Change

CL connects with constituency to understand their hopes, interests & what is important to them

Creating Energy for Action Through Conversation

33

5

CL does additional homework to reshape the narrative to address constituency’s hopes & interests

6

CL engages constituency in co-authoring a new compelling narrative in a way that builds a sense of autonomy, competence & relatedness 7 No CL listens to each constituency to discover what is important to them & to understand their language

1

CL uses understanding to prepare a first draft of a persuasive narrative in the language of each constituency

2

3

CL engages each constituency in coauthoring a compelling narrative that builds autonomy, competence & relatedness

4

8

CL checks reaction, positive emotion: interest, hope, & pride?

No

CL checks reaction, positive emotion: interest, hope, & pride?

Yes

Yes Positive emotions create energy in the sense of being eager to act & being capable of action 9

CL=Change Leader

Fig. 6.

CL uses success to further develop a persuasive narrative in the language of each constituency 11

Action comes in the form of support, time, money,& resources contributing to the work’s success 10

Creating Energy for Action through Conversation.

In the second stage of the cycle (box 2), the change leader used the information gathered in the ﬁrst stage to draft a ‘‘persuasive narrative’’ (Gergen, 1999; Weick, 1979) before meeting with each constituency. In the case of senior leaders, this narrative included an assessment of the current state in ﬁnancial terms, a proposal for improving the current state, and a projection of savings or risk avoidance. For technology leaders, the narrative focused on the ability to better track and manage technology assets. An example of this would be the ITAM white paper, which described the current policy for managing IT assets, provided background information, presented the business opportunity in ﬁnancial terms, posed critical questions for consideration, offered recommendations, and estimated the beneﬁts to P&C of better tracking and managing technology assets. I think the research Ellen did into asset management, helped her build a sound business case for ITAM. It also helped her build business practices and polices and some much needed process improvements. (Redﬁeld, interview, 2004)

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This quote from Redﬁeld speaks to the persuasive nature of the white paper. It was the basis for many conversations about the need for asset management. In the third stage of the cycle (box 3), the change leader engaged each constituency in co-authoring a compelling narrative in which they felt a sense of autonomy, competence, and relatedness (Ryan & Deci, 2000). People were able to shape the narrative in such a way that it helped them accomplish their valued goals. For example, when Hanlon saw the beneﬁt of the work, he helped the change leader move past a point of resistance with his own department. Things broke down when Ellen tried to buy a software package. I aligned with her but a lot of people didn’t. They felt they could do it better. I interjected myself to eliminate the noise and the barriers she ran into. People wanted to tell her how to do it. I said, ‘‘that’s Ellen’s job, let her do it. Let’s support her.’’ I went to my boss y the controller, and told him this is the right thing to do, he agreed. So I’m most proud of the fact that I was able to peel back the onion, get to the real issues, support her initiative, and make a lot of the naysayers go away. I think the thing moved on, they got approval to buy the product. (Hanlon, interview, 2004)

This quote conveys Hanlon’s pride in co-authoring a narrative that moved his department to action – getting them to support the ITAM work. During and after stage three of the cycle, the change leader watched closely to see if the narrative created positive emotions such as interest, hope, and pride (Fredrickson, 2003) that led people to support the work (box 4). If so, it is proposed here (box 9) that these positive emotions experienced by constituencies created energy in the sense of being eager to act and being capable of action (Quinn & Dutton, 2005). In turn, action was taken (box 10) in the form of support, time, money, and resources, which contributed to the success of the ITAM project (Homans, 1951). This kind of support came from different areas and multiple levels of the organization. For example, Elliott, an IT senior leader, created energy for the ITAM work by approving it even when he did not know where the funding would come from. When Elliott approved the work, he contributed dramatically to the success of the project. He created a ‘‘space’’ in the organization for coordinated action to take place. Ellen and others began investing their commitment, time, imaginations, and conversations into the process at much higher levels than they had before approval was granted. If, however, for a particular constituency, the ﬁrst round of conversation (boxes 1–3) did not generate positive emotions and energy for action (boxes 4, 9, and 10), the change leader re-engaged the constituency in another minicycle of narrative creation (boxes 5–7). First, she connected with the constituency to discover their hopes and interests and to learn what was

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important to them (box 5). Based on this dialogue, the change leader did additional homework and reshaped the narrative in a way that addressed the constituency’s concerns, hopes, and interests (box 6). Then the change leader re-engaged the constituency in co-authoring the narrative in a way that built for them a sense of autonomy, competence, and relatedness (box 7). If successful, the new narrative generated positive emotions (box 8), which led to energy (box 9) and action in the form of support, money, time, and resources (box 10). If not successful (box 8), the change leader circled back and engaged the constituency yet again in another mini-cycle of narrative creation (boxes 5–7). The story of the controller is a good example in which the ﬁrst round of conversation (boxes 1–3) did not generate positive emotions and energy for action (boxes 4, 9, and 10). The controller challenged the decision to purchase a vended software product for ITAM and asked that Ellen customize ERP instead. Very speciﬁc steps were taken to deal with this challenge. First, the ITAM strategy and vision were presented to him in a face-to-face meeting. This meeting was also used to understand his concerns, which were documented after the meeting. Next, Ellen did her homework, gathering data to address his concerns. She then shared the controller’s concerns and homework ﬁndings with IT senior leaders. She worked to overcome resistance by tapping resources to create a persuasive argument and working through others to get the controller to see things differently. In the end, the ITAM team implemented a solution that improved the accuracy of the company’s ﬁxed asset records (a valued goals for the controller) and won over the controller. Thus, whether energy for action was generated with each constituency in the ﬁrst round of conversations (boxes 1–3) or in subsequent rounds (boxes 5–7), the result was action that contributed to the project’s success (box 10). The ﬁnal phase in the process was to use the project’s success to further market the ITAM work to the organization. Ellen did this by further shaping a persuasive narrative in the language of each constituency (box 11). Marketing to the organization is at the heart of creating a persuasive narrative. It is the process of crafting a compelling story and inviting others to co-author it in such a way that they can see in that story, or anticipate in that story, increasing their own autonomy, competence, and relatedness, which unleashes positive emotion. Summary In summary, the creating energy for action through conversation model says people have positive emotion about the work that builds autonomy, competence, and relatedness (Ryan & Deci, 2000). Positive emotions create

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energy in the sense of being eager to act and being capable of action (Quinn & Dutton, 2005). The resulting action comes in the form of support, time, money, and resources, which contribute the success of the work. By working with others to craft persuasive narratives on a continual basis, the change leader generates more and more energy for the work, creating an upward spiral of positive energy for the change and increasing the probability of its ultimate success.

FUTURE RESEARCH The greatest limitation in this study is external validity – as a single case study, it is not generalizable. However as Stake noted, ‘‘The purpose of a case report is not to represent the world, but to represent the case’’ (Stake, 2000, p. 448). There is richness and learning in the narrative of the study. A second issue is that the researcher is also the investigator. This dual role brings the possibility of bias to the study, but it is offset by using an insider/outsider research team (Bartunek & Louis, 1992) and by the methods employed. The opportunities for future research are many. An important next step would be to test the proposed model in other contexts. This study examined change in one organization’s IT department. Studies with other populations and other organizations would help validate the model. Another compelling research possibility is to conduct a more ﬁne-grained analysis of changerelated conversations, similar to Quinn and Dutton’s (2005) work on energy in conversations. There is also an opportunity to extend this study by conducting a survey around key ﬁndings with other departments and organizations. If leading successful change is all about gaining support of others, dealing with resistance, and creating a supportive work environment, then a study examining change leaders with these abilities would be valuable. What knowledge and experience prepares them to lead successful change? What human resource systems are appropriate for rewarding successful change leaders? It would also be of value to study how change leaders effectively manage relationships both inside the team and across the organization, how change leaders use power, and how effective change leaders build system structures and routines that sustain change.

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A HYBRID THEORY OF ORGANIZATIONAL TRANSFORMATION Barry Sugarman ABSTRACT Two major approaches to organizational transformation (OT) are identified as ‘‘Drive’’ and ‘‘Grow’’ theories. Each has a serious flaw but they can be combined to form a stronger approach. However, managing the hybrid presents special challenges, including an acceptance of paradox. Five case studies are used to gain insight into OT at a process level, into the cross-conflicts and environmental reactions, including ‘‘the organizational immune reaction’’. Two propositions are formulated: the bi-focal formula (regarding the agreement between an OT initiative and its host organizational unit) and the partnership proposition (regarding shared leadership of OT initiatives).

This paper is an exploratory contribution to the theory of organizational transformation (OT), drawing on both the usual literature and on a body of experience, less formally documented, associated with the Society for Organizational Learning (SoL), a community of practice whose members are change practitioners and researchers.1 Using ﬁve case studies of OT

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associated with the Society (SoL), the paper will identify certain key factors that are required for success in OT, examining the cases in search of a better understanding of the change process. What is involved in achieving true OT? And why is it so hard? I shall develop the proposition that successful OT requires two kinds of efforts, both difﬁcult to achieve and both very different from each other, even conﬂicting. The challenge of OT, both in theory and in practice, requires a hybrid approach, combining what are often considered two independent theories. This hybrid theory of OT derives from my efforts to construct some understanding from several sources: from primary case studies in the ﬁeld, from practitioner interviews and presentations by change leaders, and from secondary analysis of cases published by other researchers. Theorizing from all these sources, I offer some ideas to expand our theory of OT, which have direct implications for the practice of change leadership.

ORGANIZATIONAL TRANSFORMATION DEFINED AND TWO APPROACHES INTRODUCED OT is deﬁned as the work of facilitating fundamental change in organizations (Porras & Silvers, 1994). ‘‘[OT] promotes paradigmatic changey [it] is directed at creating a new vision for the organization. Vision change occurs most effectively when an organization develops the capability for continuous self-diagnosis and change; a ‘learning organization’ evolves.’’ (Porras & Silvers, 1994)

So we may deﬁne OT as the work of helping organizations to become more like ‘‘learning organizations’’ (Senge, 1990). By contrast with other types of organizational change, transformational change is both broader in scope and more enduring. It is deeper, involving changes in thinking, not just behavior. Transformational change can be likened to changing the ‘‘DNA’’ or culture (Goffee & Jones, 1998; Schein, 1999) of the organization, causing it to operate in a signiﬁcantly new fashion. Such change is often called for when organizations shift their basic mission, enter entirely new markets, or when they face a crisis through failing to meet competitive challenges. There are cases of successful OT initiatives but they often run up against barriers or problems, many identiﬁed in The Dance of Change (Senge et al., 1999). These limits involve serious difﬁculty in taking the success achieved at local, team, or business unit levels and transferring it more widely across the parent organization, as well as problems in securing long-term sustained

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support for investment in organizational capacity building (Carroll, Sterman, & Marcus, 1988; Repenning & Sterman, 2001; Senge et al., 1999). To help organizations in need of transformation, we need better OT theory and practice guides, which can guide transformation that is more scalable and sustainable than hitherto. Currently available theories and approaches fall mainly into two types, neither one adequate. But combined in the right way, they could enable a stronger theory of OT and a better understanding of transformation processes. Examining several cases will help us to reach this understanding but ﬁrst we must deﬁne the two older approaches or theories. One approach, the ‘‘Grow’’ approach to OT (favored generally among organization development practitioners) is based on the empowerment of employees, engaging them in collective learning and problem solving, so that their knowledge may be applied to improve organizational processes and arrangements. Leaders and employees strive together to understand the assumptions that each one of them brings into the workplace – and to understand their own tacit assumptions, as they learn together how to improve their performance as a work team. In a Grow approach, using learningbased leadership, the boss usually does not tell employees how to solve problems but sets up the conditions where they can ﬁnd solutions for themselves (team learning). Leading this kind of change tends to be a slowstarting process of nurturing and resourcing work groups that are already inclined to move in this direction, counting on their example to attract more converts – rather than pushing or ‘‘driving’’ others in this direction (Argyris, Putnam, & Smith, 1985; Beer et al., 1990; DeFillippi & Arthur, 1998; Fisher & Torbert, 1995; Isaacs, 1999; Kim, 1993; Mirvis et al., 2003; Roth & Kleiner, 2000; Schein, 1993, 1999; Sugarman, 2001a). OT through the Grow approach depends on learning-based leaders creating routine processes of Assessment and Learning, which provide an important on-going ‘‘growth engine’’ for OT. Work groups and business units considering assessment data on their performance (formal or informal) reﬂect on the data and design improvements. Then they test them. This produces a cycle of ever-improving results (under good conditions), that is a reinforcing loop, self-sustaining to some extent, comparable to investing under a good rate of compound interest. If the returns are reinvested well the cycle can build up momentum like a ‘‘ﬂywheel’’ (Collins, 2001). This captures the Grow proposition of an initial investment period, showing small results at ﬁrst but building up to a later growth surge. The ‘‘Drive’’ approach to OT, by contrast, is favored by change leaders who put more faith in the power of changes in reward systems, regulations, resources, controls, and other structures to bring about OT. Relative to

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those who follow the Grow approach (the ‘‘Growers’’), the ‘‘Drivers’’ also put more faith in top-driven communication campaigns about change, and less faith in the power of human resource factors such as participation, team learning, visioning, and meaning-making. The ‘‘Drive’’ approach involves a more forceful process of driving change from top executives, with maximum use of executive authority to change structures so as to re-channel employees’ behavior (Kanter, Stein, & Jick, 1992; Kotter, 1995; Miles, 1997; Nadler & Nadler, 1998; Nadler, Shaw, & Walton, 1995; Tichy & Sherman, 1993; Tichy & Cohen, 1997). Each of these two approaches (Drive and Grow) has certain strengths but each one also has a serious weakness. The Drive approach can sometimes achieve a quick start-up across a broad front – but tends to lack sustainability, especially when something distracts the top leader from the role of principle ‘‘change driver’’. Another problem is that, unless those who follow the Drive approach can broaden their approach to leadership (i.e. including more participation and dialogue, as in the Grow approach), they tend to be met with more resistance and ‘‘people problems’’ and to be less effective than the Grow approach in engaging the energy of employees and middle managers for improvement and change (Senge et al., 1999). The Grow approach also has its distinctive strength along with a signiﬁcant weakness. The increased mutuality and improved quality of communication introduced by the Grow approach can create more commitment to change in more levels of the organization, so that change is less dependent on the constant driving force from the top. By itself, though, the Grow approach tends to be incomplete and insufﬁcient. It can create transformation at the local level but often gets stuck there, unable to spread further, on a larger scale. Some Drive critics of the Grow approach feel that Growers can easily become so personally invested in the values and satisfaction of worker empowerment, encouragement for grassroots creativity, and honest dialogue that they lose focus on the business. A related Drive concern, sometimes merged into the former, is over ‘‘loss of control’’ by managers who permit a Grow approach. (Growers reply: ‘‘control of what?’’ and ‘‘what is the price of that limited control?’’) These concepts of Drive and Grow OT approaches correspond broadly to the E and O change models contrasted by Beer and Nohria (2002) but the way we deﬁne Drive and Grow zeroes in more speciﬁcally on the different processes of OT involved. Beer and Nohria use three cases to develop their idea: Champion – an O case that invested in its human resource assets but was not a business success; Scott Paper in the hands of CEO Al Dunlap (an E case), who used drastic downsizing and asset sell-offs to make a large, short-term

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gain for shareholders; and Asta which used a combination of O and E approaches to turn around the business without asset stripping and to build a proﬁtable company with a future. Their contrast between O and E models, between Champion and Scott, confounds the issue of ﬁnancial success and ﬁnancial motivation with transformation methods per se (Beer & Nohria, 2002). It is not useful, I suggest, to assume that the Grow approach is associated with any lack of commitment to goals of proﬁtability – though it is inconsistent with strategies for short-term gain by selling the seed corn (asset stripping, disinvesting, and massive downsizing in order to generate shortterm proﬁts for investors as in the Scott Paper Al Dunlap case). The Grow strategy of investing in human and intellectual capital development is intended to pay off in the long run, as it did for the companies in the Built to Last and Good to Great studies (Collins, 2001; Collins & Porras, 1994). Just as a business transformation based on replacement of major production equipment or exploring and developing a new oil ﬁeld requires large investment and a long payback period, so does a Grow approach to OT. But where the physical investment is visible and investors believe that objective implementation milestones can be monitored, there is less credibility to the Grow case for investing in human and organizational capacity to produce business results. Agreed, but why is there less credibility – has it not been done or is it not possible? or is the mental model that physical investment has more value than human investment? Table 1 compares the Grow, Drive, and Hybrid theories in terms of ﬁve key elements in the transformation processes. The difference is not a black and white one. The table shows high–medium–low presence of these elements, indicating where the theories differ and where they are similar.

Table 1.

Grow, Drive, and Hybrid Theories Compareda.

Leadership (learning-based) Assessment and learning processes Executive (positional) authority Alignment Organizational integration

Grow Theory

Drive Theory

Hybrid Theory

XXX XXX X XX XX

X X XXX XX XX

XXX XXX XXX XXX XXX

Key: XXX, this factor plays a major part in this theory; XX, this factor plays a middling part in this theory; X, this factor plays a minor part in this theory. a Where do the XXs come from? I am often asked. They are not derived by any formal empirical process. Basically, they are stipulated by me to deﬁne my ideal type conceptual model.

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Because the hybrid approach and theory bring together both learningbased leadership and position-based executive authority, this creates an unstable mixture and the need for special attention to managing organizational integration, I hypothesize. Though not unknown in the separate theories, organizational integration was relatively less signiﬁcant there, compared to the greater importance it now assumes in the hybrid theory. For now it must manage the tensions and contradictions between two contrasted approaches to leadership/authority and their respective (contrasted) theories of OT. Having reviewed the Drive and Grow approaches to OT along with some of their inherent strengths and weaknesses, we now turn to examine several cases that illustrate the challenges each approach faces in actual practice. The ﬁrst two cases highlight the Grow approach. One is set in the automobile industry and involves the multiyear program to re-design, engineer, and launch for manufacturing the new model of an established automobile. The story focuses on how leaders of this large team reinvented the management process for launching a new car model, with dramatic improvement in results. The second case (Fermi) is set in the electric power industry and involves the turnaround of a nuclear power plant that had been de-licensed by the regulators. After that OT the plant not only won back its operating license but also continued its improvements over the next few years to earn a ﬁrst-class rating by the industry accreditation system. Both cases involved a workforce approaching one thousand but neither was an independent entity and neither was more than a fraction of its parent company. (Fermi produces 20% of the electric power for DTEEnergy.) Some scholars would prefer OT cases that involve the greater part of an entire, large organization. Unfortunately, very few of these are known to exist and few (if any) of them have been well documented. The Epsilon case is exceptionally well researched – both as to process and results (Roth et al., 2000). In addition, I was able to interview several key players. Precisely because these cases do not involve a total organization transformation, led from the top, they allow us to examine very important aspects of the relationship between the OT initiative and its parent company (especially ‘‘the organizational immune reaction’’). This has very wide relevance to OT theory.

A CASE OF THE GROW APPROACH TO OT: LAUNCHING THE ‘‘EPSILON’’ AUTOMOBILE Our ﬁrst case, representing the Grow approach, is the ‘‘Epsilon’’ new car design and launch project at ‘‘AutoCo’’ one of the major US-based

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automobile producers. I use the pseudonyms ‘‘AutoCo’’ and ‘‘Epsilon’’ in compliance with the agreements of the original researchers (Roth et al., 2000). It was a three-year OT initiative in collaboration with the former Center for Organizational Learning at MIT (OLC). The mission of the Center was to test the ideas presented in The Fifth Discipline (Grow theory) (Senge, 1990). Epsilon (and several other OT projects at AutoCo) developed out of earlier presentations on systems thinking and organizational learning given to automobile executives at this manufacturer. My sources for this case include several interviews with the two OT leaders of Epsilon in addition to Roth and Kleiner’s learning history describing this particular effort to demonstrate a more effective way to manage product development on a new automobile (Roth et al., 2000). The Epsilon case is a sterling success story for the efﬁcacy of applying learning-based leadership, systems thinking, and other methods of the Grow approach to improve the process of managing a new car design and launch. Throughout the industry, launches were typically late, often over budget, and always a nightmare of last-minute ﬁxes and catch-up efforts, with a signiﬁcant portion of essential parts being late. In the last weeks, many engineers would be working all-nighters, trying frantically to ﬁx lateappearing problems and creating new problems for their colleagues in other areas of the car (Walton, 1997). But not this time. Epsilon’s launch was not just on time but a week early; under budget by $30 million; and lacking the usual pandemonium and distress. The launch was a glorious ‘‘nonevent’’. What contributing factors should get the major credit for these results? A broad package of organizational learning methods should probably be credited, with special credit going to the change in behavior by the two Epsilon project leaders who worked to create a climate of more openness to employees’ ideas, more participation in planning and problem solving, with more emphasis on learning together and less of the blaming and bullying by senior managers, that had previously been common (Walton, 1997). In other words, they were practicing learning-based leadership, a core element in the Grow approach. Managers continued to set major project goals but within those goals they now encouraged workers (mostly engineers) to take more initiative, to be more open about their difﬁculties so that help could be provided earlier, and to participate more in key design decisions, using more of their talents. From the start of this project a ‘‘core learning team’’ was formed with the ten senior Epsilon managers, two internal OD staff, and several staff from MIT (researchers/consultants), which met every month or two for nine

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months. They conducted joint assessment and diagnosis on team working issues and began learning (applying) basic tools of organizational learning. Members of this leadership group ﬁrst engaged themselves in some serious learning, before asking the rest of the staff to learn and change. To develop the learning agenda several members of the core learning team interviewed other program employees about their ‘‘greatest challenges and strengths’’. Later the core team used the same method to study ‘‘why are we always late?’’ (i.e. behind project deadlines). Working together they created a systems map of many factors, which led them to discovering the point of leverage. It was the fact that engineers having a problem with their component would not report this until very late, which caused other related work to be disrupted, unnecessarily compounding the problem. Had the problem been revealed earlier, others could have helped to speed up the solution (since most issues involved several areas anyway) and prevented the escalation effect. Concealing problems in one’s own area was a consistent pattern. The team considered why this happened, concluding that it was a combination of ‘‘engineering culture’’ (don’t report any problem until you know the solution) and a company culture in which reporting a problem without a solution was held against you in performance appraisals, rewards, and reputation. The Epsilon core team wanted to change that and they realized that it would require establishing trust among the program staff that ‘‘bearing bad tidings would be safe’’. This required other supporting beliefs and values, for example that cooperation for the good of the whole program was more important than some individuals being embarrassed because their work was not going well right now. Clearly the Epsilon team was creating a culture very different from the traditional one at AutoCo. These insights that opened the door to attitude and behavior change were developed ﬁrst among the core learning team, over many meetings, including a two-day off-site ‘‘learning lab’’. Several similar learning labs were held for a total of one-third of the entire staff and many brieﬁngs and discussions were held with all of them. Much of the curriculum was concerned with communications and with changing the norms of communication. The greater openness and honesty in work team communication allowed managers to drop much of the paperwork and formal reporting they previously used to ‘‘control’’ the workforce. This produced more work satisfaction and less stress. It was more efﬁcient and enabled them to produce the recordbreaking launch results. Describing these changes several years later the Epsilon Launch Manager (number two manager) explained as follows.

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[At the start] we had a very formalistic organizational structure around the teamsy My responsibility was to control all aspects of the program. And have everyone report to me, to tell me how they were doing and where they were going – including engineering releases and all thaty And what happened is we changed those structuresy We allowed the teams to self-organize themselves around their work. We allowed the teams to quit doing the formalistic kind of reporting and had them actually tell us what kind of measurables they really needed and what they needed to know. In other words, we really let go and the natural processes evolved tremendously. And I worked very carefully with [program manager] and the other managers to make sure that we were beginning to behave as we were espousing. Basically, walking our talk. (Tape recorded interview August 2, 1999.)

A detailed analysis of this case and several other Grow initiatives (some at AutoCo and some at other manufacturing companies), sponsored by the Organizational Learning Center at MIT (predecessor to SoL), produced the following conclusions (Sugarman, 2001a). (1) There is a typical sequence of stages in the life of learning-based change initiatives. Their inception can be traced to one or a few pioneers, change enthusiasts, or ‘‘co-conspirators’’ who catch and hatch the idea for a new approach, seeking out knowledge of others who have trod this path, cautiously inviting other like-minded partners, as well as a line-manager partner (who sees the need for an OT project in his/her unit and gives it a home), and as well as a senior executive sponsor. (2) In each case, the success of the initiative in improving a unit’s performance was due to the way executives introduced a changed approach to leadership which created a safe space for employees to ‘‘learn together’’ (in place of command and control, management through fear) and which evoked from them more of their unrecognized and underutilized talents. I am calling this ‘‘learning-based leadership’’. (3) An important role was played by a core learning team, an alliance among several volunteer change enthusiasts who initiated this OT. The previous point indicated how the change leaders created a safe space for their employees; this point concerns how the leaders created a safe space for themselves, in which to learn from the novel situations they must manage. (4) Each of the organizational changes required signiﬁcant personal change in its participants (including leaders) themselves. Participants had to develop new skills in learning, especially in discovering and testing their mental models, so that they could begin to modify them, when necessary. This involved not just new skills but personal growth (‘‘emotional intelligence’’ or personal development).

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(5) The success of each case in gaining the support of the parent organization for its unconventional approach depended on the leaders of the OT initiative bringing together two elements in their strategic goals for the initiative. This is the ‘‘bi-focal formula’’ where the leaders of the initiative resolved (at least temporarily) the seemingly conﬂicting demands of both short-term business results and process improvement (paying off in the long term). They set short-term goals (providing business results) that lay along a path leading to improved processes and capacity for continuous improvement. This bi-focal balancing act (between short- and long-term perspectives) is essential to the most successful cases in the Built to Last and Good to Great studies (Collins, 2001; Collins & Porras, 1994).

A SECOND GROW CASE: THE FERMI NUCLEAR POWER PLANT2 The circumstances of our second Grow case are quite different, but the core ﬁndings show a similar process of OT based on leadership for team learning and employee engagement in important decisions affecting work and process improvement. Where Epsilon is part of the automobile industry, Fermi is part of the electric power supply industry (undergoing market deregulation); as a nuclear power plant, Fermi is tightly regulated on safety factors. Where Epsilon’s OT received minimal support or interest from senior executives, Fermi’s was very much mandated and closely managed from the top of its parent company, DTEEnergy of Michigan. Where Epsilon’s OT was conducted within a standard new car program, Fermi had to get out of a crisis situation: it was de-licensed by NRC3 and forced to shut down for a year – at enormous cost. So the goal of Fermi’s transformation effort was to rebuild its work and training processes such that they could convince NRC that they met licensing standards as a safe nuclear power plant and could resume production. Fermi’s slide into failure in the 1980s was not a surprise. Fermi and its parent company possessed numerous reports that documented the bad and worsening state of affairs. Management knew the consequences but was unable to reverse the situation before it reached crisis level. Then they took signiﬁcant actions to begin an OT: they replaced key managers, hiring a new plant director, a tough and experienced nuclear plant manager, who knew how to get employee engagement. While the Epsilon team (including up to 1,000 employees at some times, including part-timers) had to create a new

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car design and make all of its parts and subsystems work together, the Fermi team (similar in size) had to create and enact a complex set of working procedures and systems for operating the nuclear power plant that met the elaborate and rigorous standards of NRC. In no way did this call for robotic implementation of a bureaucratic master plan, however. It required the active, intelligent engagement of all members of the workforce in thoughtfully and sometimes creatively operating the equipment according to the rules and relentlessly watching for faulty equipment or procedures, or anything amiss. After its successful OT the Fermi plant regained its license to operate and went on to earn the top rating from its accreditation body. Complementary to the key role of learning-based leadership in the Grow approach is the importance of regular processes for internal assessment. Learning requires assessment and organizational learning, as something institutionalized, depends on routine assessment processes. These might range from the very formal safety and training reviews of NRC and the accrediting bodies to the daily plant review meetings, informal meetings of small work teams at the end of the day or the end of a job, reviewing together ‘‘how did it go?’’ In fact, we learned in this ﬁeldwork, that the two are not separate but rather the informal process is needed to make the formal one effective. This could be seen in Fermi’s CARD (Condition Assessment Resolution Document) system, the employee suggestion and defect reporting system. The successful revamping and relaunch of this plant-wide defect detection system was a signiﬁcant achievement of the new Fermi director. Such a system was supposed to exist in the old regime but it was mostly ignored by employees and useless. This time the plant director made sure that employees felt adequately involved in the redesign and in the very visible relaunch of the CARD system (complete with circus tent). As a result, hundreds of CARD forms are submitted every month, from all categories and levels of the workforce, and it has become a crucial mechanism to extend the eyes and ears of supervisors and managers. It collects warnings about observed anomalies, defects, possible problems that had escaped the regular system, data that concern someone. It also invites suggestions for improvements, original or seen elsewhere. These inputs are evaluated daily by a committee of supervisors, who decide on the level of response required by each item. High-level concerns are reported at the daily senior staff meeting. All these CARD items became part of a database that is analyzed and tracked. The most serious problems get a full root cause analysis. Obviously, a system like CARD is limited by the quality of its input (a culture factor) and by how well that input is used by management.

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When this system is taken seriously and widely supported it gives the plant a powerful self-assessment tool. Plant supervisors rotate through the job of managing the CARD system and keep a ﬁnger on the pulse of plant through it. A more challenging task for them as managers of an organization in transformation is to monitor the quality of CARD inputs over time. Statistics on volume of input and diversity of the workforce categories who are submitting them (e.g. the numbers coming from union-represented employees as compared to engineers and managers) is useful but no substitute for the qualitative assessment. A formal assessment (and corrective action) tool such as CARD depends on two key qualities in the leaders who stand behind it: (1) the ability to create (enable, nurture) a culture in which using the CARD system to trigger needed improvements is valued and practiced widely across the workforce and (2) the alertness and sensitivity to feel any decline in the quality of input to the CARD system (or the quality of utililizing that input) and the sense to give it one’s attention, while bringing it to the attention of one’s peers. The ideal leader can do both (1) and (2). Often we depend on different folks. Cassandra (#2) the self-appointed ‘‘canary’’ is typically not a popular role. Does the organization tolerate and at least sometimes listen to such voices? Justiﬁable pride in hard-earned achievements easily turns into complacency, then arrogance. Overdevelopment of an organization’s strengths can lead to disaster through loss of perspective and self-assessment capability, what Danny Miller calls ‘‘the Icarus phenomenon’’ (Miller, 1990). Success breeds failure in the absence of countervailing factors, for example pressure from external regulators following good principles, an assertive board of directors, etc. But even these feedback loops invite a selective focus. Which parts of the multidimensional reports get more attention? How much of the focus is on safety versus convenience, short- or long-term results, satisfying current customers or attracting a new market segment?

TENSIONS BETWEEN GROW AND DRIVE APPROACHES: INTRODUCING EXECUTIVE (POSITIONAL) AUTHORITY The situation at the Fermi nuclear plant is an example of successful OT, achieved through successfully combining Grow and Drive approaches – though the previous summary focused on the Grow side. Employee engagement was central to Fermi’s OT but unilateral executive decisions were

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also made, for example to replace certain personnel and to change structures for internal review and for training. It was a signiﬁcant achievement. I am putting the Fermi case alongside the Epsilon case, not to compare their results, but to compare their external situations. Fermi was operating in a very different environment to the Epsilon situation. The new plant manager at Fermi had to meet tough and elaborate external standards, starting from a situation of failure; in order to do so he had to win the engagement of employees through Grow methods, using learning-based leadership. They succeeded working under the scrutiny of senior management who wanted those results and they wanted that approach. At AutoCo (Epsilon’s parent company), however, this same alignment did not exist. AutoCo senior executives wanted good results, of course, but had not identiﬁed any need to revolutionize management methods. So Epsilon leaders faced a supervising executive who followed the Drive approach. He gave Epsilon’s program manager a certain amount of latitude in his management approach, based only on having some trust in his reputation for competence in his prior assignments. Clearly, there is a big difference in the relationship between the Fermi and Epsilon chiefs and their respective bosses. This is systemically determined. While Fermi had full alignment with its senior management in both goals and method, Epsilon did not have good support for its methods or understanding of what those methods were. These two cases present different alignment situations between the larger system and the unit attempting OT. And right in the center is the matter of executive authority. Executive (positional) authority allows certain people to hire, transfer, and ﬁre employees within that organization, and to assign or deny resources to projects. At the highest levels it allows them to change structures and policies including the basis on which employees are compensated. Executive authority is associated with the corporate headquarters and its mindset. It is delegated to line managers but they can be overruled by headquarters. Mindsets in and around headquarters tend to be quite different from those found in the operating core (Schein, 1996). The Grow approach can more readily ﬁnd support in the operating core than higher up the hierarchy, it appears. The operating core is closer to the human relationships between employees, customers, suppliers, etc. that directly produce value for customers, whereas headquarters staff are more involved in the impersonal, distant, derivative processes such as ﬁnancing, long-range planning, highlevel statistics, and external image management, all of which creates an afﬁnity for the more impersonal Drive approach (Schein, 1996). Then again, corporate and senior executives oversee much larger numbers of employees

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than operating managers do, making it easier for executives (looking down from their ‘‘great height’’ to see employees as ‘‘assets’’ to be managed, rather than individual people to be engaged in the goals, purpose, and culture of the enterprise). Each OT initiative’s leader has, in effect, a ‘‘contract’’ with his/her boss about this. Sometimes the leader comes from outside into an organization in trouble (e.g. Fermi). This is a good opportunity for an innovative change leader to try a new approach, with senior support. When AutoCo appointed a program manager for Epsilon, however, this was a routine assignment to one of their many new vehicle programs – starting late, with an extra-tight budget. The program manager in the Epsilon case had personal aspirations of improving the launch process; but he was not asked to do this. His boss (a tacit follower of the Drive school of management) was cautiously tolerant of, rather than encouraging these intentions.4 The Epsilon case is not only an exemplary case for Grow initiatives but also for problematic relationships between the OT leader at unit level and higher levels of management. Despite the fact of the exceptionally successful launch, Epsilon was not seen as a well-managed project by the executive overseeing it. He thought all their work on improving relationships, trust, openness about unsolved problems, etc. was a ‘‘distraction’’ from driving straight ahead down the usual path with its traditional measures and standards. By virtue of his executive authority his viewpoint prevailed in some important ways, affecting how he reported on this project to senior management and affecting the career prospects of the OT leaders. They were not promoted or recognized for reinventing the launch management process. ‘‘The organizational immune system’’ so often encountered by OT initiatives operates in several ways, as seen in the Epsilon case. ‘‘The organizational immune system’’ is never asleep on the job. It involves the mindsets of the old organizational culture (Culbert, 1996); it also operates more blatantly through executive positional power. The role of executive authority is central to understanding the factors that limit the spread of OT based on the Grow approach beyond its initial successes. In one sense, executive authority (based on positional power and authority) can be seen as the antithesis of learning-based leadership. Executives cannot simply command grow strategies of OT, but they can support and resource Grow strategies when others are willing to participate. (That is the Hybrid approach.) However, Executives can stop certain things from happening – by mandate, by cutting resources, closing programs, transferring or ﬁring employees, as seen in the following case.

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CASE: A GROW INITIATIVE KILLED BY THE NEW BOSS This case shows both the ability of local, grassroots Grow initiatives to spread informally within a very large company, even without ofﬁcial support; at the same time it shows the power of an executive to terminate a speciﬁc OT initiative quickly and easily. ‘‘The Engagement Initiative’’ began in another corner of AutoCo, the vast parent company of Epsilon, some ﬁve–six years after that project ended. The goal of this project was to achieve drastic cost reductions in a transmission system used in several highvolume vehicles. The head of engineering design for this transmission (who was also the founder of this initiative) had taken courses on organizational learning with a few like-minded colleagues from the project. He volunteered to take on leadership for this challenging cost reduction target, intending to use a Grow approach. Promptly he reached out to his counterpart, the head of manufacturing for this transmission product and involved him and his staff fully in the project, which grew to involve some 400 employees and ran for over a year. They held several large meetings including one all-day meeting for 900 project staff. Several articles in the plant newspaper featured this project. Unlike many similar initiatives, this one was not ‘‘ﬂying under the radar’’. A core group of about ten leaders met regularly two or three times a week for several months. Members of this group were so passionate about what they were doing that they were coming in to work two hours early for these dialogue sessions. At this stage there was lots of intrinsic satisfaction for the leaders but only moderate progress on business results. They achieved ﬁrstyear cost savings of 4.5% ($50) per unit but the target was $96. Meanwhile, without any warning, an executive decision changed everything for this initiative: the chief engineer (line manager) who had agreed to work with this OT initiative was transferred and replaced. Within about 10 days of her arrival the new boss removed the design head, transferred the manufacturing head, and terminated their external change consultant. Why? No reasons were given but that initiative was ﬁnished. (Sources: taped interviews, notes, and company documents.)5 What can we learn from this case? First, I want to make no attributions about the motives of the new executive. Her actions seem, however, consistent with a Drive approach emphasizing tighter management ‘‘control’’. The engagement project had not yet produced the striking improvements in business results that sometimes can protect an OT project from skeptical executives. They were halfway to their target. There was also ample process

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data to indicate substantial and growing employee involvement in and enthusiasm for the change process. But, even if this was noticed, would it be seen as an asset by a Drive manager? Might they not be harder to ‘‘control’’ if they got off track in the manager’s view? We lack direct data on this new boss and her context here but guess that she felt some pressure to cut costs – especially the (nontraditional) support costs of the Engagement Project. How would she justify the costs for an outside consultant and for large-scale employee meetings to her managers when she had no basis for believing that they were indeed a good investment? Why did she not inquire by speaking to the Engagement Project leaders? Since she issued no statements on her reasons and since I did not interview her, I don’t know. The Drive mindset tells managers that cost control and keeping the project in focus, free from ‘‘distractions’’, are high priorities and become more difﬁcult when delayed. If so, it is not hard to understand this rapid action by the new chief engineer, with apparently little inquiry. It is not necessary to attribute motives such as ‘‘insecurity’’, jealousy of informal leaders, or ‘‘need to make a personal mark by killing the pet projects of the old regime’’. (These are all attributions often made in such circumstances.) Less judgmentally, we may classify this case as another example of the many ways of the organizational immune system.

TENSIONS BETWEEN OT FRONT-LINE LEADERS AND EXECUTIVES: OPPORTUNITIES FOR INTEGRATION The hybrid approach to OT depends on collaboration along the lines of the bi-focal formula.6 That requires on both sides collaborators who can be ﬂexible in pursuing their goals: OT leaders who can see beyond pure Grow theory and line managers and executives who can see beyond Drive approaches. The bi-focal formula suggests that there are two main elements in play here but now we seem to have three sets of players: OT leaders, line managers, and senior executives. How does this work? The authors of The Dance of Change (Senge et al., 1999) using a similar but larger sample than mine, offered the ﬁnding that successful OT requires the contributions and collaboration of three kinds of leaders: (1) a line manager where the initiative takes place, (2) a senior executive as sponsor and protector, and (3) an internal consultant and networker who has skills in change process and access to change management resources. Note that the senior sponsor is

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not usually the same senior executive who oversees the project and who must be dealt with in the course of business. Often the sponsor is at a higher level. The Engagement Project originally had a senior executive sponsor, several levels above the chief engineer hosting that project, who believed strongly in the value of OT based on a Grow approach. He had speciﬁcally encouraged mid-level managers to develop and lead such projects in their own areas. But, alas, he had since retired from the company and could not help. Turnover at senior levels causes instability and increased risk for OT initiatives. Solutions are not apparent: more than one sponsor? departing sponsors ﬁnd replacements for themselves? manage without them? The many early retirements among AutoCo executives – not just among Grow supporters – reﬂected in part a massive global restructuring of AutoCo. No doubt that priority distracted senior executives from paying more attention to what was happening at Epsilon. The bi-focal formula can take the form of a two-sided agreement, between an OT leader and a line manager. The latter may need a corresponding agreement (or at least buy-in) from his/her boss. The formula needs more than a bi-lateral win/win; it needs the two halves to be well integrated. This has two requirements: ﬁrst, that the Grow methods can truly produce the results that the host organization wants; second, full integration requires that both sides understand their partner’s needs and mindset (Culbert, 1996; Johnson-Laird, 1983; Mathieu, Goodwin, Heffner, Salas, & Cannon-Bowers, 2000). The latter is a tall order and is typically achieved by increments. But you cannot start from absolute zero. The OT leader must understand the business strategy and the short-term pressures on management, and the line manager/executive must understand that the Grow approach is a different method of management that can produce premium results. If this seems all too self-evident, we have only to remember the Epsilon experience with its supervising line executive who did not see this. In this sense the agreement eventually collapsed. The launch results were delivered but the causal connection to their methods was denied by the boss, so there could be no ofﬁcial recognition or reward for the improvement in launch methods. The individual innovators lost any reward they expected and the company lost the chance to replicate this success. There was in this case a breakdown in communication (with responsibility shared on both sides). The result was no understanding in the most related senior executive of how Grow methods can create a more effective form of management (without the old, clumsy, costly, talent-stiﬂing ‘‘controls’’).

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And the further result was that AutoCo’s senior executives missed a signiﬁcant opportunity – to adopt the new, much improved approach to new car launches. The Epsilon project delivered this important gift to the company and nobody in charge noticed it! The Epsilon case is not alone in the fact that its leaders took the risk to start the project before their bosses had a good understanding of Grow methods, trusting that they can help their bosses to learn about them and their value within a reasonable time. This requires enough time for a series of ‘‘contracts’’, each building more trust and drawing executives into a more open-minded relationship with the initiative, where they can appreciate its approach and assumptions, while still holding a healthy scepticism.7 In organizations where OT leaders take it on themselves to be pioneers, with a little encouragement from senior levels – or even without that much – they take a deﬁnite risk. (This was the situation at Epsilon; but not at Fermi, where the new director knew that his boss wanted a Grow-hybrid program to restart the business.) OT leaders are internal entrepreneurs quite literally, putting at risk, not their personal savings, but their career prospects. But independently of material career rewards there are multiple intrinsic forms of rich personal satisfaction available to the learning-based OT leader (Chawla & Renesch, 1995; Senge et al., 1999; Sugarman, 2001b). The risk equation for success of OT initiatives has only become less favorable as global competition and Wall St. pressures for earnings get more intense. Grow theorists emphasize that sustainable improvements come after initial delay and commonly a period of ‘‘worse before better’’ (Senge, 1990; Senge et al., 1999; Sterman, 2001) but some consultants of the Grow persuasion are now working hard to ﬁnd a viable compromise. This is another way to arrive at the bi-focal formula, starting out closer to zero and planning on a series of short-term wins for the client, each one managed so as to lead to a further degree of understanding for the Grow approach and the needs of this collaboration. Clearly, we need case studies of these brave efforts. Neither the Epsilon nor Fermi cases involved radical structural change. Although Grow-oriented change theorists sometimes argue that structural changes are over-used in Drive initiatives (Senge et al., 1999), sometimes an OT initiative absolutely requires signiﬁcant structural change and remains helplessly stuck because it cannot get approval for that essential change of structure. It may even lie beyond senior executive authority, in the hands of a regulatory or legislative body. This is the situation in our next case. Having shown a strong Grow bias so far, I am pleased to present this case, which reﬂects a Drive approach and which is highly successful in the situation

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presented. However, I suspect that the further OT that is needed for that organization will likely require more of a hybrid approach.

CASE: WHEN RADICAL STRUCTURAL REFORM REALLY IS THE TOP PRIORITY The U.S. Veterans’ Health Administration (VHA) is the largest health care system in the USA. In 1995 it seemed to be stuck in a situation where it was badly misaligned with its fundamental mission – stuck for several years. Its mission was to provide specialized health care to low-income military veterans and those with service-related disabilities. It runs 170 large medical centers, with a medical care budget of over $17 billion. But in 1995 VHA was stuck in crisis. Congress and veterans’ groups were both highly dissatisﬁed with its performance. Part of the problem was insufﬁcient funding to cover the needs of this aging patient population but froze funding levels because key members lost conﬁdence in the agency. Eligible veterans increasingly needed primary health care but VHA’s legal mandate did not allow it to provide this – only specialized, mainly hospital-based care. But demand for this had declined greatly, leaving VHA’s expensive medical centers underused. As a government agency, VHA could not simply change its scope of service and structures. It was restricted by law to its original (obsolete) mission and structure. Several attempts to change the law had failed due to a tangle of stakeholder interests and the distrust of certain inﬂuential legislators for this agency’s ability and accountability. A big part of the problem was the over-centralized administrative system under which all 170 medical centers and many other facilities were directly run from VHA headquarters. That also could not be changed without new legislation from Congress. It was a Catch-22. Finally, a new CEO (Kenneth Kizer, MD) appointed by a new US President, found a way to negotiate successfully with Congress for new legislation permitting these structural reforms. His key argument to Congress was that the structural changes were essential to making the VHA truly accountable to Congress, while also being essential for any transformation in providing the services that were needed by the veterans. It was a cleverly framed win/win proposal. Dr. Kizer was a former State Health Director for California and former medical school department chair (private sector). He came to the VHA as a well-qualiﬁed manager, an outsider, prepared to act as an innovator in a system that had become obsolete and full of alignment problems. His vision for a new VHA was clear: ‘‘Our business is health care, not hospitals’’.

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During the next four years (1995–1999) the VHA changed in fundamental ways. It changed from a tertiary (specialized) health care system, centered on its medical centers (with very little primary care), to become an integrated health care system, with a hugely expanded primary care component. There was a painful process of closing many beds and some tertiary care programs, while initiating new primary care services on a huge scale. VHA also changed from a rigidly centralized system, administered from one national HQ, to become a more balanced system where the vertically integrated service network (VISN) director and management team had signiﬁcant authority and accountability, with room for local initiative and creativity in the 22 VISNs. Each VISN director has a performance contract with headquarters, with signiﬁcant bonus payments hinging on measured results. (This was a ﬁrst in the US federal government.) In this case the CEO and successful change leader appears in the classical hero role, exactly the model of leadership that many (especially Grow theorists) declare to be obsolete in modern times. But situational leadership still holds much validity and this situation clearly demanded a bold leader who prioritized radical structural reform as the prerequisite for further reform to meet the needs of US veterans for health care. (Sources: Kizer et al. (2000); Young (2000).)8

ORGANIZATIONAL ALIGNMENT AND INTEGRATION Alignment problems are a major feature of the VHA case where the agency had become seriously misaligned to the needs of its main target constituency (customers). As a public agency the difﬁculty was increased by the agency’s dependence on Congress for new legislation to permit any restructuring. This is an extreme example of a condition that exists widely, especially in large and complex organizations and in those that have seen much change. Any process of fundamental change is bound to create new issues of alignment and integration. The new initiatives are out of alignment with the old structures and policies (of course), which usually do not disappear but stay around with inﬂuential protectors. They are major carriers of the ‘‘organizational immune system’’ that never sleeps.9 Social theorists have long recognized integration as a basic function in all social systems (Parsons, Shils, & Naegele, 1961). Parts of the system become differentiated in order to specialize and must then be connected and coordinated so that the whole system can function effectively and survive in its

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environment.10 Managing organizational alignment and integration can take place in at least three important ways: hierarchically, by senior executives mandating policy in relation to alignment or integration issues; at the grass roots, by allowing many local solutions to emerge and be implemented, each in its own territory, with the net results of all these aggregate adjustments providing an emergent resolution11; through middle managers, who act in the ﬁeld of tension or interplay between the previous two types of change; they experience the expectations of senior executives from one side and those of the grassroots employees who report to them from the other side. The third alternative, combining the previous two, orchestrated by resourceful middle managers, is presented as the optimum by Nonaka and Takeuchi. In their model, middle managers have the major responsibility for business alignment and integration. Senior executives provide them the major strategic framework, which the middle managers must get the local managers and grassroots employees to translate and apply, to localize and actualize (Nonaka & Takeuchi, 1995). In terms of the Grow–Drive polarity and the Hybrid solution, this third way of the middle managers could be considered a partnership between executive authority (senior level) and learning-based leadership (middle managers and front-line operations managers). The top– down communication is clearly present but how much listening to upward communication occurs when senior managers are formulating their strategies? Alignment needs to be considered in two ways: within each business unit, division, or line of business how is the vertical alignment along a value chain or supply chain? across divisions and across functions (at all levels) how are the necessary contributions integrated? Integration needs to be considered in three ways: Innovations might be being developed to replace those lines of business that will soon be exhausted; the old and the new must be integrated. Integration across functions that must collaborate (e.g. R and D, marketing, manufacturing, HR, IT) is a universal need. Integration itself opens the possibility that new synergies will be fostered, which may present new integration challenges.

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Assessment processes, both formal and informal, are crucial for identifying problem areas, some of them due to poor integration. For practical purposes it does not matter which is due to poor integration and which is due to some other cause. What truly matters is that all problems that threaten the ability of the organization to meet its survival needs and mission goals should be identiﬁed and should be addressed well enough and fast enough. These standards (what is ‘‘enough’’?) are set within each environmental niche: by its customers, regulators, competitors, and other stakeholders. Often a major part of the case for change is that the organization is crippled by misalignment and by serious barriers to collaboration between different divisions or functions, and these problems are hidden by tacit agreements to avoid certain ‘‘undiscussable’’ topics (Argyris et al., 1985; Beer & Eisenstat, 1996). Overcoming these taboos and other barriers is essential to change and improvement (Beer & Eisenstat, 2000). In order for alignment issues to be better managed they must ﬁrst be identiﬁed through assessment procedures in a climate of trust. In each division or business unit the following tests of alignment or ‘‘ﬁt’’ are important for diagnosing likely barriers to organizational effectiveness: the ﬁt between the core business strategy and the environmental situation (threats and opportunities) for that business (Miles & Snow, 1994); the ﬁt between the business strategy and organizational structures (Nadler & Tushman, 1980; Tushman & O’Reilly, 1997); which includes ‘‘the folly of rewarding A while hoping for B’’ (Kerr, 1975); the ﬁt between the competencies of employees of this team or business and those required by its strategy. Such an audit or assessment can be used to design the OT strategy and later to discover problems holding back the OT initiative. Even in a onebusiness organization all three tests of alignment apply; but within more complex, multibusiness organizations they apply to each business unit and also to the corporate functions with their mandated policies, standards, and services. Alignment and Integration focuses on both the internal processes of the unit in question and on its relationships outside the unit: relationships with suppliers and customers, with regulators and competitors in the industry, with higher levels of the parent corporation. Management of alignment and integration (starting with the assessment processes) can be conducted at each of these levels, as part of its relationships with all other units, as each level and unit looks out for itself, while higher management also manages

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alignment and integration for the whole organization – from its own (corporate) point of view. An important area for research would be to understand the circumstances where alignment and integration matters are best managed locally by negotiation among players at grass roots levels and where the involvement of higher levels of management actually adds value. Opinions are sharply divided, depending on where one stands in the system. Our hybrid approach to change would include both. Our next OT case, involving major issues of alignment, occurs in one regional ofﬁce of the US EPA (Environmental Protection Agency). We are in the government sector again. It spans a longer time compared to our other cases and experiences more ups and downs in the alignment between the OT leaders and the agency head. Other aspects of alignment are salient here too, including internal alignment of goals among agency managers and alignment issues between the regional ofﬁce and national EPA headquarters.

CASE WITH ALIGNMENT ISSUES: US ENVIRONMENTAL PROTECTION AGENCY – ONE REGIONAL OFFICE This case reveals much about issues of alignment – both internally and relative to the national parent organization. The story begins with one senior executive; the trajectory of this initiative is complicated. This regional ofﬁce executive (not the regional CEO) felt passionately the need for change. He was partnered in this quest by a senior HR manager, who became his close and constant ally, consultant, and co-conspirator on this OT initiative. Both were essential to this story. With these two the project has a senior line manager and a process expert who could focus on designing and sometimes facilitating meetings, and on coaching others through tough change situations. These two felt the need for change because of the large gap (or misalignment) between their vision for how to achieve the mission of the EPA in this region and the way the agency ran. Their vision called for more partnership with industry and community groups; but too much of EPA resources went into prosecution and imposing penalties. Their vision was also about an integrated approach to achieving clean air and water in speciﬁc areas; but the EPA was structured by law into separate programs for air, water, etc. Actually the local vision, in this case, was in line with current environmental thinking and even endorsed by EPA’s national headquarters. But there was no change in the agency’s structure, goals, performance

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measures, or resource allocation at the national level to be aligned with the new vision. So anyone in the EPA working for better alignment to this new vision could be swimming upstream, facing ‘‘friendly ﬁre’’, and hazards to their careers – to a degree that varied with the attitude of their regional administrator (RA). In this region the RA basically approved of this OT initiative – until things got difﬁcult. The ﬁrst step was to create a new (regional) Ofﬁce of EcoSystems Protection, headed by Dave Fierra (the senior line manager and OT leader). This Ofﬁce created a state ofﬁce for each of the states in its region, to represent all the EPA programs in a new ‘‘one-stop-shopping’’ structure. These reforms to the federal EPA’s structures for supporting state environmental efforts required (and promoted) new thinking if they were to be fully successful – another aspect of alignment. To promote this new thinking and aiming to extend it more widely across the Regional Ofﬁce (beyond the new state ofﬁces) they introduced a new kind of executive staff meeting for the Ofﬁce of EcoSystems Protection, which they called the ‘‘EcoLab’’. Here, in weekly, three-hour meetings, Dave encouraged dialogue on how staffers in different program areas could interrelate more effectively. Capacity-building resources were introduced from the outset through a three-day ‘‘Learning Lab’’ conducted by outside consultants for the twenty top staff of the new Ofﬁce. This was an attempt to introduce a new approach to leadership. The ﬁrst year or so was frustrating, however. Not many of the top managers in the new Ofﬁce of EcoSystems Protection shared Dave’s vision. One or two strongly opposed his approach to leadership, wanting no part of this ‘learning team’ and constantly sabotaged his efforts. Since this was a government agency removing personnel was hard to carry out and needed ﬁrm support from above. This was not forthcoming from the RA; maybe Dave was not ﬁrm enough in his demands. This illustrates again the need for learning-based leaders to have the support of senior executives to protect the core of the OT initiative from sabotage. During this dark period Dave remained resilient, with the support of his HR colleague Georgie Bishop. They made an ally of the deputy administrator, a relative newcomer, who came to understand and support the new approach. A couple of years later the RA resigned unexpectedly and the deputy took over. Meanwhile, Dave and Georgie had gathered a few other supporters and helped them to apply the new ideas of leadership and strategy to various areas of the regional ofﬁce. They had also learned the importance of goal alignment: in particular the need for a structure of accountability based on a pyramid of aligned goals, peaking at the

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results-based goals of the regional ofﬁce. In this way all regional ofﬁce managers would be accountable for results-based goals, which they had written themselves and reviewed with their boss, all aligned to the goals of the level above them. These goals were to be the visible test of whether managers were adhering to the ofﬁcial vision of the region for an integrated approach to cleaner air and water (results), in place of the old programmatic (activity-based) enforcement-oriented approach. Capacity builders were brought in to provide training and coaching in the skills of writing performance goals. Basic stuff, yes, but new to this regional ofﬁce at that time. The OT leaders in this case eventually made progress within the regional ofﬁce in moving toward their vision of environmental protection and leadership in a public agency, but major challenges lay ahead. A change of administration in Washington removed the RA who supported this initiative and there has still been no structural change at the national level to support this newer vision of environmental protection through partnership instead of penalties. Thus there are, at best, mixed messages from headquarters that continues to demand accountability to the old measures of penalties and enforcement actions, while reducing budgets. I suggest that this situation is also found in many businesses that verbalize support for becoming a learning organization but continue to hold on to structures that are aligned with the old, incompatible behaviors and represent serious barriers and hazards for those who truly attempt OT without support from the top. They risk becoming victims of the immune system or even casualties of ‘‘friendly ﬁre’’. (Source: interviews, taped.)12

ORGANIZATIONAL INTEGRATION: MANAGING IN PARADOX The EPA case illustrates several dimensions of alignment. It is a government agency providing regulation and enforcement, not involved in manufacturing where there are issues of supply chain alignment. However, it did have issues of ensuring that each department’s goals were aligned to the goals of its boss’ boss and thence to the strategic goals of the Regional Ofﬁce. Initially the issue here was lack of a good accountability structure and a lack of basic management skills in writing goals and in counseling one’s subordinates on their goal statements. Changes were made to rectify those weaknesses. Then there were major misalignments between regional and national ofﬁces – not on their visions, which were similar, but on structures. National EPA headquarters still required regions to report their

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achievements in terms of the number of prosecutions and penalties levied (in line with the old, enforcement model), ignoring their accomplishments in the area of building partnerships with state and community agencies, and with businesses. Misalignment between new goals and old structures that still support different, old goals and mindsets is a fundamental part of organizational resistance to change. In other settings, it shows up as (for example) old hiring and purchasing rules that prevent changing to more ﬂexible ways of working, or pay systems that do not allow team-based rewards. Now we come to the most challenging part of integration: managing the seemingly incompatible opposites that are both essential, especially the Drive and Grow approaches to change. We have already explored some aspects of how learning-based leadership and executive authority may, in the right circumstances, support each other, or may clash. According to Clegg and others, managing paradoxes must be considered an inescapable part of organizational life and must be a central part of organization theory (Clegg, da Cunha, & Miguel Pina e Cunha, 2002). Surely that is right. Other examples of such problematic polarities, apparently incompatible pairs, include: efﬁciency and effectiveness, standardization and innovation, centralization and local initiative, supporting the old ‘‘cash cow’’ business and developing a new business to replace it, and, of course, Drive and Grow approaches to OT. We shall review ﬁrst some examples of practical attempts to manage these contradictions or paradoxes, examples that take a conventional, structural, linear approach. Then we shall identify another, more radical approach. We are now at the most exploratory edge of an exploratory paper, where the data gets thinner and our dependence on imagination greater. These are foundations for future research – and the prelude to my conclusion. Here are some management structures (conventional, structural, linear approaches) that have been tried (or could easily be imagined) for dealing with the challenge of introducing more innovative (especially Grow-oriented) units into a basically Drive-oriented parent organization. (Later we shall consider an alternative approach.) Splitting off and segregating work units that operate by different approaches (e.g. skunk works). They may remain separate indeﬁnitely or (less often) get brought into the mainstream later, as part of a developmental approach. This protects the new project from the immune system but also protects the parent organization from the possible refreshing inﬂuence of the new approach.

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Matrixing the organization, so that some departments have two bosses: a Grow one and a Drive one. I recommend this partnership pattern for OT initiatives to ease the stress on leaders while they learn to develop both sets of skills (Drive and Grow). Such nontraditional arrangements already exist, though not necessarily for this purpose. One example is the structure where specialists are assigned temporarily to various projects, reporting to both the project manager and their long-term functional manager. Another example is Two-in-a-Box (job sharing for managers) which could be administered so as to balance each two-some as a GrowDrive pair. Multitasking managers, so that each one has both a line position, with proﬁt and loss responsibility, (Drive-leaning) in one unit plus another responsibility in another unit as an OT/change or process improvement (Growleaning) consultant in that second unit. This approach and the previous (matrixing) one might be reserved for use as developmental opportunities for handpicked managers only. During a period of intense OT and capacity building that might include a signiﬁcant proportion of all managers. Phasing the principles over time, changing the emphasis from A (during phase one) to B during phase two. This can be done for a single unit or even for a multidivisional corporation all together. Examples of the latter are documented in two large-scale, whole-company OT cases: GE under CEO Jack Welch and OilCo (pseudonym) a major US/multinational oil company. Both in effect employed a phased OT process, though it was not initially planned that way. First, they used a Drive approach to jumpstart change, downsizing and de-layering structures and workforces, and pushing basic business education; later they shifted to more of a Grow emphasis on learning, open communication, and innovation, breaking down boundaries and inefﬁcient traditions (Ashkenaz, Ulrich, Jick, & Kerr, 2002; Beer et al., 2002; Kleiner & Roth, 2000; Ulrich, Kerr, & Ashkenaz, 2002). These examples deserve to be studied further in future research from the viewpoint of managing paradox. For now they demarcate the current limit of OT theory. They also raise a most important point: that changing structures alone achieves little, for structures depend on people acting out their roles within them, and the results depend on the nature and quality of that thinking and acting. Improved structures still require adaptable managers, who can change their behavior, and their mental models beneath this behavior, and tolerate the extra ambiguity this introduces for them, plus the demands of paradox. This presupposes a certain level of personal growth

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and human development, and continued progress on these during the process of OT. As many change leaders have testiﬁed: there is no organizational change without personal change. Torbert and others formalize this notion in a theory of human development with deﬁned stages. It is a steeply rising incline where few normally reach the more advanced stages required for expert OT leadership (Rooke & Torbert, 1998; Torbert, 1991). Some practitioners in the Grow tradition identify a state of consciousness in which they become better able to tolerate not knowing how to handle a new kind of situation or problem, or not knowing the answer to an important problem or conﬂict. In this state they are able to use a process of dialogue to engage a group of colleagues/employees in a process of thinking together (collective intelligence) that may result in a nonlinear, transformational solution. Knowledge that is mostly familiar to participants is rearranged (and transformed) in a completely new way to create an ‘‘aha!’’ It is a transformation in thinking for this group, showing a way they can manage the paradox better (Isaacs, 1999; Senge, Scharmer, Jaworski, & Flowers, 2004; Wheatley, 1992). They have, in a sense, transcended the dilemma, creating an outside-thebox conceptual breakthrough in which the opposites are no longer contradictory. It ‘‘dissolves’’ the problem away, as for example when the pioneers of TQM challenged the old assumptions that lower cost and better quality were trade-offs and we could not have both. This dialogue work of thinking together in a special way is a core part of learning-based leadership and the Grow approach. Does this mean that the Grow approach possesses within its own methodology the means to ﬁnd a solution to its problems of surviving and thriving in a world largely dominated by Drive thinking? Maybe. Yes, on a good day. Amazing transformational solutions can come out of good dialogue sessions – solutions for those who participate. But can you get the necessary participants/stakeholders to join in the crucial conversations? A core problem for Grow practitioners has been with those Drivers who ﬁnd Grow approaches and thinking to be nonsense, unintelligible, irrelevant, or misguided – like the executive who oversaw the Epsilon program. A practical strategy in the face of this problem is suggested by the bi-focal formula: to seek out those line managers and executives (even if they live on the Drive side of town) who can see some possible value in what the Growers have to offer – and who have some understanding of how they do it; who can see that the Growers do have their own theory and method of management. They are not just ‘‘out of control’’ and it’s not just a ﬂuke that they got good results (Epsilon executive).

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COLLABORATING ON THE CONTRACT; PARTNERING ON THE PROJECT The bi-focal formula is the key to integrating OT into the relationships that form an organization so as to improve its results. Think of it as an agreement between an OT leader and a line manager. The latter will probably need a corresponding buy-in (informal agreement) from his/her boss. (Executive authority again.) For the main agreement (between OT leader and line manager) to be fully effective the two components of the bi-focal formula must be fully integrated. This requires: ﬁrst, that the Grow-based methods can truly produce the results that the host organization wants; second, that both sides understand their partner’s needs and mindset. The latter is a tall order and is typically achieved by increments. At the least, they need some foundation of mutual trust and understanding to get started. The OT leader must understand the business strategy and the short-term pressures on management, and the line manager/executive must understand that the Grow approach involves a different theory of leadership that can produce premium results. From considering the records and participant recollections of many OT initiatives in the light of the bi-focal formula, it seems that the survival and success of Grow-hybrid initiatives require serious attention to a set of tasks that might be called ‘‘business development’’ and external relations. A similar ‘‘ambassador’’ role has been found to be important for success in problem solving work groups not speciﬁcally tied to OT (Ancona & Caldwell, 1992). Individuals who can succeed in that role for a Grow-hybrid initiative need speciﬁc boundary-spanning skills; ‘‘true believers’’ (who may be important contributors in other important roles) might or might not have the necessary skills. Needed here are Grow practitioners who also understand the Drive and executive points of view.13 This point might be expressed another way as the need for a certain kind of partnership between two kinds of leaders of Grow/Hybrid OT initiatives. This is the Partnership Proposition that states as follows: Successful Grow-Drive hybrid OT initiatives are more likely to occur when there are leader-partnerships covering both sides of the Drive–Grow polarity. Each partner specializes more on one side than the other (Grow or Drive, internal or external) – but each one is committed to delivering on the needs of both sides. Both partners are committed to both process improvement (organizational learning, capacity building) and business results (short and long term). Both partners also understand the need to satisfy both internal and external (business development) roles for their initiative.

An example of such a partnership between two top leaders could be seen at Asda, the successfully transformed British supermarket chain, presented as

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the star case at the Harvard Business School ‘‘Code of Change’’ conference (Beer et al., 2002). The Asta CEO and COO respectively represented this kind of sharing of leadership roles. The COO represented the Grow perspective, with a warm, outgoing personality and paid close attention to building human resources capacity for sustainably improved business results. He and the CEO had a mutually warm and respectful relationship. The CEO’s focus was on business strategy, ﬁnancial results (both short- and long-term), restructuring the business, and guiding the company to major growth, with more of a bias toward the Drive approach than his COO partner. But while each one had their main strengths in these two different directions, they both understood well and respected the other viewpoint too. Similar partnerships can operate at any level of the organization. In effect, it is a version of ‘‘two-in-a-box’’ job-sharing between managers, with a Grow and Drive pair working hand-in-hand. Finally, we return to the Epsilon case to draw some insight from the crucial partnership between the two top managers there. From the beginning, Fred Simon, the Program Manager (GM) aspired to make major improvements in the way this program would be managed. His vision or aspiration came partly from the experience of serving on an earlier car program, under a charismatic leader, which had been extraordinarily successful (but never replicated or documented). Initially, Fred entered the Epsilon experiment with the thinking of a fairly typical automobile line manager, with an autocratic management style. He was interested in taking some risks in order to make signiﬁcant improvements to the traditional launch process, which he believed to be seriously ﬂawed. That was the main thing that made him different. He also liked the idea of getting researcher– consultants from the renowned MIT to work with them on this. But in no way did he have a yearning to bring a Grow approach into the workplace. Back at the beginning of that project Fred was not interested in such theories. He was, however, impressed by Peter Senge’s presentation on systems thinking and organizational learning, and the possibilities they offered for managing smarter. By contrast, his partner in this OT venture, who urged him into it, was Nick Zeniuk, his second-in-command. They had worked together before. Though different in personality and style, they respected one another. Both had heard presentations from Deming and Senge about a new approach; Nick was enthusiastic and quickly learned more. He enjoyed reading OD articles and books, though he had no training in that area. Fred acknowledges that when he agreed to Nick’s proposal, he had no idea how much his involvement in learning-based leadership would change him personally.

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Initially Nick was more clear that they were promoting signiﬁcantly new ways of managing and leading, that this could be some kind of paradigm shift. The kind of partnership they had at the outset, through which they both grew and changed personally, suggests a viable pattern that can be a model. Its essence is a partnership between a relatively traditional but pragmatic (Drive-oriented) manager, who is willing to be a bit open-minded (but has only a vague idea of what the changes will be like) and a partner who is enthusiastic about becoming more of a learning-based leader. The latter may be only a beginner but (of the two) he/she has a clearer vision of what the process might be like. Since Fred and Nick began their pioneering partnership in the early 1990s there are now more opportunities for OT beginners to see and hear learningbased leaders as role models, and (more effective) to get experience in working with them. It seems remarkably hard for those who have not had some personal experience of Grow methods to understand them from purely second-hand information (just words). So ﬁnding more easy-access ways for newcomers to take a ﬁrst walk down that path, could remove a current barrier to people discovering if this is something they want to try out. Then (according to Grow theory) the satisfactions of working in this way, in relationships with more open communication, shared vision, and trust, can be expected to reinforce the initial commitment and add to it. This cycle of positive, intrinsic reinforcement can overcome frustrations from the remaining obstacles presented by the unrelenting immune system, which lurks even in relatively friendly environments (Senge et al., 1999).

CONCLUSION Successful OT, I have argued, requires us to go beyond the Grow and Drive approaches to managing change. Either approach alone has a serious weakness and cannot succeed without coming to terms with its counterpart, and without incorporating a signiﬁcant part of the other. On the one hand, OT based only on Drive principles is in danger of failing to engage employees, hence failing to put down roots (changed thinking) that is needed for sustainability. At the same time, OT based only on Grow principles is in danger of disconnection from the executive power structure and so failing to be tightly aligned with ofﬁcial strategy. It is also in danger of not making good use of structural changes in support of the Grow strategy. The hybrid approach also can fail unless OT leaders can integrate the two sides effectively. The bi-focal formula offers a guide for OT leaders, a guide

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to integrating the two sides through blending two kinds of goals (short-term results and long-term capacity building) when they contract with line managers for resources and permission to operate in their innovative (Growhybrid) fashion. This Grow-hybrid (bi-focal) approach, relative to a purely Grow approach, creates a stronger base of support in the host organization, lowered risk, and improved prospects for surviving and spreading. The bifocal formula goes beyond a basic win/win approach. It is based on a belief that better results are produced when the perspectives of the two sides are more fully integrated. This requires (1) that the Grow methods can truly, consistently produce the results that the host organization wants and needs, and (2) that both sides understand the needs and methods of the other. It’s a high standard. The interrelated hypothesis, supporting the bi-focal formula, is the partnership proposition, which states that successful OT leadership, especially application of the bi-focal formula, is facilitated by partnerships between two kinds of OT leaders – because it is hard for one person to master both sides (Grow and Drive perspectives). In these OT leader partnerships each partner specializes more on his/her stronger side (Grow or Drive) – but each one respects the needs of the other side. And each is committed to keep learning how to understand better the mindsets of the other. While there are some change leaders who can embody both approaches, this talent (or level of human development) is too rare for organizations to depend on it. So they should facilitate the forming of this kind of partnership. Such partnerships should also prove to be a powerful form of leadership development, eventually producing more change leaders capable of going solo – one person covering both Drive and Grow sides alone. At the top of the organization this partnership is especially important, but it applies at all levels. Some rare individuals are able to carry the dual burden alone; many are forced to try it because they have not found the right partner. So the crux of all this is that successful OT on the hybrid model requires (1) collaboration between OT leaders and line managers on a bi-focal contract and (2) partnership between two or more OT leader–partners on the project or initiative to deliver on the contract. The viewpoint of this paper favors the Grow approach and is concerned with its difﬁculties in getting established in a world where the Drive approach to management is widely taken for granted and the organizational immune reaction rarely sleeps. I acknowledge but do not apologize for that bias. That does not mean that I believe a world free from all Drive inﬂuences would be a better one. Even in an imaginary world more friendly to Grow

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ideas, it is far from clear to me that Grow methods could succeed alone, without at least some leavening with some elements associated with Drive theory, such as accountability for measurable results, attention to structures of many kinds, and clear boundaries. I suspect there is some danger that core learning teams initiating change may enjoy their homogeneity around Grow principles too much and for too long. (The ‘‘cult’’ danger.) Unless they ensure that they have a member (or close afﬁliate) from ‘‘the other side’’ they may not succeed in integrating the two sides well enough according to the bi-focal formula. Mostly we live in a world of Drive-oriented management, which sometimes gives a secondary, condescending nod to Grow principles. So the onus rests on those who take seriously the Grow approach to make their case. Drive is the default culture in most of the industrialized world. Many Grow practitioners operate ‘‘under the radar’’ (a personal declaration I hear often). They may carve out a clearing in the ‘‘jungle’’ but still have to deal with the majority culture at the boundary of their enclave. Producing outstanding results is a necessary but not sufﬁcient condition for OT initiative to survive, ﬂourish, and spread. The Epsilon project illustrates both striking success at the local level and hitting major limits to spreading the success (Kleiner, 1996). If Grow-oriented, learning-based leaders are to thrive and spread their way of doing business they need political cover from senior executive sponsors; they need agreements with their line managers (as stated in the bifocal formula); and they need to show both their line managers and higher executives how they contribute signiﬁcantly to the corporate strategic goals. Likewise, from the other side, smart Drive-oriented executives who want to have a sustainably high performing, competitive business should come to terms with any learning-based leaders they can ﬁnd and give them space and support to implement OT in their business. These partnerships can create win/win arrangements up and down the organization and better results. (This is collaboration on a bi-focal agreement.) Such bi-focal agreements are the bread and butter of OT, connecting the process work and learning to the organization’s business model and strategy. Managing these agreements is challenging work. It includes ﬁnding the places in the organization where there are opportunities for such agreements (and members who would want to participate); negotiating these agreements, and producing the promised results as well as those other results that are necessary to build organizational capacity. To be an effective learningbased leader is not easy, but to be an effective leader of a Grow-hybrid OT initiative is harder, since it requires the ability to see both sides and to integrate both sets of principles and expectations.

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Just as (I believe) the partnership between Drive and Grow leaders is the key to improved OT practice and results, I believe that the key to improved understanding of OT and better theory lies in partnership between practitioners and theorists. This paper would not have been possible without the contributions of many OT practitioners and fellow SoL members to my education in OT, for which I am most grateful. I see a strong parallel between these two essential partnerships for important purposes, one for theory and one for practice, both challenging, sometimes very rewarding, and always risky.

NOTES 1. SoL, the Society for Organizational Learning, is an intentional learning community composed of organizations, individuals, and local SoL communities around the world. SoL is a not-for-proﬁt, member-governed corporation. It was created to connect corporations and organizations, researchers and consultants to generate knowledge about and capacity for fundamental innovation and change by engaging in collaborative action inquiry projects. SoL was formed in 1997 to continue the work of MIT’s Center for Organizational Learning (1991–1997). Peter Senge, author of the The Fifth Discipline: the Art and Practice of the Learning Organization is the founding Chair of SoL. (From www.solonline.org/aboutsol/who/) 2. My research partner for the DTE ﬁeldwork was Susan Hull. We had the privilege of conducting site visits, interviews, and observing various meetings at both nuclear (Fermi) and two fossil generating plants, thanks to Doug Gipson (Senior Vice President), Bill O’Connor (Vice President, Fermi), Bill Roller, Gayle Ashbridge, and Colleen Brown. DTEEnergy was a member of SoL up to the time of our ﬁeld work. The company had a signiﬁcant number of supporters of the Grow approach among senior executives, managers at all levels in the Fermi division, and in various areas of the rest of the company. In this respect it is unique among the cases used here. 3. NRC is the Nuclear Regulatory Commission, part of the US Department of Energy. 4. My assessments in this case are based on Car Launch and interviews with the two change leaders and some other employees, not including their boss. However, I have information from a colleague who interviewed the boss. 5. For several long interviews, company newsletters, and other help in researching this case, most of it done before we suspected that it would have an abrupt ending, I am obliged to Allan Barr, outside consultant to this project. 6. Naming this idea as ‘‘the bi-focal formula’’ is intended to evoke the image of eye glasses that help the user to focus on close objects at one moment and to switch easily to see distant objects – back and forth, freely. Transfer this optical image to twinned time focus shifts, switching between near-time and longer-term issues. The metaphor of peripheral vision is also useful here.

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7. This hypothesis is based on the experience of several SoL-connected OT projects. I am greatly indebted to a number of outstanding OT practitioners for the opportunity to see them at work and to discuss with them their practice theories, especially Marilyn Darling, Heidi Sparkes Guber, David Flanigan, Robert Hanig, Fred Simon, and Nick Zeniuk. 8. My citable data sources consist of the two published sources listed. In addition, I also had the beneﬁt of valuable context from working as a research employee of the VHA for over two years, working on semi-related topics, having access to the current (post-Kizer) culture of that organization. I also acknowledge the help of Martin Charns in understanding VHA. 9. In other cases we shall ﬁnd structure to be a more central issue, in one of two senses. In some OT cases, process improvement demands changes in company-wide infrastructures or permission for the new initiative to operate outside of them. (This typically creates resistance from stakeholders in the old order – hypothesis.) In other cases, the very purpose of the OT initiative may be to cause the organization to update and upgrade its infrastructures and practices, as for example in the ﬁrst CEOled OT at Xerox in the 1980s after its market share plunged from 80% to 20% (Kearns & Nadler, 1992). 10. In the Parsonian view there are four basic functions in any social system: adaptation, goal attainment, integration, and latency (pattern maintenance). 11. The importance of grassroots as an important source of integration is probably underestimated by most. But not by Weick, certainly, who suggests a whole different approach to OT, based on assuming that emergent, grassroots change is commonplace throughout organizations, instead of assuming that every change initiative requires a heroic effort against resistance. Change management, in that view, has more need for guidance and steering, and less need for the usual initiating and persuading (Weick, 2002). 12. For my data on the EPA case I am indebted to David Fierra and Georgiana Bishop, joint leaders of that initiative who gave me several long interviews. I also interviewed four of their colleagues and the two outside consultants who supported the early part of this project. 13. The learning-based leader who is good at attracting followers for a Grow OT initiative, who is good at creating safe space for their learning dialogue, who is good at coaching members, and in developing a shared vision with them may not also be good at the external role that involves establishing an agreement and mutual trust with a line manager and the executive sponsor and managing external relations with them and other outside collaborators.

ACKNOWLEDGMENTS This paper has taken me a long time to ﬁnd a workable way to present its ideas. The wreckage of several earlier attempts reminds me of the degree of transformation needed to reach this point. So I am grateful to Phil Mirvis, John Carroll, Nathaniel Foote, Frank Schneider, and Carol Gorelick for

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their help in developing this paper. Working with Susie Hull on the DTE Fermi case and with Dave Fierra and Georgie Bishop on the EPA case was a pleasure. I am grateful to many active members of the Society for Organizational Learning (SoL) for so many opportunities to learn from their experiences with personal and organizational transformation and even to experience some of my own. With certain members I was able to see them working with extraordinary skill as change leaders and to talk with them about their OT theory. For this I am grateful to Marilyn Darling, Heidi Sparkes Guber, David Flanigan, and Robert Hanig. Finally, for sharing with me their own pioneering experiences in depth and exploring with me many questions and hypotheses in this area, I am specially grateful to Fred Simon and Nick Zeniuk.

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FORMATION OF EXPECTATIONS REGARDING CHANGE OUTCOMES: INTEGRATING INFORMATION AND SOCIAL EFFECTS Feirong Yuan and Richard W. Woodman ABSTRACT Much of the literature in organizational change has taken a single approach to explain employee expectation formation regarding the outcomes of a change event. A conceptual model is developed to integrate two existing streams of research (the information effects approach and the social effects approach) and to develop a comprehensive picture of outcome expectation formation. We propose that information and social effects function simultaneously to shape an employee’s outcome expectations. The strength and content consistency of information and social effects jointly determine what people expect regarding change outcomes and how confident they feel about those expectations. Implications are discussed in terms of setting the boundaries for information and social effects as well as future research directions. The expectations that people hold inﬂuence their behavior. Not surprisingly, expectations appear as a key construct in a variety of behavioral theories (e.g., Ajzen & Fishbein, 1980; Vroom, 1964). An expectation is commonly deﬁned as an individual’s subjective belief in the probability that a given state either Research in Organizational Change and Development, Volume 16, 81–104 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16003-6

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does or will exist (cf., Woodman & Tolchinsky, 1985). Living in a world of uncertainty, people typically develop a variety of expectations that bring the image of the future into the present. Such expectations serve as important means for individuals to digest uncertainty and to make decisions about effective and appropriate behavior. Change, by its very nature, creates uncertainty. The natural link between change and uncertainty makes expectations extremely important in guiding people’s behaviors during change processes. Employee expectations about the outcomes of a change event or program, in particular, have assumed an important role in both the research and practice of organizational change and development. Consistent with the expectancy theory of motivation (Vroom, 1964), organizational members will put forth more effort to facilitate a change process when they believe a desirable change outcome will be realized. In change management practice, establishing positive expectations for change outcomes has long been considered an important strategy to increase employee readiness for change either explicitly (e.g., Cummings & Worley, 2005, p. 158; Woodman, 1989) or implicitly (Armenakis, Harris, & Feild, 1999; Struckman & Yammarino, 2003). Despite the importance of outcome expectations in the change process, research to date has provided an incomplete and somewhat inconsistent explanation about how organization members form these expectations. Studies that have addressed the issue of outcome expectations in organizational change tend to fall into two broad categories. First, one group of studies suggests the importance of providing change-related information (e.g., the purpose of the change, the nature of the change, and how the change is going to be implemented) for boosting positive expectations about change outcomes. Studies in this category have typically found that providing employees with relevant, timely, and adequate information about the change event will signiﬁcantly reduce change-related anxiety and lead to more favorable beliefs about change outcomes (e.g., Miller, Johnson, & Grau, 1994; Miller & Monge, 1985; Schweiger & DeNisi, 1991; Wanberg & Banas, 2000). We label this group of studies as the information effects approach as, collectively, they emphasize how the quantity, quality, and timeliness of change-related information could affect employees’ expectations about change outcomes. A number of other studies, from a quite different perspective, have highlighted the role of the supervisor, manager, or leader in inducing positive expectations among subordinates or group members (Eden, 1984, 1986, 1988b; King, 1974; Sutton & Woodman, 1989). These studies generally suggest that optimistic beliefs of the managers or leaders about the consequences of a change event will induce similar optimistic outcome expectations among employees. We label this latter group of studies as the social

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effects approach due to their focus on how the outcome expectations of inﬂuential others shape the outcome expectations of employees. The two existing camps of study approach the issue of employee expectation formation from different angles. Importantly, studies of information effects on expectation formation typically ignore possible social effects and studies of social effects rarely make attempts to incorporate information effects. However, in the real context of organizational change, an employee’s outcome expectations are likely to be inﬂuenced by both information about the change event and beliefs from inﬂuential others. Moreover, most changerelated information is likely to be designed by managers and delivered to employees by supervisors, and therefore would also contain and reﬂect the judgments and opinions of others. Therefore, information and social effects seem to be intertwined with each other and affect the formation of expectations simultaneously. Research, however, still lacks a theoretical framework to explain how an employee formulates his or her expectations about change outcomes under the inﬂuence of both information effects and social effects. This paper is a preliminary attempt to address this research gap. We ﬁrst review the two existing approaches to expectation formation and describe the rationales behind each. Then, we suggest that the information effects approach and social effects approach each emphasizes a different information processing mechanism through which employees form their expectations about change outcomes. Next, we propose a heuristic model to integrate the two existing research approaches. We contend that change-related information affects expectation formation through both information effects and social effects. People’s expectations about change outcomes will be a weighted function of these two effects. Information characteristics, social opinion validity, individual conﬁdence in information scrutiny, and change-related variables are proposed as key factors determining the impacts of information and social effects. The strength and content consistency of the information and social effects will jointly determine an individual’s expectations regarding change outcomes as well as his or her conﬁdence in these expectations.

TWO EXISTING APPROACHES TO EXPECTATION FORMATION Information Effects Approach Studies in the information effects approach suggest that the quantity, quality, and timeliness of change-related information have important effects on

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employee experienced uncertainty, anxiety, and attitudes toward change. For example, Schweiger and DeNisi (1991) found that employees who received frequent, honest, and relevant information about the merger (i.e., a realistic merger preview) perceived signiﬁcantly lower levels of uncertainty than employees of another plant who only got limited information about the merger. Wanberg and Banas (2000) found a positive effect of perceived timeliness, adequacy, and usefulness of change-related information on employees’ openness to a restructuring. Employee expectations regarding change outcomes, as the cognitive component of attitudes toward organizational change, will similarly be shaped by received change-related information. Change creates uncertainty because it brings about something new and unfamiliar. Information about the change event therefore provides the basis for people to develop expectations about the future. Among other things, information about the change event (e.g., background, goals, implementation plan) could help employees to develop a rich understanding of why the change is needed, what behaviors are necessary for successful change implementation, and what consequences will stem from the proposed change. As such, the generation and dissemination of valid data concerning planned changes has long been considered a crucial component of effective change management (e.g., Cummings & Worley, 2005, 159; Woodman & Pasmore, 2002). Employees could acquire change-related information from a variety of sources including, but not limited to, the information purposefully provided as part of the planned change effort. Managers and supervisors typically play a key role in informing employees about change-related issues and concerns. However, in addition to these top–down communication channels, employees can also get change-related information from informal sources such as coworkers, friends, colleagues in other organizations who have knowledge about the change event (or similar events), and business press articles about pending changes in a particular organization. Social Effects Approach The social effects approach of expectation formation highlights how inﬂuential others’ expectations about the consequences of an organizational change will shape employees’ expectations about the same change event. As an example, in a now-classic study, King (1974) investigated the effects of managerial expectations on the outcomes of organizational innovation. King conducted his experiment in four plants of a company that manufactured clothing patterns. Job enlargement was the ‘‘organizational innovation’’ implemented in two plants (plants 1 and 2) and job rotation was implemented

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in two other plants (plants 3 and 4). Managers in one job enlargement and one job rotation plant (plants 1 and 3) were told that they could expect ‘‘higher levels of output.’’ Managers in the other two plants (plants 2 and 4) were told that the aim of the management was to improve relations with employees and that ‘‘increased output was not expected to occur.’’ The results suggest that job enrichment had no effect but expectations did. During the 12-month period following the change, there was no change in the productivity of the low-expectation plants (plants 2 and 4). However, the outputs for both high-expectation plants (plants 1 and 3) increased signiﬁcantly by similar amounts regardless of whether they received job enlargement or rotation. King suggested that managers’ expectations for a positive change outcome were transmitted to their employees, which created mutual expectancy of high performance and stimulated productivity. Inspired by the discovered effect of management expectations, some scholars in the arena of organizational change and development (e.g., Eden, 1988b; Woodman & Tolchinsky, 1985) suggested deliberately raising managerial expectations as a way to stimulate positive expectations among employees and to increase the possibility of effective change. A number of theories provide the conceptual explanation for why inﬂuential others’ (e.g., managers) expectations regarding the consequences of a change event may shape an employee’s expectations of change outcomes. One important theoretical basis is social information processing theory (Salancik & Pfeffer, 1978). Individuals adapt attitudes, behavior, and beliefs to their social context. Social information processing theory suggests that characteristics of an individual’s job are not just an objective reality but socially constructed. An employee uses social information to develop his or her perception of the meaningfulness, importance, variety, and other characteristics of the job. Similarly, the meaning and characteristics of a change event are also, at least partially, socially constructed. In particular, managers and coworkers’ expressed beliefs regarding the consequences of a change event may have a direct impact on the target employee’s expectations about the change outcomes (Lam & Schaubroeck, 2000; Rousseau & Tijoriwala, 1999). Another related theoretical basis is research on self-fulﬁlling prophecy (SFP) and Pygmalion effects. SFP was originally deﬁned as a false deﬁnition of a situation evoking a new behavior that makes the originally false conception come true (Merton, 1948). SFP has been studied in research about stereotyping (Merton, 1948; Snyder, Tanke, & Berscheid, 1977), where a perceiver’s actions based upon stereotype-generated attribution about a speciﬁc target individual may cause the behavior of that individual to conﬁrm

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the perceiver’s initially erroneous attributions. In educational settings, SFP is most frequently discussed in terms of the effects of teacher expectancies on student performance, often referred to as Pygmalion effects (Harris & Rosenthal, 1985; Rosenthal & Jacobson, 1968). Although research on SFP and Pygmalion typically focuses on how one person’s expectations affect another person’s expectations about him or herself (Darley & Fazio, 1980; Miller & Turnbull, 1986), researchers in the arena of organizational change and development have studied such expectation effects in a slightly different way and suggested that one person’s expectations about a change event can also affect another person’s beliefs and expectations about that change event (e.g., Eden, 1988b; Woodman & Tolchinsky, 1985).

EXPECTATION FORMATION: AN INTEGRATED MODEL The two existing approaches in the literature explain employee expectation formation from different perspectives. The information effects approach suggests that employees form their outcome expectations by analyzing and interpreting information about the change event. The social effects approach suggests that employees form outcome expectations through making inferences from other people’s judgments and beliefs. As such, the two approaches seem to emphasize two different information processing mechanisms in which employees could engage in to form their expectations. Social psychological research in attitude change and persuasion suggests two major routes by which people process information (Eagly & Chaiken, 1993; Petty & Cacioppo, 1984, 1986; Petty & Wegener, 1998). One is the central route, through which people reach judgments based on careful and thoughtful consideration of issue-relevant information. The other is the peripheral route, where people’s judgments are based on cues in the context without necessitating analysis of the information presented. By emphasizing employees’ analysis of change-related information, the information effects approach mainly emphasizes the central route of information processing in expectation formation. The social effects approach, on the other hand, emphasizes the peripheral route of information processing by suggesting that employees would take other people’s judgment about change outcomes as cues or references to form their own judgment. However, in the real context of an organizational change, both the information and social effects tend to function simultaneously. Most distributed information about a change event carries not only facts about the

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change event but also certain opinions of the information source (e.g., the top management and the change agent). Change-related information is also likely to be processed via both the central route and the peripheral route of information processing. Instead of solely relying on their own information interpretation (i.e., the information effects) or simply following the beliefs of inﬂuential others (i.e., the social effects), employees are most likely to do both and their expectations regarding change outcomes are likely to be a function of both effects. In this section, we propose a conceptual model to integrate the information and social effects of expectation formation. We argue that information and social effects affect an employee’s formation of outcome expectation simultaneously. And, people’s outcome expectation is a weighted function of both effects. The weight an individual attaches to these two information processing mechanisms will be determined by characteristics of the changerelated information, validity of social opinions, individual conﬁdence in information scrutiny, and characteristics of the change event (see Fig. 1). The amount of weight an individual attaches to either information or social effects determines the impact of the effects on his or her outcome expectations. We refer to such impact as the strength of the effects. The strength and content consistency of the information and social effects will jointly

Information characteristics 1. Quantity 2. Quality 3. Timeliness Information effects

Individual confidence in information scrutiny Change-related information

1. General self-efficacy 2. Perceived change-related expertise 3. Past success in information scrutiny

Change-related variables 1. Magnitude of change 2. Length of the change process 3. Scope of change 4. Personal relevance 5. Frequency of change

Expectations regarding change outcomes - Content - Confidence

Perception of real change outcomes

Social effects Social opinion validity 1. Status 2. Knowledge 3. Trustworthiness 4. Similarity 5. Agreement

Fig. 1.

Perceived discrepancy

Formation of Expectations Regarding Change Outcomes: An Integrated Model.

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determine an individual’s expectations regarding change outcomes as well as his or her conﬁdence in these expectations. Information Characteristics The extent to which information effects inﬂuence people’s outcome expectations (i.e., the strength of information effects) will ﬁrst of all depend on the quantity, quality, and timeliness of the change-related information (see Fig. 1). The quantity of information refers to the amount of information available regarding the change event. A study by Miller et al. (1994) found that the amount of information had a signiﬁcant effect on reducing anxiety toward a change. When trying to make a judgment about change outcomes, employees will have more opportunities to evaluate and therefore be inﬂuenced by change-related information when such information is available in greater amounts and is provided more frequently. However, simply having a large quantity of information does not guarantee a meaningful interpretation. A second important information characteristic is the quality of the change-related information, which can be deﬁned as the extent to which employees perceive the information as useful in helping them understand the change. Useful information should cover important aspects of the change and should provide explanations for key components of the change process. Useful information also needs to be adequately received and comprehended by employees. Finally, timing of the information communicated is essential in addition to its quantity and quality. Timely information provides employees with sufﬁcient time to interpret and understand important change-related issues. Regardless of its quantity and quality, change-related information will not have a major impact on people’s judgments unless sufﬁcient time is allowed to analyze and digest this information. The above observations can be summarized as follows: Proposition 1. The strength of information effects increases when the quantity, quality, and timeliness of change-related information increase. Social Opinion Validity Social opinions could come from multiple sources such as supervisors, change agents, coworkers, friends, and signiﬁcant others. The extent to which social opinions affect employees’ outcome expectations (i.e., the strength of social effects) will ﬁrst of all depend on whether these opinions

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are judged as valid. Extensive research in social psychology has been done on the issue of source credibility (cf., Petty & Wegener, 1998, for a review). Applying to the context of organizational change, at least ﬁve factors may inﬂuence an individual’s perception about the validity of other people’s judgments about change outcomes: status, knowledge, trustworthiness, similarity, and agreement (see Fig. 1). First, research has shown that recipients ﬁnd information from high status or ‘‘powerful’’ sources as more persuasive than information from sources with less perceived power (Festinger & Thibaut, 1951; Raven & French, 1958). Employees may consider the judgments concerning potential change outcomes from high-status people (e.g., supervisor, managers) as more valid because those people typically have more complete and accurate information about the change event and they may also have more power to make certain outcomes occur. Second, the judgments of individuals with more expertise regarding the coming change event will likely be considered as more valid than the judgments of low-expertise people. High expertise has been identiﬁed as an inﬂuential persuasion variable when people are processing information based on other people’s opinions (Petty & Cacioppo, 1986). The potential ability of an external consultant or change agent to inﬂuence employee expectations stems, in part, from the perceived expertise of the consultant. Third, credible sources are not only knowledgeable but also need to be perceived as trustworthy (Eagly, Wood, & Chaiken, 1978; Hass, 1981; Petty & Cacioppo, 1981). Many factors may inﬂuence a person’s perception of the trustworthiness of another. One important factor is the past experience with the person. If another’s judgment was followed but subsequent results show that the judgment was in error, the focal employee will be less likely to consider that person’s judgment as valid in the future. In addition, an individual might attribute other people’s beliefs either to their backgrounds or to factual evidence (Kelley, 1967, 1972). While managers and OD consultants may have higher status and more knowledge about the change event, employees may attribute their favorable judgments about the change event to their motivation to promote the change rather than to the true merit of the change. Therefore, sometimes friends and signiﬁcant others may be perceived as more objective and trustworthy than managers or change agents responsible for the change intervention. Another factor is the similarity between the focal person and others. Social comparison theory (Festinger, 1954; Goethals & Darley, 1977) suggests that similarity is an important predictor of the use of other people’s

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opinions. Source–receiver similarity has also been shown to increase the persuasive power of other people’s opinion (Brock, 1965). In the particular case of organizational change, people are more likely to consider opinions from people who have similar jobs and performance records as valid reference to predict the impact of the change event on themselves. Further, judgment about the change event from people who have similar personal values will be considered as more valid than those from radically different others. Finally, agreement among opinions from different people has an important effect on perceptions of opinion validity. The agreement, especially unanimous consensus, among social opinions is a powerful indicator of the validity of that opinion (Asch, 1955). The foregoing can be summarized as follows: Proposition 2. The strength of social effects increases when the perceived validity of social opinions increases. Social opinion validity perception is affected by the characteristics of the opinion source (e.g., status, knowledge, trustworthiness, and similarity) as well as the agreement among multiple social opinions.

Individual Confidence in Information Scrutiny As stated previously, information effects and social effects represent two different information processing mechanisms in expectation formation. Social psychological research in attitude formation (Petty & Cacioppo, 1986; Petty & Wegener, 1998) suggests that the ability, or more speciﬁcally the perceived ability, of an individual to scrutinize issue-relevant information is an important determinant of an individual’s reliance on these two information mechanisms. Brockner’s (1983) plasticity hypothesis suggests that people with low levels of self-esteem are more likely to be inﬂuenced by social cues. Similarly, research in epistemic authority (Ellis & Kruglanski, 1992; Kruglanski, 1989; Kruglanski & Jaffe, 1988) suggests that the difference in self-ascribed epistemic authority (i.e., people’s perception of themselves as knowledgeable and capable of reliable judgments) affects the degree to which people will use their own knowledge to make judgments. In the particular case of evaluating the outcomes of a change event, we label an individual’s perceived ability as conﬁdence in information scrutiny, which refers to a person’s subjective belief about his or her ability to

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understand, analyze, and evaluate change-related information as the basis of making a sound judgment. An individual will have more faith in his or her own analyses of change-related information (i.e., stronger information effects) when conﬁdence in information scrutiny is high, and will be more inclined to rely on social opinions (i.e., stronger social effects) when conﬁdence in information scrutiny is low (see Fig. 1). Conﬁdence in information scrutiny is an example of speciﬁc self-efﬁcacy (Eden, 1988a; Eden & Kinnar, 1991; Woordruff & Cashman, 1993), which refers to people’s self-efﬁcacy in performing well on a speciﬁc task – judging the outcomes of a change event by analyzing and evaluating change-related information. Conﬁdence in information scrutiny is an individual’s subjective perception of his or her ability. As a subjective assessment, it will be inﬂuenced by a variety of individual differences. In particular, we consider general self-efﬁcacy, perceived change-related expertise, and past success in information scrutiny as important (see Fig. 1). General self-efﬁcacy is a stable trait that represents people’s beliefs about self-competence in achievement situations in general (Eden, 1988a). Speciﬁc self-efﬁcacy is a situation-speciﬁc state that varies from situation to situation (Sherer et al., 1982). As a general belief in self-competence, general selfefﬁcacy has been found to have a positive impact on speciﬁc self-efﬁcacy beliefs (Chen, Gully, Whiteman, & Kilcullen, 2000; Eden & Kinnar, 1991; Woordruff & Cashman, 1993). Similarly, we argue that an individual’s general self-efﬁcacy will positively impact that individual’s conﬁdence in information scrutiny. Another individual difference variable is the perception of or belief in change-related expertise. Speciﬁc knowledge about the task inﬂuences an individual’s speciﬁc self-efﬁcacy in accomplishing the particular task (Gist & Mitchell, 1992). For example, compared with other organization members, employees with a human resource management background are likely to be more conﬁdent in predicting the outcomes resulting from the implementation of a new compensation policy. Having knowledge and expertise salient for a particular change event will increase the conﬁdence in analyzing and evaluating information about this organizational change. Yet another important individual difference variable is an individual’s successful past experience in information scrutiny. Personal mastery experience, especially mastery experience in similar activities, is an especially inﬂuential source of efﬁcacy expectations identiﬁed by Bandura (1977). If an individual’s own analyses with regard to previous organizational changes have proven to be accurate and successful that experience will substantially increase his or her conﬁdence in evaluating change-related information for

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subsequent changes. Similarly, erroneous judgments will erode an employee’s conﬁdence. The above analyses can be summarized as follows: Proposition 3. The strength of information effects increases and the strength of social effects decreases when individual conﬁdence in information scrutiny increases. Conﬁdence in information scrutiny is affected by individual differences such as general self-efﬁcacy, perceived changerelated expertise, and past success in information scrutiny. Change-Related Variables The impacts of information effects and social effects on employee outcome expectations are also likely to vary across different organization change events. There are many characteristics of a change event that could inﬂuence an individual’s reliance on these two information mechanisms. We do not argue that the ﬁve change-related variables shown in Fig. 1 are the only possibilities, but we expect them to be among the most important. First, consider the magnitude of change. It is similar to concepts such as levels (ﬁrst-order versus second-order change) or types of change (radical/ revolutionary versus incremental/evolutionary change). First-order changes are linear and continuous in nature. They do not shift the basic paradigm used by the system to guide its functioning. The frames of reference used by members to deﬁne organizational phenomena are maintained (Porras & Robertson, 1992). Second-order changes, however, are multidimensional, multilevel, qualitative, discontinuous, radical organizational changes involving paradigmatic shifts (Levy & Merry, 1986; Tushman & Romanelli, 1985). The magnitude of change represents a continuum ranging from ﬁne-tuning changes, such as employee training, to radical organizational changes, such as reengineering and mergers. Changes with great magnitude fundamentally alter how an organization operates, presenting people with new concepts and new frames of reference not easily understood in light of previous knowledge and experiences. Under these circumstances, employees will be less conﬁdent of their ability to scrutinize change-related information (i.e., weaker information effects), and will be also less conﬁdent of the accuracy of other people’s judgments about the change outcomes (i.e., weaker social effects). The length of the change process is another important factor. A longer time period brings greater uncertainty regarding the ﬁnal outcome. When the change takes a long time employees will have less conﬁdence in foreseeing the outcomes of a change based on their own data analyses and will also have less conﬁdence in other people’s forecasts. With longer change programs, it

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becomes increasingly difﬁcult to anticipate all of the factors that might affect the ﬁnal result. Therefore, an increase in the length of the change process will reduce the strength of both information and social effects. A third factor is the scope of change. The scope of change increases when more people and more functional disciplines are involved. As people have different values, preferences, and abilities, it follows that the more individuals are involved, the greater the diversity among them. Likewise, employees working in different functional areas have different skills, experiences, and viewpoints. The involvement of more people and more functional areas unavoidably adds complexity to the change process. The increased complexity will reduce an individual’s conﬁdence in his or her own ability to evaluate change-related information (i.e., weaker information effects) and will also reduce an individual’s conﬁdence in the accuracy of other people’s predictions (i.e., weaker social effects). Personal relevance is another important factor. Personal relevance is an important determinant of people’s motivation to scrutinize issue-relevant information (Petty & Cacioppo, 1979, 1990). People will be more motivated to digest change-related information when the change event has a major impact on their work life such as their work procedures and job security. In these situations, change-related information will have a greater impact on people’s outcome expectations (i.e., stronger information effects). Likewise, for a change event that is more personally relevant, people will more actively seek out social opinions regarding change outcomes and will pay more attention to available social information (i.e., stronger social effects). Finally, the frequency of change matters. High frequency of changes may increase employee cynicism and suggest that change programs are likely to be ineffective (Wanous, Reichers, & Austin, 2000). Such cynicism creates a sense of indifference and will discourage employees from digesting change-related information or evaluating social opinions about the change event (Reichers, Wanous, & Austin, 1997). The foregoing can be summarized as follows: Proposition 4. The strength of both information and social effects decreases when the magnitude, length, scope, and frequency of change increase, and when personal relevance of change decreases. Formation of Outcome Expectations: Integrating Information and Social Effects There are two important properties of an individual’s expectation regarding change outcomes. One is the content of that expectation, that is, the issue of

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what to expect. The other is an individual’s conﬁdence in this expectation. The content of the outcome expectation will inﬂuence employee attitudes toward the change event and their willingness to participate in and support the change process. People are more likely to facilitate a change event (by actively learning new procedures, participating in training and information sessions, cooperating with change agents, spreading good will among coworkers, etc.) when they believe that the change event will bring about consequences that are meaningful and beneﬁcial. However, this linkage between positive expectations and supportive behaviors may be moderated by people’s conﬁdence in their outcome expectations. People’s conﬁdence in their judgments determines how much they commit to and act on their judgments (Klayman, Soll, Gonzalez-Vallejo, & Barlas, 1999). A ﬁrm belief in positive change outcomes is more likely to result in active and consistent supportive behaviors than ambiguous positive feelings. Less conﬁdent expectations are also easily changed and therefore less durable. A simultaneous examination of both the strength and content consistency of the information and social effects provides a viable way to understand the content of people’s outcome expectations as well as their conﬁdence in those expectations. Considering the strength of both effects results in four possible situations: both effects are strong, information effects strong/social effects weak, social effects strong/information effects weak, or both effects are weak. At the same time, the employee’s own conclusion based on analyzing change-related information (information effects) could be either consistent or inconsistent with the opinions from other people (social effects). Different strength and content consistency situations can be summarized in Table 1. The two left columns of Table 1 describe situations where an employee’s own conclusion based on analyzing change-related information is consistent with social opinions. In these situations, the content of an individual’s expectations regarding change outcomes is consistent with both his own analyses and other people’s beliefs. An individual’s conﬁdence in her outcome expectations, however, could vary from high to moderate depending on the strength of the two effects. Clearly, an employee will be very conﬁdent in her judgment of the change outcomes if she was very conﬁdent in making her own judgment (strong information effects), which turned out to be consistent with the opinion shared by most other knowledgeable and trustworthy people (strong social effects) (i.e., consistent content, both effects strong). Such conﬁdence will be especially high if instead of passively receiving social opinions, the person was actively interacting with others and was reinforcing her beliefs by explaining her rationale to others (Heath & Gonzalez, 1995).

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Table 1. Content of and Conﬁdence in Change Outcome Expectation as Determined by the Strength and Content Consistency of the Information and Social Effects. Consistent Content Content Both effects strong Information effects strong, social effects weak Social effects strong, information effects weak Both effects weak

Conﬁdence

Inconsistent Content Content

Consistent with both Consistent with both

High

Consistent with both

High

Consistent with the social effects

Moderate

Consistent with both

Moderate

Ambiguous, undetermined

Low

High

Ambiguous, undetermined Consistent with the information effects

Conﬁdence Low Moderate

There are also situations where information and social effects are consistent with each other but only one effect is strong. This could be a situation when there are mixed social opinions about change outcomes yet the focal person was very conﬁdent in her own information analyses because of successful previous experience (consistent content, information effects strong/ social effects weak). This could also be a situation when less conﬁdent people gained conﬁdence when their judgment was backed up by similar beliefs shared by a large number of powerful and knowledgeable others (consistent content, social effects strong/information effects weak). In those situations, an individual’s conﬁdence in his outcome expectations is likely to be high due to the consistency between information and social effects, although the conﬁdence level would not be as high as it would be when both effects are strong. Even the consistency of the information and social effects would not boost an individual’s conﬁdence too much when both effects are weak. An example is an individual who only came to a tentative judgment based on his own analyses because the available change-related informant was ill-constructed and difﬁcult to understand (weak information effects). Several coworkers shared his belief about change outcomes. Yet, he was not completely conﬁdent in these coworkers’ ability to make an accurate forecast for this change event (low validity perception, weak social effects). In that situation (consistent content, both effects weak), he is likely to have moderate conﬁdence in

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his own judgment based on some support from social opinions. However, the conﬁdence level will not be high due to the lack of conﬁdence in both his own analyses and those of others. The two columns at the right-hand side of Table 1 describe situations where information and social effects are inconsistent. This could be the situation when a highly conﬁdent self-reliant individual came to a judgment about change outcomes (strong information effects) that was inconsistent with the opinion shared by a large number of knowledgeable others (strong social effects) (i.e., inconsistent content, both effects strong). When the information from two strong effects is in discrepancy, it becomes extremely difﬁcult for the focal person to make a decision about what to follow. The individual is likely to experience high levels of anxiety and his expectations are likely to be ambiguous and undetermined. The discrepancy between information and social effects is relatively easy to resolve when one effect is much stronger than the other (information effects strong/social effects weak, or social effects strong/information effects weak). People would be likely to form expectations based on the stronger effect in these situations. And they will have a moderate level of conﬁdence in their expectations because the strong impact of one effect enables them to negate the inconsistent judgment from the weaker effect. The bottom-right cell of Table 1 represents the situation where people cannot make conﬁdent judgments based on their own analyses, and at the same time, cannot rely on a convincing social opinion (inconsistent content, both effects weak). One example would be a dramatic and lengthy companywide transformation. Such a long-lasting and large-scope change may deprive an individual of her conﬁdence in making an accurate forecast about the consequences based on her own analyses (weak information effects). At the same time, managers, change agents, and different coworkers may hold different beliefs regarding change outcomes that are at odds with each other (weak social effects). In this situation, there is disparity not only among other people’s opinions but also between the focal person’s judgment and other people’s beliefs. Under these circumstances, employees are likely to experience high levels of anxiety with ambiguous and undetermined outcome expectations. Expectation Formation in a Continuous Change Process Organizational change is a continuous process. Pettigrew, Woodman, and Cameron (2001) have argued strongly that notions of time need to be incorporated into all theories dealing with changes in organizations. Our

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attempt to incorporate time into the model explaining expectation formation is shown by the dotted lines in Fig. 1. Employee expectations may change over time. Early experiences with a change may inﬂuence later expectations as the change continues to unfold. Further, an individual’s reliance on different information mechanisms may change at different points of an organizational change program. For example, employees will usually have more information about a change after it has been underway for a period of time. An employee might feel more conﬁdent in making her own evaluations and judgments about change outcomes in the later stages of a change process (i.e., stronger information effects) because change-related information is available in larger quantity and is easier to comprehend than before (as shown in Fig. 1 by the dotted line from perception of real change outcomes to information characteristics). Another potentially valuable way to understand expectation formation in a continuous change process is to focus on the notion of discrepancy effects, that is, the possible effects of differences between employee expectations and actual outcomes as diagrammed in Fig. 1. At some point, expectations will be confronted with reality. The perception of a discrepancy between reality and expectations could create psychological dissonance, which makes people feel uncomfortable (Festinger, 1957). A person could reduce that dissonance by distorting his perception of the reality to make it consistent with his expectations. However, as suggested by assimilation-contrast theory (McClelland, Atkinson, Clark, & Lowell, 1953), perception distortion cannot completely reduce the perceived discrepancy when the real outcomes are too different for people to fool themselves. When people have to face a discrepancy between their expectations and real outcomes that cannot be ‘‘assimilated,’’ this perceived discrepancy could inﬂuence their future mechanisms of expectation formation by changing the weights they place on information and social effects (as shown in Fig. 1 by three dotted lines from perceived discrepancy to information characteristics, individual conﬁdence in information scrutiny, and social opinion validity). On one hand, the perceived expectation-reality discrepancy might inﬂuence an individual’s future judgment about the quality of the change-related information and his future conﬁdence in scrutinizing change-related information. A discrepancy that is very small, or nonexistent, from one’s own judgment could enhance the individual’s belief in the usefulness of change-related information and his conﬁdence in information scrutiny, which increases his reliance on his own information scrutiny (stronger information effects) in the future. In contrast, a large discrepancy between real outcomes and his own judgment would discourage him from

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relying on his own information evaluation (weaker information effects) in the future. On the other hand, the perceived discrepancy between real change outcomes and social opinions about change outcomes may well inﬂuence the perceived validity of the source of the opinions. A very small (or no) discrepancy will increase the validity of future judgments from that source. A large discrepancy will reduce the credibility of that source’s future judgments. Moreover, a large discrepancy resulting from following other people’s opinions might discourage the individual from relying on social opinions (weaker social effects) in the future.

IMPLICATIONS AND CONCLUSIONS Much of the literature has taken a single path to explain the formation of employee expectations about change outcomes. The proposed model integrates the information and social effects approaches by examining how they impact expectation formation simultaneously. One implication of this integrated model is to suggest effective boundaries for both information effects and social effects in shaping employee expectations. It is conventional wisdom that organizations should provide employees with information about proposed changes. The model of expectation formation proposed here, however, suggests that information may not be able to improve employee expectations regarding the change outcomes under all circumstances. Distributing change-related information does not guarantee that employees will make judgments based on that information. Speciﬁcally, our model suggests that providing high-quality information alone cannot guarantee a positive impact unless employees are conﬁdent about their ability to evaluate this information. Similarly, the proposed model suggests a boundary for social effects by arguing that the optimistic managerial beliefs regarding change outcomes will have an important impact on employee expectations only when: (a) these opinions are judged to be valid; (b) the focal employee’s conﬁdence in information scrutiny is relatively low; and (c) the change event is personally relevant and its magnitude, length, scope, and frequency are within a reasonable range. The proposed model suggests that both information and social effects will be reduced when the magnitude, length, and scope of change increase. An interesting issue thus becomes how to utilize information and social mechanisms to construe positive expectations during large-scale organization transformations such as reengineering and culture change. One possibility is to introduce a large-scale change gradually with a series of smaller changes.

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Some existing evidence suggests that such gradual implementation will enhance the success of organization transformations (Amis, Slack, & Hinings, 2004). Based on our model, we would suggest that one beneﬁt of introducing radical changes gradually is to reduce the perceived magnitude and scope of the change, which allows people to develop certain expectations through information and social mechanisms. Another possible strategy is to frame radical changes in a way so that they appear less intimidating to employees (Reger, Gustafson, Demarie, & Mullane, 1994). The change-related variables in our model are ultimately people’s subjective perceptions. Effective management ‘‘sense-giving’’ (Gioia & Chittipeddi, 1991) could possibly shape employee’s perceptions of the change event in desirable ways. Most importantly, the proposed model provides a framework to understand both employees’ outcome expectations and their conﬁdence in these expectations. It emphasizes the importance of integrating both information and social effects in developing a comprehensive understanding of change outcome expectation formation. An examination of Table 1 generates several interesting observations. One observation is the ‘‘consistency effect’’; that is, given the same effect strength situation, an individual is always more conﬁdent in his outcome expectations when the information and social effects are consistent. The consistency effect supports the utility of using multiple strategies (e.g., formal and informal information channels, factual information distribution, and social network management) to establish positive expectations among employees. Future research is also needed to examine how one’s conﬁdence in outcome expectation moderates the relationship between positive expectations and supportive behaviors during organizational changes. Table 1 also identiﬁes two situations where people might not be able to reach clear expectations about change outcomes (i.e., expectation content ambiguous and undetermined). Such situations could occur not only when both effects are weak but also when both effects are strong and inconsistent. These two cells of the table are relatively unstable because people are eager to resolve uncertainty by moving to other cells. Under those ambiguous situations, people will actively search for new information to break the balance between conﬂicting judgments. Their expectations are undetermined, ambiguous, and easily changeable. These situations, therefore, present valuable opportunities for management to channel employee expectations. An important issue, therefore, is how to identify those change stages where high levels of ambiguity are present and how to identify employees who are experiencing such ambiguity.

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In addition, it is important to note that expectations formed from different mechanisms may have different characteristics. For example, research on attitude change suggests that positive expectations resulting from effortful analyzing of change-related information are (a) relatively easier to recall; (b) relatively more persistent and stable over time; (c) more resistant to challenge from competing messages, and (d) more predictive of the person’s behavior (Petty, Cacioppo, Strathman, & Priester, 1994). Therefore, compared with outcome expectations mainly induced by others, positive expectations that are mainly based on effortful information evaluation may be more likely to result in employee supportive behaviors toward the change. This observation suggests that an advantageous strategy will be to encourage employees to analyze change-related information and form positive judgments from that information evaluation. Such expectations would likely be more stable over time and more resistant to pessimistic rumors. One limitation of the proposed model is that it assumes that the formation of expectations is a conscious process consisting of purposeful evaluation of information through different mechanisms. This assumption may not always be valid. Individuals with certain personalities or from certain cultures could be so used to relying on one particular information processing mechanism that doing so becomes an automatic process. The proposed relationships in our model of expectation formation also need to be subjected to empirical test. Studies of change outcome expectations to date have mostly focused on the direct main effects of either information or social inﬂuences. Empirical studies are needed to examine how these effects are moderated by different factors. For example, one could test the moderating effect of change-related variables by examining how perceived personal relevance of change affects the usage of change-related information and behaviors to seek out social opinions about the particular change event. Also, one could test the moderating effect of individual conﬁdence in information scrutiny by examining how optimistic managerial beliefs have different impacts on employees with different levels of perceived change-related expertise. Future research also needs to test the interplay between information and social effects. One possible way is to manipulate the content and strength of information and social effects, and to examine how an individual’s outcome expectations and his conﬁdence in such expectations vary across different experimental conditions. Longitudinal studies would also be desirable to explore how expectation-reality discrepancies for the current change event inﬂuence an individual’s perception of information quality, social opinion

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validity, conﬁdence in information scrutiny, and hence his expectation formation process for future organizational changes.

ACKNOWLEDGMENTS We would like to thank Adrienne Colella, Maura Belliveau, and Bob Henson for their insightful comments on earlier versions of this manuscript.

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CEO DISCOURSE IN MERGERS AND ACQUISITIONS: TOWARD A THEORY OF THE PROMISE– REALITIES GAP Jacqueline Fendt ABSTRACT This study explores the nature and role of CEO discourse in mergers and acquisitions (M&A), and especially during the highly complex postmerger integration process. Abstraction from two extensive empirical data sources suggests that executive discourse in M&A can be seen as fitting a taxonomy involving four categories: dubbed the cartel, aesthetic, videogame and holistic communicator. It is furthermore purported that executive sense-making through discourse may need to be monitored around an ideal and permanently oscillating distance between the executive promise and the many different realities that stakeholders experience in the post-merger process: too little distance prevents change from happening, too much distance erodes the belief in the promised possibilities. This distance, named the promise–realities gap, is different for each (type of) stakeholder, as stakeholders perceive both the discoursed promise as also their everyday corporate realities in different manners. This individual perception of discourse and of the multitude of perceived realities and the volatility of their influencing variables exacerbate the successful management of the promise–realities gap. Research in Organizational Change and Development, Volume 16, 105–153 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16004-8

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It is a recognized fact that despite their long-standing popularity and strategic importance mergers and acquisitions (M&A) do mostly not achieve the expected – and announced – objectives (e.g. Charman, 2000; Grubb & Lamb, 2001; Hussey, 2002; Keite, 2001) and can result in considerable ﬁnancial, strategic and emotional damage (Child, Faulkner, & Pitkethly, 2001; Galpin & Herndon, 2001). Of the three factors that are typically evidenced to be critical to M&A success, namely strategic fit, purchase price and effective implementation (Schweiger, Csiszar, & Napier, 1993), the latter is given increasing weight both in theory and practice. In an eclectic stream of research, scholars have moved beyond the study of the structural and ﬁnancial potentials of value creation through combination, toward examining the impact of managerial action and communication, i.e. the process through which value is created (e.g. Buono & Bowditch, 1989; Buono, Bowditch, & Lewis, 1985; Goleman, 2003; Green, 2003; Hubbard, 1999; Marks & Mirvis, 2000). In continuation of this train of thought, this study examines the nature and impact of CEO discourse on post-merger management. It builds on data accumulated during a seven-year research project on how Chief Executive Ofﬁcers (CEOs), in this case of Swiss or German-based global organizations, cope with the multiple and often conﬂicting demands placed on them in a post-merger context. In addition to being grounded in a broad review of relevant theory and vast documentary evidence, the study includes an unusual source of ﬁeld-gathered evidence. The researcher was herself a leading executive and in this capacity had extensive contacts with the business elite of her region. She kept a detailed professional diary for many years, collecting rich data on the rites, practices, power relationships, kinship patterns and, simply, ways of life of CEOs. She closely observed her ‘tribe’, the CEOs of multinational companies, as they smoothly led seemingly improbable mergers to sustained success, ran apparently successful organizations and/or apparently promising mergers into disaster and/or saved them from just that to bring them back on track. In this landscape of post-merger management from a CEO perspective, sound strategic and ﬁnancial decisions were certainly helpful prerequisites for success, but reasons for merger success or failure were – more often than not – found to lie in the social, cultural and psychological challenges of the post-merger process. In this chapter we examine how some CEOs of transnational mergers handled their communication vis-a`-vis their internal and external stakeholders. We describe the extreme complexity of their ﬁeld of action. We argue that the prevalent postmerger literature – while increasingly addressing process, the human side of M&A and the need to understand and address culture and identity issues in post-merger acculturation – often portrays a static and unambiguous

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understanding of culture. We argue that a less static and functionalist stance vis-a`-vis issues of culture, identity and discourse may possible lead to a better understanding of and to new solutions to the prevailing post-merger difﬁculties. Beyond the commonplace that ‘communication is important’ this chapter describes the executive struggle with discourse in M&A in the face of some hitherto unaddressed aggravating circumstances, namely: the complexity of having to similarly address a plethora of diverse internal and external stakeholders, representing widely different often conﬂicting needs, all essential to the merger success, at the same time. We argue that this may necessitate a new, more complex and less static understanding of the post-merger organization the transience and perishability of the climate of trust and commitment that is the prerequisite to acculturation and good operational functioning: we relativize the current functionalist position that post-merger ambiguity, ambition and anxiety can be reduced by providing stakeholders with ‘credible and relevant’ communication (e.g. Schweiger & DeNisi, 1991). We argue that the expectations and perceptions of the different stakeholders are too varied and that it is therefore virtually impossible and in any case perilous to deliver communication that is ‘credible and relevant’ the volatile nature of the diversity of cultures, norms and values of the multiple stakeholders that enter into play, as they each interpret both executive discourse and what is happening at the work place. In this study we ﬁnd that culture and identity clashes are mostly about interpretations of situations at hand and not based on static, stereotype cultural differences between e.g. ‘the Germans’ and ‘the Americans’ or engineers and marketers, etc. We therefore suggest that research should focus on dynamic aspects of culture, i.e. on cultural ambiguities rather than on coherent, cliche´-type differences. Such an approach could advance our understanding of how to manage such dynamic, aleatory and contextbound differences, rather than just (re)conﬁrm their existence. The CEOs in this study have adopted sundry discursive behaviors and strategies in the described highly complex and often confusing post-merger situations. It is suggested that the observed behaviors ﬁt a taxonomy involving four categories, namely the cartel, the aesthetic, the videogame and the holistic communicator. These discursive categories are discussed and described along major characteristics and dimensions in terms of their contribution to post-merger success. It is furthermore suggested that sense-making through discourse, given the volatility of culture and identity, may need to be monitored dynamically, at an ‘ideal’ and permanently oscillating distance

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between the executive promise and the many different realities that stakeholders experience in the post-merger process: too little distance prevents change from happening, too much distance erodes the belief in the promised possibilities. We argue that this distance, named the promise–realities gap, is context- and time-bound and different for each (group of) stakeholder. Stakeholders perceive both the discoursed promise and the reality – i.e. what is in their view ‘actually happening’ in the company – in different manners. We show how the stakeholders’ individual perception of discourse and of the multitude of perceived realities and the volatility of their inﬂuencing variables exacerbates the management of the promise-realities gap. We also discuss the role of the media as carriers, distributors, accelerators and ampliﬁers, but also as conscious and/or unconscious manipulators of executive discourse in post-merger situations.

M&A AND DISCOURSE Mergers and Acquisitions are examples of dramatic, extreme situations in the lives of organizations and people within them (Buono et al., 1985; Vaara, 2003; Vaara, Tienari, & Sa¨ntti, 2003). Many studies evidence that M&A – almost by default – provoke various types of conﬂicts between the two mergees and thus jeopardize the performance and goal achievement of the combined organization (Buono et al., 1985; Croyle & Kager, 2002; Farmer, 1996; Fortgang, Lax, & Sebenius, 2003; Krug, 2003; Larsson, 1990; Lubatkin, Schweiger, & Weber, 1999; Mosher & Pollack, 1995; Pritchett, Robinson, & Clarkson, 1997; Sitkin & Pablo, 2005). Moreover, there is evidence that antecedent M&A experience – be it in the merging organization and/or in the actors leading the merger change process – does not imperatively improve post-merger performance (Haleblian & Finkelstein, 1999; Srikanth, 2005; Zollo & Leshchinskii, 1999; Zollo & Reuer, 2001). The nature of postmerger management is therefore, albeit increasingly researched, still not conclusively understood in theory and certainly not mastered in practice. On the One Handy The importance of executive discourse in the leadership and management research of M&A has long been recognized (e.g. Bastien, 1987; Cartwright & Cooper, 1993b; Haspeslagh & Jemison, 1991; Napier, Simmons, & Stratton, 1989; Sales & Mirvis, 1984; Schweiger et al., 1993). Language in organizational situations is known to be a vehicle and lubricant for social

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interaction, for reﬂection and for sense making upon organizational phenomena. It both provides a basis for cognition and is a tool to shape cognitions (Vaara et al., 2003). Discourse includes here formal speeches and statements given by top management (Seeger, 1994), but also casual conversations (Hardy, Lawrence, & Phillips, 1998), recurring anecdotes managers and employees tell and retell (Brown, 1990; Browning, 1992) and even written down in formalized statements such as reports, internal memos and press releases. Discourse – and especially the use of metaphors in the discursive construction of meaning – is said to play a key role in moments of organizational change (Cleary & Packard, 1992; Grant & Oswick, 1996; Marshak, 1996; Sackmann, 1989) and innovation (Hill & Levenhagen, 1995). M&A situations produce a particularly acute individual and collective need to understand a new situation and its implications for the self, the group, the organization, etc. The images a leader creates around a merger and the related process away from the existing toward a new organizational future are referenced to be decisive for the merger success (Vaara, 2005; Vaara, Tienari, Piekkari, & Sa¨ntti, 2005). Organizational discourse is also closely linked to culture. Discourse, the symbolic dimension of organizational life and the way speech constitutes meaning for members (Putnam & Fairhurst, 2000; Weick, 1995), simultaneously expresses and creates collective identity and culture for stakeholders (Cerulo, 1997; Hardy, Lawrence, & Grant, 2005). It is a ‘‘way of knowingy[focusing on] the subtle aspects of organizing and to determine what is ﬁgure and ground in the framing of organizational events’’ (Putnam & Fairhurst, 2000, p. 79). As such it can strengthen organizational culture by motivating managers and employees to work cooperatively (Fiol, 1991; Hardy et al., 2005; Pratt & Foreman, 2000) and manage tensions, ﬂuidity and paradox in organizational identity (Fiol, 2002; Gioia, Schultz, & Corley, 2000; Hardy et al., 2005; Pratt & Foreman, 2000). As Kroeber and Kluckhohn (1952) suggest, ‘‘culture consists of patterns (y) transmitted by symbols constituting the distinctive achievement of human groups, including their embodiment in artifacts: the essential core of culture consists of traditional (y) ideas and especially their attached values; culture systems may on the one hand be considered as products of action, on the other as conditioning elements for further action’’. Metaphors, powerful rhetorical tropes comparing seemingly unrelated subjects, entail larger belief and meaning structures. They function selectively to highlight some ideas over others, to create new ways of seeing and thinking (Lakoff & Johnson, 1980) or to mask and de-emphasize some (undesired) ideas or values (Hart, 1997). In times of

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high uncertainty when meaning construction is needed to interpret multiple and often diverging organizational realities, metaphors have instrumental value in helping to embrace change (Marshak, 1996). Scholars have identiﬁed the particular utility of metaphors in situations where organizational reality needs to be restructured in the light of radical change (Grant & Oswick, 1996; Marshak, 1996), especially when continuity needs to be maintained (Putnam & Fairhurst, 2000), i.e. in the management of such organizational dichotomies as stability vs. change and autonomy vs. coordination (Smith & Eisenberg, 1987) and, consequently, in post-merger situations, which cumulate all the above needs (Fendt, 2005). Most current studies on post-merger implementation purport top management communication as a key success factor to merger implementation success. Mergers bring about uncertainty and, as a consequence, anxiety and stress, and communication is said to relieve these effects (Bastien, 1987; Stahl & Sitkin, 2005). Schweiger and DeNisi (1991) argue that to provide stakeholders with ‘credible and relevant information’ alleviates the traumatic effect on employee quality of life and trust in top management. Inversely, Napier et al. (1989) have found an adverse effect on commitment, productivity and trust due to a lack of credible and open information. It is for example suggested that CEOs provide abundant, clear, honest, consistent and constant communication (e.g. Goleman, 2003). Likewise, Marks and Mirvis (1998) stress the importance of the positive articulation of values and priorities in M&A. Marks (2000, p. 22) describes how it took him some effort but that eventually he ‘‘ywas able to convince [the CEO] that ‘telling it like it is’ was the right approach for him to take’’. Others stress the need to begin early, remain intensive throughout the M&A process, to deal quickly with matters (Evans & Pucik, 2005), to listen openly and ‘send convincing messages’ (DiGeorgio, 2003). Schweiger et al. (1993, p. 63) urge that every effort should be made to communicate honestly and that successful ﬁrms explain the following philosophy: ‘‘if we can tell you, we will, if we cannot tell you, we will tell you why (y) if we do not know we will try and ﬁnd out’’. Stahl and Sitkin (2005, p. 92) consider ‘‘ythe credibility of information provided by top management [to be] a sine qua non for trust to emerge’’. To summarize, extant literature argues that discourse in mergers serves as an indispensable function of sense making (Maitlis, 2005; Vaara, 2003; Weick, 1979, 1995), enculturation of new members (Putnam & Fairhurst, 2000), uncertainty reduction (Grant & Oswick, 1996), management of identiﬁcation (Browning, 1992), bonding (Brown, 1990; Dooley & Zimmerman, 2003) and of the creation of norms, roles, structures (Schein, 1985) as well as trust in top management (Stahl & Sitkin, 2005). The call for discursive

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honesty, credibility, consistency (both that the CEO sticks with his message over time and that top management, board etc. speak with one voice) openness, abundance and permanence is nearly unequivocal. Dissonant voices are rare. This is unusual but understandable as these are all virtues that one would spontaneously subscribe to. yBut Then Again, on the Other Hand Given the apparent conclusiveness of the extant body of research it is all the more surprising that in this research CEOs do by and large not follow the stated academic recommendations – and with mixed success when they do. There are intrinsic rationales why they do not and in the subsequent ﬁndings section these are analyzed and abstracted into a taxonomy of behaviors. But there are also two sets of extrinsic rationales that speak against the proposed discursive behavior. Even CEOs who were capable and desiring to be commensurate to the stated virtues – both for moral reasons and because they believed in Stahl and Sitkin’s above quoted logic of success (success is a function of trust that is a function of discursive credibility) – did not act accordingly. For one there are, at least in stock-quoted companies, solid legal reasons why managers cannot communicate frequently and honestly, such as SEC and FTC regulations, public contractor rules, one or both the acquirees’ desire to maintain secrecy, etc. Second, CEOs simply considered discursive honesty, credibility, openness, abundance and permanence as more or less impossible to do (at least not all of these together). And if and where all but practiced, these virtues do not necessarily contribute to postmerger success. To begin with, honesty, credibility, consistency, openness, abundance and permanence are in the eye of the beholder. As referenced, CEOs in post-merger situations face very diverse types of stakeholders, each type with a different, often diverging or even competing agendas. There are for example those who want to maintain jobs, plants, infrastructures (e.g. middle managers, employees, unions, local politicians and the local communities) and those who tend toward a speedy and forceful implementation of whatever operational synergies are possible (typically top management, ﬁnancial analysts, shareholders). To defend their causes all these groups – and sometimes individuals from within such groups (who may yet again have an agenda of their own, i.e. an election campaign) – make ample use of the media, who thus carry, distribute, amplify and accelerate discourse. Often, the media also manipulate and pervert discourse, both willingly – as they take a (mostly negative, accusing) stance – and unwillingly, for example when they themselves are manipulated by purveyors of spin (McKenzie &

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Cannon, 2000). Often spread out in real time (e.g. on live television), such (true or false) media reports increase the pressure on top management to act and to act fast. They can for example provoke such reactions as walkouts, share price drops and/or key talent defection, absenteeism, low morale and productivity (Napier et al., 1989; Schweiger & DeNisi, 1991) and may thus necessitate immediate correction of discourse and/or of managerial action. Such corrections may necessitate concessions and/or the acceleration of decision-making before the facts are ripe, etc. In other words, there is often no time to follow Schweiger et al.’s third recommendation ‘‘if we do not know we will try and ﬁnd out’’. Because the external pressures are too strong, top executives are forced to act quickly so as to stop – or turn – the spin and minimize speculation. Also, it is recommended in the literature that discourses that prove useful in reducing equivocality are retained and reused for similar purposes, or discarded when not useful. But in such situations of extreme external pressure and high-power stakes, discourses that are communicated publicly may become ‘tenacious justiﬁcations’, difﬁcult for the organization to discard or deny (Weick, 1988). In such cases, the original purpose of the discourse (often a metaphor, for example ‘marriage of equals’, ‘marriage made in heaven’, etc.) can turn sour and get out of control. The original metaphor is then often taken up again and again by perverted in all manner of directions (e.g. ‘shot gun marriage’, ‘marriage with the devil’, etc.). Also, the prevalent explanation forwarded for conﬂicts in mergers are rooted in the different personal, institutional and socio-cultural settings. Combining companies are said to each contain a preset texture of values and norms and, when these textures are different, they are likely to act as long-term barriers to social integration (Kleppestø, 2005; Olie, 1990). Such discrepancies of values and norms are reported to exist at various levels (e.g. continental, regional, national, inter-organizational, organizational, group and individual) and functions (engineering, ﬁnance, human resources, marketing), etc. and such culture clashes are referenced to play ‘a major and fundamental role in determining merger and acquisition outcomes’ (Cartwright & Cooper, 1993a). The understanding of ‘culture’ in many such studies is often static, coherent and surprisingly unambiguous: Germans are for example usually precision-obsessed engineers, hierarchical and lacking any sense of humor, the French are arrogant, philosophize all day long and always stop work at midday for a copious delicately cooked meal and a glass of red wine, the Swiss are boring, rich and speak at least four languages while all Americans are cool, entrepreneurial, superﬁcial shoot-ﬁrst-aim-later types. While acknowledging that solid cultural stereotypes exist and that to understand them can facilitate acculturation to a

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certain extent (Trompenaars & Hampden-Turner, 1993), this research has yielded a world far more complicated. Cultural characteristics and identities of the respondent executives were not stereotype and stable but arose from a diversity of received traditions and encounters and were thus transient and varying. So much so, that one German CEO had a master in sociology, a past as a pragmatic silicone valley entrepreneur a Swiss engineer for a wife and a foible for wine, thus giving way to most diverse diverging and/or shared understandings, norms and values. Furthermore, there were ‘‘yall the differences between people in positioning and experience; and y the pragmatics of purpose and interest’’ (Barth, 1993, p. 5). The identities encountered and in need of management were therefore not reducible to such ‘stable memberships of communities of thought’ (Kleppestø, 2005) as are described in most post-merger studies. In this chapter we propose to go beyond this predominantly functionalist understanding of culture in M&A. As in Kleppestø (2005), we understand cultural clashes as conﬂicts ‘over deﬁnitions of the situation at hand’ (p. 131), rather than as conﬂicts between default topologies of static norms and values. When such a point of view is adopted, it becomes more relevant and interesting to study variations and ambiguities, rather than coherence, processes rather than structures and, ﬁnally, the nature of how to deal with cultural differences rather than the differences per se. The original research had focused on CEO cognition and had not especially examined discursive issues. It had seemed futile to dig into discourse in the light of the apparent conclusiveness about how to handle communication in mergers. But the issue became more relevant as was observed what substantive difﬁculties many CEOs displayed in the management of discourse in the intricate post-merger environment – and it became deﬁnitively exciting as some CEOs failed in their M&A communication with just the discursive strategy that is unanimously recommended by current literature (i.e. the more, the faster, the more honest, the bettery). The researcher decided therefore to revisit the two original data sources (described in the methodology section) with discourse in the focus.

METHODOLOGY AND EMPIRICAL FOUNDATIONS This study is based on two data sources: the author’s ‘CEO diary’ – collected over years of active presence in the ﬁeld, an ethnographic journal that contains detailed notes on the author’s regular contacts with over one hundred top executives in Switzerland and Germany, many of which leaders of

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companies in the process of digesting one or several recent mergers. In a separate study, this data was distilled into seven ‘impressionist tales’ (Van Maanen, 1988), and a moral, illustrating various facets of the mergers and acquisition game and its principal actors (Fendt, 2005). Grounded in this experience, the researcher had embarked upon a second research loop, combining a case study approach with grounded theory method on 10 major global corporations that had been involved in signiﬁcant acquisitions or mergers since 1996 (Table 1). The databases serving both these research loops were revisited for the purpose of this study. Indeed, substantial records from the ethnographic diaries and a fair number of questions in the in-depth narrative interviews directly or indirectly addressed discursive phenomena (Table 2). These data were reread, recoded and abstracted in the light of the new research question. A longitudinal, exploratory, multiple case study design with triangulation was chosen and the whole study was systematically documented throughout the preparatory phase, evidence collection, evidence analysis and evaluation. Longitudinal, so that phenomena could be observed throughout a variety of contextual situations, which was presumed to lead to a clearer understanding of their nature; exploratory, because situations are explored in which the studied phenomena have ‘‘yno clear, single set of outcomes’’ (Yin, 1982) and multiple-case because it adds conﬁdence to ﬁndings if a replication logic is followed (Miles & Huberman, 1994). Both literal replication logic (similar results to previous cases) and theoretical replication (contrasting results but for predictable reasons) were tested. Reliability was addressed by systematic documentation of the research process and by a longitudinal approach over a period of seven years. Validity was addressed as construct validity by communicative validation in the shape of respondent checking and member checking, and chains of proof. The ‘proposals of reality’, which were gained from the analysis were mirrored back to the interviewees and their feedbacks taken into account and incorporated into the results. Furthermore, analysis and interpretation data was randomly checked by another scholar so as to ensure consistency of interpretation and reduce subjectivity. The 10 postmerger cases were chosen by theoretical sampling and described in terms of their nature, location, M&A motives, post-merger status and the ﬁeldwork conducted. The main research focus was on the CEO. Each executive was interviewed twice, with a time interval of no less than six months between the two formal, narrative interviews. To reduce subjectivity, one further member of the CEO’s management team was also interviewed, also twice and also with a time interval of no less than six months. The two-interview approach permitted to verify emerging concepts

Merger Nature

Respondents

Brief Description, Context

M&A Status

M&A Rationale

HQ

Acquiree and acquirer

CEO, VP

TELECOM: New Market Player on hitherto closed market. Strongly inﬂuenced by Global Brand. Objective is to get established in a newly deregulated market. Long-term No. 1 objective. At ﬁrst totally focused on branding. Euphoric ambiance. Need for fast growth obliged to acquire suboptimal staff. Huge marketing and training budgets. After successful years, painful consolidation with a strong demotivation effect

Reaching delayed completion

Growth, market share

CH

2

Several large acquisitions

CEO, VP

HITECH: This global group had under-gone considerable changes, including company name and brands. Key technologies and solutions for leading companies in IT and manufacturing. Several strategy and management changes. Unrest at the top. Confusing communication

Merged and split again

Growth, diversiﬁcation

CH

3

Takeover dubbed merger of equals

AUTOMOTIVE: Transatlantic mega-merger between highly

D

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1

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Table 1. Case Studies.

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Table 1. (Continued ) Merger Nature

Respondents

Brief Description, Context

Local COO, strategic consultant

renowned but stalled and overdiversiﬁed European and mythical US competitor. Years of hardcore restructuring, merger turns to blunt acquisition, destruction of 100,000 jobs. Numerous discursive blunders IT: Strong global brand. Strong leadership from US. Global market organization. Locally strongly sales driven with some local solution business. Several CEO changes. Strong industry consolidation pressure. Race for time to move from products culture to services/solutions culture

Several M&A

CEO, CEO subset

5

Large acquisition

CEO, CEO (subset)

HOTEL BUSINESS: Over 6,000 subsidiaries worldwide. Moving its offering upscale by acquiring upmarket businesses. Young charismatic but tough Swiss trouble shooter. Young staff, ‘‘Easyjet’’-style, relaxed, multinational, efﬁcient, motivated. New or outdiscourse

M&A Rationale

HQ

Completed at high ﬁnancial and human cost

Market share, econom. scale, hubris?

Ongoing

Products to services, market share

D

Ongoing

Consolid., econom. of scope

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4

M&A Status

CEO, VP

LIFE SCIENCES: Leading but stolid sciences group merges with slightly smaller, more dynamic competitor to form new global group, abandoning both brand names. Co. A features leadership of empowerment, Co. B a command-and-control leadership, Co. B. dominates merger and imposes much of its culture – but new identity is remarkable well embraced by both. CEO discourse plays key role

Completed on time

Competitiveness, long-term survival, reduce R&D costs

CH

7

Merger of equals

Minister, VP

GOVERNMENT: A vote instructed this regional public administration to reduce its Ministries from 7 to 5. Strong, authoritative Minister with excellent business training Great efﬁciency. Most leading staff are politicians, few have business/ managerial experience. Some inhibition as to concept of new public management and to applying ‘‘business terms’’ to citizens’ needs. Clear hierarchies

Tech./legal completion

Industry consolid., economies of scale, customer focus

CH

8

Merger of equals

(CEO) Chairman, VP

BANKING: Merger of equals between two Swiss-based global players. M&A is daily business

Completed

Global competitiveness,

CH

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6

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Table 1. (Continued ) Merger Nature

Respondents

Several acquisitions

Chairman,VP

10

Several acquisitions

CEO, VP

to theses ﬁrms who integrate dozens of companies/year by rigid, documented processes incl. bonuses, training, attractive positions to keep key players on board. Mutual acquisition knowledge helped to make merger a remarkably smooth success AIRLINE: High quality branded small but global player, aggressive acquisition strategy to gain size and compete with global alliances. With industry facing adversity due to poor conjuncture and terrorism, the endeavor ended in bankruptcy. Arrogant rhetoric FOOD: Typical German midsizer (30,000 employees), founderowned until recently, highly patriarchal. An ingenious product range of excellent quality permits to expand in neighboring markets. Highly successful in all respects: EBIT, cash ﬂow, market share, talent retention

M&A Status

M&A Rationale

HQ

economies of scale, synergies

Company in receivership

Growth, global portfolio, synergies, survival

CH

Completed

Expansion to new markets, synergies

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Brief Description, Context

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Table 2.

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Interview Guideline.

Narrative Interview Guideline (Excerpt: Only Interview Queues Directly or Indirectly Related to Discourse are Stated) First Interview How would you measure the success/failure of a M&A? How do/did you handle collaboration with your team How do/did you collaborate/communicate with stakeholders (customers, suppliers, board, banks, NGOs, unions, administration, etc.) What differentiates post-merger management, if anything, from other managerial situations? Were you surprised by any leadership requirements during post-merger phase? What competencies are/were primarily asked of you? Which competencies do you consider the most important in such a situation? Which was personally your single most important learning from M&A? How would you rate pressure (from different stakeholders)? How? How important was culture? In what way? What is culture? Identity? Was trust an issue? Who are your most frequent contacts regarding the merger? If/when you doubt: do you consult/whom do you consult? Do you usually get answers to your questions/ doubts? What interests/fascinates you about ‘‘management’’? About ‘‘leadership’’

Second interview Have you any comments re transcription, codes, interpretations of the ﬁrst Interview? Describe any changes since last interview (personal, context) How is the merger going? How is the climate in and around the company? How do you know this? (walking around, questionnaires, reports feedbacky) If applicable: Did you do things differently since last interview? Looking back since last interview: what are key success factor of post-merger coping? What surprised you, what was unexpected? Are you a ‘‘thinker’’ or a ‘‘doer’’? Why? Are you a converger or a diverger? Why? Are you a ‘‘listener’’ or a ‘‘talker’’? Why? Do you tend to give trust before it’s deserved? Why? Are you neutral or emotional in your contact with people? Why? Are you an ‘‘intervener/controller’’ or a delegator/empowerer’’ Do you explicitly work with people similar to you or rather different? What does success mean to you personally? How do you deﬁne performance? Are you rather short-term driver or long-term oriented? Why? Do you simplify or try to understand, explain complexity? Are you an exploiter or an explorer? Are you always in control or sometimes allow yourself to be vulnerable? What about intuition? Integrity? Identity? Charisma? Do you share your knowledge? In what situations, how? What is your life goal (accountability vis-a`-vis yourself, vis-a`-vis others) Do you enjoy your work? Anything else that you think I should know?

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against possible changes in behavior over time due to learning, context or mood and allowed the researcher to ‘break the ice’ and get very candid selfassessments from the subjects, including a glimpse into highly personal matters. This process resulted in a considerable mountain of data of 40 very long, narrative in-depth interviews with 20 top executives from 10 different companies, as well as detailed notes from 117 formal meetings and several hundred informal encounters with leading executives of the 10 case companies, plus hundreds of notes from observational and documentary evidence, the author having gained good access to conﬁdential corporate material. This data was then coded, iteratively abstracted, any theoretical signiﬁcance explored and contrasted with available theoretical frameworks, and subsequently developed into concepts and higher order categories and their respective characteristics and dimensions. As stated, the original study did not set out to look in particular for discursive phenomena. But the results that emerged showed that the management of executive discourse played a key role in the situations of radical organizational change that the observed mergers represented and the desire to analyze this further led to this paper. For the purpose of this research, the complete original database has been screened once again to identify moments of discourse and understand their relevance to the entrepreneurial situations and outcomes at hand.

FINDINGS The ﬁndings are presented in three subsections. The ﬁrst concerns the structural understanding of the transient post-merger situation as a juxtaposition of at least four different organizations. This set of ﬁndings is proposed because to understand the complex and particular nature of the transient postmerger organization emerged as relevant to the management of executive discourse. In a second subsection some salient issues with discourse in M&A are drawn from the cases used to describe the discursive strategies and tactics deployed by the respondents are explained. These are mirrored back to extant M&A discourse theory, whereby both frequent occurrences and unusual, ambiguous behaviors were researched. This subsection also has the purpose to give the reader some insight into the substantial original data and into elements of its analysis, abstraction and interpretation process that has eventually led to subsection three. In this ﬁnal subsection of ﬁndings, we propose some theory of discourse in the shape of a taxonomy of executive discursive behavior.

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Subsection One: The Post-Merger Organization In M&A communication research, it is typically recommended that CEOs establish a communication strategy (or philosophy) and plan (e.g. Schweiger & Lippert, 2005). All observed companies and respondents had such a strategy and plan in place. Yet, their implementation often posed considerable problems: post-merger situations are environments of very high stress. Top management, and above all the CEO is bombarded with urgent problems and pulled in all manner of directions by opposing forces. Internal and external stakeholders with their different, often conﬂicting stakes need to be addressed, often under the pressure of intensive and extensive daily media coverage. Many of the mergers studied were spectacular as they involved some mythical industry players. Thousands of jobs are usually at stake and there are all the ingredients of a good drama: a glamorous stage, power games, a charismatic hero – or two; inevitable winners, losers, power ﬁghts – and sometimes a villain. This is enough to keep the popular media busy for weeks, closely following the key story, but also endorsing it with dozens of minor battlegrounds about everyday heroes, victims of globalization, ruthless leaders, etc. Meanwhile the ﬁnancial media are busy observing whether the new management is truly taking all the necessary measures to obtain the promised synergies (i.e. stream down headquarter overheads, consolidate production sites). Their judgment of how radically the expected synergies are being implemented in turns inﬂuences the stock price and thereby the (shareholder) value of the new company. Such media attractiveness in turns motivates additional stakeholders, for example political representatives, activists, etc. to appropriate the subject for their own cause. Their interventions give spin to the formal management messages on the merger at hand and render the control of discourse extremely challenging. What is more, two companies do not become one because some contracts are signed. For quite some time, the two combining players continue to have their own operations, valuable customer and supplier relations, systems and processes, all types of acquired tacit know how, that the other partner does not have or know of. Also, the two companies have a history, an identity, a pride (that is often built by differentiation, i.e. over decades of competition with the very company that they are now supposed to be part of!). All this explicit and implicit value needs to be preserved within the newly merged companies – at least so long as it needs to understand it and be able to judge what to keep and what to discard. Executives therefore do well to understand that they shall temporarily head not one but several different juxtaposed organizations and all that comes and goes with them: the acquirer

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(Organization A), the acquiree (Organization B), the newly emerging combination (Organization C) and some kind of project organization usually called ‘integration team’ (Fig. 1). These organizations, the actors within them and the stakeholders around them have very different and often conﬂicting expectations. Moreover, the actors within these organizations are often the same, but depending on the role they play in within one of these organizations, their interests are different and so are their discourse and their action. Many simply do not know their destiny; they are anxious and stressed and under pressure to cater both for their company – or companies, which? – and for their own interest. Arthur, for example, vice president of Company A, may have to defend that company’s product portfolio (even though he knows that it may be sacriﬁced) because all his long-standing clients have these products in place and want to safeguard their investment. At the same time he wants to demonstrate his toughness, his capacity to change and his commitment to the new management, so as to secure as high a position as possible for himself in the emerging Company C – or a position at all, since, by deﬁnition, there are two executives in line for each post. Also, he is part of the integration team who has the mission to evaluate and propose which production plants to keep and which to close down so as to obtain the announced operational synergies that ﬁnancial analysts expect. Arthur’s wife happens to be manager of a threatened shop ﬂoor. She, in turns, is ﬁghting side by side with the union representative, and with the help of the local media, for her future and that of her rank and ﬁle. On Saturdays Arthur would play golf with the supplier of Company B and with the local minister of ﬁnance, who both lobby intensely for their own agenda. His daughter prepares a term paper at college about the correlation between CEO pay, job cut announcements and stock price gains in M&A. This is perfectly normal post-merger madness as it was encountered in all shapes and sizes in this research. The CEO must understand these multiple realities and manage them, as he or she moves this complex construct toward becoming one effective and committed organization. In these transient, highly uncertain and often dramatic organizational situations established rules, relationships of trust and comfortable positions are upset. Identities are shaken, anxiety is severe, competition is ﬁerce, and the temptation to withhold, manipulate or obfuscate information is high. Thus, multiple and often conﬂicting interests that all warrant satisfaction create multiple dilemmas that have to be dealt with simultaneously in various organizational units and frequently across unit boundaries and organizational levels. Key talent has to be retained (value preservation) and sometimes radical change must be implemented (synergies, value realization). They must

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Fig. 1. The Transient Post-Merger Organization.

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hear and meet the needs and wants – information needs and wants to begin with – of such varied and powerful stakeholders as customers, shareholders, ﬁnancial analysts, union representatives and the media to name a few. Executives have to gain the understanding, trust and commitment of their managers and employees – not once, but every day afresh. The management of this juxtaposition of different but strongly interrelated organizations cannot be entirely anticipated since the due diligence cannot bring out all the hidden challenges within both original organizations. Such surprises are latent in the process itself and necessitate permanent vigilance and correction of action and, by that, set high demands on discourse. CEOs must ﬁnd the right words – and the right balance between deeds and words. Subsection Two: Key Issues with Discourse and Strategies Adopted To give some insight into the analyzed original data and the abstraction process and some salient issues with discourse in M&A are presented here as six discursive strategies and tactics deployed by the respondents are introduced:

the the the the the the

synergies and scale discourse globalization, global power discourse equal footing, marriage discourse ambiguity discourse ‘we are young and dynamic’ discourse long-term sustainability discourse (perception management).

These discursive approaches are mirrored back to extant M&A discourse theory whereby both frequent occurrences and unusual, ambiguous behaviors were researched. For a better understanding of their distinction from – and relation to – each other, the discursive strategies are positioned in an M&A discourse framework informed by the dimensions of financial focus and people focus (Fig. 2). The proposed strategies are not to be understood as mutually inclusive or mutually exclusive. They are not meant to be rigid labels, applied to individuals, but sets of behaviors that should be considered in the context of pertinent circumstances. In fact, many of the CEOs have adopted – at one moment or another – a mix of strategies, whereby they tended to oscillate between neighboring behaviors. For example, it was common to observe both ‘synergy’ and ‘global’ discourse (that would then become ‘global synergies’) and also ‘global’ and ‘marriage’ discursive combinations, but not the ‘young and dynamic’ and ‘synergy’ combination. ‘Ambiguity’ was also a

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Fig. 2.

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Discursive Strategies in M&A.

behavior that was combined with a number of strategies. Also, CEOs changed strategy during the integration process. Either because a particular strategy did not work as expected or, more frequently, because the communication style adopted at ﬁrst was artiﬁcial, planned and did not correspond to the genuine objectives and personality of the CEO. Little by little, as things became hectic and the discursive mode changed from planning and anticipation to improvisation and instinct, the discourse changed. One example was the automotive case (case 3) that began on an ‘equal footing’ (marriage of equals) and global power note and drifted very quickly into a synergy and scale-dominated discourse. The Synergy and Scale Strategy Some CEOs have remained oblivious to the increasingly pressing popular and academic body of literature on the ‘human side’ of M&A. To them, the merger is accomplished when the contracts are signed. Any remaining issues would then be settled by ‘throwing money at them’, as one respondent put

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it. Such CEOs explain their merger actions primarily through ﬁnancial parameters and metaphors such as ‘synergies’, ‘1 plus 1 makes 3’, ‘economies of scale’, or even through ﬁnancial key ﬁgures, such as ‘return on investment’, ‘return on equity’, etc. One explanation that emerged is that they had made a (more or less conscious) choice to focus primarily on their ﬁnancial stakeholders, such as the board of directors, shareholders, analysts, banks, etc. ‘More or less conscious’ means that there was often no explicit intent to spoof or obfuscate information to other stakeholders but rather a kind of reduced ﬁeld of vision, a ‘tunnel vision’ onto the ﬁnancial side of the merger. In some cases (cases 2, 3 and 9) this exclusive viewpoint had provoked violent reactions from stakeholders that had remained unaddressed and resulted in considerable human and image damage for the company. The (popular) media played an important role as an enhancer and accelerator as they took the stance ‘oppressed’ in such situations. The Global Power Strategy The justiﬁcation of mergers for globalization reasons was a frequent underpinning of merger rationales. CEOs used powerful symbolic globalization speech, such as ‘single global entity’, ‘global powerhouse’, ‘world class products and brands’; two market leaders joining up ‘for global growth’ and ‘global synergies’. By emphasizing on the ‘single global entity’, the leaders of a large automotive merger (case 3) had aimed to place the merger in a logic of normality in response to environmental changes. It should have signaled the beginning of a new and inevitable alignment of the automotive industry (Fitzgibbon & Seeger, 2002). The ‘single global entity’ metaphor, grounded in the larger notion of global presence being a prerequisite for competitiveness, had at ﬁrst a wide appeal, even to stakeholders of naturally opposing interests such as shareholders and employees. Especially since it was tempered with assurances (or at least ambiguities understood as assurances) that the unique identity of the two partners would not be lost. However, there was little relation between the chosen rhetoric and the actual decision-making. The suggested changes got ‘‘yforgotten in hypocritical organizational reality’’ (Vaara, 2003). This hypocrisy between the rhetoric and the organizational reality was soon unmasked (Hart, 1997) and a culture clash broke out that was attempted to be remedied by imposing the German culture onto the US company. This immediately debunked the metaphors and gave them a negative connotation. The rank and ﬁle still used them, but in a distorted, caricatural and cynical way. The ‘perfect ﬁt’ metaphor became the ‘misﬁts’ as it was understood to be a smokescreen created by the CEO to downplay the companies’ contradictions in terms of culture and values and

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to imply that convergence in terms of structure and cultures was not a primary merger goal. Though this metaphor originally provided both external observers and employees with reasons for embracing the project, it turned sour when the gap between the promises it entailed and the reality that was beginning to be experienced widened. The Equal Footing (Marriage) Strategy The unifying, equal footing approach is classical for most mergers (or acquisitions) where two partners of roughly similar size are combined. It includes the most solicited metaphor of all, the marriage metaphor (for a comprehensive study on the marriage metaphor in M&A see Dooley & Zimmerman, 2003). In both loops of this research dozens of companies applied the marriage cliche´ at one point or another. And if it was not brought into play by the formal discourse, it came in through media headlines: ‘marriage made in heaven’, ‘perfect ﬁt’ and ‘a marriage of equals’ were some of the most known metaphors. These were heavily used and heavily heard and repeated by all stakeholders. Equal footing metaphors were also used as a smokescreen for takeovers. With the ‘marriage of equals’ metaphor one CEO (case 3) sought to portray the merger as voluntary, based on mutual attraction and expected beneﬁts for both parties. It was also designed to create the meaning that no single person would run this group. This metaphor harvested deep skepticism from the onset and soon began to be manipulated by the executives of the acquiree as a ‘shotgun marriage’ and a ‘marriage with the devil’, to create negative meaning and explain the unequal power rapport between the two merging partners. Approximately one year after the merger the complete rhetoric had been put in place had been belied and had lost its purpose of positively framing organizational reality. Equal footing discourse is also often used in connection with a (cross-)culture message. Extreme cultural differences (e.g. French and Japanese, as in the Renault and Nissan merger) are referenced to render post-merger integration more difﬁcult and this is why many leaders anticipate such differences with multicultural equal footing discourse in the style of ‘united colors of Benetton’, implying that the cultural diversity is considered an asset and that ‘all are considered equal’. Discourse is closely linked to the actors’ cultural identity and language. Many studies draw attention to the increased difﬁculties encountered in mergers of very different cultures. The data in both research loops strongly suggests that a merger between companies that speak the same language (e.g. both German) does not necessarily facilitate acculturation compared to one between culture differences that are more evident. This may be because when the actors are seen to be culturally related, the

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difﬁculties are not anticipated (Hofstede, 1991). Vaara (2003) speaks in this case of the ‘‘yparadox of cultural proximity’’. The differences in culture are then subtler (c.f. also Javidan, Stahl, Brodbeck, & Wilderom, 2005), dynamic (Kleppestø, 2005) and often invisible (Clair, Beatty, & MacLean, 2005). Silence could for example be mistaken for consent whereas it could simply be an expression of a culture of conﬂict avoidance (Vaara, 2003). The equal footing discourse invites the rank and ﬁle to commit morally to a common peer-to-peer project. Congruously, if demasked as rhetoric and demagogy, it will backﬁre. The CEO in case 3 failed to maintain the commitment of his rank and ﬁle. They considered themselves as ‘‘yagent[s] of the interests who own or ultimately control the organization in which [they work]’’ (Armstrong, 1989) – he considered them his heelers. Frustration can ﬂaunt into the face of a CEO if and when he is perceived as not being such an agent of the common interest. His reports will then inﬂuence the course of events from their position and according to their own judgments about what would be best for the company – and ‘‘ydeploying their discretion to achieve certain corporate goals’’. Such executives are determined and prepared to rather ‘ask for forgiveness than permission’ as one respondent put it, since they believe that the action necessary in their eyes could no longer be initiated through the normal hierarchies. Their actions became ‘‘yshaped by an alternative sense of the corporate interest’’ (Smith, 1990, p. 151). They saw their role as one of ensuring the long-term viability of the organization and did no longer accept the CEO’s deﬁnition of how this should be done, judging him to be primarily concerned with himself. The CEO’s equal footing discourse aimed at creating a common culture that ‘‘yshape[d] behavior or (y) structure[d] one’s perception of the world’’ (Heidrich, 2002, citing Carroll) had failed, because the discourse underlying the acculturation was not trusted as the gap between the discourse and the reality experienced was too wide. The Ambiguity Strategy Discourse is extremely pervasive, more so in crisis situations when all eyes and ears are on the leaders. Intimately tied to rituals, myths, symbols and cultural artifacts it is quickly disseminated throughout all levels of the organizations (Putnam & Fairhurst, 2000), especially in highly uncertain moments, such as post-merger situations, where the need for information and therefore the information seeking behavior is enhanced (Rogers & Agarwala-Rogers, 1976). As referenced, top management must simultaneously address very different groups of stakeholders representing many diverse, often conﬂicting stakes, need and values (Cheney, 2001; Freeman,

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1984). To maintain credibility with all stakeholders and address their competing needs and wants becomes more difﬁcult in global environments (Seeger & Bolz, 1996) and is especially challenging in post-merger situations, when it is obvious to all stakeholders that the future organizations, and thereby power structures are shaped (Fendt, 2005). One strategy observed was to use general and ambiguous discourse, so that each group of stakeholders can take different meanings from the same message (Eisenberg, 1984). One example is the ‘perfect ﬁt’ evoked in the equal footing section above. A perfect ﬁt can be more or less anything to everyone. Some understand this as a metaphor for a peer-to-peer relationship, others more like an accessory, as in ‘ﬁtting’ or ‘ﬁt out’ or in ‘suit’ and ‘accommodate’. As long as nobody asks, such nondescript metaphors reassure. Many CEOs in this study used this strategy at least at some moment in the merger. Often, ambiguity was combined with another discursive strategy. Sufﬁciently abstract and broadly constituted discourse can relate to diverse audiences. However, if and when stakeholders unmask ambiguous speech as volitional and feel morally deceived and disappointed, this behavior can sustainably undermine credibility. The automotive CEO’s had to face at one point such a moral disappointment and correct his discursive derailments accordingly. Still, the ‘single global entity’ and the ‘perfect ﬁt’ metaphors were maintained. Whether this was done because their negative effect was not recognized – because in an increasing march toward grandiosity the CEO had stopped being vigilant (stopped learning, c.f. Bennis & Nanus, 1985) – or whether the metaphors had become ‘tenacious justiﬁcations and difﬁcult to discard’ (Weick, 1988) – is unclear. The ‘marriage of equals’ metaphor was actively discarded, even contradicted by the CEO himself and revealed as pure negotiation tactics, in other words as a lie. This cost considerable management credibility and some legal difﬁculties with shareholders. Stakeholders, and above all the CEO’s colleagues perceived this as dishonest and narcissist: he had ‘taken off completely’, was ‘not listening anymore’ and was perceived as being ‘on another planet’, were some explanations heard in the hallways. Narcissism leads to the development of an excessive preoccupation with one’s image as a successful manager (Bruhn, 1991; Heckman, 1997; Tracy, 2004), toward empire-building and grandiosity and the manipulation of others. It favors extreme individualism, hinders collaborative behavior and leads to an unwillingness or even incapacity to ‘hear the truth’ (Arndt, Thornton, & Foust, 2000; Bennis, 1988; Bruhn, 1991; Murphy, 1996). Such excessive self-centredness and lack of empathy – the CEO found it necessary to debase his US counterpart by telling the world that he had never really meant to play it fair but had always intended to take over the merging

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partner – diminishes trust and thereby the lubrication that allows the organization to work (Bennis & Nanus, 1985). The consequences were considerable key people desertion: physical desertion by leaving the company and moral desertion by passive or active subversive action within the company were some of the consequences. While the rank and ﬁle authored increasingly tragic narratives of events, resisting subjugation (Jermier, Knights, & Nord, 1994), the CEO preserved his hegemony by telling a narrative of epic change (Brown & Humphreys, 2003; Foucault, 1977). But the top management team was no longer a moral community (Anthony, 1986), and therefore, as Reed and Anthony argue, no longer effective: ‘‘Accumulating evidence shows that managers (y) depend for their effectiveness upon norms of reciprocity, upon trust, obligation and the maintenance of defensible social relationshipsy Reality, both social and economic, (y) depends on the dialectics of control and cooperation, on leadership and community and, ﬁnally, upon authority, which is essentially moral.’’ (Reed & Anthony, 1992, p. 608).

The ‘‘We Are Young and Dynamic’’ Strategy The CEO of a large hotel merger (case 5) had a hard time framing organizational reality with salient metaphors. His group had decided to adopt a multibrand strategy with a number of culturally highly diverse brands. These would include both some highly efﬁcient and proﬁtable budget hotel chains and, the one hand, a noble but slightly ailing luxury chain. It was difﬁcult to attribute to this project a strong, unifying message that all stakeholders could hold on to. He eventually sought a common denominator in using modern, young, dynamic and adventure-laden metaphors and mind maps to facilitate the change needed from both highly diverse cultures (Clarke & Mackaness, 2001; Eden & Huxham, 1996). Eventually he even became, himself, the ‘embodied metaphor’ (Jacobs & Heracleous, 2005) of being the young, modern ‘everything, everywhere, to everyone’. By putting his person on the scale, he attempted to create a moral community (Anthony, 1986) in his management team. This is a frequent strategy in young (or young at heart) CEOs of fastpaced knowledge and/or relationship-laden industries. Owing to the recursive nature of meaning generation (Weick, 1995), maps and metaphors have the capacity to construct, rather than only represent the ﬁeld of change, which was what had happened in this hotel merger in a number of areas. However, some more seasoned executives did not ‘mentally resonate’ (Jacobs & Heracleous, 2005, p. B2) with these metaphors and retracted and/or blocked the change processes, which led to a poor climate and even to a temporary change in leadership style in the CEO. Rather than change the

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metaphors, the CEO changed the people to ﬁt the metaphors and his style, and assured the project success. The value of metaphors is how they enable people to place their experiences in context (Stohl, 1995). In most observed mergers, after an initial moment of euphoria, a gap began to widen between the emerging reality and the rhetoric – or, to be more precise, between the different realities (as perceived by the various stakeholders) and the different rhetorics (also as perceived by the various stakeholders). Inconsistencies and confusion began to reign and the explanatory value of the metaphors was reduced. In this confusion, the same rhetoric that had at ﬁrst provoked pride and motivation now created demotivation, despair, cynicism, reduced management credibility and reduced productivity. The same confusion was also used by opponents (e.g. competitors, NGOs, politicians, certain media, headhunters seeking to poach key talent, etc.) to further weaken the meaning system of the corporation that had thus become incoherent. During such moments of genuine crisis, many CEOs seemed unable to spin the rhetoric into the positive. The Long-Term Sustainability Strategy (Perception Management) One respondent (case 6) managed the rhetoric–realities gap more tightly and thereby more proliﬁcally. The mega merger began with a clap of thunder: the mythical company names or the mergees were abandoned just as their over 100-year-old global brands. This message left no doubt: this merger was to be a project of radical change. Yet, management’s promises were far less boastful than for example in the automotive merger (case 3). Here, communication was not based on metaphors at all but on a sobering argumentation that the merger would ‘assure the future of the company’, ensure ‘sustainability’ and enhanced global competitiveness. The long-term dimension of the action was emphasized and gave the project a connotation of social responsibility. Moreover, organizational reality was framed by the unconditional availability of the executives to the media and other stakeholders, for ‘taking the nasty questions, too’ (Von Wartburg, 2004). The CEO had anticipated – earlier and more clearly than in any of the other cases – the huge craving for understanding. But other than many of his peers, he did not forward the big, salient promises, but rather a general message that was solid, also visionary to a certain extent, but at the same time surprisingly modest: ‘long-time survival’. This overall message was seconded with a constant ﬂow of small, concrete announcements. These announcements were immediate, ‘real time’, so to speak: the minute a decision was made in the top management team it was communicated to

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everyone – always with the correlating organizational and personnel consequences, via their 24 hours telephone hotline. In this case it was the media, rather than the company, that strongly worked with metaphors to describe the new company and, especially, the new and unexpected CEO. ‘Life sciences giant’, ‘Super Ted’, ‘smiling Ted’, ‘eager beaver’ and ‘wizard’ were some labels that emblazoned the front pages. Although this discourse was principally awesome it was still considered a liability by the executives who did all to tone it down, by relativizing their communication and occasionally admitting to unresolved issues and, in the case of the CEO, even to some vulnerability. This relative discursive modesty and human touch was accompanied by regular, immediate and openly communicated answers to issues at hand. The role of the media in the construction of reality through metaphor is not negligible: on the one hand, they help to compare the company’s promise with the appearing reality and reinforce the plausibility or, in the negative case, the incompatibility. On the other hand, they also invent metaphors themselves, which the corporate leaders then have to manage.

Subsection Three: A Taxonomy of Executive Discourse Abstraction of data from the two research loops has also yielded three categories of behaviors that inform M&A discourse among the researched leaders. Certain types of discursive behaviors within each category were particularly favorable – or adverse – to successful post-merger management. From these positive behaviors a tentative, hypothetic, ‘ideal’ category of communication behaviors has been constructed, with all the reservations that must clearly be made vis-a`-vis such an idealizing approach. However, the increased complexity of today’s world – and post-merger situations are extreme examples of this complexity – cannot be faced by simpliﬁcation, but rather with an increase of our own internal capacity for complexity. It appears therefore reasonable to outline a set of hypotheses on such a possible behavior of increased internal complexity, which shall be attempted under the label ‘holistic communicator’. The three emerging categories and the fourth, hypothetical category are brieﬂy outlined and summarized, together with their properties and dimensions, in Table 3. The Cartel Communicator: ‘Life is Power’ Cartel communicators are solitary, no-nonsense, facts-and-ﬁgures kind of guys that do not mingle much, except in their restrained circles. Such

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executives grew up in protected markets, trade organizations and barriers and have a low tolerance for ambiguity. Their communication is instrumental, utilitarian, pedagogically motivated and focused on power and unconditional control. Cartel communicators’ messages are determined. Their rhetoric is often dry and martial. They are versed negotiators and powerful speakers in small homogenous circles. Yet many times they are not particularly apt communicators, especially not to large, diverse audiences, nor do they see the need for broad, multi-stakeholder communication, which they delegate to their head of communications. The Cartel communicator’s secretive, power-based lobby has been highly successful in a stable world in which this communication style has served well for decades. Now, that this world is changing, Cartel communicators increase the dose of what used to work, rather than adapt to new needs – often with disastrous results. When they speak of change, they mean that the others must change. They speak of ‘global business’ and ‘acculturation’ from a conqueror’s perspective (the others must learn our culture), they speak of new technologies, ‘knowledge workers’ and ‘ﬂexible labor’ as external phenomena, without relating these metaphors to their own behavior. However, the cartel style has also some solid strengths, namely an unﬂinching determination, an excellent network among top-level political and economic leaders, bold decision-making and a long-term perspective. The cartel communicators’ discourse follows ‘global power’ logic, sometimes combined with ambiguity. The Aesthetic Communicator: ‘Life is Beauty’ This type of leader is the incarnation of communication. Her day’s work begins with a thorough reading of the press that largely determines her actions and priorities. She multiplies personal media appearances, carefully staged as those of a pop star. Her rhetoric is smooth and her metaphors well-oiled. The aesthetic style is all about image. Aesthetic communicators never go anywhere without their PR consultant. Such executives search for meaning, control and security through acts of systematization, exhibition and diversion. They sometimes take the concept of embodied metaphors (Jacobs & Heracleous, 2005) as far as establishing themselves as the metaphor for change, in the sense of a style icon in the fashion business or of an anchorman at a news channel. Their style posits a dualism with the leader on one side and the followers on the other, which mystiﬁes leadership and jeopardizes true collaboration. They believe that they can use the media for their purposes but often end up being used by the media. The problem is that Aesthetic communicators’ successful public appearances bring them to take their perceptions for realities and the curtain over the stark truth often

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Table 3. Discursive Categories with Characteristics and Dimensions. Characteristic, Dimension

Cartel Category

Value system

Life is power and control Within the law Directive Globalization, power discourse; ambiguity

Ethics Leadership Discursive strategy

Communication means

Main entrepreneurial focus Time dimension Medium diversity

Is a possession, a means to an end Degree of control Decades Single medium (verb)

Videogame Category

Holistic Category

Life is beauty

Life is a game

Life is multiple realities, and respect Add value, respect Integrated Management of promise– realities gap

Code of conduct Analytic Culture, equal footing, marriage discourse; ambiguity Multiple personal appearances With CEO

Add value Conceptual ‘‘Young’’, adventure, innovation discourse By images, symbolic acts With all

Is a product to be acquired

Is constructed

Degree of admiration, media support Next quarter Reduced media (verb, some images)

Degree of excitement

Integrated

The time of a game Multimedia

Long and short term

Mixture of verb and image, feeling With CEO and all of top management

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Communication responsibility Knowledge

Formal verbal statements With head of comm.

Aesthetic Category

Long-term dominance High, permanent Low Poor

Short-term results High Medium Excellent, universal

Adventure Integrated High, until boredom High High Excellent but addresses Excellent, diverse only the’young’ Mistake making as a resource

Attitude toward mistakes Networking

No mistakes Stable, long-term conﬁned to few peers

Reduced network

Perception of uncertainty

Is an inhibitor and must be reduced

Social embeddedness Relationship with ext. stakeholders Films

Solitary Lobby

Is related to some temporary factor and must be managed Elitist Communication negotiation Sideways, American Beauty, Kagemusha

Intense, multiple partners, alternating, temporary Is a fact of life and must be integrated in the game tactics Unselective Invited to join the game or ignored Matrix, Erin Brockovich

The Godfather Trilogy, Wall Street

Both long-term and alternative networking Is a fact or life

Diverse, selective Communication, collaboration All types

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Vision Determination Internet literacy Rhetoric

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remains closed until it’s too late. Still, the aesthetic style has distinct strengths, namely a high awareness for communication with various stakeholders, an accent on systematic communication planning, and a processview of change, intuition and charisma. The aesthetic communicator’s discursive strategy is politically correct and mostly one of culture and equal footing, especially marriage. Ambiguity also has its place. The Videogame Communicator: ‘Life is a Game’ This type is a natural multimedia communicator. You ﬁnd her everywhere: in the media, on the shop ﬂoor and especially in the intranet, on the mobile phone and any other electronic communication device. Videogamers are acutely lucid, very well informed, anti-authoritarian and unsparing with the classic leaders, which they consider mediocre, cynical and mendacious. To them, the change program is no longer a program. Change is simply a fact of life. They aptly use visual, symbolic communications, raising the mission at hand to a level of worthwhile human adventure rather than an astute business deal. They use a wide variety of metaphors, both traditional as also images, icons and visual symbols that have the advantage of faster and easier proliferation via electronic media (mail, chats, blogs, SMS, MMS, and other internet- and telecom-related communication means) which they amply use for their leadership. While such metaphors, usually based on globally known popular ﬁlms, musical and TV show references with high recognition value seem to transcend classic cultural barriers (Holden, 2002) – such as German vs. American, or engineers vs. marketers – their recognition value is sometimes restricted to a certain age group (the internet literates) and may create a barrier of comprehensiveness between their generation and more seasoned executives and collaborators. Still, they have a playful but effective capacity to enthuse and innovate that brings their team to ‘beat the bad guys, free the princess and generally make the world a better place’. Videogamers want to have fun above all. They believe that doing a good job and being a good citizen does not have to come at the price of cynicism and sacriﬁce of family life and bonding with friends. It goes without saying that they tell the truth, even when it’s ugly: they see themselves and their followers as ‘in it together’. Videogamers don’t think in hierarchies and terms of ‘moving to the top’ but rather prefer to multiply experiences. They have no mind about losing face before colleagues and easily volunteer unﬁnished bits and pieces of solutions in management meetings. Many have experienced failure in the dot.com hype, but this did not diminish their selfconﬁdence or their entrepreneurial attitude. In their logic it has helped them to progress. Videogamers are explorers, not exploiters: they hop from

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project to project and get bored rather quickly as soon as the task gets repetitive. They stick it out the time of a game. The videogame communicators’ discursive strategy is typically young and adventurous. The Holistic Communicator: Life is Multiple Realities Although they constantly advocate change, many executives have just as much trouble to let go of old habits as have their followers. Many are stuck in one of the above communication modes, often by a long history of success in that particular mode. Now that what worked has become dysfunctional, many increase the dose of what had always served them, instead of changing. But the study has shown that this need not be the case: executives that could combine the strengths of all communication styles, did particularly well in complex and multiple-reality environments. Even though this fourth category is by and large hypothetical, some of the respondents some of the time and one respondent most of the time (case 6) have displayed discursive comportment similar to that described in the holistic category. The life sciences CEO is an example of what could be called a Holistic Communicator. Such leaders work heavily with change metaphors, but not in the ‘us vs. them’ variant of the metaphor that: ‘fails to capture the complexity of the international business environment’ (Champlin & Olson, 1994). Other than the cartel communicator whose communication is grounded in a logic of international trade, holistic communicators reason from a perspective of international investment. Their notion of business is not one of war, but of cooperation and of mutual growth, because in an investment perspective, ‘‘us’’ can easily become ‘‘them’’ and vice versa. The holistic communicator is lucid and technology savvy, highly informed; media saturated and has a certain reserve vis-a`-vis authority in general. His or her values and beliefs are embedded in an existential logic namely that man is free to be anything and by this freedom entirely responsible for his acts (Sartre, 1946). He is driven by a sense of societal purpose and responsibility, but not in a missionary way. Life is a multiple, it is power (as in cartel), beauty (as in aesthetic) and sometimes just a game (as in videogame), but this multiple is not motivated by perverted postmodernist ‘anything goes’ logic. Rather the sum of the multiple is embedded in a respect for the other and with an overall goal to add value to society. Value is not exclusively deﬁned in immediate material terms, which gives a long-term perspective to his or her action. Simultaneously, this long road to sustainability is paved with regular short-term goals to be achieved. The holistic communicators are both individualists and communitarians and choose strategies that permit the enhancement of value to both themselves and their community.

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They adopt a systemic perspective of coactive self-organization in terms of the emergence of personal identity, freedom and innovative change in social interaction. Interpersonally these individuals give a high priority to their family, not only as a safe haven from corporate stress and a source of energy and recovery but in a give-and-take way of mutual development. Their signiﬁcant others are similarly engaged in professional projects and the task of developing and educating their offspring is shared. At work, they are essentially team-oriented and nonhierarchical. Since they are highly selforganized they have, however, also solitary moments and are also capable and ready to work in elite environments (Giddens, 1998). Their relationships with stakeholders are based on two-way communication and negotiation and their networks combine both stable and long-term partners and momentary alternating, project-based alliances. The holistic communicator’s discursive strategy is perception management. Since this discursive behavior has demonstrated superiority over other comportments, this strategy is described in some more detail. Perception management is characterized by: Conviction transfer by the leader him or herself: The belief that the promised future will indeed hold must be instilled in the major stakeholders. For this it is not enough to deliver facts and ﬁgures. A genuine conviction transfer must take place. Proﬁts and cost savings cannot be the purpose of the merger, only a possible result. It must be made convincingly plausible why this merger is in the best interest of the common future. For this, process information is needed, for example an explanation of all the relevant steps that have led to the merger decision. This conviction transfer cannot be delegated, but must be done by the CEO him or herself. The person who is responsible for the promised future must be visible and ready to answer all questions. Tangible, visible presence in the organization: Stakeholders want to ‘hear it from the horse’s mouth’. For followers to trust their leaders, it is not enough for them to see them on the cover of Business Week. They should invest the time, go to the sales and shop ﬂoors, to the cafeteria and to the R&D labs – enjoy it and be seen to enjoy it. Although this is a taxing task, it is important that the leader is present and available to stakeholders in the organization and around it (e.g. employees, clients, suppliers, unions). Stakeholders must see the leader tell it all and take the nasty questions, too. Many leaders limit their personal appearances to stock market related stakeholders (shareholders, analysts, the media) and delegate the internal communication to the human resources manager, the clients to

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sales, etc. Many leaders also retract when it gets precarious and try to hide company problems from their employees and the public. As recent examples have shown, the act of hiding causes more damage than the actual problems. Secrecy breeds corruption power abuse and in-ﬁghting. Honesty builds trust and unearths entrepreneurial energy (Schweiger & DeNisi, 1991). Media presence: The media, as has been evidenced, is a powerful variable in post-merger communication. The new company must show its colors and be present in the media by competent representatives to permit a true public discourse. If top management does not ﬁnd time for this in the hectic integration period it will stand in its own way to success. The public will want to know how the restructuring is handled, what compensation packages are foreseen for layoffs, who are the leaders and which intermediary objectives were set. Concerted media presence shapes the perception of the merger toward outside stakeholders. As long as the delta between the ‘promise of a better future’ and the perceived operative reality is small, the media will positively reﬂect management competency toward the inside of the organization. What the media say can come across more credibly than any company memorandum or glossy brochure. Executives who take their media work seriously simultaneously support their leadership legitimacy within the organization. However, since the external communication is always a step ahead of the internal reality, there are inevitably consistency discrepancies in the perception. These discrepancies must be kept small, by fast integration decisions and by ‘dilemma communication’. The delta between the conveyed ‘truth’ and the bitter reality was enormous in the automotive example with the consequence that the stakeholders did not convey the projected future it into certainty. Credibility: If the promise for a better future is to be believed, it must be made by a person who enjoys high conﬁdence. Conﬁdence, or trust, is generally not earned but given. For trust to be given, the CEO must be aware of his or her role as an example, a rainmaker. He or she must state an example worth copying with his or her attitude and live the values that underlie the merger decision. Executives must have the kind of communion with their stakeholders that they intend to install as the forthcoming corporate culture. The inevitable uncertainty, distress and concernment that go with a merger must be countered with a clear vision and precise objectives and tasks. The process of development of these objectives must be done in a timely manner but there must be the necessary judgment and openness to be able to integrate new insights that invariably arise during the process. If the objectives and the leadership attitude are coherent, trust

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will be given and the common negotiation of best practices and of the forthcoming organizational texture will bring stakeholders closer. Leadership (to lead the change): In the same logic of credibility, leaders must be seen to apply the proclaimed need to change also personally, let go of old habits, and try out new things. This includes also making mistakes, more so: to consider and declare mistake-making a natural resource for growth and innovation. It means also to show a certain degree of vulnerability, to question oneself, to encourage new ideas and even propose some ideas before they are fully developed and/or decisions. Integration figure: There is therefore a need for one or several authentic integration ﬁgures with whom the stakeholders can identify. Figures alone do not make a merger, people do. Credible trusted personalities are more necessary than ever in moments of uncertainty and ambiguity. What such persons do or say is perceived as true: perception becomes reality. These truths must however always be infused by real facts and situations, otherwise they risk to be dismissed as propaganda. These truths must orient themselves in the real people whose problems and opportunities are ultimately deﬁned by themselves and not by the people who decide over them. The CEO in the Hotel example was a strong integration ﬁgure, holding a variety of stakeholders together in his heterogeneous environment (Von Wartburg, 1999, 2004). To be tough and emphatic at the same time: To be tough and clear in what needs to be done. Leaders must say it, then do it, step by step. Effective leaders are understanding when it comes to individual fates. How the leader treats people, the compassion he or she has for the inevitable losers, the human solutions he or she ﬁnds for the inevitable problems will determine no less than the future culture of the company. To focus on the essential – the change mission, the people: For people to focus, their leaders must focus. If they do well, the whole world will want them. Leaders should not respond to the calls of the sirens and not go for the seventh prestigious board membership. If they do poorly, many have a tendency to seek recognition and satisfaction elsewhere. If leaders stick it out and are seen to stick obnoxiously with the mission through good and tough times, their people will, too. Not to confound speed and precipitation: Change projects are long-distance races. Granted: some decisions need to be taken fast and announced quickly to alleviate the unbearable uncertainty and avoid talent defection. Also, in order to get on a positive perception loop one needs some early and regular successes. Such successes need to be chosen well and correspond to the sense-making discourse in place. The nature of the successes

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announced and celebrated determines the future culture of the company. With all this speed, the sustainable goals should not be jeopardized: some things just need time. To distrust success: The leader is doing well? Then he or she is prone to be heading for trouble and should gear up his or her vigilance. It is so easy to fall into a stereotype behavioral pattern if something worked well a few times, an increasingly researched phenomenon under the label ‘success trap’ (Askvik & Espedal, 2002). To use modern media: For stakeholders to embrace new media company systems, etc. Leaders must use them ﬁrst. It helps to be seen to innovate with new communication formats (mail, blogs, chats, online databases, etc.). It does not help when leaders have their mails printed out by their secretaries and dictate their answers back to them. To manage the promise–realities gap: Leaders must understand the concept of promise. They should make a promise and take care to describe the steps toward this Promised Land. These steps must be repeated, digestible and be followed by immediate action. With every step announced and then completed, credibility will increase and people will follow, even through considerable hardship.

FURTHER EXPLANATIONS AND LIMITATIONS These discursive categories are neither mutually inclusive nor exclusive. They are not meant to be labels applied to individuals, but sets of behaviors that should be considered in the context of pertinent circumstances. Within the categories there are also degrees of behavioral and motivational intensity. For example, within the cartel category the extreme of the spectrum would include individuals experiencing extreme isolation and, in one case, severe depression. Whereas the cartel category is clearly Internet-illiterate and the videogame category totally literate and creative with regard to the ever-changing facets of the Internet and multimedia world, the aesthetic category displayed the complete range of the use of information and communication technologies for discourse. Some similarities transcended some categories. For example, the rhetoric regarding change was quite similar in the cartel and aesthetic categories both in terms of an active, extraordinary effort to change being called for and also with regard to who had to make it; namely ‘they’, the ‘others’; the other managers, employees, or society in general. They parted from the stance that they had ‘made the step’ into the 21st century and that it was their duty to lead others toward making it. The

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videogame communicators did not speak much about change because their expectation was not based on stability, ‘change is with us’ as one respondent illustrated it, using a perverted quote from the ﬁlm ‘Star Wars.’ Another similarity common to the cartel and aesthetic categories was the use of the ﬁrst personal pronoun singular, ‘I’, whereas the individuals from the videogame category tended toward using the plural form ‘we’, even when asked a personal question. Similarities between the aesthetic and videogame categories include the desire to inform and to involve people in their decisions although the manner in which this was done differed considerably, in that it tended to be top down in the aesthetic group and interactive and reciprocal in the videogame category. Of course it could be argued that these sets of behaviors are highly personal and that individuals cannot change their attitudes and behaviors easily to match them with an ideal ‘way of doing things’. But then these behavioral orientations have been detected as being common to groups of individuals, individuals that are furthermore active in a same type of assignment, in a same linguistic environment under similarly complex contextual conditions. It can be claimed that to observe so many actors so closely and to describe and abstract their behaviors may provide some insight useful to other actors in similar situations – not empirically, but in the sense of theoretical generalization (Yin, 1984). In the same line of arguments we propose to take our analysis a step further in proposing an emerging theoretical model of perception management, which we dub the promise–realities gap. Granted, this ﬁnal level of abstraction is still somewhat speculative and should be understood as an adumbration, a rough sketch that may inspire others to pursue their research along similar lines.

TOWARD A THEORY OF THE PROMISE–REALITIES GAP It has been amply evidenced in eclectic streams of academic literature that executives must manage complex dilemmas of apparent opposites such as formal vs. informal organization (Roethlisberger & Dixon, 1939), mechanistic vs. organic (Burns & Stalker, 1961), control vs. autonomy (Thomas, Kaminska-Labbe´, & McKelvey, 2005), open vs. closed systems (Katz & Kahn, 1966) or juxtaposed organizations of different cultures in post-merger situations (Fendt, 2005). Such a dilemma of a different nature, perhaps comparable to March’s (1991) exploitation vs. exploration, is the management of the communication in change situations (situations of uncertainty).

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A particularly salient situation of uncertainty is the post-merger situation, mangled about in all manners of direction in this chapter. All these situations and phenomena have in common that executives must, sometimes in an ‘almost schizophrenic manner’, as one respondent put it, deal with dilemmas. The must, as another described it, be ‘‘yit – and the contrary of it, at the same time’’. De Witt and Meyer (1999) suggest that such dilemmas confront managers with paradoxes, puzzles, predicaments, quandaries or trade-offs. Solutions to such dilemmas advocated include the ‘optimal mix’ (March, 1991), the ‘balance’ (Bradach, 1997 the attempt to reconcile both sides by striving for some kind of synthesis (De Witt & Meyer, 1999) or to pursue ‘synergistic dynamics’ (Christensen & Foss, 1997). But the issue here is not so much the reconciliation of opposites, but the management of a gap, which, in order to yield best results, must be understood and maintained at an optimal, digestible separation distance. The obvious stakeholder desire is to close the gap, to relieve the tension between the hardship experienced and the satisfactory future portrayed. However, when the gap is closed, no further progress occurs. If the gap widens too much, stakeholders refuse to contribute to its closing. At the merger announcement, it is all words. ‘‘Mergers are a promise of a better future,’’ says Walter Von Wartburg, Swiss communications expert and former Head of Communications of Novartis during their merger. ‘‘If the promise is plausible, it will immediately be honored by the stock markets. But employees need much more time to let go of things that worked and try something new. The leaders need to create the perception that the promised future will actually materialize. For this you need trust – you need a top executive that is credible.’’ When a promise is launched, it is the CEOs that stand for it vis-a`-vis the shareholders, the management, the staff and other stakeholders. Ergo, for change to happen, the distance between promise and reality must be managed. Also, it is argued in a social constructionist epistemology, that there is not one reality, but rather many realities, as each stakeholder (or group of stakeholders) perceives his or her own reality – not only of what is said, but also of what is happening in the organization. If the gap is too small, nothing will happen, if it is perceived as too wide, as utopic, the project will fall into a negative spiral and fail. This distance, that we dub the ‘promise–realities gap’, has not so far been much observed nor discussed in the M&A communication literature. The promise–realities gap is illustrated as a dynamic model in Fig. 3. Schweiger and Lippert (2005) brieﬂy address such a gap in their research on integration and M&A value creation, arguing that ‘‘the greater the gap between communication and the reality, the lower the credibility of the leadership’’ (p. 36). This hypothesis implies, however, its contrary, too,

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Fig. 3.

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i.e. that the smaller the gap between communication and the reality, the higher the leadership credibility. This argument is challenged here. Our cases have shown that leaders who can keep a constant dynamic tension – a stable gap – between what ‘is’ and what is announced – thus create the belief that although the reality they experience may be painful and chaotic, it is slowly but steadily approaching the promise. As one respondent put it: ‘‘Communication is not something aparty it’s management – and management is communication. It’s not what you write in the media bulletin, it’s not what you say, but what is read and heard.’’ Therefore, not what is said, but what is then heard and read is constantly related to the everyday operational reality, with its hardship and ‘usual chaos’. There seems to be an ‘optimal tension’ between these two concepts, a distance that permits conﬁdence and yet encourages change. This optimal tension is a dynamic concept, since the reality changes permanently as certain actions are implemented.

CONCLUSION AND SUGGESTIONS FOR FURTHER RESEARCH There is substantial evidence that CEOs and their leading executives can make a difference: they have a great potential at hand to thrust the organization forward – if they get it right. But while many CEOs aim to promote change, their own communication styles and behavior actually discourage it, as they fail to manage the promise–realities gap. The management of the promise–reality gap is perception management. It is the perceived promise and the perceived reality that need to be managed so as to activate stakeholder commitment. Now, perception has to do with credibility and trust. Credibility and trust are built up when communication and perception correlate. Regarding the promise, this means that coherent action must follow the promise and that this action must again be communicated quickly and coherently. When a certain form of action and/or behavior that is requested from stakeholders (i.e. to let go of old habits, to work in teams, to be open to a new culture, use new systems and similar), it helps if this action and behavior is also displayed by the leader requesting it. Many executives ask for change, but often do not live by their exigencies (Fendt, 2006). However, as was evidenced in this chapter it is not only a matter of ‘walking the talk’. Change discourse and metaphors a` priori provide hope and reassurance in times when people feel insecure about their future. The risk of any metaphor is that the vision it inspires is substituted for reality (Champlin & Olson, 1994) and that this substitution does subsequently not hold up. The

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perception between the promise the discourse and/or metaphor stand for and the realities experienced must be managed at a separation distance that is sufﬁciently large that it triggers change and sufﬁciently small that it seems plausible that the promise can be reached. The promise–realities gap:

is dynamic and must be permanently assessed and negotiated is easier to negotiate if the leader is perceived as coherent and credible is different for every stakeholder inﬂuences stakeholder behavior and thereby merger performance can be inﬂuenced by stakeholders.

The CEO can best negotiate this gap by a coherent discursive behavior here summarized under the term perception management. ‘‘Change is an attitude, a state of mind’’ (Dalziel & Schoonover, 1988) and the leader’s attitude, vividly scrutinized by his or her followers during times of hardship, inﬂuences the perception and facilitates negotiation. Three categories of executive discourse have been abstracted from two empirical data sources and a fourth hypothetical category was drawn from the conversation between data and theory. These categories are summarized with their characteristics and dimensions in Table 3. As the terms ‘ideal’ and ‘hypothetical’ stipulate, such a set of behavioral patterns as is proposed in this section based on ‘what worked’ and ‘what did not work’ in post-merger management cannot but appear ambitious. Nevertheless, some of these behavioral patterns have shown to work in the data collected and have led to a notably improved communication behavior in transitional situations and thereby to better entrepreneurial performance. Time, practice and further research will be the judges of whether any of the purported hypotheses will be sustained. Clearly, there are opportunities for further research. For one, it would be useful to observe the described phenomena and test the proposed behavioral patterns in other cultural and or organizational contexts and using other methodologies and/or forms of measurement such as survey approaches, expanded samples and samples containing German-speaking as well as other European- or US- or Asian-based mergers. Regarding the latter, without succumbing to the simplicities of rigid and normative cultural stereotypes (as discussed in the introduction to this paper), different discursive behaviors of the CEOs and top management teams of the combining ﬁrms can be expected. These may attenuate or accentuate the ﬁndings of this research and permit a comparison of ‘ways of doing things’. Similarly, it would be interesting to explore possible differences in the discursive

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behavior of male and female executives, which was not possible here due to the inﬁnitely small sample of female executives (one!) among the respondents. Furthermore, there was some emerging evidence that the image has seconded and even sometimes replaced the verb to some extent in knowledge assimilation, socialization and communication. This new use of multimedia competencies in cognition and discourse, in general and at top management level deserves further research. Is it just a new kind of management rhetoric as there were many in the past decades or is it a whole new cognitive culture in the making? As studies in rhetoric and semiotic are text- and languagefocused, i.e. single media, the information and perhaps even the tools for analyzing and understanding the special and visual aspects of this multimedia cognitive phenomenon are rudimentary or even lacking altogether and some researcher may just want to dedicate his or her time, curiosity and wisdom to this area. Future research projects could be directed toward the deeper understanding of the inﬂuence of executive compensation on the management of the promise–realities gap. Irrespective of the much-mediated and heatedly debated isolated cases of excessive compensation, the data of this research suggests that many of the prevailing compensation systems encourage a short-term behavior, which may not be beneﬁcial to the companies. Also, through the increasing publicity of their action and due to the recent changes in legislation demanding increased transparency regarding executive pay, executives are increasingly becoming public, and to a certain extent political ﬁgures. The issue is therefore on the table. According to Rapaport (1982) environments communicate meanings that trigger appropriate behaviors. Trust is an important driver of culture both in their relationship with internal and external stakeholders. The perception of fairness in the spread of executive compensation, especially in the light of simultaneous belt-tightening measures and layoffs at the employee level, is an important inﬂuencing factor of trust (Goudsmit, 2005). Moreover, many employees are also shareholders of their companies, either directly or via the pension funds of their company. The injustice they resent in relation to the large compensation packages is therefore both emotional and rational. The phenomenon of trust plays an essential part in the discourse and rhetoric research. The particularity of the post-merger organizational arrangement with its complex and multiple internal layers and characteristics and its aggressive external contexts enhances the importance of trust and renders it more precarious. Depending on whether regular calibrations of expectations are performed (Hubschmid, 2002) the implications of trust can be negative or positive. It would therefore be interesting to contribute to the emerging

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discussion on trust in relation to organizational forms (Hubschmid, 2002; Sabel, 1993; Weick, 1988) by examining in what way, if any, new and more intangible and temporary forms of communication and collaboration could generate new forms of trust.

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TAKING YOURSELF WITH YOU: TRANSFER OF ACHIEVED IDENTITY AS A PREDICTOR OF EMPLOYEE ADJUSTMENT TO CHANGE Mary S. Logan and Anne M. O’Leary-Kelly ABSTRACT This study develops the concept of achieved identity and examines its role in employee adjustment during times of organizational change. Specifically we examined the effects of achieved identity in a sample of food service employees at a southern university in the United States whose jobs were outsourced to a new organization. In this initial study, we found that: achieved identity was predictive of employees’ attachment to the prechange employer; expected transfer of achieved identity was predictive of the transfer of work identities to the post-change environment; the ability to reestablish a positive work identity was important to employee adjustment to change. Using results obtained in this initial study, we develop a revised model of the role of achieved identity in organizational change.

‘‘Dynamic’’ does not seem too profound a term to describe today’s business environment. Organizations are experiencing changes that redeﬁne everything Research in Organizational Change and Development, Volume 16, 155–190 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16005-X

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from their products to their mission statements. Somewhere between the stock swaps, ﬁnancial analyses, and planned synergies stand the affected employees. It is increasingly clear that large-scale organizational changes can cause signiﬁcant disruptions to employees and, thereby, to organizational functioning. In this dynamic environment, employees are often required to move from one organization to another. As a result, it is important to explore the effects of these changes on both the personal and the corporate bottom line. Research on planned organizational changes (e.g., mergers and acquisitions) suggests that large-scale change often does not result in the hoped-for outcomes. In fact, between 50% and 80% of corporate mergers and acquisitions do not reach their projected potential (Blake & Mouton, 1983; Elsass & Veiga, 1994; KPMG, 1999). Explanations for these disappointing results often emphasize the ‘‘human’’ side of organizational change (Nahavandi & Malekzadeh, 1988). That is, even when structural changes are desirable from a ﬁnancial or operations perspective, negative employee reactions can be inﬂuential to the degree of success of the planned change. Social identity theory principles appear important to the success of change. Merger and acquisition research suggests that threats to self-esteem and social identity may be underlying factors in the unconstructive behavior of employees who experience structural organizational change (Haunschild, Moreland, & Murrell, 1994; Terry, 2001; Van Oudenhoven & De Boer, 1995). Although it seems advisable that organizations undertaking signiﬁcant structural changes recognize the identity-related consequences of such change for their employees, there are few research ﬁndings to direct such efforts. Currently, it is not clear how organizations can facilitate change efforts and still protect employees from the damaging effects on their social identities that may lead to negative reactions to change, such as reduced job satisfaction, diminished job performance, increased turnover, and employee strikes (Haunschild et al., 1994; Van Oudenhoven & De Boer, 1995; Willcocks, Fitzgerald, & Feeny, 1995). A critical research issue, then, is to determine how to protect, preserve or transfer employee identities during this change process. The purpose of our study is to explore this question. More speciﬁcally, the fundamental premise of this paper is that: The favorability of employees’ reactions to organizational change depend on their perceived ability to transfer a valued work identity (an ‘‘achieved identity’’) to the new organizational context.

In the following sections, we ﬁrst consider existing research on the role of identity in organizational change. Next, we further explain the concept of

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achieved identity. Third, we present hypotheses regarding the transferability of achieved identity during organizational change and its effects on employee-related outcomes. Finally, we describe our longitudinal ﬁeld study and its results.

SOCIAL IDENTITY AND ORGANIZATIONAL CHANGE Social identity is an ‘‘individual’s knowledge that he belongs to certain social groups together with some emotional and value signiﬁcance to him of this group membership’’ (Hogg & Terry, 2000; Tajfel, 1972, p. 292). Social identity theory posits that individuals categorize themselves and others into identity groups as a way of deﬁning or locating the self, and other individuals, within a social arena (Ashforth & Mael, 1989). These categorizations, then, serve the useful purpose of minimizing uncertainty in that they provide a structure for situating individuals within an otherwise uncertain social system. In essence, social identity classiﬁcations provide answers to questions such as ‘‘Who am I’’ and ‘‘How do I ﬁt in with others around me?’’ (Stryker & Serpe, 1982; Turner, 1982). Research suggests that an individual’s sense of identity, and identiﬁcation with valued groups, is critical to work-related outcomes such as organizational commitment, cooperation, cohesion and loyalty, extra role and prosocial behaviors, compliance, turnover, job involvement, and worker satisfaction (Brown, 1969; Dutton, Dukerich, & Harquail, 1994; Hall, Schneider, & Nygren, 1970; Lee, 1971; Mael & Ashforth, 1995; O’Reilly & Chatman, 1986). According to social identity theory, these positive effects result from the ‘‘sense of self’’ that an attachment to the organization provides. Further, it appears that work-related identities are nested; that is, individuals sustain multiple identities which are ordered hierarchically such that ‘‘higher-order’’ identities – those focused on the organization itself – encompass lower-order identities, such as identiﬁcation with the organizational division, the work group, or the job role (Ashforth & Johnson, 2001). Higher- and lower-order identities are presumed to be interconnected, with changes in one triggering alterations in the other (Ashforth & Johnson, 2001). This interconnected system of identities becomes vulnerable when signiﬁcant employment changes occur. If organizational change involves an alteration in the employment relationship between the individual and the employer (e.g., as in outsourcing, layoffs, mergers), this change will

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inﬂuence the individual’s higher-order identity. Because identities are nested, changes in the higher-order identity have great potential to trigger alterations in lower-order identities (Ashforth & Johnson, 2001). This suggests that the effects of change on work-related identities will be quite profound, regardless of the type of change that occurs. Because changes in the higher-order identity may trigger reevaluation of lower-level identities, it is important, then, to consider which aspects of identity might be threatened by employment-related changes. The organizational change literature focusing on resistance to change also contributes to understanding the role of identity during change. Piderit (2000) explains there are three components to resistance to change, cognitive, emotional, and intentional. The cognitive dimension refers to the individual’s attitude about the object. This would be the individual’s view of the change. Is it a threat to their organization and their group identity? Is the change positive or negative for the group? Does it lower the prestige of the group? The emotional dimension refers to the individual’s feelings toward the change. Is there fear or anxiety related to the change? Does it feel like a betrayal or an opportunity? The behavioral or intentional dimension refers to the individual’s intentions toward the object. Will the employee actively resist or support the change? The reaction to the change will be related to the strength of identity, importance of identity, and seriousness of the threat to identity. Ways to protect the individual’s sense of identity could logically then lead to reduced resistance to change. If you reduce the threat, the negative reactions might be lessened. Identity issues can also be analyzed in terms of the content and the process of change. What in the process can protect an individual’s identity? Although there is little research evidence to inform this question, several factors seem likely to be important. Participation may allow individuals to feel that they have been involved in decision making and thereby protecting their self-esteem and work-related identities. Communication and information sharing during the change could also work to show individuals how their identities will be protected. Information about the new organization might encourage employees that the new organization has an even higher status and better environment to support their identities (Terry, 2001). Dirks, Cummings, and Pierce’s (1996) ideas on types of change can also be viewed with respect to social identity. They identiﬁed three types or continua of change: Self-initiated vs. imposed, evolutionary vs. revolutionary, and additive vs. subtractive. As Dirks et al. (1996) point out there are three needs of the self: self-esteem, self-continuity, and self-control. People will accept change if it fulﬁlls the needs of the self and they will resist change

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if it frustrates self-fulﬁlling needs. People will promote changes if they are self-initiated, evolutionary, and additive. Imposed change threatens control, revolutionary change threatens continuity and self-enhancement, and subtractive change threatens possessions and prestige dwindles. From all of the above we see that there is a very strong connection between social identity and the results of organizational change. The needs of the self dictate cognitive, emotional, and behavioral aspects of resistance to change. Understanding how change affects the individual’s identity can help change agents to adjust the process of change and the type of change to minimize the threat to identity. We now turn to a speciﬁcation of a unique form of social identity – the achieved identity.

A SPECIFIC TYPE OF SOCIAL IDENTITY: ACHIEVED IDENTITY Defining Ascribed and Achieved Identity Much of our current understanding of identity goes back to early role and status theory. Jenkins (1996) reviews the theories of Linton (1936), Merton (1957), and Nadel (1957) and makes the distinction between ascribed and acquired or achieved identity. Some aspects of our identity (position or status) we have little control over. This part of our identity is our ascribed identity. Ascribed identities are those that are based on contingencies of birth (Jenkins, 1996). For example, sex and race identities are ascribed in that they involve (typically) unchangeable physical characteristics. Although the manner in which these identity categories are interpreted (whether a speciﬁc identity categorization is favored or frowned upon) is socially constructed (Jenkins, 1996), still the individual essentially ‘‘acquires’’ them without choice or effort. Nadel (1957) posed that it is possible to add aspects of ascribed identity that are not determined directly by birth, for example through early and ritualized initiation rights such as baptism. In addition, he indicated that ascribed identities are generally easy for observers to recognize. According to Nadel, achieved identity is much more about the individual. The development of the achieved identity depends on experience and typically involves some degree of choice, effort, and self-direction (Jenkins, 1996). In this case the individual ‘‘embraces the role for its desirability, voluntarily committing himself to its various implications’’ (p. 36). This, then, is an interpersonal form of identity that is determined by the individual’s success in handling interpersonal role requirements (Brickson, 2000;

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PART A:

Organizational Environment

Contingencies of Birth

Ascribed Identity

OrganizationRelated Attitudes and Behaviors

Achieved Identity

OrganizationRelated Attitudes and Behaviors

PART B: Organizational Environment

Fig. 1.

The Role of Identity in Organizations.

Brickson & Brewer, 2001; Marcus & Kitayama, 1991). Achieved identity represents the individual’s sense of mastery, status, and reputation within a speciﬁc social context. Fig. 1 illustrates the general nature of both ascribed and achieved identities. As shown there, a fundamental difference between the two is that ascribed identity resides in the context of the social (or organizational) environment, while achieved identity is determined by the social (or organizational) environment. The implications of this statement and the effects of these forms of identity on environment-related attitudes and behaviors are discussed next.

Ascribed and Achieved Identity within the Organizational Context In Part A of this ﬁgure, and consistent with arguments to this point, we see that ascribed identity is determined by contingencies of birth. Individuals with a given ascribed identity then enter and exist within speciﬁc social environments, which can provide more or less hospitable contexts for this ascribed identity. The important point here, though, is that ascribed identity is not typically changed by the environment itself. For example, gender is an ascribed identity determined at birth, and ‘‘female’’ is not an identity that is

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changed as a result of which employer an individual chooses. However, the choice of employer certainly can inﬂuence how favorably the female identity is received. Beyond this, how favorably the identity is received will inﬂuence the individual’s attitudes and behaviors within the organization’s environment (as shown in Fig. 1). For example, women who experience work contexts high in organizational tolerance for sexual harassment will develop less positive feelings and behaviors within that organizational context (Hulin, Fitzgerald, & Drasgow, 1996). On the other hand, because achieved identity is determined by an individual’s experiences and success in handling interpersonal role requirements (Brickson, 2000; Brickson & Brewer, 2001; Jenkins, 1996; Marcus & Kitayama, 1991), it is fundamentally determined by the social environment in which it exists (see Part B of Fig. 1). The favorability of the achieved identity, then, seems likely to inﬂuence the individual’s attitudes and behaviors within that social environment. For example, an employee who develops a history of work-related successes, and the positive reputation that accompanies this, has developed a strong positive achieved identity that will make him feel and act positively within that work setting. Fig. 1 provides insights into how organizational change will inﬂuence ascribed and achieved identities, because it demonstrates where and how organizational environments have their impact on identity. With ascribed identities, a change in the organizational environment can inﬂuence only the context within which the identity currently resides or operates. For example, if a female employee’s company merges with another and the work environment becomes more poisoned and hostile toward women, this creates negative experiences that certainly will inﬂuence attitudes and behavior toward the organization. However, this organizational change, and indeed no organizational change, can alter the ascribed identity itself. Alternatively, because the organizational environment determines the achieved identity, organizational changes have great potential to inﬂuence achieved identity. Using the earlier example of the employee with a history of work-related successes, consider the effects on this employee of an organizational change such as a merger, or even a less dramatic change such as the hiring of a new supervisor. These changes in the work environment can alter the individual’s experiences, interpersonal relationships, and role requirements, all fundamental determinants of the achieved identity (Jenkins, 1996). Given this, we focus in this paper on achieved identity. Our interest is in the effects of organizational change on identity, and it is evident that organizational inﬂuences are more profound in developing and shaping the

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achieved identity than the ascribed identity. As mentioned earlier, our fundamental premise in this paper is that if an employee believes that his or her positive achieved identity can be transferred to the newly changed organizational environment, the change will be met with less resistance and more positive results for both the employee and the organization. We now turn to a discussion of the transfer of achieved identity.

TRANSFERRING ACHIEVED IDENTITY Although there is substantial research on social identity generally, there is less research that explains whether or how individuals transfer their identities from one setting or place to another. This is, however, a critically important question because organizational changes often involve shifts in identity (Ashforth & Johnson, 2001). In this section, we develop predictions about when identity transfer is most likely to occur. At ﬁrst glance, it seems that it would be quite easy to ‘‘take yourself with you’’ – that is, to shift an identity achieved in one place or time to another. Certainly this is relatively uncomplicated if the identity is not tied to a speciﬁc environment. For example, if an individual has a strong achieved identity that is oriented toward the profession, changes in the organizational environment may be of lesser importance than are changes in the environment of the profession. On the other hand, setting is often primary and many of us have experienced situations in which our expectations about ‘‘who I am’’ (status, reputation) in one setting do not translate well to another. For example, a person who is well-respected in one work organization may not attain this same level of respect with a new employer; a person who is regarded as a leader in one social sphere (e.g., a church group) may not attain this same reputation in another (e.g., at work). ‘‘Identity exits’’ can be extremely difﬁcult involving losses that can threaten the self (Sieber, 1974) and produce unfavorable cognitive, emotional, and behavioral consequences (Weisenfeld & Bartel, 2001; Ebaugh, 1988). Given that organizational changes inherently involve shifts in the work environment, it is important to determine what types of factors might inﬂuence the conﬁdence an individual has that an achieved identity will shift from the pre-change to the post-change work environment. This is critical because fears about alterations to a valued identity can poison reactions to the proposed change (as illustrated in Fig. 1). Fig. 2 illustrates predictor variables that we tested in the study we report on here.

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Pre-Change Attachment

Pre-Change Achieved ID

Communication Messages from Organization

Identification Commitment Job Satisfaction Intent to Turnover

Job-Related Self-Efficacy

Expected Transfer of Achieved Identity

Post–Change Achieved Identity

Fig. 2.

Post-Change Attachment Identification Commitment Job Satisfaction Intent to Turnover

Role of Achieved Identity in Organizational Change.

First, and consistent with Fig. 1, we propose that achieved identity is likely to inﬂuence an employee’s level of attachment to the current (prechange) employer. Individuals who have strong positive (esteem supportive) achieved identities are those who feel that they have acquired positive reputations within the current organization, and who value the identity that this reputation provides. Because individuals with a strong social identity feel a greater sense of connection and certainty, these identities will be highly valued (Hogg & Terry, 2000). We expect, then, that an employee with a more positive and salient achieved identity will be more attached to the current organization, which provides the opportunity and context for the valued identity to develop. Hypothesis 1a. Employees with strong (vs. weak) positive achieved identities will experience stronger organizational identiﬁcation with the prechange employer.

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Hypothesis 1b. Employees with strong (vs. weak) positive achieved identities will experience stronger organizational commitment to the prechange employer. Hypothesis 1c. Employees with strong (vs. weak) positive achieved identities will experience stronger job satisfaction with the pre-change employer. Hypothesis 1d. Employees with strong (vs. weak) positive achieved identities will experience a weaker intention to turnover from the pre-change employer. Second, we expect that the current achieved identity will inﬂuence the expectations that employees develop about their role or place in the new (post-change) work environment. This, of course, is essentially the question of identity transfer. That is, the employee facing change will assess whether the current valued identity will remain whole after the organizational change is experienced. Research on identity transition describes a three-step process, including a separation phase (letting go of the old identity), a transition phase (a state of limbo), and an incorporation phase (in which the new identity is accepted) (Jenkins, 1996). Organizational changes seem likely to cue up this ﬁrst step in which employees must assess whether they will be required to let go of their current identity. Of course, this ﬁrst stage is more difﬁcult when an individual’s current work identity is strong and positive; that is, letting go of a strong valued identity is undoubtedly more difﬁcult than is releasing a weak or negative identity. In fact, in these latter cases, it seems likely that employees may welcome a change. It seems reasonable, then, to expect that individuals who have the most esteem supportive identities in the current work environment will, other things equal, have lower expectations that unplanned or forced changes in the work environment will be personally beneﬁcial. Hypothesis 2a. Employees with stronger (vs. weaker) pre-change achieved identities will be less likely to expect their achieved identities to transfer to the new organization. This prediction, however, may be complicated by a number of forces. First, it seems likely that employees who have the strongest conﬁdence in their own work-related abilities may be less fearful that change will have negative effects. Such employees may recognize that their positive achieved identities are threatened by the organizational change, but still believe that they are capable of transferring the valued identity because of their strong job skills.

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Alternatively, employees with lower levels of job-related conﬁdence may experience no such positive buffering effect. Therefore, we predict: Hypothesis 2b. Employees’ job-related self-efﬁcacy will moderate the achieved identity–expected transfer of identity relationship, such that the relationship will be stronger for employees with low job-related self-efﬁcacy. Hypothesis 2a also may be moderated by the nature of information received by employees. During times of change, employees will be attuned to information that helps them interpret the degree of change they will experience and the likely personal consequences. In general, if employees receive positive information about the impending organizational change and about the new work environment, they seem more likely to expect their valued identities to transfer. Alternatively, more negative messages about the change or the new work environment may lead employees to be skeptical that they can remain ‘‘whole’’ (i.e., achieve the same positive identity) within this new, less advantageous work environment. More speciﬁcally, we predict that three types of information may impact on perceptions of transfer: (1) information about the degree of change that will occur, (2) information about the new employer, and (3) information about the reasons for the change itself. Information About the Degree of Change Because the achieved identity is built upon an individual’s experiences within a speciﬁc social context (Jenkins, 1996), employees who believe that the new work environment will be signiﬁcantly different from the existing one seem most likely to have pessimistic views about their ability to transfer their work-related identities. Therefore, employees who have achieved positive identities in the pre-change environment may especially question his or her ability to recreate this identity elsewhere when it appears that the two work contexts (pre- and post-change) will be signiﬁcantly different. Alternatively, when employees believe that there will be little change in their new work context (compared to the old), individuals can be more optimistic about recreating valued pre-change identities within the post-change environment. Therefore, we predict: Hypothesis 2c. There will be a stronger positive relationship between an employee’s pre-change achieved identity and his or her expectations regarding identity transfer when the employee perceives that the work context will change little (vs. signiﬁcantly).

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Information About the New Employer Individuals who face an organizational change that involves a change in their employer will undoubtedly assess information about the nature of that new employer. In such situations, employees seem most likely to be comfortable with a change, and to have conﬁdence about their own place in this change, when they have positive information about their new organization. From a social identity standpoint (Stryker & Serpe, 1982; Turner, 1982), having a new employer requires employees to ask ‘‘who will I be’’ and ‘‘how will I ﬁt’’ in this new employment setting. To the extent that employees have positive impressions of the new organization and view membership in a positive light, they seem more likely to have positive reactions (Terry, 2001), including stronger expectations that their current valued identity can be relevant within this new employment setting. Based on this, we predict: Hypothesis 2d. There will be a stronger positive relationship between an employee’s pre-change achieved identity and his or her expectations regarding identity transfer when the employee receives positive (vs. negative) information about the new employer. Information About the Reason for Change It also is interesting to consider whether employee perceptions regarding identity transfer are inﬂuenced by more generalized information related to the change itself. That is, if employees feel that the overall process of change is unjust, are they less likely to believe that they can remain ‘‘whole’’ as a result of this change? Research indicates that when employees feel they are fairly treated during signiﬁcant organizational change, they have more positive feelings about the change and about the entities involved (Cobb, Wooten, & Folger, 1995; Kilbourne, O’Leary-Kelly, & Williams, 1996). One important aspect of fairness is the degree to which employees are provided with social accounts, or information about the need for change (Bies & Shapiro, 1987; Cummings & Worley, 1993; Konovsky & Brockner, 1993). It appears that employees who have a clear understanding about the conditions of the change and why it is necessary are more likely to react positively (Kilbourne et al., 1996). On the other hand, employees who do not understand the reason for change may experience a loss of control and a greater perceived threat as a result of the change. For such employees, the work setting will seem quite disordered,

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making it more difﬁcult for them to determine their personal place (identity) in this new social environment. Therefore, we predict: Hypothesis 2e. There will be a stronger positive relationship between an employee’s pre-change achieved identity and his or her expectations regarding identity transfer when the employee receives greater (vs. less) information about the reasons for the change. The next relevant question, then, is whether employees’ expectations about identity transfer inﬂuence their actual ability to reestablish a valued work identity. Essentially, this question determines whether employers need to be concerned with managing employee perceptions regarding identity transfer. On the one hand, it may be that an employee’s pre-change expectations about his or her role in the new work setting will become irrelevant once the new work environment is encountered and experienced. For example, other things such as pay, job security, and the work itself may be more inﬂuential to identity transfer. On the other hand, the employee’s expectations may determine the type of experience that he or she actually has within the new work setting (a self-fulﬁlling prophecy explanation). Although both arguments are feasible, we ﬁnd the latter more convincing. For example, from an expectancy theory perspective (Vroom, 1964) it seems likely that employees who have high expectations that they can achieve a salient positive identity with the new employer will be more motivated to work toward this positive identity. Therefore, we predict: Hypothesis 3. An employee who has strong (vs. weak) expectations that a positive achieved identity will transfer to the new work environment will report a stronger positive achieved identity in the post-change work setting. If an employee’s expectations can inﬂuence his or her ability to establish a positive work identity with the post-change employer, it becomes important to ask whether the establishment of this new identity is important to employee-related outcomes after the organizational change. That is, is the formation of a strong achieved identity in the post-change work setting important to an employee’s adjustment to organizational change? We predict that attachment to a new organization will depend on the employee’s ability to reestablish a strong social identity within this new context. Individuals who expect that the personal reputation and standing they built in one work setting will be exported to, and relevant in, a new setting seem less likely to be threatened by change and more likely to adjust to change. This is akin to research regarding identity protection during the

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socialization process (Van Maanen & Schein, 1979). Therefore, we expect that employees who believe that their pre-change achieved identity has transferred to the post-change work context will report stronger attachment to the new employer. As shown in the hypotheses, ‘‘attachment’’ is measured via several variables: Hypothesis 4a. An employee who is able to transfer a positive pre-change achieved identity to the post-change work context is more likely to develop strong organizational identiﬁcation with the new employer. Hypothesis 4b. An employee who is able to transfer a positive pre-change achieved identity to the post-change work context is more likely to develop strong organizational commitment to the new employer. Hypothesis 4c. An employee who is able to transfer a positive pre-change achieved identity to the post-change work context is more likely to develop strong job satisfaction in the post-change work environment. Hypothesis 4d. An employee who is able to transfer a positive pre-change achieved identity to the post-change work context is more likely to develop a weaker intention to leave the new employer.

METHODS Sample This study involved food service employees at a university in the southern United States. These employees performed duties related to the preparation and delivery of staff and student meals. Historically, food service workers were employed by the university, however, six months prior to our initial survey, the university ofﬁcially announced its intention to outsource the food service function and choose a provider. This change would require employees to sever their employment contract with the university and to be employed by the new provider, although they would continue to work within the university environment with the same coworkers and supervisors. Once a new provider was identiﬁed, management from both the university and provider organization met with employees to describe the impending changes. Employees were not required to attend these sessions but most did. The sessions were informal and unstructured and their content varied depending on the managers and employees involved. Therefore, although there was an effort by management to communicate with employees,

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employees received different amounts of information and different messages about the upcoming changes. Employees were surveyed at two points in time: (1) within two weeks of the date when employees began to work for the new food service provider, and (2) ﬁve months after the original survey. Employees completed a written survey at Time 1 and participated in a phone survey at Time 2. All food service employees (70 full-time employees, 35 part-time student employees, and 9 managers) were surveyed at Time 1 (n ¼ 114). The Time 1 questionnaires, along with an introductory letter explaining the purpose of the study, were distributed with employee paychecks, and respondents were asked to return the surveys in stamped return envelopes. A follow-up request (along with a $1 incentive to complete the survey) was sent to the homes of nonresponsive employees, resulting in an overall response rate of 33% (the response rate was 31% for full-time employees, 31% for part-time student employees, and 56% for managers). At Time 2, the respondents were contacted by phone for a follow-up survey. We were able to contact 32 of the original 38 respondents (2 employees did not want to participate, others could not be located), resulting in a response rate of 84%. Of these 32 respondents, 20 were full-time, 7 were part-time, and 5 were managerial employees. Time 1 Measures Information related to achieved identity, organizational commitment and identiﬁcation, and job satisfaction were collected in a section of the survey that was titled ‘‘Your Beliefs About Work Before the Change’’ and was prefaced with the following instructions: ‘‘We want to know how you felt about your job before you knew food services was going to be outsourced. Please answer the following questions based on your experiences when you worked for the University.’’ (Note that we refer to the pre-outsourcing ﬁrm as ‘‘University’’ and the post-outsourcing ﬁrm as ‘‘New Company.’’) All alpha coefﬁcients can be found in Table 1. Achieved Identity. Five questions were developed to assess employees’ perceptions of their achieved identity when working for the university. Items were anchored by 1 ¼ Strongly Disagree and 7 ¼ Strongly Agree, and instructions related to these items reminded employees that ‘‘The following questions refer to your feelings when the University ran the food services.’’ Items included ‘‘I couldn’t have been as successful working anywhere except the University,’’ ‘‘I don’t think I would have received as many promotions at another company,’’ ‘‘I could easily achieve the same level of status with

Variable

Mean

s.d.

1

3.70

1.18

(0.65)

4.91

1.16

8.80 5.54

9.0 0.95

0.60 0.47

5.07

1.08

0.35

5.38 2.68

1.06 1.41

0.10

2

3

4

5

0.07 0.11

0.30y

(0.84)

0.21

0.40

6

7

0.21

0.06

0.14

0.07

1.49

0.28

0.54

0.00

0.60

0.59

0.38 0.29

4.13

1.57

0.21

0.43

0.36y

0.44

0.64

0.28

4.74

1.17

0.31y

0.33y

0.24

0.42

0.33y

0.40 0.20

3.46

1.94

0.30

0.33y

0.28

0.09

0.53

0.04

0.54 0.04

0.28

0.18

0.47

4.78

po0.10 two tail test.

1.29

0.08

11

12

13

14

15

16

0.24

4.67

1.20

0.57

0.26

1.18

4.62

10

0.49 0.70 0.58 (0.94) 0.28y 0.43 0.63 0.47 (0.81)

4.80

1.37

9

0.70 (0.87)

0.36

4.38

8

(0.85)

0.61 0.11 0.27 0.19 0.23

po0.05. po0.01. y

Means, Standard Deviations and Intercorrelations for Time 1 and Time 2 Variables.

0.30

0.48

0.56

0.44 0.50

0.24

0.28

0.10

0.07

0.57 0.76 0.57 0.07

0.19 y

0.11

0.36 0.31

y

0.20

0.36

(0.75)

0.80 (0.87)

0.15

0.61

0.72 (0.79)

0.25

0.78

0.67

0.47 (0.78)

0.57 0.20 0.67 0.69 0.77 .042 0.26 0.14

0.42 0.15

(0.84)

.14

0.47

0.52

0.45

0.29

0.35y

0.21

0.54

0.70

0.47

0.42

0.47

0.46

0.19

0.54

0.71

0.42

0.44

0.58

0.24

(0.74) (0.68) 0.54

(0.64)

MARY S. LOGAN AND ANNE M. O’LEARY-KELLY

Time 1 1. Achieved identity 2. Expected transfer of achieved ID 3. Tenure 4. Organizational commitment 5. Organizational identiﬁcation 6. Job satisfaction 7. Intention to turnover 8. Self-efﬁcacy Time 2 9. Actual transfer of achieved identity 10. Organizational commitment 11. Organizational identiﬁcation 12. Job satisfaction 13. Intention to turnover 14. Reason for change 15. New Company information 17. Degree of change

170

Table 1.

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171

another employer s,’’ ‘‘The work I did at the University might not have been appreciated at another company,’’ and ‘‘My job history at the University gave me a strong sense of job security.’’ The scales for all of the achieved identity measures can be seen in the appendix (see Table A1). Job Satisfaction. The Job Diagnostic Survey satisfaction scale (Hackman & Oldham, 1975) was used to measure overall job satisfaction. The employees were asked to indicate how satisﬁed they were with different aspects of their jobs. Sample questions included: ‘‘The amount of job security I had,’’ ‘‘The amount of pay I received,’’ and ‘‘The amount of challenge in my work.’’ Organizational Commitment. Organizational commitment was measured with six items from the Mowday, Steers, and Porter (1979) scale. Sample questions included: ‘‘I was willing to put in a great deal of effort beyond that normally expected in order to help the University be successful,’’ ‘‘I worked hard on my job,’’ and ‘‘I was proud to tell others that I was part of the University.’’ Organizational Identification. This construct was measured using a 6-item version of Mael and Tetrick’s (1992) scale. Sample items included: ‘‘When someone criticized the University, it felt like a personal insult’’ and ‘‘The University’s successes were my successes.’’ At Time 1, subjects also were asked to report on their perceptions of the transition to the new employer. These questions were included in a section titled ‘‘Your Beliefs About the Change to New Company.’’ This section was prefaced with instructions stating ‘‘Now we are interested in your thoughts and feelings about the change from University-run to New Company-run food service. Please answer the following questions based on your experiences since you learned that food services was going to be outsourced to New Company.’’ Expected Transfer of Achieved Identity. These questions asked employees about their expectations that achieved reputation and status within the University would transfer to their work environment with the new food service provider. The same basic achieved identity questions were used, but were changed to reﬂect the comparison (see Table A2). Management Communication. Three aspects of management’s communication with employees during the change were assessed: information about the degree of change (Degree of Change), information about the reason for

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outsourcing (Reason for Change), and information about the new employer (New Company). Speciﬁc items from the scales are available in the appendix, Table A4. Time 2 Measures At Time 2, data regarding the actual transfer of achieved identity and attachment to the new employer were collected. This data collection occurred ﬁve months after the change to a new employer and was conducted using a phone survey. Concern about the length of the phone interview led us to shorten the Time 1 scales for job satisfaction, organizational commitment, and organizational identification. In each case a few questions were removed from the scale. The reliabilities remained acceptable, see Table 1. Actual Transfer of Achieved Identity. Employees were asked to report on the degree to which their achieved work identities actually did transfer from the university to their new work situation. The same basic questions and anchors from the achieved identity scale were again used, but altered to reﬂect the new referent (see Table A3). Intention to Leave. Three items were used to assess the employee’s intention to leave the new employer. Items included ‘‘I am planning to leave New Company as soon as possible,’’ ‘‘I plan to stay at New Company for as long as possible,’’ and ‘‘I am reluctant to leave New Company.’’ Control Variables In order to isolate the effects of achieved identity on our dependent variables, we considered several constructs as potential confounds: Job Characteristics. Because outsourcing can lead to changes in employees’ job responsibilities, each subject rated the characteristics of his or her job while working for the University (at Time 1) and the characteristics of the job while working for the new employer (at Time 2). Four aspects of the job – freedom, task variety, feedback, and task signiﬁcance – were assessed at both times, using the Michigan Organizational Assessment Questionnaire (MOAQ) (Cammann, Fichman, Jenkins, & Klesh, 1983). Comparison of pre- and post-outsourcing ratings of job characteristics suggested little perceived change in employees’ jobs as a result of outsourcing. There were no signiﬁcant differences in pre- and post-outsourcing ratings on any jobs characteristics. Because there were no signiﬁcant differences, we did not control, in later analyses, for changes in job characteristics across the two work environments.

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Tenure. Because an employee’s tenure may inﬂuence factors such as feelings about the original employer and attachment to a new employer, we asked employees to indicate how long they had worked for the University. Among the full-time employees included in the sample (i.e., excluding the more temporary student employees), the average tenure was 13.5 years. Tenure was used as a control variable in all regression analyses.

RESULTS Table 1 contains means, standard deviations, reliability coefﬁcients, and intercorrelations for all independent and dependent variables. Hypotheses 1a, 1b, 1c, and 1d predicted that an employee’s level of achieved identity in the pre-outsourcing work environment would positively inﬂuence his or her attachment to the pre-outsourcing employer. This prediction was tested using hierarchical multiple regression procedures, with organizational tenure as a control variable. As shown in Table 2, Hypotheses 1b, and 1c were supported. Achieved identity predicted organizational commitment and job satisfaction. Hypothesis 2a predicted that employee’s with a stronger pre-outsourcing achieved identity would be less likely to expect their identity to transfer. We tested this hypothesis with hierarchical regression in which expected transfer Table 2.

Regression of Time 1 Attitudes about the University on Time 1 Tenure and Achieved Identity. Time 1 Attitudes

Time 1 Tenure Achieved identity Model R2 Signiﬁcance **po0.01. y po0.10 po0.05.

Organizational Identiﬁcation

Organizational Commitment

Job Satisfaction

Intention to Exit

Standardized beta

Standardized beta

Standardized beta

Standardized beta

0.294 0.187

0.003 0.481

0.176 0.518

0.188 0.040

0.230 0.018

0.409 0.000

0.184 0.161 0.096 0.210

174

Table 3.

MARY S. LOGAN AND ANNE M. O’LEARY-KELLY

Regression of Expected Transfer of Achieved Identity on Time 1 Achieved Identity and Tenure. Expected Transfer of Achieved identity Standardized beta

Time 1 Tenure Achieved identity Model R2 Signiﬁcance

0.247 0.325 (po0.12) 0.079 0.278

**po0.01. *po0.05. y po0.10.

was regressed on organizational tenure and pre-change achieved identity. As shown in Table 3, there was no support for this direct effect. Hypothesis 2b predicted that the pre-change achieved identity–expected transfer of identity relationship would be moderated by the job-related selfefﬁcacy of the employee. This prediction was tested using moderated regression procedures (Cohen & Cohen, 1983) in which expected transfer was regressed on organizational tenure, pre-change achieved identity, job-related self-efﬁcacy, and the interaction between the latter two variables. As shown in Table 4, this hypothesis was not supported. Hypotheses 2c, 2d, and 2e predicted that communication messages about the organizational change would inﬂuence the relationship between prechange achieved identity and expectations that achieved identity would transfer to the post-change environment. Hierarchical multiple regression procedures were used to test for the proposed interaction effects. Interaction terms were created and entered in step 2 of the regression (Cohen & Cohen, 1983). As shown in Table 4, Degree of Change and New Company Information variables were not signiﬁcant moderators of the pre-change achieved identity–expected transfer of identity relationship (Table 5). However, the interaction between Reason for Change and pre-change Achieved Identity was marginally signiﬁcant (po0.10) in its effect on expectations regarding transfer of identity (Fig. 3). Hypothesis 3 predicted that employees who expect their pre-outsourcing work identities to transfer to the post-outsourcing environment are more likely to achieve a positive identity in the new work context. We again used hierarchical multiple regression and controlled for organizational tenure. As shown in Table 6, our ﬁndings indicate support for this prediction.

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Table 4. Two-Way Interaction Between Achieved Identity and Time 1 Self-Efﬁcacy Predicting Expected Transfer of Achieved Identity. Dependent Variable Step 1 Time 1 Tenure Self-efﬁcacy Achieved identity Model R2 Signiﬁcance

Expected Transfer of Achieved Identity Standard beta 0.137 0.261 0.304 0.098 0.385

Step 2 Achieved identityself-efﬁcacy Change in R2 Signiﬁcance

0.248 0.002 0.809

Overall R2 Signiﬁcance

0.10 0.550

**po0.01. *po0.05. y po0.10.

Hypotheses 4a, 4b, 4c, and 4d, which predicted that employees’ abilities to transfer valued work identities to the post-outsourcing work setting would inﬂuence their attachment to the new employer, also received support. Hierarchical regression analyses (using organizational tenure as a control variable) demonstrated that the transfer of achieved identity had a strong and signiﬁcant positive relationship with organizational identiﬁcation, organizational commitment, and job satisfaction. In addition, and as predicted, there was a signiﬁcant negative relationship with intentions to leave the new employer (see Table 7).

DISCUSSION AND IMPLICATIONS Our purpose in this research was to examine whether and how employees’ social identities are threatened when they experience organizational change. Admittedly, our ability to conclusively examine this important issue was limited by the size of our sample and by our inability to conduct an extensive examination within this organizational setting over time. However, our general model and initial ﬁndings point to some very interesting issues

Two-Way Interaction between Achieved Identity and Individual Communication Messages Predicting Expected Transfer of Achieved Identity.

Reason for change New company info. Degree of change Achieved identity Model R2 Signiﬁcance Step 2 Achieved identityreason for change Achieved identitynew company information Achieved identitydegree of change

Expected Transfer of Achieved Identity

Expected Transfer of Achieved Identity

Reason for change

New Co. Info

Degree of change

Standard beta

Standard beta

Standard beta

0.199

0.260

0.459 – – 0.325y

– 0.460 – 0.319y

0.319 0.010

0.288 0.018

1.715y –

– 0.660

0.234 – – 0.200 0.332 (0.124) 0.116 0.302 – –

–

–

Change in R2 Signiﬁcance

0.069 0.088

0.011 0.512

0.005 0.696

Overall R2 Signiﬁcance

0.388 0.007

0.299 0.036

0.121 0.442

**po0.01. po0.05. y po0.10 two tail tests.

0.472

MARY S. LOGAN AND ANNE M. O’LEARY-KELLY

Step 1 Time 1 Tenure

Expected Transfer of Achieved Identity

176

Table 5.

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177

6 Expected transfer of Achieved Identity

5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 Low High Level of Pre-outsourcing Achieved Identity High reasons for change Low reasons for change

Fig. 3.

Interaction of Reason for Change and Pre-charge Achieved Identity on Expected Transfer of Achieved Identity.

around identity and organizational change. Because of the preliminary nature of this empirical work, we would like to both review our current ﬁndings and then present a revised model that should be useful for future research. Our ﬁndings suggest that achieved identity is an important construct in the organizational change process. First, we found that employees who had developed a strong and positive identity in the pre-change work environment were more strongly committed to the organization and more satisﬁed with their jobs. This suggests, consistent with social identity theory (e.g., Ashforth & Johnson, 2001), that the possession of a strong work identity is a positive state for individuals. It is curious, however, that a strong achieved identity was not associated with stronger organizational identiﬁcation. Organizational identiﬁcation involves a perception that the relationship with the organization is important to the individual’s deﬁnition of self (Ashforth & Mael, 1989). The fact that a strong achieved work identity is associated with commitment to the organization but not identiﬁcation with the

178

MARY S. LOGAN AND ANNE M. O’LEARY-KELLY

Table 6. Regression of Actual Transfer of Achieved Identity (Time 2) on Expected Transfer (Time 1) Controlling for Tenure. Time 2 Actual transfer of achieved identity Standardized beta Time 1 Tenure

0.005

Expected Transfer of Achieved Identity

0.942

Model R2 Signiﬁcance

0.891 0.000

y

po0.10.

po0.01. po0.05.

Table 7. Regression of Time 2 Attitudes about New Company on Time 1 Tenure and Actual Transfer of Achieved Identity (Time 2). Time 2 Organizational Identiﬁcation

Tenure Actual transfer of achieved identity Model R2 Signiﬁcance y

Standardized beta 0.101

Organizational Commitment Standardized beta 0.252

Job Satisfaction

Standardized beta 0.031

0.596

0.843

0.689

0.401 0.003

0.648 0.000

0.488 0.000

Intention to Turnover Standardized beta 0.073 0.703

0.531 0.000

po0.10.

po0.01 po0.05.

organization suggests that employees may be adept at distinguishing among their different multiple identities. That is, employees seem capable of maintaining a strong achieved identity along with a distant organizational identity. Simply stated, it appears that feeling positively about the self in terms of achieved reputation at work does not directly translate into feeling that the organization, which provides the context for this work self, is a critical

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part of the self-identity. As argued earlier by identity theorists (Ashforth & Johnson, 2001), there is much that researchers can learn by exploring the interplay among multiple work-related identities. We found very little evidence that individuals’ expectations regarding their place in the new (post-change) work environment depended on their pre-change achieved identity and the messages they received regarding the organizational change. There was no signiﬁcant direct effect of pre-change achieved identity on the expected transfer of achieved identity. In addition, only one of the moderators of this relationship that we proposed (i.e., information regarding reasons for the change) even approached signiﬁcance. Clearly, the weakest part of our proposed model in Fig. 2 involves this relationship between the existing work identity and expectations regarding transfer. In the next section, we present a revised model that could guide future investigations of this important relationship. Interestingly, our results indicated that a priori employee expectations regarding the transfer of identity are predictive of the actual ability to reestablish a positive work identity. On the surface, the ability to reestablish a positive identity seems likely to be inﬂuenced by actions of the new employer (i.e., how the employee is treated and regarded by this employer). However, our ﬁnding emphasizes that employees also have some control over the reestablishment of achieved identity, in that those employees who expected they could transfer their identity were able to accomplish this. Although we are not able with our current data to explain the process by which this transfer of identity occurred, one explanation is that there is a self-fulﬁlling prophecy effect. That is, employees who expect that they can reestablish a strong positive identity may enter the new employment relationship with stronger self-efﬁcacy (Bandura, 1986), with a more proactive and information seeking approach to socialization (Ashford & Black, 1996) and with stronger motivation as a result of stronger expectancies (Vroom, 1964). This stronger conﬁdence and more active information seeking may actually lead employees to be regarded more positively within the new work environment, thereby resulting in a positive post-outsourcing achieved identity. If future research conﬁrms that employees’ expectations do indeed create a self-fulﬁlling prophecy in terms of adjustment to the new work environment, this suggests that employers must be highly attentive not only to how employees are treated once they enter the new work setting, but also to the types of beliefs they develop prior to the organizational change. Finally, our ﬁndings indicate that the ability to transfer a positive social identity from the pre- to post-outsourcing work environment is critical to employee attachment to the new employer. We found that employees who

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reestablished a positive identity in the new context were more committed to and identiﬁed with the new employer, more satisﬁed with their jobs, and less likely to report turnover intentions. These ﬁndings emphasize the importance of consideration of employee identity during times of signiﬁcant organizational change. When employees are able to maintain valued identities, their ability to adapt to change appears to be greatly enhanced. It also is interesting to note that employees with the highest pre-change identity also had the highest post-change identity. The fact that there appears to be some consistency in achieved identity perceptions could suggest that there is a dispositional force at work here. Individuals may have predispositions toward developing positive vs. negative identities, or toward developing strong vs. weak identities. Examination of the extent to which this occurs, and how it inﬂuences employees’ reactions during times of change, would be an interesting extension of this research.

A REVISED MODEL AND FUTURE RESEARCH Although Fig. 2 provided a good starting point for research on achieved identity and organizational change, a more reﬁned model can be developed as a result of what was learned through this initial study. Fig. 4 illustrates this new model. We begin by discussing the portions of the new model that are consistent with our earlier model. We then turn to a discussion of new aspects of the model that can improve on our earlier predictions. The revised model maintains the basic structure in which achieved identity serves as a cement that attaches individuals to their work organizations and jobs. Although evidence of an achieved identity–attachment relationship was stronger in the post-change (vs. the pre-change) environment, there was evidence for the existence of this relationship at both time periods. The revised model also maintains the connection between expected transfer of achieved identity and post-change achieved identity, given the evidence for this relationship that was found in our study. However, the aspects of the original model that were weakest in explaining our data related to the connections between pre-change achieved identity and expected transfer of achieved identity, suggesting that this aspect of the model requires further thought and reﬁnement. Speciﬁcally, in Fig. 4 we suggest that this connection be reconsidered in light of motivation theory. We should note that the choice of motivation theory as a guiding principle here represents an interesting shift from our initial perspective in Fig. 2. In the earlier ﬁgure, our primary focus was on aspects of the organizational

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Pre-Change Attachment

Pre-Change Achieved ID

Social Information

Identification Commitment Job Satisfaction Intent to Turnover

Change-Related Self-Efficacy

Expected Transfer of Identity

Post-Change Attachment Post-Change Achieved Identity

Fig. 4.

Identification Commitment Job Satisfaction Intent to Turnover

A Revised Model of the Role of Achieved Identity in Organizational Change.

environment that may moderate between pre-change achieved identity and expectations regarding transfer. That is, three of the moderating variables that were posed here examined communication messages (i.e., elements in the organizational environment) that were given by the organization in regard to the change. However, our study found that a self-fulﬁlling prophecy might be important to the transfer of achieved identity in that expectations regarding transfer inﬂuenced actual transfer. If this is the case, then a focus on the individual’s desire and willingness to transfer the identity may be much more important that our original model suggested. Therefore, our revised model takes greater account of the motivational aspects of the transfer process. When individuals are considering whether a pre-change achieved identity can be expected to transfer to a new setting, they essentially are developing expectancy judgments. Expectancy Theory suggests that individuals determine their levels of effort based on several judgments. Simply stated, these

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MARY S. LOGAN AND ANNE M. O’LEARY-KELLY

judgments come down to assessing: (1) ‘‘Can I do this’’ – that is, if I exert effort, what is the likelihood that an outcome will occur (expectancy judgments), and (2) ‘‘What outcomes of value do I get if I do this’’ – that is, what beneﬁts accrue to the individual if the outcome is achieved (instrumentality and valence judgments). Application of this logic to the question of how achieved identity transfers from one environment to another allows us to create a more reﬁned model in Fig. 4. Speciﬁcally, we expect that employees who face a signiﬁcant organizational change will develop expectations regarding the likelihood that their current valued identity will transfer to the new work environment. At least two types of judgments seem important here: (1) judgments about whether the new environment will facilitate the transfer of identity, and (2) judgments about whether the individual is capable of shifting the identity. In regard to the former, we expect that employees will seek information from varied sources. One source of information, which was examined in our current study, is the organization itself. However, our results suggested that information from this source was not very inﬂuential in the development of transfer expectations. Perhaps a more inﬂuential source is social information, that is information from other employees in the work setting. As individuals interact with colleagues and build perceptions about the new work environment, their expectations regarding their own identity in the new workplace seem likely to crystallize. If the social information indicates that the individual will retain his or her positive identity (i.e., that the new work environment will support this, that the coworkers themselves will support this), then expectations regarding transfer will be positively enhanced. A second aspect of expectancy judgments relates to an individual’s selfefﬁcacy. Does this person believe that he or she is capable of transferring the new identity. This is a separate issue from whether the individual believes that the environment will provide the opportunity for the identity to reemerge. For example, one of our food service workers may believe that he can transfer his positive achieved identity to the new workplace, given the social information that he has received. However, if he is near retirement and feels little energy for reestablishing himself, his expectations regarding transfer will be low (i.e., he will have low efﬁcacy). Although our study examined self-efﬁcacy as a moderator of the achieved identity–expected transfer relationship (see Fig. 2), it was job-related self-efﬁcacy that was measured. In future investigations, we would like to explore a more proximal form of self-efﬁcacy, that is the individual’s conﬁdence that he or she has the personal capability to reestablish the work identity in the postchange environment.

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183

A second aspect of Expectancy Theory involves judgments regarding instrumentality and valence. In connecting these judgments to our model, it seems most probable that they will inﬂuence the relationship between expected transfer and post-change achieved identity. That is, individuals may hold expectancy judgments that lead them to believe that identity can be transferred (i.e., the new work environment will support it, they are personally capable of making it happen), but not exert effort to make this happen if they do not believe that valued outcomes will be forthcoming. For example, a star employee in the pre-change environment who has little faith that reestablishing this identity after the change will lead to recognition or rewards, may do little to reestablish the identity. In our previous version of the model, we did not recognize this key issue regarding incentives. Employees must want to reestablish the identity, and the ‘‘wanting to’’ is dependent on what valued outcomes they foresee. In summary, Fig. 4 provides a new model for research on achieved identity that we hope will lead to new research questions and investigations. Our preliminary study showed that achieved identity matters and provided a few core insights, but there is much more work needed before a real understanding of the role of work identity is established.

IMPLICATIONS FOR CHANGE MANAGEMENT This initial study of achieved identity in organizational change has several implications for practitioners. First, it is clear from our research that change agents must be cognizant of identity issues. It is important for organizations to know how much of an employee’s identity is attached to the work environment in the form of achieved identity. When employees have established valued work identities, they have more to loose as organizational changes occur. More importantly, it is noteworthy that threats to identity are much more fundamental to the self than are threats to other factors (e.g., rewards, social relationships) that may be vulnerable during times of change. Identity theory establishes that the fundamental nature of identity makes individuals very reactive to identity threats, suggesting that employee responses to this aspect of change may be especially strong. This recognition of the importance of identity is not, but should be, integrated into change models and change management practices. Second, our study established that achieved identity is critical to postchange employee adjustment. Perhaps the strongest ﬁndings in our study suggested that employees who were able to reestablish strong positive

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identities in the new work environment were those who adapted best to the change. This emphasizes again that it is critical that organizations pursue due diligence in regard to employee work identities, just as they do in regard to ﬁnancial aspects of organizational change. Third, and very importantly, we found that employee expectations about identity transfer were strongly predictive of their abilities to reestablish work identities. This is critical because it suggests that employers must not only provide supportive new work environments, but also must pay close attention to the expectations that employees develop prior to any change. Our study was not very successful in identifying speciﬁc variables that are predictive here, but using our revised model (see Fig. 4) we can speculate about several factors that may be important. We suggest that change agents work to build employees’ expectancy beliefs that valued identities can be transferred. This may be done by afﬁrming to employees that their success to this point was because of their hard work and effort, rather than because of some unique aspect of the current work environment. Further, these employees will need to see that their history at the prior organization still counts, that they are not starting over, and that they will be better off riding out the change rather than starting over somewhere else. In addition, our results also imply that change agents should be cognizant of those employees who had not established valued identities in the pre-change work environment. Because these employees had ‘‘negative’’ identities, they were less attached to the previous employer. As a result of the organizational change, there is a potential for improvements in the identity connections that these individuals have with their work environments. We would expect that building this potential will involve the same mechanisms just described – that is, change agents should build employees’ expectancy beliefs that a stronger and more positive new identity can be established. This suggests that different appeals may be necessary for different employees, depending on the strength and favorability of their existing identity connections. For those with strong positive identities, building expectations that change will not diminish their standing will be critical. For those with weak or negative identities, building expectations that change allows for starting over and new opportunities will be critical. On the face of it, these may appear to be conﬂicting messages in that one communicates that ‘‘nothing will change’’ while the other communicates that ‘‘everything is open to change.’’ However, to regard these as conﬂicting is to assume that there must be winners and losers in the identity game – that is, that only some individuals can develop a strong achieved work identity. Certainly, this assumption must be tested, but we suspect it is not valid. We are unaware of identity research suggesting that individual identities

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operate as a zero-sum game. Rather, we expect that deft managers and change agents can appeal to the identities of both those who feel disenfranchised and those who feel honored, albeit through different messages.

LIMITATIONS There are several noteworthy limitations to this research. First, our study suffers from a limited response rate and sample size. This outcome, although disappointing is not surprising. During times of organizational upheaval, employees may be disinclined to voluntarily participate in organizationsponsored projects, both because they feel uncertain about their employment status and because they feel less obligated to help the employer. Certainly, the limited number of participants creates concerns about statistical power. It is important to note, however, that the small sample size does not negate any of the signiﬁcant ﬁndings reported here, rather it limited our ability to detect signiﬁcant results. For example, only one of the moderated relationships proposed between pre-change achieved identity and expected transfer approached signiﬁcance. Certainly it may be that these are not sound predictions, but another possibility is that limited power prevented us from uncovering any moderators that might exist. Second, because we studied the adjustment process after the outsourcing had already been announced we had to rely on a retrospective measurement strategy to assess pre-outsourcing attitudes. Despite the potential limitation of this approach, Buono, Bowditch, and Lewis (1985) aver that a potential advantage is that experienced differences between the old setting and the new might actually make these factors more salient. Third, in some instances we were required to make compromises regarding measurement that we would not have chosen in a more ideal setting. For example, we used abbreviated versions of several dependent variables in our Time 2 data collection because we feared fatigue due to extensive phone interviews. As a result, reliabilities for a few scales were lower than normally expected (o0.70). These limitations are counterbalanced by several strengths of the research. First, we conducted a longitudinal study (over a ﬁve month period) that allowed us to track employee reactions as workplace changes occurred. Second, because employees reported no signiﬁcant changes in their job characteristics, we were able to isolate the identity-related effects of outsourcing in a way that would not be possible with other forms of outsourcing (e.g., where employees experience signiﬁcant changes in their job conditions and responsibilities).

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CONCLUSION This study is an interesting ﬁrst chapter in the untold story of how employee identity suffers or prospers during times of organizational change. Workrelated identities tend to be of signiﬁcant importance to individuals (Ashforth & Johnson, 2001) and our study demonstrates that employment changes that disrupt these identities can have formidable individual and organizational consequences. To date, most research on organizational change has focused on collective (or group) identity. Brickson and Brewer (2001) suggested recently that there is more involved in such situations than just the collective identity and intervention efforts should be directed to relational identity orientations. Achieved identity is just this type of relational orientation. Perhaps organizations need to ‘recruit’ their acquired employees with positive information about the organization and how the employee will ﬁt and thrive in the company’s environment. This information maybe crucial to both retention and productivity. Given that ‘‘change’’ is a work-related reality for many employees today, we encourage research that will contribute additional chapters to this relevant and important story.

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Linton, R. (1936). The study of man. D. New York: Appleton-Century, Inc. Mael, F. A., & Ashforth, B. E. (1995). Loyal from day one: Biodata, organizational identiﬁcation, and turnover among newcomers. Personnel Psychology, 48, 309–333. Mael, F. A., & Tetrick, L. E. (1992). Identifying organizational identiﬁcation. Educational and Psychological Measurement, 52, 813–824. Marcus, H. R., & Kitayama, S. (1991). Culture and the self: Implications for cognition, emotion, and motivation. Psychological Review, 98, 224–253. Merton, R. K. (1957). Social theory and social structure. Glencoe, Ill: The Free Press of Glencoe. Mowday, R. T., Steers, R. M., & Porter, L. W. (1979). The measurement of organizational commitment. Journal of Vocational Behavior, 14, 224–247. Nadel, S. F. (1957). Theory of social structure. London: Cohen & West Ltd. Nahavandi, A., & Malekzadeh, A. R. (1988). Acculturation in mergers and acquisitions. Academy of Management Review, 13, 79–90. O’Reilly, C., & Chatman, J. (1986). Organizational commitment and psychological attachment: The effects of compliance, identiﬁcation and internalization on prosocial behavior. Journal of Applied Psychology, 71, 492–499. Piderit, S. K. (2000). Rethinking resistance and recognizing ambivalence: A multidimensional view of attitudes toward an organizational change. Academy of Management Review, 25, 783–794. Sieber, S. D. (1974). Toward a theory of role accumulation. American Sociological Review, 39, 567–578. Stryker, S., & Serpe, R. T. (1982). Commitment, identity salience, and role behavior. Theory and research example. In: W. Ickes & E. S. Knowles (Eds), Personality, roles, and social behavior (pp. 199–218). New York: Springer. Tajfel, H. (1972). Social categorization (English translation of ‘‘La categorisation sociale’’). In: S. Moscovici (Ed.), Introduction er la psychologie sociale (Vol. 1, pp. 272–302). Paris: Larousse. Terry, D. J. (2001). Intergroup relations and organizational mergers. In: M. A. Hogg & D. J. Terry (Eds), Social identity processes in organizational contexts. Philadelphia: Psychology Press. Turner, J. C. (1982). Towards a cognitive redeﬁnition of the social group. In: H. Tajfel (Ed.), Social identity and intergroup relations. Cambridge University Press: Cambridge. Van Maanen, J., & Schein, E.H. (1979). Toward a theory of organizational socialization, In: B.M. Staw, (Ed.), Research in organizational behavior (Vol. 1, pp. 209–264). Greenwich, CT: JAI Press Inc. Van Oudenhoven, J. P., & De Boer, T. (1995). Complementarity and similarity of partners in international mergers. Basic and Applied Social Psychology, 17, 343–356. Vroom, V. H. (1964). Work and motivation. New York: Wiley. Weisenfeld, B. M., & Bartel, C. (2001). Parting is such sweet sorrow: The challenge of social identity exits. Academy of Management Meeting, 2001. Willcocks, L., Fitzgerald, G., & Feeny, D. (1995). Outsourcing IT: The strategic implications. Long range planning, 28(5), 59–70.

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APPENDIX Table A1. Examples of Questions used to Measure Achieved Identity at Pre-change Employer. Anchors: 1-Strongly Disagree to 7-Strongly Agree. My job history with the university gave me a strong sense of job security I don’t think I would have received as many promotions at another company The work I did at the University might not have been appreciated at another company I don’t think I would have been as successful working anywhere except the University I can could easily achieve the same level of status with another company s

Table A2. Examples of Questions to Measure Expected Transfer of Achieved Identity. Anchors: 1-Strongly Disagree to 7-Strongly Agree. My job history at the University will give me a strong sense of job security with (company name) Promotions that were a possibility at the University are also possible at (new company) My work will be appreciated at (company name) I think I can be as successful at (company name) as I was at the University I can easily achieve the same level of status with (company name)

Table A3. Examples of Questions to Measure Actual Transfer of Achieved Identity. Anchors: 1-Strongly Disagree to 7Strongly Agree. My job history at the University gives me a strong sense of job security with (company name) Promotions that were a possibility at the University are also possible at (new company) My work is appreciated at (company name) I am as successful at (company name) as I was at the University I have easily achieved the same level of status with (company name)

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Table A4. Questions to Measure Information Given to Employees. Anchors: 1-Strongly Disagree to 7 Strongly Agree. Degree of change Basically, we were told there would be no major changes for food service employees We were encouraged to think that our jobs would not really change much New company information We were told that Food Services was a great place to work I was made to feel welcome to the Food Services family I learned a great deal about Food Services’s business philosophy The presenters implied that knowing about Food Services was important to our futures Reasons for change I agreed with the reasons that were given for outsourcing food services It was explained that the outsourcing change supported the mission of the University The information presented changed my ideas about outsourcing

WITKIN’S COGNITIVE STYLES AND FIELD THEORY APPLIED TO THE STUDY OF GLOBAL MANAGERS AND OD PRACTITIONERS Lichia Yiu and Raymond Saner ABSTRACT There has been an upsurge of publications based on Hermann Witkin’s ground-breaking work on cognitive styles and human perception differentiated into field-dependent and field-independent styles (Winerman, 2006; Nisbett & Miyamoto, 2005; Nisbett, 2003). This paper builds on current and past research of Witkin (1969) and applies his concepts to the study of global managers and OD practitioners. The goal is to describe core aspects of culture-related challenges, which global mangers and OD practitioners have to overcome, and ends with proposing future research on the possibilities of training global managers and OD practitioners in order to develop integrated perceptual-cognitive ability (IPCA). Such an IPCA competence would allow them to master both field dependent and field-independent perceptual-cognitive skills.

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1. SCOPE OF THIS PAPER As multinational companies and OD consultancies expand to compete globally, they are faced with the challenges of increasing cultural diversity, and the demand for additional sets of interpersonal competencies and cultural literacy. An increasing percentage of the managers within global companies and a growing number of OD experts working abroad have to work closely together with people of other cultures on activities that transcend national borders. Failure to manage these cross-cultural relationships could mean signiﬁcant business risks and costs. Substantial work has been done in the area of cross-cultural management (Schneider & Barsoux, 1997; Redding, 1992; Roberts & Boyacigiller, 1984; Harris & Moran, 1979, 1987), cross-cultural interpersonal interaction (Gudykunst, 1991), multicultural teams (Adler, 1985; Hambrick, Davison, Snell, & Snow, 1998), and global organizational design (Bartlett & Ghoshal, 1989). All of these studies point to the impact of globalization on leadership qualiﬁcations (Saner, 2001), on competencies required to manage non-business interfaces (Saner, Sondergaard, & Yiu, 2000), and on cultural variances of teaching the Harvard Case Method (Saner & Yiu, 1994b). However, as yet, insufﬁcient attention has been paid to the role requisites of global managers and internationally active OD experts. Building on the research by Denison, Hooijberg, and Quinn (1995), which emphasize the need to focus on the cognitive and behavioural complexities of managerial leadership, and the work by Kanungo and Mendonca (1996), which calls for culture-contingent leadership approaches when working in developing countries, this article proposes that global management and international OD competence requires speciﬁc cognitive abilities. These abilities are needed to manage cognitive complexity and to deal with the role ambiguity inherent in the complex role structure of a global manager and of an international OD expert. Building on the initial work relating to this topic (Yiu & Saner, 2000), the authors raise two theoretical questions, namely: 1. What are the perceptual-cognitive requisites that global managers and international OD experts have to fulﬁl in order to carry out their functions effectively within a multicultural environment? 2. Are there speciﬁc perceptual-cognitive abilities that distinguish a global manager from a parochial manager and an international OD expert from a parochial OD expert? The authors postulate that intercultural adaptation, especially regarding cognitive capacity, is needed in order to guarantee a global manager’s and

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the international OD expert’s effectiveness during his/her transnational assignments. It is further hypothesized that one of the deﬁning feature of the global managers’ and international OD experts’ competencies and effectiveness is their ability to manage perceptual-cognitive complexity. Mastery of perceptual-cognitive complexity is also required of the direct reports in the various foreign subsidiaries who have to work for their expatriate global managers/supervisors. While more attention has been given to the pre-departure training (expatriation) of the managers, much less attention has been given to the need for acculturation of the employees in the subsidiary of a global company. While the authors suggest that subordinate effectiveness should also be studied, the main emphasis of this paper focuses on the global manager, not on his/her subordinates. The same observation can be made with regard to the client system of an OD expert working in foreign countries and in different cultural environments. His/her clients and their respective employees have to adjust to the professional and national cultural background of the OD expert. As described below, OD theory and practice is also culture bound and needs to be adapted to different cultural contexts. The adaptation requires mutual adjustments by the OD experts and his/her client system. Insufﬁcient attention has been given in the literature to the adjustments required by the client and the client system. However, this paper focuses on the OD expert, not his/her client system.

2. CULTURAL INFLUENCES AND DIFFERENCES Nationalities and their respective cultures affect an individual in numerous interconnected ways, most importantly, values, cognitive schema, demeanour and language (Hambrick et al., 1998). These culture/nationality driven characteristics consequently affect a person’s perception and behaviour, as well as how the person is perceived by others in a multinational context (Fig. 1).

2.1. Language Language affects the person’s ability to participate in work-related interchanges as well as social activities. National background inﬂuences to a great extent the English proﬁciency of the person, which is the lingua Franca of today’s business world. The ease and familiarity in using English and other local languages tend to shorten or lengthen the psychological distance which already exist between persons of different cultures and nationalities.

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National Culture X • values • cognitive schema • demeanour • language

Perceptual -cognitive processing P E R S O N

P E R S O N

A

B

• • • •

National Culture Y values cognitive schema demeanour language

• Perceived similarities/dissimilarities • Liking/disliking • Social distance • feeling of trust

Fig. 1.

Intercultural Interaction and Its impact on Psycho-Social Assessment.

2.2. Demeanour A substantial body of data is available concerning the differences in outward physical behaviour, or demeanour, of people of different nationalities and cultures. Most commonly documented are those relating to eye contact, physical proximity, punctuality, conversational style, interruption patterns, and physiological reactions to emotional stimuli (Gudykunst & Ting-Toomey, 1988; Hall, 1983; Mesquita & Frijda, 1992). Differences in behaviour tend to create irritation, reinforce stereotypes, and heighten the perceived psychological distance among multinational teams. These differences can also cause a breakdown in communication and disrupt group cohesion (Hall, 1969).

2.3. Personal Value Research by Laurent (1983) and England (1975) has shown that managerial values which business executives bring to their tasks are predominantly due to national systems of beliefs (cultural values). Personal values as deﬁned by Hofstede (1980) are ‘‘a broad tendency to prefer certain states of affairs over others’’. Hofstede (1991) further says that culture is the programming of the

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mind. The value dimensions most often mentioned by the management theorists are individualism vs. collectivism, universalism vs. particularism, power distance, relationship to time, and uncertainty avoidance (Parsons & shills, 1951; Kluckhohn & Strodtbeck, 1961; Hofstede, 1980, 1991; England, 1975; Triandis, 1982; Trompenaars, 1993). 2.4. Cognition National culture affects one’s cognitive schema, or what one knows, assumes, or perceives about the world (Lord & Foti, 1986). March and Simon (1958) and Maruyama (1980) point out that individuals with diverse cultural/national background differ in terms of the knowledge they possess. This can include knowledge of facts, events, and trends; knowledge of assumptions about future events; knowledge about alternatives; and knowledge of assumptions about how consequences are attached to alternatives. For example, individuals of heterogeneous national background tend to know, assume, and perceive different things about their respective countries (Walsh, 1995). In their comparative study, Mesquita and Frijda (1992) found that national culture affects not only cognitive content (knowledge) but also the processing and interpretation of new cognitive content as well as the way they perceive potentially emotional stimuli. Their ﬁndings echo the work done by the anthropologists in this ﬁeld. In sum, the global manager’s and the international OD expert’s nationality and cultural background tend to determine his/her value system, cognitive schema, demeanour, and English language proﬁciency. These characteristics in term, we assume, play an important part in determining his/her role effectiveness in a transnational setting when dealing with culturally heterogeneous groups. The authors argue that of the four major cultural determinants mentioned above, the impact of cognitive schema, especially, the perceptualcognitive orientation and reaction to social and emotional stimuli on the managerial behaviour is least studied. Therefore, it warrants a more in-depth analysis of these perceptual-cognitive requisites of global managers.

3. WITKIN’S FIELD AND COGNITIVE STYLE THEORY Recent research and publications by Winerman (2006), Nisbett and Miyamoto (2005), Nisbett (2003), and Nisbett and Norenzayan (2002) have

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brought to the fore the pioneering work done by Hermann Witkin and his colleagues, which were unfortunately left dormant since the untimely death of Witkin in 1979. As stated by one of the Witkin’s close associate, Berry (1999) His untimely death was a devastating blow to the ﬁeld, and no one came forward to maintain the momentum of this very active area (p. 2).

Witkin’s work is a continuation of the Gestalt psychologists’ pioneering work on human perception by Max Wertheimer, Wolfgang Koehler, Kurt Koffka, Kurt Lewin, Kurt Goldstein, and others most of whom emigrated from Germany and taught at the New School of Social Research in New York City starting from the mid-1930s. Witkin studied Gestalt psychology and Gestalt perception, and deepened the understanding of perception and cognition through his ground-breaking studies focusing on the link between perception and cognition. Borrowing from Nisbett (2003, pp. 42–43), the following are the main features of Witkin’s work applied to cognition and perception. Nisbett states that Witkin and his colleagues showed some people are less likely than others to separate an object from its surrounding environment. Based on the results of his research, Witkin created a dimension in human cognition, which he called ‘‘ﬁeld dependence’’ referring to the degree to which perception of an object is inﬂuence by the background or environment in which it appears. Witkin and his colleagues measured ﬁeld dependence in a variety of ways. One of these was the Rod and Frame Test. In this test, the participant looks into a long box at the end of which is a rod around which is a frame around. The rod and frame can be tiled independently of each other and the participants’ task is to indicate when the rod is completely vertical. The participant is considered ﬁeld dependent (FD) to the extent that judgements of the rod’s verticality are inﬂuenced by the position of the frame. A second way of testing ﬁeld dependence is to place people in a chair that tilts independently of the room in which it is placed. In this test, called the Body Adjustment Test, the participant is considered FD to the extent that judgements of the verticality of the participant’s own body are inﬂuenced by the tilt of the room. A third way, and the easiest to work with, is the Embedded Figures Test. In this test, the task is to locate a simple ﬁgure that is embedded in a much more complex ﬁgure. The longer it takes people to ﬁnd the simple ﬁgure in its complicated context, the more FD they are assumed to be. Applying Witkin’s concepts and test instruments to cross-cultural settings, Ji et al. (2000) presented European Americans and East Asians with

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the Rod-and-Frame Test developed by Witkin and colleagues. East Asians made more errors than European Americans, indicating that East Asians were attending more to the whole ﬁeld and thus had more difﬁculty ignoring the frame. Extending this line of work, Kitayama et al. (2003) recently developed the Framed-Line Test (FLT), which allows measurement of holistic vs. analytic perception in the same task format, and they replicated the ﬁndings. Furthermore, East Asians not only attend more to the ﬁeld, but also attend to it earlier, they remember more about it, and they ‘bind’ salient target objects to the ﬁeld in memory. Summarizing key points of recent research by Nisbett and Miyamoto (2005), Lea Winerman (2006) reports for the APA Monitor that cognitive differences between Westerners and Asians show up in other areas as well. For example, in tests of categorization, Americans are more likely to group items based on how well the items ﬁt into categories by type. For example, a cow and a chicken might go together because they are both animals. Asians, in contrast, are more likely to group items based on relationships – so a cow and grass might go together because a cow eats grass. Another difference between Westerners and Asians regards the fundamental attribution error – a mainstay Western psychological theory for the last 30 years that, it turns out, may not be so fundamental after all. The theory posits that people generally over-emphasize personality-related explanations for others’ behaviour, while under-emphasizing or ignoring contextual factors. So, for example, a man may believe he tripped and fell because of a crack in the sidewalk, but assumes that someone else fell because of clumsiness. However, most East Asians do not fall prey to this error. They are much more likely to consider contextual factors when trying to explain other peoples’ behaviour. In a 1994 study, for example, psychologists Morris and Peng (1994) analysed American and Chinese newspaper accounts of recent murders. They found that American reporters emphasized the personal attributes of the murderers, while Chinese reporters focused more on situational factors. Cognitive style, according to Berry (1976), is a cultural phenomenon. In other words, the eco-cultural system in which a person resides will determine his/her preferred cognitive style. Witkin and Berry (1975) examined different societies and found that there were substantial differences among them in ﬁeld dependence. Farmers, who live in societies where they must coordinate their actions with others, were found to be more FD than were people who hunt and gather, or who herd animals for a living. The latter sorts of livelihoods require less coordination with the actions of those of others, and

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social, political, and economic role relations tend to be relatively simple. Industrialized people have levels of ﬁeld dependence comparable to those of mobile hunter-gatherers and herders. Like mobile peoples, industrialized peoples have substantial freedom in their work lives and relative simplicity in role relations. There are, of course, alternative explanations available for these results, but taken on their face value they are consistent with the proposition that culture affects perception at a deep level. Summarizing the cultural differences in ﬁeld dependency and cognitive styles, ﬁeld independent (FID) individuals tend to be more autonomous, pay more attention to concrete facts, and are equipped with cognitive restructuring and analytic abilities. In contrast, persons of industrialized societies tend to have a ﬁeld-independent cognitive style and persons of traditional societies tend to have a ﬁeld-dependent style. There are, however, fundamental differences (see Fig. 2) and important implications. Winerman (2006) observes that the idea that culture and societal contexts can shape the way people think at these deep levels is a departure for psychology, which as a ﬁeld traditionally assumed that basic cognitive processes are universal. Nisbett and Norenzayan (2002) like Berry (1991) emphasize the fact that the environment can have an important determining impact on human perception and human cognition; thereby, bringing into question the assumption of autonomous thinking and perceptions of environmental data. Witkin and his colleagues argued that ﬁeld dependence is in part the result of an orientation toward people. An outward orientation toward the social

Information Seeking Strategy

Field Dependent (FD)

Field Independent (FID)

Wait and see

Act

External

Internal

Dependent

Autonomous

Emotional Stimuli

Facts and Logic

Interpersonal Skills

Cognitive Restructuring and Analytic Skills

More Frequent in

Asian and Developing Countries

Western and Industrialised Countries

More Prevalent in

Developing Countries Agricultural societies

Developing Countries Hunting & Nomadic societies

More Often among

Women

Men

Frame of Reference Social Relations Focus of Attention Skill Set

Fig. 2. Contrast of Cognitive Styles According to Witkin (1978a, 1978b) and Berry (1976).

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environment encourages an orientation toward the ﬁeld in general. Consistent with this proposal, Witkin and his colleagues found that more socially oriented people were more FD than were more introverted people (Witkin, 1969). They also found that Orthodox Jewish boys, who live under substantial social constraints and with strong social role obligations, were more FD than more secular Jewish boys, who were in turn more FD than Protestant boys (Adevai, Silverman, & McGough, 1970; Dershowitz, 1971; Meizlik, 1973). Both sets of ﬁndings were obtained even when IQ was controlled. Communication and social interactions are essential parts of a manager’s task. It is so as well for an OD consultant. Communication is a function of perception, information processing, and sense making. In an intercultural context, the sense making could be skewed due to the cultural-bound cognitive processes. In order to be effective in a cross-cultural role-set, managers and OD consultants alike need to ‘‘stretch’’ not only their behavioural repertoire but also their perception and cognitive capacity.

4. CULTURAL ADAPTATION OF GLOBAL MANAGERS AND ROLE REQUISITES After examining the corporate structure of today’s large European, American, and Asian companies, Bartlett and Ghoshal (1993, 1997) proposed a model of managerial and leadership roles which are presumed to be essential for the global organizations. They state that these roles go beyond the traditional roles of a manager and outlined what the needed personal proﬁles of these front line, senior, and top-level managers should look like. What is missing in their analysis are the perceptual-cognitive dynamics which inﬂuence and shape the dynamic interactions between the global manager and the motivational forces of his/her culturally heterogeneous subordinates and external counterparts such as foreign government ofﬁcials, clients, and advocacy groups. Perhaps, Bartlett and Ghoshal (1997) assume that effective leadership behaviour is universal and hence does not warrant further elaboration. Hofstede (1980, 1991) on the other hand has demonstrated clearly that national culture and corresponding work values have to be taken into account when discussing international, cross-cultural, and organizational leadership practices. Based on Hofstede’s work, Kanungo and Mendonca (1996) argue eloquently for the need to adapt prevalent leadership models of the West and the North to ﬁt the cultural speciﬁcs of the East and the South, and propose

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to deﬁne the effective leadership role and behaviour through the stand point of perceived leadership behaviour and dispositions. In other words, Kanungo and Mendonca’s work and that of other scholars, for example, Sinha (1980, 1990) and Triandis (1993) help to remind us of the necessity to understand effective managerial leadership within the larger socio-cultural context, and to accept the fact that the transferring of Western role models to a non-Western work environment are of limited utility. Combining these two strains of theoretical development, on the one hand, Bartlett and Ghoshal’s call for transformational managerial and leadership qualiﬁcations of global companies, and on the other, Kanungo and Mendonca and Triandis’ emphasis on cultural contingency model of leadership, this paper extends this line of inquiry by examining more in depth the cognitive-perceptual abilities of an effective global manger from the stand point of a culturally heterogeneous manager–subordinate role set. Moreover, this paper attempts to further clarify the perceptualcognitive requisites of a global manager and to deﬁne his/her personal qualiﬁcations. The authors’ deﬁnition of the role requisites of a global manager goes deeper than the deﬁnition given, for instance, by Hooper (1979), who lists the skills associated with multiculuralism. Instead, the authors focus on the perceptual-cognitive processes underlying the multicultural social interactions, and attempt to deﬁne how these social interactions in turn foster cognitive and behavioural changes. Global manager is, thus, deﬁned as a manager who has the cognitive-affective and social abilities and skills to communicate effectively (a) with people of any culture encountered and (b) in any situation involving a group of people of diverse cultural backgrounds. Ideally, global mangers should be individuals who can move from one culture to another with ease. They should be persons from a ‘‘third culture’’ who have acquired cognitive and behavioural patterns that are shaped, created, and learned in the process of relating their own cultural systems to the cognitive systems of individuals from other cultures. Therefore, the global managers are not only the transmitters of their own cultural cognates, but also the active receivers of cognates of other culture bearers (Meggisson & Meggisson, 1996. The authors hence assume that a successful cultural adaptation leads to sustainable behavioural changes, such as the development of transnational leadership competencies. Moreover, the assumption is that this can only happen when there is a fundamental perceptual-cognitive re-alignment and a re-patterning of the existing perceptual-cognitive repertoire. In other

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words, the authors recognize differences between short-term transient changes and long-term permanent changes of perceptual-cognitive abilities resulting from intercultural exposures. Speciﬁcally, the authors postulate that in order to be effective in the multicultural context, managers will have to go through a personal transformational learning process. Such change is related to the cognitive structures and processing skills, which the global manager acquires intuitively in the process of multiple transnational assignments or consciously through awareness and deeper level reﬂection.

4.1. Adaptation Challenge 1: Cultural Distance between Cultures A global manager’s ability to be effective depends on a variety of factors ranging from business acumen to intercultural competence. Prominent among factors that inﬂuence the intercultural competence is the combination of (a) the cultural distance and type of culture/nationality-driven diversity between the global manager’s heterogeneous role sets and (b) the personal attributes and behavioural repertoire of the global manager. The former has a direct and positive relationship with the degree of cultural adaptation, while the later is often linked to the manager’s ability to make sense of the new situation and make appropriate adaptation. When looking at the components of culture, e.g., customs, language, religion, and technology, it can be said that the more similar these cultural components are, the less impact they have on managerial effectiveness (Earley, 1987). On the contrary, the more diverse the cultures, the greater their inﬂuence on managerial effectiveness (Megginson & Megginson, 1996). It can also be said that each culture has its own role deﬁnition and expectations concerning a leader, a manager, a subordinate, and a guest. Therefore, when the cultural distance is great between the role sets, there is greater probability of either role ambiguity or role conﬂict. Both could lead to a fair amount of stress and result in mutual mistrust. For the purpose of this paper, culture can be viewed as a set of common understandings which characterize the social system’s milieu (Caltin & Lad, 1995). In this context, the cultural distance could be best illustrated by using Hofstede’s four dimensions of culture, namely, individualism vs. collectivism, power distance, uncertainty avoidance, and masculinity vs. femininity. Hofstede (1980) illustrated the cultural similarity vs. dissimilarity by measuring the proximity of countries and by how readily they merge to form a compact cluster. Thus, Colombia, Mexico, and Venezuela are very similar

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and readily form a cluster that is of different value orientation from cluster countries like Denmark, Sweden, Norway, Netherlands, and Finland. The authors strongly link the individual’s ability to make appropriate cultural adaptation with his/her perceptual-cognitive processing skills and his/her cognitive capacity to master the complexity of multiple juxtaposed and overlaid cultural realities. In making sense of their intercultural experiences, the global managers cannot solely rely on either the FID mode of information seeking and processing, or only on the FD mode. Instead, global managers need to employ a combination of the two in order to perceive the context of the exchange as well as likely cultural implications in this context, and then draw the proper conclusion from it and decide on the best course of action. Relying solely on a FID or solely on a FD, perceptual-cognitive functioning would most likely lead to miscommunication and misjudgment. Both miscommunication and misjudgment tend to engender mutual feeling of frustration and rejection, which in turn reinforce the initial perception and feeling of social distance and alienation. The manager with a dominant FID orientation would be perceived as arrogant or ‘‘too distant’’; the other with a dominant FD orientation as ‘‘too laid back’’ or incompetent. While globalization has brought a degree of convergence in terms of accepted international business conduct and managerial behaviour, such convergence tend to disguise the ‘‘cultural gulf’’ lying beneath. The cultural distance is more evident when expatriate managers deal with the staff who have had limited exposure to western education and with business partners and stakeholders who are traditional in their perspectives and behaviour.

4.2. Adaptation Challenge 2: Culturally Appropriate Role Taking Across Cultural Boundaries The cultural adjustment of a global manager has to be viewed from both role theory and social exchange theory perspectives. This is to say that the role-taking process of a global leader/manager within a multicultural context is strongly shaped by the cultural backgrounds of the global manager and the whole palate of role sets of others who communicate to him/her important role information. These role sets include not only vertical dyad linkages but also horizontal and network relationships and concomitantly by his/her perceptual and cognitive abilities. Following this further, the authors assume that an FD approach would allow the global manager to more accurately perceive and receive important

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role information from his/her environment during various role episodes1 thanks to his/her ability to empathize and build a sense of togetherness with others. Conversely, an FID approach would allow the global manger to avoid becoming too conﬂuent with his/her immediate milieu and become fully local. FID ability, thus, would allow him/her to retain a separate perspective and see the world through multiple lenses (perspectives). Cultural adjustment in this ongoing and interdependent cycle of role sending and role behaviour sequence (role taking) (Katz & Kahn, 1978), as discussed in the preceding section, goes further than being aware of the cultural differences of the other in a multicultural context. Instead, the authors argue that global managers are required to not only master to a greater degree the cognitive understanding of the other cultures but also attain subjective familiarity of the other culture as an insider would be able to attain2 (Hanvey, 1979). Like a chameleon, the global manager knows how to activate different sets of knowledge–attitude constructs in order to mediate between overlapping and contradictory role deﬁnitions and expected role behaviour. Yet, such psychological elasticity could not be achieved without the global manager undergoing profound learning and developmental changes. This ability to acquire and integrate both FID and FD cognitive modes is the result of learning through self-awareness, reﬂection, and cognitive self-discipline.

4.3. Adaptation Challenge 3: Adequate Social Exchanges across Cultural Boundaries Looking at the role requisites of a global manager, the authors found another strand of research useful, namely, the social exchange theory. Leader– Member Exchange (LMX) research has identiﬁed low-quality leader–member relations as being characterized by economic (contractual) exchanges that do not progress beyond what is speciﬁed in the employment contract, whereas high-quality leader–member relations are characterized as social exchanges that extend beyond what is required of the employment contract (Sparrowe & Liden, 1997). Blau (1964, p. 94), when describing the differences between social and economic exchanges, said ‘‘Only social exchanges tend to engender feelings of personal obligation, gratitude, and trust; purely economic exchanges as such do not.’’ Thus, the high-quality exchanges (‘‘in group’’) are important for the motivational aspect of the leadership. The exchanges between the global manager vis-a`-vis the multitude of his/her cross-cultural counterparts need to go beyond the economic nature

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of personal transactions and be rooted in high (in group) social exchanges. To be effective, global managers need to refer to the social cues communicated by his/her host cultural counterparts in order to achieve the highquality exchanges needed to get things done. In more collectivist and high power distance societies, the relationship between the manager and his vertical dyadic relationships tend to be characterized as paternalistic. Consequently, the exchange requires it to be more social rather than economically oriented. On the other hand, in more individualistic and medium to low power distance societies, the interpersonal exchange tends to be more impersonal and economic (contractual). An FD mode would allow the global manager to be in tune with the emotional stimuli, which constitutes the balk of the social exchange, while a FID mode would allow the global manager to take stock of the situation. Residing in between cultures, global managers need to develop a balanced, sophisticated view of his/her operational realities (centre of the concentric cultural contexts) by maintaining a bi-focal viewpoint (external and internal frame of references).

4.4. Intercultural Role Requisites of a Global Manager In summary, appropriate cultural adjustment requires personal attributes which pertain to high-level intercultural awareness (Hanvey, 1974; Adler, 1985; Tung, 1994; Tung & Worm, 1997; Harris & Moran, 1979), psychological elasticity (Maruyama, 1970), and integrative cognitive functioning (Saner & Yiu, 1994a, 1994b). Instead of the ability to imagine and to learn a variety of roles in the context of one’s national culture, a competent global manager has to have the ability to imagine and empathize with the different viewpoints and roles in foreign cultures by taking the cues from his/her intercultural counterparts. The second, psychological elasticity, designates the psychic mobility, which allows the global managers to move in and out of different cultural constructs, in and out of old and new relationships, and in and out of a multitude of organizational roles. Psychological elasticity proscribes the global manager’s ability to temporarily suspend his/her subjective valuation and to blur the boundary between one’s self and non-self (Maruyama, 1970). However, the third attribute – integrative cognitive functioning –is the least-developed construct. the authors deﬁne it as an integrated cognitive-perceptual ability constituting both Witkin’s cognitive abilities, namely ﬁeld dependence and ﬁeld independence cognitive orientations. Although least known, the authors consider the integrative cognitive functioning as

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most vital in order to play the role of global manager effectively and the most challenging to master.

5. CULTURE GAP BETWEEN TRADITIONAL OD VALUES, THE ORGANIZATIONAL CULTURE OF THE CLIENT SYSTEM, AND THE CLIENT SYSTEM’S NATIONAL CULTURE Conventional OD theory and practice has been considered as being inﬂuenced by humanistic psychology and corresponding value preferences emphasizing participatory, trusting, and more egalitarian approaches to interpersonal communications. It has also been reported that because of this humanistic value preference, OD inevitably is limited in its application when faced with environments, which favor more traditional, hierarchical, and secretive value orientation (Hodgetts & Luthans, 1996). Scholars have described the tensions between traditional OD practice and their application to non-US environments, for instance, Murrell (1984, 1986, 1988), Saner and Yiu (2002), Sorensen, Head, Thomas, Yaeger, and Cooperrider (2001), and Fagenson-Eland, Ensher, and Burke (2004). All of these authors describe the need for the adaptation of OD practice to a multitude of non-US environments. As a way of clarifying the possible value gap between conventional OD and national culture, Johnson and Golembiewski (1992) summarized Jaeger’s (1986) conceptualization of Hofstede’s (1980, 2001) four value dimensions (namely power distance, uncertainty avoidance, masculinity vs. femininity, and individualism vs. collectivism), and accordingly, categorized traditional OD value orientation within the frame of Hofstede’s culture dimensions as follows (see Fig. 3). Comparing the two proﬁles, the reader can easily see that the OD orientation does not ﬁt with the dominant values of several of the largest country cultures of the world. To illustrate this point, it is informative to compare some of the prevalent Hofstede value orientations of selected countries with traditional OD value orientations, namely (a) High power distance (strong hierarchical–power based on authority and less on professional competence-expertise power) – for instance, countries with high power distance are countries like Malaysia, Philippines, Mexico, Brazil, France, Turkey, and Belgium.

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LICHIA YIU AND RAYMOND SANER HOFSTEDES' FOUR CULTURAL DIMENSIONS Power Distance

Low PD is associated with social egalitarianism and as PD increases, status inequality and distance in social relationships also increase.

Uncertainty Avoidance Low UA is associated with tolerance of ambiguity and minimised structuring of relationships; high UA leads to elaboration of rules and structures.

Masculinity - Femi ninity Masculinity stresses results and the importance of material things, while femininity stresses the importance of feelings and relationships.

Individualism - Colle ctivism Individualism stresses and tolerates individual uniqueness, while collectivism defines individuals through their social, group characteristics.

JAEGER'S CHARACTERISATION OF TRADITONAL OD VALUES Power Distance

Uncertainty Avoidance

Masculinity

PD is low.

UA is low.

Masculinity is low.

This means that OD values are associated with status equality and the minimization of social differences.

OD values stress tolerance of ambiguity and minimize elaborate structuring of relationships.

Results and things are less associated with OD values than is the feminine stress on feelings and relationships.

Fig. 3.

Individualism Individualism is medium. Jaeger concludes that OD values are inconsistent with both extremes of the IndividualismCollectivism scale. On the one hand, OD stresses and tolerates individual differences, while on the other it facilitates collaboration and teamwork.

Jaeger’s Comparison between Traditional OD Values and Hofstede’s Value Dimensions.

(b) High uncertainty avoidance (bureaucratic rituals and procedures as means to minimize ambiguities, too much informality in personal relations, and preference for rules and procedures rather than informal arrangements) – countries with high uncertainty avoidance are, e.g., Greece, Portugal, Guatemala, Uruguay, Belgium, Japan, Spain, and France. (c) Masculinity vs. femininity (masculinity favours acquisition of material possessions and hoarding of information; whereas femininity stresses

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relationships and importance of feelings as forms of sensors to assess environmental interactions) – countries with high scores on masculinity values are Japan, Austria, Venezuela, Switzerland, Mexico, and Great Britain, while countries with high femininity scores are, e.g., Sweden, Norway, Netherlands, Costa Rica, and Finland. (d) Individualist value orientation (individualism means that a person aims at self-reliance, independence from groups, while collectivism highlights an emphasis on belonging to a group and basing human interactions on insider/outsider distinctions) – countries with high individualistic value orientations are, e.g., USA, Australia, UK, Canada, Netherlands, and New Zealand, while countries with high collectivist orientations are Guatemala, Venezuela, Indonesia, Pakistan Thailand, and China. A potential conﬂict exists in developing countries whenever a donor country conducts an OD intervention in a recipient country of the Southern Hemisphere. However, research results of OD practice in developing countries seem to suggest that OD success is actually higher in situations when the value distance between humanistic OD and the client’s traditional value orientation is actually large and not small (Johnson & Golembiewski, 1992). The reason for this seeming contradiction might lie in the underestimation of the power factor of OD projects in developing countries. The OD practitioner working in the South is supported by institutional power (donor country guarantees budget, resources, governmental inﬂuence), and hence, any reported acceptance of egalitarian OD techniques should be seen in the context of power asymmetry between ‘‘northern’’ consultant (high power) and ‘‘southern’’ client (low power). The beneﬁciary is in need, hence dependent, resulting in having low power. The client is therefore, most of the time willing, out of necessity, to drop his/her insistence on respect for his/her own high power needs (high power distance) typical of the most developing country cultures.

5.1. Relation between Field Dependence, Hofstede’s Cultural Value Orientation, and OD Practice 5.1.1. Correlation between FID and Masculinity Hofstede cites the study by John Berry (1976), when Berry carried the study of perceptual-cognitive differentiation to the ecological level. Between 1964

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and 1974, Berry studied more than 1,000 members of 21 different communities in Africa, Australia, Europe, and North America using a battery of psychological differentiation tests. Berry then found systematic differences in the levels of ﬁeld dependence that he related to factors in the ecological and cultural situations of these communities. Based on the research done by Berry, Hofstede (2001) proposes a correlation between ﬁeld independence and masculinity on one side, and femininity and ﬁeld dependence on the other hand. He states (p. 305) Conceptually, valuing social relationships (cultural femininity) converges with relying on external frames of references as guides to behavior (ﬁeld dependence); valuing ego gratiﬁcation (cultural masculinity) converges with relying more on internal frame of reference (ﬁeld independence).

5.1.2. Correlation between OD Interventions and Femininity Applied to an internationally active OD expert, this would mean that an OD expert applying traditional OD theory and method would be more congruent with enterprises and countries high in femininity values and low in a masculinity value orientation. The opposite match, that is a more femininity-oriented OD expert working for a company embedded in high masculinity value orientation, could lead to misunderstandings and in worse case, to conﬂicts. Communications in a high masculinity-oriented client systems, according to Hofstede, would most likely be based more on numbers, deadlines, production ﬁgures, cost and sales forecasts, etc., rather than on expressions of feelings, open discussions of interpersonal dynamics. Fagenson-Eland et al. (2004) hypothesize that OD intervention in countries with high masculinity score would be more likely to use training and development, career development initiatives, team building, and technology integration than countries with low masculinity score. Rarely, conﬂict resolution types of interventions could be conducted in high-masculinity countries or companies. Although their comparative study of OD and intervention tools used in seven countries (mostly English-speaking countries except two) provided inconclusive ﬁndings, it does shade some light on different cultural preferences of OD interventions. Instead of looking at how culture inﬂuence the choice of OD interventions, the authors postulate that the perceptual-cognitive ability might be a more sensitive predictor in constructing a productive clientconsultant relationship of OD and the appropriate choice of OD tools for intervention.

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5.1.3. Perceptual-Cognitive Ability of OD Expert Similar to global manager, OD expert needs to adopt its perceptual-cognitive style when working in a cross-cultural context. Although OD value prescribes a more relationship orientation, the general mode of cognitive processes of OD practitioners remains embedded in the ecological environment of their upbringing – analytical, causal, and FID. Therefore, when working in cross-cultural context, there remains the need to adapt and adjust in order to perceive the full context of social interactions and organizational dynamics through a pair of ‘‘local’’ lens. Cognitive complexity, the authors would argue, is therefore even more paramount for OD practitioner in the cross-cultural context since s/he needs to be an insider to fully appreciate the interpersonal dynamics at different levels and remains at the margin to grasp the underlying causes of the organizational issues.

6. INTEGRATIVE COGNITIVE FUNCTIONING (INTEGRATED PERCEPTUAL-COGNITIVE ABILITY) Managing perceptual-cognitive complexity in a multicultural context would be the ability to function simultaneously in FID and FD modes. This means that global managers and international OD experts should be able to perceive ﬁgure and ground simultaneously, i.e., perceiving the totality of a conﬁguration (gestalt) at changing intervals alternating from ﬁgure to ground, to total ﬁeld (embedded-ness). Scarce data exist concerning the perceptual cognitive structure of the global managers. Rhinesmith (1993) mentioned the ‘‘global mindset’’ of the global managers based on the personal observation without going into the detail as to the perceptual-cognitive processes. Others attempted to understand the need for perceptual-cognitive requisite by looking at the learning style of the international managers. When comparing the learning style of the ‘‘most international’’ managers (identiﬁed by consensus of the total group) with the other international managers among 250 executives from West Europe, Ratiu (1993) observed that the two groups used different learning strategies as identiﬁed by Kalb and Fry (1975) in cross-cultural situations and re-labelled them the red and blue loops (see Fig. 4). ‘‘Most international’’ managers used a microstrategy, which was more descriptive, impressionistic, relational, and intuitive (the blue loop); while the other group used a macrostrategy, which was more analytical, explanatory, and theorizing (the red loop). They were not

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Red Loop (macrostrategy)

Description, impression,

Explanation, theory

What is happening?

Modification

Experience

Fig. 4.

Why is this happening?

Confirmation

Experience

Different Facets of a Fundamental Learning Cycle between the ‘‘Most International’’ and ‘‘international’’ Managers (Ratiu, 1993).

interested in the rationale or the logic of events; instead, they were interested in perceiving the situation by applying different frames of references. Applying Witkin’s terminology, the red loop resembles the cognitive processing of the FID mode, while the blue loop more of the FD mode. In other words, the international managers exhibit more of the FID traits and actively construct the ‘‘ﬁeld’’ of intercultural interactions in accordance with their logic for sense making. ‘‘Most international’’ managers, on the contrary, seek to make sense of the situation by looking at other actors in the social environment for clues to understand the intercultural interactions. This temporary suspension of judgment and bystander position are the characteristics of the FD mode. Taking Ratiu’s (1993) observation further, the authors suggest that global manager cannot function effectively in a multicultural context without taking on the perceptual-cognitive skills and traits of both processing orientation. Therefore, in view of the eco-cultural determinant theory posited by Berry (1976), the authors suggest that global managers have to acquire new perceptual-cognitive abilities during their tenure abroad. Cognitive schema, according to Rosch (1978), could be grouped into three levels of structural categories – super-ordinate (overall attitude or assessment), basic (beliefs), and subordinate (values). He also assumed that cognitive schema have an associative network and spreading activation points. Therefore, the activation of certain cognitive/attitude/knowledge structure could be triggered due to different level of motivation and cognitive effort. Individuals exert varying amounts of effort to process information concerning an attitude object (Chaiken, 1980; Petty & Cacioppo, 1986). As the type of cognitive processing changes, for example, from super-ordinate level

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to subordinate level, more of a perceptual-cognitive effort is required. Building on the attitude structure and cognitive processing model developed by Thompson and Hunt (1996), one could state that manager’s different responses to the social stimuli of cross-cultural interactions should show a difference in perceptual-cognitive structures and processing skills between a parochial and a global manager (see Fig. 5). In their longitudinal study of cross-cultural transfer of managerial skills and technology, Megginson and Megginson (1996) found that cultural adaptability and managerial effectiveness were interrelated, interdependent, and mutually determinant. Not only does culture inﬂuence managers’ effectiveness, but also managers, in turn, inﬂuence the culture in which they operate. Reality, from the social construction point of view, is nothing but the inter-subjective construction of situations (Berger & Luchmann, 1966). Seen from this standpoint, leadership among culturally divergent groups requires

Level of Changes

Parochial Manager Parochial /OD Expert

Global Manager /International OD Expert

Overall attitude

• more culturally aware of the differences

• Empathy with the other culture

Belief system

• Limited and superficial modification of one’s own cultural beliefs

• Questioning one’s own cultural beliefs • New interpretations associated with cross-cultural signals • New linkages between different beliefs and values

• No change Values

• Adding new beliefs • Restructuring of existing cognitive construct into new ones • Greater differentiation of the mental constructs • Increased cognitive complexity • Repatterning of behaviour within one’s repertoire so that it is fostering trust

Breath of Perceptual Categories

• Unchanged

• Greatly expanded

Fig. 5. Relative Impact of Intercultural Interactions on the Cognitive Structure of Global Managers/International OD Experts vs. Parochial Managers/Parochial OD Experts.

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a forging of new social realities, which can accommodate all members’ idiosyncratic requisites. This process of reshaping and reframing of realities needs to be a two-way process. Both the global manager and the international OD expert and their respective culturally diverse counterparts partake in it together. However, the onus of this reshaping and reframing rests more on the shoulders of the global manager and the international OD expert than on the other role partners; since by the role deﬁnition, they are there to inﬂuence and to coordinate so that the objectives of the organization or the OD change project can be carried out efﬁciently and effectively. The cultural ﬁt between the expatriate leader/manager and the international OD expert and their counterparts (employees or client system) who they come into contact with requires a much higher attention to the context of the interaction and to all its embedded social cues. In other words, effective global managers and effective international OD experts are those who have the cognitive and behavioural capability to recognize and react to paradox, contradiction, and complexity in their environment due to cultural differences (Danison, Hooijberg, & Quinn, 1995). Cognitive capability, according to Jacques (1989), can be deﬁned as ‘‘the maximum scale and complexity of the world which an individual is able to pattern and construe, including the amount and complexity of information that must be processed in doing so’’ (p. 33). This capability to perceive and to process complex information requires both the capability to observe and to actively deconstruct information. In keeping with terminology used by Witkin (1978), the former represents an FD cognitive style, while the latter an FID style. When working in countries of high power distance and high collectivism, an FID supervisor might tend to be insensitive to the social cues and rely too much on his/her internal frame of reference. This is typical of the expatriate from the West who ﬁnds him/herself being perceived by the host country counterparts as ‘‘acting like an elephant in a porcelain shop’’. In countries of medium to low power distance and high individualism, an FD supervisor might tend to be oversensitive to the social cues and rely too much on his/her external frame of reference. This is typical of the manager from the East/South who ﬁnds him/herself being perceived as being ‘‘passive’’, ‘‘evasive’’, ‘‘reluctant to initiate’’, and ‘‘unwilling to take responsibility’’. Interactions between the two will inevitably lead to frustration and tension. A truly global manager will need to stretch the boundaries of his/her cognitive-perceptual abilities in order to deploy both cognitive styles for the purpose of inﬂuencing the attitudes and behaviours of his/her subordinates.

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By applying an integrated perceptual-cognitive style, he/she can then perceive the unspoken words and ﬁnd alternatives to elicit compliance and commitment needed to achieving the group’s objectives.

7. FUTURE RESEARCH AGENDA In this article, the authors have examined the effect of intercultural interactions on a managers’ ability to function cognitively and identiﬁed the role requisites of the global manager. Similar considerations have been given to an OD consultant. The authors propose a mode of role development and role effectiveness that takes into account the effect of intercultural interfaces on the perceptual-cognitive functioning of the global manager and OD consultant. Further, the authors have shown that the difference between a global manager and a parochial manager and that the difference between a global OD expert and a parochial OD expert may be due to the degree of cognitive adaptation and cognitive restructuring. The proposed model broadens and links several theoretical areas of organizational behaviour, namely (1) global leadership, (2) cognitive processes, (3) impact of intercultural adaptation, and (4) role competencies of a global manager and OD consultant. From research (Hofstede, 2001), it is known that global leadership is a culturally contingent phenomenon and that global leadership requires the management of complexity. Future research should help clarify how such adaptation happens and what effect this adaptation has on an individual’s perceptual orientation and cognitive functioning. Secondly, different cultural values may lead to different cognitive schema (Lord & Foti, 1986) and processing orientation (Berry, 1976). Future research should help clarify how the role repertoire of a global manager evolves and broadens over time and how this evolution of roles is linked to cognitive structures and processes, and leader–member social exchanges. Findings will also inform the OD experts who are interested in being active globally, particularly in areas of personal development. using the analogy of a personal computer, this capacity requires both a Pentium microprocessor (cognitive complex structure with multiple associative networks and activating points), a large storage hard disk (cognitive capacity), multiple processing programs, e.g., window 95, Lotus, and Macintosh (multiple sets of mental programming based on speciﬁc cultures), and converters (cultural cognates) to manage the multiple interfaces (information seeking and validation skills).

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It is the authors’ proposition that research in the area of the perceptualcognitive processing abilities offers the greatest potential towards an understanding of the role formation and role episodes experienced by a global manager in multicultural role sets and to a lesser extent that of an OD expert. research based on Witkin’s work has been widely reported in the ﬁeld of education (e.g., Simpson et al., 1995; Whyte et al., 1996; Young & Fouts, 1993) and information technology (e.g., Bates, 1994; Meng, 1991). In contrast, little is reported in the management-related literature.

7.1. Expected Benefits of Future Research Based on the hypothesized cognitive differences between global managers/ international OD experts and parochial managers/parochial OD experts, selection criteria for being assigned to a subsidiary abroad or for being contracted to conduct an OD assignment in foreign countries could extend beyond the commonly used ones, such as professional expertise and past performance records. In addition, personal attributes pertaining to his/her ability to learn and to successfully adjust interculturally should be assessed. Such a study of the cognitive styles of effective global managers would contribute to the following: 1. Development of more effective managerial leadership and OD competence in culturally diverse work environments. 2. Preparation of managers and OD experts for organizational change projects in cross-culturally heterogeneous environments. 3. Better selection and promotion of global managers and better selection of OD experts due to clearly deﬁned selection criteria based on personal attributes. 4. Reduction of expatriate failure rates and failed OD interventions abroad through training in FD and FID processing skills. 5. Limitation of potential damages to business relationships and opportunities in multicultural contexts through the acquisition of integrated perceptual-cognitive competencies. A more accurate prediction of intercultural adaptability could also help global companies avoid costly pre-mature termination (direct costs of expatriate relocation) and costly estrangement between expatriates and host country counterparts (indirect social capital costs). Similarly, a more accurate prediction of intercultural adaptability could help an internationally active OD expert broaden his/her client base and increase professional capital.

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8. CONCLUDING REMARKS To deal with increasing interdependency, complexity, and uncertainty inherent in the multinational work environment (‘‘turbulent ﬁeld’’ as Emery & Trist, 1965, call it), effective perceptual-cognitive skills are fundamental for the success of global managers and international OD experts. The authors suggest that effective global managers and international OD experts need to acquire an integrated perceptual-cognitive style, which would encompass the FD and FID cognitive skills and which would allow a global manager and an OD consultant alike to constantly shift between scanning the environment for social cues and deconstructing and/or reconstructing the perceptual ﬁeld in order to enhance personal effectiveness.

NOTES 1. Role episode, according to the deﬁnition of Katz and Kahn (1978), consists of a four-part sequence, namely role expectations (evaluative standards of the role), sent role (inﬂuences from the role sender), received role (perception of the focal person and his self-expectation), and role behaviour (focal person’s response to the complex of information and inﬂuence thus received). 2. Hanvey (1974) proposes a 4-level model to stratify cross-cultural awareness. While levels I, II, and III address varying degree of cognitive understanding of the other cultures, and level IV requires subjective familiarity of the other culture as an insider would be.

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ARCHETYPAL CHANGE AND THE PROFESSIONAL SERVICE FIRM David M. Brock, Michael J. Powell and C. R. (Bob) Hinings ABSTRACT This chapter explores archetypal change in the context of professional service firms. To understand recent and ongoing changes in professional service firms, we briefly show how the professional archetype has evolved since the 1960s. We then present four theoretical models to describe processes by which institutionalized archetypes can change, and possibly coexist in the same field. Three professional archetypes are described, each in the context of historical development and the change model described earlier. At the one extreme is the traditional professional partnership; at the other the larger, multidisciplinary, corporate, global professional network, or GPN; in between is the ‘‘Star’’ form – relatively specialized, flatter structure, resisting significant growth, with fixations on excellence, and being the leader in a professional niche.

The ‘‘archetype’’ concept has both its proponents (e.g., Greenwood & Hinings, 1993) and opponents (Kirkpatrick & Ackroyd, 2003) for and against its validity as a tool for understanding organizational change. The idea of archetypes is rooted in issues of organizational design, speciﬁcally conﬁguration theory and institutional theory. An archetype is a conﬁguration Research in Organizational Change and Development, Volume 16, 221–251 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16007-3

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of structures and systems that are consistent with an underlying interpretive scheme (Greenwood & Hinings, 1993). Conﬁguration theory suggests that there are a limited number of organizational design types (Mintzberg, 1979; Miller & Friesen, 1982; Meyer, Tsui, & Hinings, 1993). For Greenwood and Hinings, ‘‘the pattern of an organizational design is a function of an underlying interpretive scheme, or set of beliefs and values, that is embodied in an organization’s structures and systems. An archetype is thus a set of structures and systems that consistently embodies a single interpretive scheme’’ (Greenwood & Hinings, 1993, p. 1055). Thus, the concept has a strong organizational lineage and represents an important approach to issues of organizational design and change. It is particularly important in understanding why radical organizational change is difﬁcult (Greenwood & Hinings, 1996). It has been criticized for being overly functional (Kirkpatrick & Ackroyd, 2003) and also for being difﬁcult to operationalize (Morris & Pinnington, 1999). However, neither of these criticisms have impacted the dominance of the archetype approach for understanding professional service ﬁrms (PSFs) where it has been most widely used. In this chapter we aim to provide theoretical bases robust enough to explain archetypeal change in institutional contexts, as well as two apparent outcomes of such change, namely hybrid organizational forms and coexistance of competing archetypes. We begin by sketching the organizational and institutional context of the study – the ﬁeld of PFSs – before approaching the various theoretical frameworks.

THE PROFESSIONAL SERVICE CONTEXT Whether they are safely transferring ownership of a home from one family to another, or advising on questionable accounting practices to major corporations, professional services are a crucial part of our contemporary knowledge economy. But like many other institutions, PSFs, such as accounting and law ﬁrms, have experienced considerable change and uncertainty over the past two decades. PSFs and their clients are increasingly global, markets for professional services have been deregulated, competition is increasing both within and between professions, clients are more sophisticated and demanding, and innovative technologies open opportunities for service delivery and encourage the entry of new providers. And institutional boundaries between professions, long protected by statute and tradition, have weakened as governments deregulate professional services and ﬁrms move to take advantage of new business opportunities (Brock, Powell, & Hinings,

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1999). Consequently, the organizational ﬁelds (DiMaggio & Powell, 1983) within which PSFs operate have undergone substantial change. In response, PSFs have changed in signiﬁcant ways through internal restructuring, merger, the development of new services, shedding less economic service divisions, and internationalization (Greenwood & Lachman, 1996). Not long ago it was relatively simple to understand professional organizations. By the late 1960s, sociologists had delineated the main characteristics of the archetypal professional organization (Scott, 1965; Hall, 1968; Montagna, 1968; Bucher & Stelling, 1969) with power resting in the hands of professional experts, while managers administered the facilities and supported the professionals. Decision-making was collegial, change slow, and strategy formulated consensually. There was little hierarchy and degrees of vertical and horizontal differentiation were similarly low, reﬂecting respectively the professional culture of collegiality and generalist nature of the professionals. Coordination and control occurred through the standardization of skills and a strong clan culture of professionalism rather than through formalized systems and supervision. This provided the bases for Mintzberg’s (1979) classic delineation of the professional bureaucracy within the management literature, leading to Greenwood, Hinings, and Brown’s (1990) professional partnership (or P2) model, where the professionals (e.g., lawyers in a law ﬁrm) were not only the operators but also the managers of the ﬁrms. More recently, the same scholars have suggested that new managerial structures are being superimposed over the traditional professional cultures and processes, arguing that increasingly competitive markets have induced professional bureaucracies to adopt more corporate and managerial modes of operation in search of increased efﬁciency (Cooper, Hinings, Greenwood, & Brown, 1996). Beginning from the premise that the classical models of the professional ﬁrm may no longer ﬁt the changing and more dynamic environment, we suggest that new organizational types are emerging within the professional service sector that need to be analyzed and understood. We regard this as important because of the centrality of professional ﬁrms, such as accounting, law, engineering, software development, and health clinics to Western, knowledge-based economies. Increasingly, advanced economies are centered around professional service industries both domestically and internationally (Aharoni, 1993, 1999; Greenwood, Hinings, & Cooper, 2006). Further, autonomy is increasingly recognized as a crucial structural component for contemporary organizations (Brock, 2003; Young & Tavares, 2004), and thus fundamental aspects of the professional ﬁrm are seen as alternatives to bureaucratic, hierarchical corporate organizational models in order to

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release innovation, deal with uncertainty and better manage knowledge workers. Also, many organizations that are not PSFs, per se, are utilizing more and more professional workers; so an understanding of the contemporary issues in organizing professionals is important in a general sense. We show how the professional archetype – itself a relatively static concept – is subject to powerful institutional forces in its ﬁeld, and indeed that there currently seems to be multiple archetypes coexisting in the PSF ﬁeld. For reasons of parsimony and coherence, this chapter’s focus is on organizations in the traditional professional ﬁelds of accounting and law, not on the professional associations as such, nor on change in the professions generally. There are a number of contributions that the paper makes. First, it adds to and extends the various debates about conﬁgurations of organizations. Little work has been done on PSFs. Second, it systematizes what literature there is. Third, we deal with the issue of the ability of various organizational forms to coexist within the same institutional ﬁeld. And in examining the multiplicity of professional organizational forms we potentially enable managers to select organizational arrangements appropriate to their particular circumstances. The next section describes a multi-part theoretical framework in which archetypal professional organizations may be conceptualized, develops some theoretical approaches to change in an archetype, and suggests a model for archetypal coexistence. The third section of the paper discusses the three archetypal outcomes of the changes to the professional organizational ﬁeld and how these changes are consistent with our theoretical framework. The paper concludes with a discussion of theoretical implications and directions for future research.

ARCHETYPES AND CHANGE The archetype concept has recently been used to explain change in professional organizations, for example, accounting (Greenwood et al., 2006), architects (Pinnington & Morris, 2002), hospitals (Dent, Howorth, Mueller, & Preuschoft, 2004), and law ﬁrms (Pinnington & Morris, 2003). Greenwood and Hinings (1993, p. 1052) deﬁne an organizational archetype as ‘‘a set of structures and systems that reﬂects a single interpretive scheme.’’ The interpretive scheme is the key (Bartunek, 1984). Structures and systems do not constitute a disembodied organizational frame but rather are infused with meanings, beliefs, intentions, preferences, and values. Interpretive schemes composed of such subjective meanings underpin the objective identities of organizational structures and processes. So a multinational aid

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agency and a global corporation may theoretically have the same organizational structure on paper, but their diverse values, beliefs, and agendas would lead us to identify them as belonging to quite different archetypes. Archetypes are generally considered to be institutionally speciﬁc (Greenwood & Hinings, 1993), with organizational conformity based on the institutional norms, legitimacy, and other resource ﬂows (Meyer & Rowan, 1977). Using an archetypal approach, then, involves taking a ‘‘holistic’’ perspective and looking not just at organizational structure and systems but also at the beliefs, values, and ideas they represent (Kirkpatrick & Ackroyd, 2003). This statement is important because it emphasizes the relationship between, and interaction among, the various elements of organizations, such as culture, structure, power, and politics. Archetypal models thus go beyond the culture literature that has tended to treat culture as an autonomous variable. This approach of identifying organizational archetypes is an important step in understanding patterns of organizational change, because although individual organizations may try to adopt new structures and systems from time to time, sustaining that change in the face of an unchanging organizational archetype is likely to be very difﬁcult. For this reason, Greenwood and Hinings (1988) suggest that students of organizational change need to be aware that not all change efforts succeed; and that there are multiple change tracks. Some organizations fail to sustain their change momentum and revert to their prior states, because the latter are more consistent with the archetype; others get caught between the original and an emergent archetype in an apparently schizoid state. Changing the archetype itself is very difﬁcult as it reﬂects deeply held beliefs and values about how organizations should be structured and operated. For example, in 2000 KPMG in Auckland, New Zealand, took over a law ﬁrm, renamed it ‘‘KPMG Legal’’ and tried to integrate it into the ﬁrms extant audit, tax, and advising organization. The attempted merger failed after a few years because of the resistance of the lawyers to the adoption of a more corporate model. Similarly, Greenwood, et al. (1990) provide an example of an accounting ﬁrm that attempted to move away from a professional partnership archetype to a corporate, business model of operation. However, the existing partners were strongly committed to the values of autonomy and collegiality of the partnership model that they were unwilling to give up authority to a CEO and an executive committee. In addition, they did not have the necessary knowledge or capability to manage a more business-like organization. Institutional theory argues that in a stable, mature ﬁeld there will be a dominant archetype (cf. Greenwood & Hinings, 1993, Scott, Ruef, Mendel, & Caronna, 2000); other forms will either disappear or be relegated to

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subsidiary positions. However, when there are strong pressures for ﬁeld level change, i.e., deregulation or technological advances, the number of viable archetypes will increase in response to these pressures (Greenwood & Hinings, 1993). There will be competing interpretive schemes with their associated structures and systems, i.e., more than one archetype will exist in the ﬁeld. These archetypes may coexist; however in times of change they are likely to compete. Just as the retail ﬁeld has general retailers, department stores, boutiques, and other forms, PSFs seem to have more than one alternative interpretive scheme from which to choose. The following section presents a description of how archetypes might change, based on four related theoretical arguments. First, we draw on institutional theory to show how de/legitimizing forces can eventually impact on archetypes. Then we present resource dependency to include the resource-seeking roles of managers/owners. The third section introduces various ideas to explain the emergence of hybrid organizational forms in certain circumstances. Finally, we develop the coexistence part of the theory, showing how more than one archetype may coexist for a period of time.

TOWARD A THEORY OF ARCHETYPAL CHANGE Challenging an Interpretive Scheme From an archetypal perspective, successful change1 ﬁrst requires that the interpretive scheme underpinning a particular archetype be challenged, and an alternative interpretive scheme presented. For example, reacting to increasing proﬁt motives and decreasing professional collegiality, PSFs can contract to internalize several specialty areas instead of referring clients with speciﬁc needs to neighboring ﬁrms. As Greenwood and Hinings (1993) note, commitment to interpretive schemes is dynamic rather than static and unchanging, and subject to change. Changing levels of commitment to the values and beliefs of the interpretive scheme provide a potential dynamic for change in the archetype. Infused with new values and beliefs, interpretive schemes may be advanced that delegitimize the old, thereby encouraging change. Furthermore, structure, systems, and their underlying interpretive schemes are in a reﬂexive relationship with each other, so that structures and systems impact on the interpretive scheme, and may potentially change the very beliefs and values that underpin them (Gray, 1999). Further, actions and emotional reactions of organizational members act as modifying

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forces (Bartunek, 1984). Thus, the introduction of new management structures and systems, like new performance measurement or compensation systems, over time is likely to cause the interpretive scheme to internalize these structural and systemic changes. The replacement of the traditional ‘‘lockstep’’ reward system with the more individualized ‘‘eat-what-you-kill’’ (or piecework) system in law ﬁrms is such an example (Flood, 1999). These changes are unlikely to succeed in the short to medium term, however, unless they are presented and implemented in a way that is seen to be consistent with the overall direction of the existing interpretive scheme or with an alternative set of values that is gaining legitimacy. For example, it may be that, at the same time as new systems and structures are being introduced to PSFs, the old professional values are being challenged by new managerial and societal values. Symptomatic of such a challenge is the rebranding of the global accounting ﬁrms as business service or advisory ﬁrms, illustrated by the KPMG, ‘‘The Advisory Firm’’ business card shown in Greenwood, Suddaby, and Hinings (2002). Because key components of the interpretive scheme may well be deeply institutionalized, archetypes are resistant to change. However they are not chiseled in stone. They are subject to challenge, environmental pressures, and consequent delegitimation. Examples of these external pressures are the deregulation of professional markets, increased competition, ﬁnancial constraints, cost pressures, changes in government policy, globalization, demands of international clients, increasingly sophisticated clients, and technological change (Brock et al., 1999; Greenwood & Lachman, 1996). Internal (or organizational level) drivers such as performance crises, changing economic utility, increasing social fragmentation, conﬂicting internal interests, and increasing technical speciﬁcity may also be factors in deinstitutionalization (Dacin, Goodstein, & Scott, 2002; Oliver, 1992). These have all impacted on the PSF, as will be shown in upcoming sections of this chapter. First institutional theory is used to develop an understanding of the ﬁeld-level changes, followed by resource dependency to explain the explicit organization level forces. While Oliver (1991) has discussed divergent as well as the convergent assumptions of these two paradigms, here they are discussed separately and used at these different levels of analysis.

The Institutional Perspective PSFs are deeply embedded in institutionalized ﬁelds, with strongly held beliefs and values shaping organizational action and behavior, and have

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demonstrated strong commitment to a consistent organizational archetype. For example, law ﬁrms and accounting ﬁrms have shown themselves to be very resistant to any ownership model other than the partnership even in jurisdictions, such as Australia, where conversion to a public company is allowed. Law ﬁrms have also been resistant to the corporate model of a multi-disciplinary ﬁrm, believing strongly that only lawyers should be in positions of authority in law ﬁrms. Even a strong organizational archetype can be undermined such that it results in change in organizational arrangements. Institutional theory, with which the construct of archetype is closely related (Greenwood & Hinings, 1993), tends to focus on conformity to, and coherence with, institutionalized norms. Such pressure for isomorphism makes organizational change difﬁcult. However, Oliver (1992) builds on Greenwood and Hinings’ (1988) explanation of how interpretive schemes are delegitimated and replaced, and suggests that a variety of political, functional, and social factors contribute to the delegitimation of particular institutions, and explains the possible deinstitutionalization of accepted structures, practices, and processes. Similarly, we would expect a process of questioning and challenging accepted beliefs and practices to undermine the interpretive scheme that is at the foundation of the dominant organizational archetype. Change in the interpretive scheme may lead eventually to structural and systems changes. The dominant archetype, then, can no longer be taken for granted as alternative archetypes surface and may gain ascendancy. The key issue of coexisting archetypes is addressed in a later part of this paper. It is important to understand how this process of delegitimation of an archetype, or a set of institutional beliefs and practices, occurs. Cooper et al. (1996) tend to see it as a consequence of external forces such as globalization and deregulation that change the environment in which PSFs operate. The organizations must adapt and change to meet the requirements of the new environment. As noted earlier, such environmental change was a feature of the last two decades of the 20th century. At the same time the accepted beneﬁts and benevolence of professionals and the professions have been increasingly questioned. Hinings, Greenwood, and Cooper (1999) refer to the serious questioning in the 1990s of the usefulness and validity of the audit functions provided by large accounting ﬁrms in the face of major corporate collapses and frauds that these audits failed to predict. The recent allegations of Anderson’s connection to several scandals such as the demise of the Waste Management and Enron Corporations have been highly publicized, leading in turn to the demise of that PSF (Ringshaw & Wastell, 2002). Such challenging

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of the value of professional services, and of the special protected position and powers of professionals, is reminiscent of attacks on professional power such as that of Ivan Illich, Zola, McKnight, Caplan, and Shaiken (1977) Disabling Professions. These populist critiques were supported by the revival of neo-classical economics in the 1980s that viewed professionally sanctioned restrictions on practice as unnecessary and self-interested restraints of trade, referring back to work by free market economists such as Milton Friedman (1962). The argument that professionals operated in their own interests, not those of the clients or customers, became the fashionable view of those seeking to reform public sector bureaucracies in the 1980s, pushing for increased consumer power and choice. This was the rhetoric of governments seeking to deregulate the professions and to introduce internal markets into publicly funded service delivery systems. The message was clear: the traditional model of professional dominance, and its manifestation in organizations controlled by professionals, not only was subject to self-interest but also may not have delivered appropriate services. Along with the critique of the professions, came the rise of general management, or managerialism, with its promise of improved efﬁciency and cost-effectiveness (Ferlie, Ashburner, Fitzgerald, & Pettigrew, 1996; Hood, 1991). Management had been undergoing its own self-styled professionalization with the increased prominence of the MBA degree. Highly trained managers who entered professional bureaucracies or partnerships did not simply want to support the professionals, or administer facilities. Nor were they socialized into deferring to the superior knowledge and expertise of professionals. They took a broader, macro view. They wanted to manage, to improve the coordination and production efﬁciency of the PSF, and to introduce a strategic perspective. There has been a shift in paradigm from administration to management that had signiﬁcant implications for the interpretive scheme underpinning the traditional archetype (Ferlie et al., 1996; Kitchener, 1999). In these ways the interpretive scheme underlying the traditional professional archetype has been increasingly questioned and challenged. There are two aspects to the institutional perspective for examining change through the concept of archetypes. First, it highlights and reinforces the notion that organizations are deeply embedded in their institutional context based in values and norms. Second, following on from this as Meyer, Goes, and Brooks (1993) have suggested, because of the embedded nature of organizations, very strong jolts are often needed to produce change in professional organizations.

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The Resource Dependency Perspective The challenge to the traditional archetype has not just been from external, delegitimizing forces. A theory of archetypal change must also allow for the active, agentic role of professionals and their organizations in challenging the dominant archetype and in pushing for modiﬁcation or change. A most useful theoretical perspective to explain and even predict agentic change in archetype is thus derived from resource dependency theory which views organizations as acting to protect or develop or replace resource ﬂows (Oliver, 1991; Pfeffer & Salancik, 1978; Scott, 1987). Faced with resource limitations or uncertainties in one area, organizations will actively seek to develop compensating new resource ﬂows. Organizations in mature markets will seek to enter new markets or develop new products or services. This approach allows a focus on resource acquisition and development as a driving force in strategic organization change (Child, 1997). The search for new resource ﬂows in the face of the uncertainty of traditional revenue earners such as audit, is an important reason why accounting ﬁrms enter new businesses and develop new products like management consultancy services, information technology and, more recently, legal services (Suddaby, 2001). In part, such a shift reﬂects a strategic intent to provide a one-stop shop for business services; in part, it is the replacement of a declining resource ﬂow (accounting and auditing services) with a growing resource ﬂow. Similarly, global accounting ﬁrms enter new markets, such as China, not just to follow global clients, but also to develop proﬁles in new and growing markets (Rose, 1998). The resource dependency view in the context of the delegitimation of the traditional professional archetype allows for the active search for new opportunities and resources on the part of organizational actors as a crucial factor in organizational change (Leblebici, Salancik, Copay, & King, 1991). This search leads the organization to question traditional ways of doing business and to challenge the institutions that have long underpinned the professional archetype in order to open the door to new resource ﬂows. In periods of environmental uncertainty and ﬂux, organizational ‘‘upstarts’’ or entrepreneurs frequently arise to challenge the status quo (Leblebici et al., 1991; Powell, 1991). In short order, what was once regarded as too aggressive and beyond the professional pale quickly becomes accepted as legitimate practice (see Powell, 1993 and Sherer & Lee, 2002, for discussions of how professional innovations become accepted practice). A theory of archetypal change needs to recognize this reﬂexive relationship between the changing environments within which PSFs operate and the innovative and

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entrepreneurial activity of some organizational actors. Both environmental factors and organizational agency contribute to the delegitimation of existing archetypes and the development of new, rival archetypes that coexist or compete with the old. While it is clearly not a new idea that PSF leaders (traditionally called managing partners or senior partners, but today may be the CEO or president) are looking for new markets, it is important to recognize agency here. That is, PSF leaders are not simply responding to external pressures (as institutional theory might suggest) but also creating change themselves. Resource search may well lead to change in and of itself. These issues of coexistence within institutional ﬁelds, and how our change theory can deal with coexistence, are the topics of the following section. Hybrid Forms A general observation from the organizational change literature is the emergence of hybrid organizational types featuring outwardly changed forms along with the persistence of traditional characteristics at the core (Powell, 1987). For example, Ferlie et al. (1996) suggest that the introduction of the ‘‘New Public Management’’ into the UK public sector has resulted in hybrid organizational structures and cultures, combining traditional public service values with their new business management tools and systems (see also Kitchener, 1999, on the topic of health care). In the wider organizational literature we see contemporary researchers pointing to the emergence of similar complex, hybrid, old/new structures (e.g., Powell, 1987, 1990). Such hybrid structures are especially likely to emerge when traditional organizational forms are confronted with new, global, information-age structural challenges. For example, in explaining how multinational corporations resolve the structural dilemma of operating effectively across borders in the knowledge age, Nohria and Ghoshal (1997) point to the emergence of the ‘‘differentiated network.’’ This structure consists of diverse sub-units, each with its own internal structures and with different relationships with headquarters and other afﬁliates, sharing information and resources where appropriate but retaining quite distinctive local organizational structures. Elsewhere, explaining why the introduction of new information technology frequently does not have the anticipated effect of eliminating bureaucracy, Schwarz and Brock (1998) suggest that hybrid structures are quite common. They term the organization characterized by coexisting traditional, hierarchical organizational and contemporary network structures the ‘‘coexistent organization.’’ This is yet another hybrid form, with the original structural artifacts persisting while new organizational

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arrangements appear at the surface. Meyer and Rowan (1977) and Scott (1987) also discuss the issue of change to superﬁcial as opposed to core features of the organization. In PSFs too, while observing changes, there is much evidence of the continuity of aspects – perhaps relics? – of the traditional professional archetype reﬂected in Morris and Pinnington’s (1999) ‘‘Continuity and Change’’ title. Below the surface of change there is evidence of traditional professional values and structures like collegiality, consensual decisionmaking, and professional autonomy. The same idea is present in the analogy of ‘‘sedimentation’’ used by Cooper et al. (1996) to explain the process of archetypal change associated with the emergence of the Managed Professional Business (MPB) form, speciﬁcally the layering of new practices on top of the old. For example, it is now common for large law ﬁrms to retain partnership and its committees, but superimpose a management committee or board of directors that meets more frequently and has more direct managerial inﬂuence. We may thus expect an emerging PSF archetype to reﬂect similar hybrid structures – displaying aspects of both change and continuity.

Coexistence The ﬁnal section of our theory building looks down at the archetype level, arguing for the possibility of more than one concurrent archetype. While the above frameworks allow us to understand – perhaps even predict – archetypal change, these changes are unlikely to be linear or instantaneous. Rather, it is likely that there will be a period of ﬁeld incoherence when several competing archetypes may coexist (Greenwood & Hinings, 1993). Hinings and Greenwood (1988) showed how different British local government archetypes coexisted during a decade of change and transition. Kikulis, Slack, and Hinings (1992) went a step further and found three competing sports governance archetypes coexisting among Canadian national sport organizations during the 1980s, similarly a decade of transition. To use a retail analogy again, demand seems to persist for general traders, boutiques, as well as large networks of department stores in the dynamic retail environment. Similarly, as the developing PSF ﬁeld itself becomes increasingly differentiated, it seems to be receptive to more than one organizational archetype (Heinz & Laumann, 1982). Bartunek’s (1984) analysis indicates that interpretive schemes can change though a dialectical process, the outcome of which is a synthesis of the interacting old and new interpretive schemes. Dialectical analysis emphasizes the interaction of historical forces over time. So, for example, a generation

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ago most professionals operated as individuals or partnerships because legal systems wanted them to have full (unlimited) liability for their work. Next, we observe historical development in terms of change and possibly also progress. As jobs within PSFs become more specialized, specialists from other professions are increasingly hired, international alliances are forged, and thus corporate governance structures become more suitable for managing this more complex, differentiated organization. Finally in the dialectic process, one phase of any historical development tends to be confronted and replaced by its opposite. This opposite, in turn, tends to be replaced by a phase that is somehow a resolution of the two opposed phases. In this case the synthesis is coexisting archetypes, with partnership forms and corporate forms coexisting to meet different needs in the market at the current stage of historical development. We do not, however, propose two dichotomous archetypes–partnership and corporate – with a movement from one to the other. Rather the emerging hybrid may well become a new archetype itself with a new model that combines features of both originating archetypes. Another approach to explain coexistence would be to view them as different strategic conﬁgurations occupying different niches. Increased segmentation of professional organizational ﬁelds may result in quite separate niches for strategic development that enable the ongoing coexistence of different types of professional organizations. Indeed, a number of earlier studies, especially in law, have demonstrated the clear segmentation of the professional ﬁeld (e.g., Heinz & Laumann, 1982). As a general example, Miles and Snow (1978) present their strategy-structure-process types as not only being viable in any industry but also as potentially equally proﬁtable. This is possible because they occupy different strategic proﬁt/market space – or niches – and thus succeed by serving different types of customers (for example, families, corporations, governmental agencies) and this do not compete head-to-head. In this section we have thus seen how institutional theory and resource dependence can explain the possible complex factors that may result in archetypal change and hybrid PSF forms, while dialectic and strategic arguments suggest how changing archetypes may coexist. We now examine the extent to which the foregoing theoretical bases help understand the archetypal developments in the evolving ﬁeld of PSFs.

MULTIPLE ARCHETYPES The previous sections provided the historical background and theoretical bases for a process of delegitimation and de-institutionalization for the

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traditional professional archetype as a consequence of powerful forces for change. Further, it described the active search for new resources on the part of organizational actors seeking to reduce their dependence on diminishing resource ﬂows and to enhance resource ﬂows from new growth markets or services. The combination of the delegitimation of the existing dominant archetype and the need for new resources could lead to the emergence of new, or substantially different, archetypes of the PSF. New environmental conditions and new resource strategies generally require changed structures (Chandler, 1977). And there is mounting evidence in recent research on professional ﬁrms that supports the emergence of new organizational forms, such as the MPB (Cooper et al., 1996) or the Global Business Advisory Firm (Rose, 1998). On the basis of an analysis of secondary sources, and informed by the prior section’s theoretical frameworks, a typology of three coexisting archetypes is presented in the following sections.

Professional Archetype 1: The Professional Partnership Amid the dynamism and changes in the PSF ﬁeld, the traditional or P2-form is an example of an institutionalized archetype that persists with essentially unchanged characteristics (summarized in Table 1) except for some increasingly business-like approaches to inter-ﬁrm alliances, ﬁnding and retaining clients (Greenwood et al., 1990, 2002; Lee & Pennings, 2002; Pinnington & Morris, 2002; Morris & Pinnington, 1999). There has been delegitimation and consequent change away from of several aspects of the traditional P2, like partnership in general, the centrality of the audit function in accounting, and generalist (as opposed to specialist) attorneys in law ﬁrms (Aharoni, 1999; Sherer & Lee, 2002). However, these forces have had limited effects on the P2, unlike the other archetypes to be discussed later. Several professionals still choose, or are required, to practice in partnerships, thus supporting the persistence of the P2 model. These limited changes clearly support the sedimented change (Cooper, et al., 1996) and continuity and change (Morris & Pinnington, 1999) models within the hybrid framework. Similarly, resource-seeking behaviors have not fundamentally changed the P2 archetype, mainly because – as outlined above – their key resources remain relatively stable and plentiful. Like general traders in the retail sector, the small-medium, generalist strategies have broad and relatively stable appeal to the broad market (Pinnington & Morris, 2003). These appeals may include convenient locations, personal service, lower prices, and familiarity. The P2 also retains some popularity among unspecialized

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Table 1.

Structure and process

Strategy

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Some Aspects of the Three Archetypes. P2

Star

Peer control, Flat structure, Partnership-track, Small size, Moderate support staff and small technostructure, High decentralization Generalist/routine work, Accessibility, Reliability, Local

Peer control, Informal, Small or Medium size, Moderate support staff and moderate technostructure

Strong differentiation and integration mechanisms, Spatial differentiation, Formal, Large support staff and technostructure, Networks

Niche, Differentiation, Elite, Local or Regional

Multidisciplinary, Leverage, Consistent branding, International Corporate, Money making, Market dominance

Interpretive scheme

Collegiality, Client focus, Referrals

Examples

Family lawyers and accountants

Excellence in professional specialty, Independence, Highest rewards Kohlberg, Kravis & Roberts; Wachtell, Lipton, Rosen & Katz

GPN

Baker & McKenzie, Boston Consulting Group, KPMG, Landwell

practitioners – both those trained a generation ago as well as those newer or entering the professions – due to lower barriers to entry as well as the same accessibility and convenience issues attractive to consumers. Thus, the features of the professional partnership’s interpretive scheme described by Greenwood et al. (1990) – namely collegiality, client focus, and referrals – are still very much unchanged (Løwendahl, 1997). Small professional partnerships may decline in absolute number, but like convenience stores, are always likely to be with us. We should not underestimate their ability to adapt to changed environmental conditions so as to enhance their survivability. Contemporary variations on traditional organization of the P2 include local or national networks, and increased use of nonprofessionals in specialist and even managerial roles within the PSF. Networks or franchise arrangements of smaller law ﬁrms or tax accountants, for example, help overcome some of the disadvantages of small size and limited bargaining power while retaining the beneﬁts of self-employment and allowing further resource seeking behavior.

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Professional Archetype 2: The Global Professional Network A signiﬁcant archetypal response to delegitimating forces and resource seeking behaviors is the emergence of a large, differentiated PSF (Covaleski, Dirsmith, Heian. & Samuel, 1998; Pinnington & Morris, 2002, 2003; Roberts, 1998). Indeed, even in the 1960s, when the classic professional partnership archetype was dominant, Scott (1965) suggested there were already signs of a shift from the autonomous model of professional organization to the heteronomous, where professionals were increasingly subject to bureaucratic control. A decade later, Haug (1973) saw the end of professional dominance as professionals underwent a process of deprofessionalization as a consequence of the routinization of their tasks, increased consumer pressure and technological change that gave a wider range of people access to professional expertise. Others suggested the ongoing proletarianization of professionals whereby professionals lost their special status and were subjected to the controls of advanced capitalism – a similar fate as that of artisans and craft workers during the Industrial Revolution (McKinlay & Arches, 1985; Derber, 1982). Also, Nelson (1988) and Spangler (1986) pointed to the increased bureaucratization and routinization of legal practice both in large law ﬁrms and professional bureaucracies. Like their corporate cousins, large PSFs have increasingly taken on a more diversiﬁed and internally differentiated structure (Aharoni, 1999; Løwendahl, 1997). On the basis of their analysis of change in two Canadian law ﬁrms, Cooper et al. (1996) argue that the dominant archetype of the professional organization was shifting from P2 to a form they term the MPB. Their MPB retains some of the attributes of the old P2 archetype with an overlay, or additional sedimented layer, of managerialism and business values2 (Pinnington & Morris, 2002, 2003). Whereas the MPB clearly represents the progression along the path of managerialism and business-like interpretive schemes that are more and more common in contemporary PSFs, further reading of related literature on the larger contemporary PSFs suggests a somewhat more radical archeype: According to Brock et al. (1999) the global professional network (GPN) builds on and extends the MPB archetype for two reasons. First, the GPN archetype incorporates a fuller range of the important recurring themes and structures emerging in the ﬁeld of professional organizations, such as use of network structures, corporate governance, transnationalism, greater complexity, and internal differentiation. Further, we explained above how, in the context of institutional and resource-seeking tendencies, the contemporary P2 has anyway changed to include some managerial and business-like features. The GPN seems to be an emerging

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archetype, whose interpretive scheme emphasizes generating wealth and market dominance. In the following paragraphs we outline six important characteristics of the GPN, each one a reﬂection of these emerging changes in the ﬁeld of PSFs. In each characteristic the traditional professional interpretive scheme seems to be sufﬁciently institutionalized so as to persist, while newer organizational processes are overlaid – very much in accordance with the hybrid or ‘continuity and change’ aspects of our theory described above. Increasing Reliance on Formal Networks Informal networks can be more effective than formal relationships in facilitating cooperation between potentially rival organizations (Chisolm, 1989). These informal networks traditionally characterized the professions: Kitchener (1999) relates a medical professional remembering the ‘‘goodold-days’’ when expensive equipment would be informally loaned, and other personal favors done by supposedly competing professionals. However, as a result of resource seeking behaviors in contemporary competitive market places with more formalized performance controls, there is more reliance on formal networks and an eschewing of informal links (Aharoni, 1999; Roberts, 1998). In keeping with the business-like theme, relationships are more likely to be contractual (Hoggett, 1996). Law ﬁrms of varying sizes around the world may be linked to form a ‘‘virtual multinational’’ law ﬁrm (e.g., Landwell, www.landwellglobal.com/). Smaller accounting ﬁrms have a franchise system in order to use a well-known national or international brand name in exchange for a fee (e.g., Nexia, www.nexia.com). These networks of small PSFs beneﬁt from potential economies of scope and branding appeal (like H&R Block, an American tax preparation network that is gaining global appeal) and thus threaten to replace traditional, independent P2 ﬁrms. More Individualized Reward Systems While many traditional partnership proﬁt-sharing agreements still exist, more ‘‘eat-what-you-kill’’ remuneration systems are being put in place throughout the professions (Gilson & Mnookin, 1985). Rewards are based on indicators of productivity like number of clients and dollars billed. Flood’s (1987) case study of a U.S law ﬁrm shows the link between productivity, inﬂuence, and power. Sherer and Lee (2002) describe how law ﬁrms have developed an alternative to the partnership track – traditionally characterized by proﬁt sharing – to staff and senior attorneys on short-term, more performance-based and market-related contracts. Traditional professional bureaucracies, such as hospitals, have introduced performance-based

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pay in order to ‘‘incentivize’’ the health professionals (Denis, Lamothe, Langley, & Valette, 1999). These systems attempt to examine more areas of performance, and are designed and administered by human resource professionals (Ferner, Edwards, & Sisson, 1995). Managerialism and Becoming More ‘‘business-like’’ Explicit in the MPB archetype (e.g., Cooper et al., 1996) the language of business is increasingly the norm in contemporary PSFs: customers, market share, efﬁciency, and – importantly – proﬁt (Cypert, 1991; Galanter & Palay, 1991; Morris & Pinnington, 1999). Furthermore, there is widespread adoption of new management structures, functions, and systems such as performance appraisal systems, management by objectives, strategic business units, marketing, business development, cross-selling, chief executive, and senior management team structures (Covaleski et al., 1998; Greenwood & Lachman, 1996; Kitchener, 1998; Løwendahl, 1997). These reﬂect fundamental legitimizing forces that in turn gradually effect changes in the PSFs interpretive scheme, away from the collegiality and profession-focus, toward the more business-like attitude widespread in other commercial enterprises. Increasing Corporate Governance Business-like organizations need business-like governance structures; and the partnership model is considered inﬂexible and tends to inhibit change (Galanter & Palay, 1991; Hinings, Brown, & Greenwood, 1991; Lee & Pennings, 2002; Pinnington & Morris, 2002). There are thus serious questions as to whether it can survive the pressures of globalization and need for decision-making efﬁciency (Greenwood & Empson, 2003). Partnership has not, of course, been used in certain professional organization types (like hospitals and universities); and is gradually being replaced by trusts, corporations, and other limited liability forms in medical practices, some law jurisdictions, and many small-medium accounting ﬁrms (Freedman & Finch, 1997). Several large accounting ﬁrms have adopted a corporate, limited liability status (Aharoni, 1999; Greenwood & Empson, 2003). The limited liability partnership has already become the dominant form for large North American accounting ﬁrm;. and for those remaining in professional partnerships, increased size, consequent dilution in partnership shares, and the introduction of different levels of partnership, effectively change the meaning of partnership for most partners – they actually are little different from middle managers in terms of their status, power, and remuneration.

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Increasing Global Reach As discussed earlier, professional service organizations both contribute to and are impacted by the general trends toward globalization (Aharoni, 1993; Cannon, 1997; McAuliffe & Voss, 2003; Roberts, 1998). New communication technologies present opportunities for professional organizations to pursue resource acquisition internationally through mergers and acquisitions (Spar, 1997). Aharoni (1999) suggests that this propensity is a function of various characteristics of particular professions (such as certiﬁcation and standardization), which he suggests explains why the accounting profession has been more globally oriented than law. However, there is now evidence that law ﬁrms are beginning to make up for lost ground in the internationalization process (Mears & Sa´nchez, 2001). The many burgeoning global institutions like WTO, the EU, and international treaties, like the Hague Convention all create carrying capacity to support GPN type ﬁrms.3 From Generalist to Specialist to Multidisciplinary Practice While the trend from generalist to specialist practices has been apparent for some time, the corollary is more specialized PSFs appealing to particular markets or providing particular services. However, we see a further trend from specialist to multidisciplinary practice (Flood, 1999; Suddaby, 2001; Greenwood et al., 2002), with medium-sized general practices typically squeezed out (Aharoni, 1999). Legal barriers to multidisciplinary practice are steadily vanishing4 (Fischel, 2000; McAuliffe & Voss, 2003). Cypert (1991), Rose (1998), and Spar (1997) describe the tendency for professional ﬁrms to follow their expanding global clients so that they can deal with one ﬁrm wherever they are in the world. By the same logic, these ﬁrms have to offer the full range of professional services that the client might require. The result is increasing internal differentiation in these larger organizations. So the strategic shift is toward implementing a global ‘‘one-stop shop’’ for professional and business advisory services through the development of multidisciplinary practices (Brock & Powell, 2005). The above six categories of change among the large PSFs reﬂect a combination of environmental forces that have delegitimizing effects on traditional professional values (like collegiality, professional afﬁliation, and partnership) and legitimized competing themes (like proﬁtability, market dominance, and corporate branding). Professionals who choose to practice in these large PSFs are often driven by resource seeking motivations – for example, career progression or career stability through specialization. These six common themes are different in signiﬁcant respects from the old professional bureaucracy and P2 forms, and suggest an emerging general

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archetype for today’s large PSFs. Contemporary examples of GPNs are the global accounting, consulting, and engineering ﬁrms; and networks of large multinational law practices. While most of these organizations are global, large national law ﬁrms that establish overseas subsidiaries or network partners also share the characteristics found in the GPN archetype.

Professional Archetype 3: The Star Another emerging archetype seems to be the highly specialized boutique-like professional ﬁrm that persists in that form (Brock et al. 1999; Gray, 1999; Sherer & Lee, 2002; Starbuck, 1993). While institutionalization clearly results in structural attributes persisting similar to those of the P2 (see Table 1), the Star’s interpretive scheme and strategy are unique. Resource seeking within a relatively narrow range of professional specialty areas – or a niche – allows the Star to position itself as elite. Unlike the GPN it eschews growth by merger or signiﬁcant horizontal diversiﬁcation because its principals value their independence. Key to its survival is a ﬁxation on the highest professional quality standards and a commitment to individual excellence. It is typically the leading ﬁrm of specialists in its ﬁeld, in its town, and often beyond. The Star is the professional’s professional; hence the source of its legitimacy is the tradition of professionalism and high quality service within each professional specialty area. These are often the institutional entrepreneurs of professional services, more accustomed to risk than either the P2 or GPN (DiMaggio, 1988; Lawrence, 1999). The traditional partnership dimensions generally persist in the Star, but its professional and performance supremacy affords more organizational slack. Rewards are signiﬁcantly higher than industry average, based on the exceptional effort, expertise, and talent invested. A broader range of individuals in Star organizations are all expected to bring in new business and revenues through aggressive pursuit of big deals and wealthy clients. Notwithstanding the emphasis on these ‘ﬁnder’ roles, senior professionals tend to be more involved in the less glamorous ‘minder’ and ‘grinder’ roles than those in the more internally differentiated GPN. It should also be noted, however, that large cases and deals tend to come the Star’s way due to a reputation effect – but reliance on these lumpy income sources is consistent with relatively low risk-aversion, as mentioned above. The relative absence of hierarchy and bureaucratic controls, and the focus on the successful individual professional rather than the organization or team, also distinguishes the Star archetype from the GPN. It has more in

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common with smaller and highly successful surgical practices or investment banking deal-making units than the large global professional ﬁrms described earlier. In the medium term, we suspect that the Star is a viable PSF archetype. It is likely to be more pervasive in law and medicine where localism and national borders have traditionally fostered local rather than global growth. For example, one area where several elite specialist PSFs are found is in forensic accounting, where work is conﬁned to local courts and legal systems (Lawrence, 1999). Published evidence of this archetype is presented by Starbuck’s (1993) cases of the ‘‘Wachtell, Lipton, Rosen & Katz’’ law ﬁrm in New York; and Sherer and Lee’s (2002) analysis of institutional innovation in Cravath, Swaine and Moore, another law ﬁrm with ofﬁces in New York and London. Some quotes from the web sites of these two ﬁrms exemplify the Star interpretive scheme: Wachtell, Lipton, Rosen & Katz provides a unique service to our clients and enjoys a global reputation as one of the most prominent business law ﬁrms y . We operate with a ratio of partners to associates of one-to-one y . We are committed to providing our associates with a level of compensation signiﬁcantly higher than that of any other comparable ﬁrm. (www.wlrk.com). Cravath emphasizes the quality of its legal services. We are not, and will never try to be, the largest law ﬁrm y . Our goal is to be the ﬁrms of choice for clients with the most demanding transactions and cases (www.cravath.com).

In fact these two ﬁrms consistently earn proﬁts per partner in the $2–3 million range, outliers even among the highly proﬁtable AmLaw 50 colleagues (see www.americanlawyer.com). Gray (1999) also identiﬁes his ‘‘Conner Bertrand’’ as a Star (in Australia). In health care, specialized units that gain national and international reputations like the Mayo and Cleveland clinics exemplify the Star form.

Coexisting Archetypes In the previous section we identiﬁed three archetypes of PSFs coexisting today. While there are clearly change processes underway, aspects of these institutionalized organizations also resist change. The contemporary P2, which is the result of gradual market-related evolution around the institutionalized core of the traditional archetype, appears to be under threat in the face of the environmental changes discussed earlier. However it shows much resilience5 amid the trend to larger professional forms (Greenwood et al., 2002). While solo practice and very small ﬁrms seem to be less prevalent, it is

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clear they will continue to exist in the foreseeable future, with average size of practices increasing (Aharoni, 1999). Also, we observe two hybrids, each a result of the persistence of some institutionalized organizational aspects along with the result of resource seeking within the context of contemporary deregulated and global economies. First, the large, business-like, diversiﬁed, networks of PSFs, frequently with global reach – the emerging GPN archetype. The trends toward deregulation, globalization, new technology, increased competition, and client demands all feed into the growth of GPNs. A superﬁcial view of the structures of GPNs hardly differentiates them from other large industrial and commercial enterprises and multinationals. However, the continuity and sedimentation theme is critical here. It implies that many of the internal processes of contemporary GPNs still rest on traditional professional values of collegiality, consensus, quality of service, and technical autonomy in serving clients. In this sense, it reﬂects the emergence of a conjoint, or hybrid archetype (Powell, 1987; Scott, 1965), as noted earlier, combining new business values and structures with central elements of the old professional interpretive scheme. However, remembering earlier arguments concerning the reﬂexivity of structure/process and interpretive scheme, a continuing trend away from professional values toward corporate values in the GPN is predicted. Finally the specialized, small-medium, quality leader, is introduced. Like the other two archetypes, the Star retains several of the characteristics of the traditional professional organization mentioned earlier. In fact because the Star is less focused on growth and managerialism, in many ways it is in fact closer to the traditional form. Ongoing research on PSFs is providing examples of the power of archetype and the risks of archetypal change. For example, Greenwood et al. (2006) show how two accounting ﬁrms, facing similar sets of external circumstances move differently in archetype change. Each ﬁrm experienced growing disagreement over prevailing practices, with groups in each ﬁrm competing over appropriate value commitment. Crucially, in both ﬁrms the dissatisﬁed groups were beginning to associate the basic features of the P2 archetype as underlying the ﬁrm’s weak performance; and, as contributing to their positions of disadvantage. The MPB Archetype was articulated and it codiﬁed their dissatisfaction and provided direction to the push for change. However, movement to a new archetype will occur only if there are enablers of change, namely power and capability, support the desired change. This is where the differences occurred. With regard to power, one ﬁrm elected a new leadership team that set about concentrating authority at the apex of the ﬁrm and set about

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introducing MPB-like structures and systems. In addition, this new senior management team had previous experience of, and the technical skills to understand the design and operation of the MPB archetype; thus, capability in both the nature of the new organization, and in the processes of change enabled successful change. The other ﬁrm made similar power moves, but much later, and in more muted form. After two years only a few aspects of the MPB had been implemented. Senior management felt less able to make wholesale organizational changes, partly because of their own commitment to the P2 values, and partly because of the dispersed power structure. This, of course, meant also that those responsible for the change, senior management, were unsure of how to design and operate anything other than the P2 form. And, they failed to bring in managers with the necessary skills of design or implementation. The result was a failed attempt at archetype change. Resource seeking behaviors clearly help explain the archetypal change, as search for new opportunities and resources spur the emergence of alternative strategies, structures, and interpretive schemes. However it is also apparent from the three archetypes presented that they tend to position themselves in different strategic space: The GPNs main clients are large corporations, the P2 serves private customers and small business, while the Star usually gets the highly specialized clients and cases that neither of the other two have the expertise to handle. So we can further understand this period of coexisting archetypes in terms of strategic differentiation. Greenwood and Hinings (1993) suggest that while there may be a transitional period of archetypal incoherence, there will be pressure toward coherence or isomorphism. The possibility of further future archetypal change is discussed in the ﬁnal section of this chapter.

IMPLICATIONS AND FUTURE RESEARCH DIRECTIONS It should be noted that the GPN and Star archetypes, as developed here, are hybrid models retaining elements of the more traditional professional archetype while adopting new strategies, systems, structures, and values. Hybrid structures themselves may well be relatively unstable (see Powell, 1990), perhaps representing a ‘‘schizoid’’ state as suggested by Hinings and Greenwood (1988). Future research could examine the ongoing development and elaboration of the GPN archetype in order to ascertain whether this hybrid condition is sustainable in the medium to long run, or whether

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there will be an inevitable pull toward internal archetype coherence. This may result in the archetype moving either back toward its traditional roots, what Hinings and Greenwood (1988) call an ‘‘aborted excursion,’’ or forward toward the eventual triumph of the market-driven model. An alternative possibility, of course, is that the emergent, hybrid GPN archetypes developed here, or the MPB version developed by Cooper et al. (1996), represents a new synthesis of values and interpretive schemes previously in dialectic tension with each other. In-depth, micro research within professional organizations representing this archetype is needed to determine the extent to which a new interpretive scheme has emerged that synthesizes the old professional and the new business values and beliefs. The research question is whether the old and the new values, beliefs, and structures coexist independently within professional organizations (as in what Schwarz & Brock, 1998, call the coexistent organization) or whether they have merged to form a new reality or a new web of meaning. Stability in the longer term is more likely if the old and the new elements of the emergent archetype are interwoven, resulting in a new organizational fabric. Morris and Pinnington (1999) imply with their motif of continuity and change in UK law ﬁrms, supported by Kitchener’s (1999) research on the emergence of hybrid marketbureaucratic structures in UK hospitals, a more recursive and reﬂexive model where old and new values and systems interact and re-interpret each other. Furthermore, much of the evidence upon which the typology of professional archetypes presented here is derived from Anglo-American research. More research is needed on those European and Asian contexts where the traditional archetype of professional organizations has not been so well established to ascertain the generalizability of the changes observed in this chapter.6 This is increasingly relevant in the face of the globalizing tendencies of American professional ﬁrms, with the view to dealing with clashes of national cultures that may occur around the organizational and professional cultures. In moving to the GPN, PSFs are opening themselves up to multiple inﬂuences in setting standards and making decisions. While this is primarily being done to ensure standard, high quality service at all points of delivery, it also opens up the possibility of new tracks of evolution as practitioners from different jurisdictions work together. Recent research by Hitt, Bierman, Uhlenbruck, and Shimizu (2006) on global law ﬁrms, for example, has shown not only how crucial human resources are to performance in global markets, but also how these large ﬁrms often struggle to maintain proﬁtability as they expand overseas. Also, as Aldrich (1999) has argued about organization theory in general, the evidence primarily comes from the study of large PSFs. One of the

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contributions of this paper is that it takes the size differences among professional ﬁrms seriously. To back this up we propose a focused research initiative on smaller PSF in general and the ‘‘Star’’ construct in speciﬁc. There may also be signiﬁcant inter-profession differences (Kirkpatrick & Ackroyd, 2003). It was noted earlier that the number of viable archetypes in an institutional sphere increases as institutional forces lessen (Greenwood & Hinings, 1993), i.e., with deregulation or technological advances. So it seems that less regulated professions (e.g., law in Europe or Accounting in general) will be more subject to archetypal change than the more regulated professions (e.g., medicine or law in the U.S.). Similarly, multidisciplinary practice became a viable strategy for PSFs earlier in Europe and South America than in North America (Herman, 1999; Fischel, 2000; Suddaby, 2001). These interprofessional differences in general, and multidisciplinary practice in speciﬁc, are potentially fruitful areas for further PSF research. There is no doubt that the PSF is undergoing substantial change, and this process is likely to continue in the future. However, even should one archetype achieve dominance, the evidence presented in this chapter suggests that it will retain a distinctive professional character. There is little evidence to suggest that professional organizations will lose their distinctiveness and simply be subsumed under a monolithic corporate business archetype. Indeed, the tendency seems to be in the other direction as large corporations seek to adopt ﬂatter structures wherein employees have ownership and autonomy reminiscent of the traditional professional forms. Further research is needed to delineate the changing dimensions of PSFs as they transform themselves to meet the demands of new institutional environments and uncertain resource ﬂows. There is no reason to believe that PSF leaders are under any illusions as to the internal and external challenges facing their organizations in the contemporary competitive arena. On the one hand this chapter should convey many of the difﬁculties and complexities of archetypal change. On the other research has demonstrated that successful change tracks are feasible as long as attention is paid to the underlying interpretive scheme, and the ongoing reﬂexive relationships among the PSFs structures, values, and beliefs.

NOTES 1. Note that here we are talking about fundamental organizational change to a different archetype. Organizations certainly may undergo minor change within archetype without changing interpretive scheme.

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2. Comprehensive summaries of the MPBs features are in Cooper et al. (1996) and in Hinings et al. (1999). 3. The authors are grateful to Dev Jennings for this point. 4. While the Sarbanes-Oxley Act (2002) has been widely debated, its effect is limited both in national as well as disciplinary scope; and may well be short-lived. 5. If Hollywood’s presentation of popular culture is a gauge, small-medium, generalist professional ﬁrms are more prevalent than ever! The serial drama ‘‘The Practice’’ is a perennial award winner, and reruns of LA Law are still sought-after. The ubiquitous daytime soap operas are largely centered on small-medium general hospitals, as are the blockbuster evening dramas ‘Chicago Hope’ and ‘ER.’ (Somehow Accounting has not caught on among Hollywood scriptwriters!) 6. For example, Hofstede (1991, pp. 155–158) explains how accounting is deeply rooted in cultural value systems.

ACKNOWLEDGMENTS We are grateful to Yair Aharoni, Mark Dembovsky, Laura Empson, Daniel Feldman, P. Devereaux Jennings, Jiunn Chieh Lee, Avi Meshulach, Tim Morris, Bill Pasmore, Ran Lachman, Bill Starbuck, and Dick Woodman for their constructive comments that contributed to the development of this article.

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STRATEGICALLY REPOSITIONING AND TRANSFORMING PUBLIC ORGANIZATIONS Paul C. Nutt ABSTRACT A framework is offered that predicts when public organizations are susceptible to change. Many researchers interested in change focus on leadership. Such an approach overlooks structural factors that inhibit change and what leaders seeking to realize change can realistically hope to accomplish. The framework identifies organizational capacity, responsiveness, and constituencies as key structural factors that govern change feasibility. Capacity, responsiveness, and constituencies are knitted together in the framework to identify types of public organizations that are ready for change and those apt to resist change. Types of change are considered that range from strategic repositioning to transformation. Also discussed are guidelines for leaders seeking to strategically reposition or to transform a public organization. To realize a transformation requires a new kind of leader, called a Mutualist. The skills required by Mutualist leadership and Mutualist leaders are identified and compared to those identified in the transformational leadership literature. Research questions are formulated and a research program proposed to deal with research issues identified by the framework.

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INTRODUCTION Public organizations are continually called on to radically change their practices (Osborn & Gaebler, 1992). But are such demands reasonable? Can public organizations make sweeping changes? If so, when is change possible? These questions are addressed by examining some of the forces that hold public organizations back, suggesting how to manage these forces so that change can occur. Propositions are offered that predict when change is feasible and conditions that allow change. Often change is put in leadership terms, discussing leader traits necessary to realize change (Fisher & Torbert, 1991). Leaders as change agents are important, but have been considered elsewhere (e.g., Burns, 1978; Bennis, 1989; Block, 1991). Here, a different tact is taken by exploring structural limitations to change and what is required to overcome them, offering guidelines for effective leadership when a window of opportunity opens. Propositions are offered and a research program is suggested. Propositions identify forces creating inertia and what would be required to deal with them, seeking to identify when change is feasible. Two types of change are considered: strategic repositioning (Quinn & Cameron, 1988), which modiﬁes current practices, and transformational change (e.g., Tichy & Devanna, 1986; Wheatley, 1992) that devises new practices. Small-scale incremental changes, such as TQM, are not considered. The unit of analysis is the organization, considering the general-purpose bureau or agency found in federal, state, county, and city governments. Although not fully developed, the ideas should extend to the private nonprofits and small in size but large in number voluntary organization. Space precludes considering either in the discussion.

STRUCTURAL FEATURES THAT INHIBIT CHANGE A public organizations’ susceptibility to change is given by the prospect of adding additional internal capacity, the organization’s external responsiveness, and the number of constituencies served (King, 1982; Nutt & Backoff, 1997b; Bryson, 1988). Capacity sums up the resources available to an agency. It includes things like computers but, due to the labor-intensive nature of most public services, stresses the current numbers and skill level of key people and the prospect of growing an agency’s competence level (Levine, 1978; Lawrence & Dyer, 1983; Galbraith & Schendel, 1983; Thompson & Strickland, 1996). Capacity determines whether an agency can

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respond to pressures for change: how far it can stretch. Limited capacity erodes conﬁdence and a perceived lack of competence entices organizational players to resist change, fearing that new demands will expose their shortcomings (Eichholtz & Rodgers, 1964; Zaltman, Duncan, & Holbrook, 1973; Nutt, 1987). Capacity can be measured in a comparative manner using per capita funding for agency types, such as university hospitals, corrected for patients served by severity, or business schools per capita funding, adjusted by proportions of undergraduate, MBA, and PhD enrollments. Highcapacity agencies would be well above the median and low capacity ones well below it. Responsiveness stems from the extent agency initiatives deal with client needs. In the private sector, initiatives are demanded by a market (e.g., Miles & Cameron, 1982; Lawrence & Dyer, 1983; Porter, 1985). In the public sector, oversight bodies that regulate fees to be charged and supply funds as budgets act as a market. Instead of selling to end users, the public organization must sell to the oversight body when it wants to increase its responsiveness. Oversight bodies can be very ﬁckle about the level of responsiveness desired (Levine, 1980). Not much is expected for long time periods only to have the agency suddenly appear on the agenda of a legislature. Demands are made and responsiveness expected. Leaders must ﬁnd a way to cope with these new demands. The prospect of change is given by the extent to which agency leaders commit to meeting such demands. Change can be held back by certain types of commitments, and facilitated by others. An index of responsiveness would identify the percentage of agency initiatives over those services offered plus those not being offered. The missing services can be inferred from changes in agency mission under discussion by various stakeholders and new services proposed by public policy watchdogs. Interest groups emerge as demands are placed on an organization, creating a third dimension that accounts for the number of constituencies served. The ‘‘constituencies served’’ metric runs from one to many, indicating the number of interest groups and oversight bodies that are being accommodated. For example, a state Department of natural resources (DNR) has constituencies that include ﬁsh, wildlife, hunting, and environmental groups; professional groups sharing enforcement and protection responsibilities; land owners (public and private); professional associations; and still others. Each has interest in what a DNR does and the leverage to block an unwanted change. In the proposed model, change requires that a public organization move toward increased internal capacity and increased external responsiveness

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(called capacity and responsiveness). Increased responsiveness brings in additional constituencies that must be catered to. Propositions offered point out how public organizations get stuck and what must be overcome to make change feasible. To simplify the discussion, ﬁrst we consider responsiveness and capacity. This is shown by a path that moves up the diagonal, running from lower left to upper right, indicated by the arrow in Fig. 1. The path moves along the diagonal to the buffeted and then to the proactive zone, suggesting a sequence of conditions that must be created to enlarge the scope of change. A public organization with an imbalance in responsiveness to its constituencies and capacity will ﬁnd it difﬁcult to engage in change. A balance between responsiveness and capacity is required before change is possible.

CHANGE FORCES

High

Forces undermining Patronage and capacity building

Loss of Patrons

PROACTIVE ORGANIZATIONS

PROTECTED ORGANIZATIONS

BUFFETED ORGANIZATIONS

EXTERNAL RESPONSIVENESS

Erosion of capacity

ROUTINIZED ORGANIZATIONS

PROFESSIONAL ORGANIZATIONS

Low Increased expectations Low

INTERNAL CAPACITY

Fig. 1.

Change Forces.

High

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The third dimension, number of constituencies, creates a ‘‘change surface’’ that is difﬁcult to construct in word. Imagine a saddle as this surface. The three zones predicted to have low change prospects (protected, professional, and routinized) are found in a ﬂat region that surrounds the buffeted and proactive zones, as few constituencies (often only one) are being served. The surface rises as the buffeted zone is approached from one of the lowchange zones, depicting additional constituencies that must be served or accommodated. As the proactive zone is approached there is an even larger increase in constituencies, shown by a surface that moves sharply upward. In the proactive zone the slopes are very steep, conveying the notion that leaders must have many ‘‘balls in the air’’ to keep a transformational change on course. The saddle surface suggests that leaders must pump in enormous resources to mount and maintain a transformational change. A sizable increase in resources realizes only a small gain in the constituencies served and the responsiveness to each.

Organizations that Resist Change Public organizations are classiﬁed as one of the ﬁve types. Stable types have little motivation to change. Stability arises, somewhat paradoxically, when capacity and responsiveness are out of balance. Because either building capacity or responsiveness dominates, attention is focused on the maintenance of capacity or responsiveness and not on using capacity to provide needed responsiveness. Such an organization has drifted far from the buffeted zone in Fig. 1. As capacity and/or responsiveness decline, change becomes increasingly difﬁcult. (The propositions are listed in Table 1.) Proposition 1. An imbalance between capacity and responsiveness identiﬁes organizations apt to resist change. Professionally Dominated Organizations Public organizations with high capacity, real or perceived by outsiders, and little responsiveness are often professionally dominated. Activity is dictated by the professional values. Responsiveness, beyond the imperatives suggested by these values, is missing. This is possible because political, legal, and economic forces that direct and channel agency energies and ensure accountability are not in place. Such an organization has considerable prerogative to act in the arena dictated by professional values, such as police work.

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Table 1. Proposition 1 Proposition 2 Proposition 3 Proposition 4 Proposition 5

Proposition 6

Proposition 7

Propositions about Change in Public Organizations. An imbalance between capacity and responsiveness identiﬁes organizations apt to resist change Change in professionally dominated organization requires a perceived loss of capacity Change in a protected organization requires a loss of patrons Change in a routinized organization requires a sustained increase in expectations Strategic repositioning becomes feasible when demands for greater client responsiveness pose questions about how organizational capacity is used A transformation becomes feasible when organizational leaders are allowed to be responsive to latent/emergent demands and develop capacity within an appropriate set of cooperating agencies to meet the demands A Mutualist leader, with the support of oversight bodies, must create a proactive organization to initiate a transformation

The FBI under Hoover, the Department of Defense under Reagan, the IRS before the ‘‘tax revolt’’ of the late 1990s, and the CIA are examples. Departments of taxation and the Attorney General’s ofﬁce provide examples in state government. Public organizations that rely on highly skilled and self-regulated staff members to provide key services can also become professionally dominated organizations. Examples include state-run mental health hospitals, acute care hospitals, university medical centers, university facilities, social work agencies, public defender ofﬁces, the state architect ofﬁce, and others dominated by professional elites, who control the terms of services provided. Such organizations periodically release selective data and testimonials to suggest they are doing a good job. Only malcontents out of favor with the leadership make claims that pose challenges. Faculty critics inside universities, who see student responsiveness curtailed by unmanaged departmental and facility conﬂicts, can be isolated and labeled as low performers, as few outsiders understand what is and is not an effective performer. The prospects of reform under such conditions are dismal, making the risk to all but the most radical reform advocates unacceptable. Change, prompted by a leader, or an outsider, is very difﬁcult when professionals can maintain this kind of control over what an organization does. The professionally dominated bureau or agency can ignore client preferences, the political agenda of reformers, and may even be insulated from budget cutting. In some instances, the professionally dominated

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organization can turn aside legal mandates and judicial orders. Such organizations have little motivation to change. Protected Organizations A protected organization can be created or may evolve into a protective posture. An example of a created type can be found in state departments of development (DOD). In recent years, Republican-controlled legislatures and state houses see such departments as a way to spur economic growth and create jobs. DOD leaders have considerable incentive to carefully maintain this old-boy network, in part to harness forces that would call for accountability. When a critic asks how many new jobs have been created by a DOD and how much tax base has been given away, the network is mobilized to deﬂect the critic’s questions or make them seem unwarranted or politically motivated. Other organizations move into a protected posture as a way to survive. The impetus stems from stress. Public organizations become stressed when their leaders attempt to respond to demands made by clients and oversight bodies, without the means to do so. When a threat emerges leaders seek an island of stability that provides safety. Leaders of agencies singled out for reform often ﬁnd themselves in this position as mandates are added without the funding to carry them out. Cities balking at the many unfunded mandates in recent federal legislation provide an example. Attempts to satisfy these demands spread available funds too thin to accomplish much. Recently, funding for homeland security has been siphoned off by states before being allocated to cities, prompting claims by city leaders that the hoped for protection standards are unattainable. When attempts to respond prove to be futile, due to low capacity or the inability to grow the needed competence, an agency can only resort to strategic posturing that concentrates on the most important constituents. For instance, state legislatures and federal laws charge state departments of education with instituting educational reforms. Oversight bodies use these mandates to lean on the department to carry out competency-based education, insure ﬁnancial equity across school districts, implement new funding formulas, adhere to federal regulations for special education, reconcile the demands made by life skills and back to basic curriculums, and still others. Few agencies have the competence and the funds to do all this. To survive, leaders resort to image management, talking about what they have done not, and what they will do. Knowing that accountability lurks around the next corner, leaders grope for a way out. If oversight bodies reject a ‘‘K-Mart’’ solution that would let an agency deliver low quality to

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all comers, the only path is to redeﬁne responsiveness very narrowly, doing what opinion leaders in the oversight body ask. Leaders determine the agenda of key people on the oversight body. They then focus the agency’s limited resources on doing what these individuals want to demonstrate responsiveness. For example, to survive a bureau of workers compensation (BWC) narrowed the interests served. Such interests in a BWC are often polarized, with clients and oversight bodies having very different views. Clients, represented by labor unions among others, want assurances that injured workers will be taken care of. However, small business representatives often dominate BWC oversight. People with these interests want their costs lowered by reducing the fees they pay to the agency for compensation beneﬁts. A BWC is often forced to choose reducing fees over beneﬁt provision to be responsive to its dominant coalition of small business interests. To survive, such an agency cultivates patronage in the dominant coalition that endorses the agency and its actions – typically key players in a state legislature. If successful, the stressed organization can move from a threatened to a protected position. To become protected, there is a shift in responsiveness from broad to narrow, which drastically limits the number of constituencies served. This shift allows the stressed agency to move from an unstable position to one that can become protected, if patronage in the served constituency is carefully managed. To develop patronage, leaders ferret out the beliefs and commitments of key people that fund them and/or control the terms of their service, such as fees and co-payments. Many public leaders have become very clever in identifying the agenda of key people in an oversight role and then giving them what they want. This can be done proactively by recognizing opportunities that can give the agency leverage. Leaders can then exploit the opportunity by carving out a domain in which their organization has an exclusive right to act, creating a ‘‘protected’’ environment in which to operate. Legislation can even be written to give exclusive rights or responsibilities. For example, the Iowa legislature gave the University of Iowa Medical School exclusive rights to provide all tertiary health care services, statewide. In a protected organization, old-boy networks are carefully maintained to deﬂect criticism and routine accountability and to harness the forces that would normally be used to monitor actions. The leader exploits values that have become legitimized and are no longer subject to challenge. No one questions the massive shift in funds to county governments for mental retardation and developmental disabilities (MRDD). Levies pass routinely, even though patients are still warehoused,

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albeit locally, and the inefﬁciency of county governments is well known. Agency leaders carefully manage the old-boy network that supports levies to insure continued funding. Control of turf in this way creates little incentive to improve capacity or to serve additional constituencies, making the organization quite political.

Routinized Organizations Some public organizations have both limited capacity and little responsiveness (Levine, 1984; Nutt & Backoff, 1993b; Ingram, 2001). Capacity gets eroded by years of budget cutting, limitations on prerogatives from court rulings, rule making by legislatures, assignment of duties to other agencies during reorganization, and chronic staff turnover. More motivated staff departs with each new set of limitations. As capacity declines, complacency sets in, making change difﬁcult (Alter & Hage, 1993). Leaders are stiﬂed when demands crop up at a rate that exceeds the organization’s ability to understand them, let alone cope with them. Such organizations gravitate toward a ‘‘learned helplessness posture’’ in which rationales for avoiding action displace efforts to build capacity to meet demands. If little is expected of the agency, no one questions such a posture and no constituencies need be served. Public organizations low in capacity, responsiveness, and constituencies served often become routinized. Codiﬁed routines are developed and rigidly followed, substituting the routines for responsiveness. Because no one questions what such an organization produces, it can go about this meaningless processing offering neither beneﬁts nor accountability. The routine processing has little value but can be used to derail change, contending that there are no resources available to support it. Examples include bureaus of motor vehicle licensing, contract activities in departments of transportation, claim processing in bureaus of worker’s compensation, and service departments such as travel, records and transcripts, and stores in universities. Former students who complain about poor service, such as delays in getting a transcript, are ignored by university leaders and oversight bodies who have more important things to do. Delays in receiving compensation beneﬁts fall on deaf ears, charges of unfair or unethical contracting for highways are ignored, and questions about the inability to deal with the most trivial exceptions go unanswered by the motor vehicle bureau. Oversight bodies ﬁnd little reason to think about the agency, let alone question its practices, allowing it to drift toward a change-resistant posture.

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Forces for Change Protected and professional organizations are pushed toward change by a loss of patrons or a loss in capacity. The routinized agency experiences this push when expectations increase. When either occurs, an organization experiences buffeting and begins to feel pressure to reconsider its strategic commitments. This movement can occur in three ways as shown by the arrows in Fig. 1. Change for a Professionally Dominated Organization A perception of diminished capacity pushes the professionally dominated organization toward the diagonal in Fig. 1, opening the door to change. The strategy of a professional organization rests on maintaining its perceived capacity. The FBI’s reputation after Hoover’s death went into eclipse, and did so again after 9/11, forcing the FBI to re-examine its commitments and priorities. Ohio’s Department of Corrections felt a similar pressure after the Lucasville riot. A decline in competence, real or perceived, is a necessary precursor to change. Constituencies (old and new) make demands. This prompts the organization to try to rebuild its image of competence, as new practices are being forged and adopted. When real or perceived competence declines, new strategic positioning is required. The ﬁrst move is to defend past practices, coupled with small-scale adaptations of them to placate those calling for change. Sustained pressure is required to force change on a larger scale. For example, the IRS, stung by reports that staff unmercifully harasses tax payers, conﬁscate the bank accounts of the children with parents in arrears, and give inaccurate tax advice, mounted an effort to do damage control and to reform some of its procedures. In the aftermath of Lucasville riot in Ohio, a task force brought a number of reforms in the use of computer technology, training, and accreditation. The FBI, stung by public awareness of its colossal intelligence failures in the aftermath of 9/11, agreed to shift its energies from crime to preventing terrorism and to share information with other agencies with similar mandates. Proposition 2. Change for a professional organization requires a perceived loss of competence. Such pressure is necessary, but sometimes not sufﬁcient to move an organization out of its professional posture. When an Ohio highway patrolman killed his wife, the resulting media frenzy spilled over into agency practices. For the ﬁrst time, questions were raised about how the patrol spends its money and the effectiveness of its practices. This attention,

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however, proved to be short lived and the patrol soon returned to its professional posture of demanding budget increases without any performance accountability, beyond those called for by police values. Questions about the overlap of service areas, the cost and beneﬁts of patrol cars on highways, and instances of failures to protect citizens were called antipolice and ignored. Change for Protected Organizations Protected organizations are found in the upper left corner of Fig. 1. Here resources are devoted to cultivating patrons in an oversight body. The oversight body for a state economic development agency may have an agenda that ignores citizens and their needs. Legislators that appoint the oversight body are often drawn to ﬂashy projects, such as arenas and convention centers. These projects do little to create local jobs or enhance local quality of life, but take precedence over projects that do. Agency leaders push arena and convention center ideas to cultivate patrons. This makes the organization highly responsive in a very narrow way. When this takes place, agency leaders are reluctant to question the oversight body or its values and assume that clients are being served by the priorities of their oversight body. The strategy is to maintain the old-boy network and other arrangements that protect turf. Change is not apt to occur unless these arrangements erode. Erosion of turf or prerogatives occurs when patrons lose elections or leave ofﬁce or when the old-boy network ceases to function. This tosses the protected organization into the mainstream. The political agenda of newcomers or a shift in power among stakeholders’ signals the need for action. A clear and compelling call for better services by clients often results and cannot be ignored. The organization must increase its capacity to meet these demands, shifting it toward the diagonal in Fig. 1. Proposition 3. Change for a protected organization requires a loss of patrons. After a new governor took ofﬁce, Ohio’s department of public welfare experienced such a shift, moving from a protected position to one of increased expectations. The welfare department had to abandon a strategy in which its clients were expected to respond as directed and to move toward one that emphasized helping clients. This provided an impetus for change, as clients and client advocacy groups became constituents (Fig. 1). The loss of a protected status prompts an increase in scrutiny by interest groups that illuminates low capacity. Exposing this low capacity can force rapid action to improve matters, making change possible.

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Change for a Routinized Organization The framework deals with circumstances that arise when events push a routinized agency into view. The absence of a mandate in a routinized organization inhibits change. Such agencies have few expectations. Public organizations with low capacity can be ignored for decades. Such organizations have little accountability until there is a shift in expectations. For instance, decades of complaints about long waits and inept staff reached a breaking point and prompted change in a state bureau of motor vehicles. New funds were provided and new systems were designed to allow mail-in license plate renewals that separated taxpayers and staff, reducing both dysfunctional agency contacts with the public and the time involved. Note how complaints had to become intense before action was taken to increase competence (new systems). The push had to be compelling and concerted to push the agency into the buffeted zone. External pressures must have mounted to spill over a threshold before change is put on an agency’s agenda. Pressures from fee/co-pay limitations, budget cuts, functions sent to other agencies or inherited from them, client safety, union actions, shifts in oversight expectations, judicial rulings, technological advances, minority hiring, lawsuits, client preferences, clientadvocate preferences that differ from those of clients, leadership changes, leader turnover, and declining competency must breach a threshold (Nutt & Backoff, 1993a). The framework predicts that sustained pressure from such sources is required before an oversight body will increase its expectations and enhance capacity to push a routinized agency into the buffeted zone. Increased expectations and capacity call for accountability. This pressures leaders to show how one is used to deal with the other. If accountability is lax or if the external pressures are short lived, the agency is predicted to slip back into a routinized posture. The new function is absorbed into standard practices and repertoires of the agency. Proposition 4. Change for a routinized organization requires a sustained increase in expectations. This increase in expectations comes from stakeholders. When the new demands gather good currency, they spill over a threshold to become expectations. Often this stems from a galvanizing event: a patient escapes from a mental health institution and kills someone, a child is abused in a foster home, an agency head becomes embroiled in an ethical ﬁasco by contracting with family members, or the head of a state teacher retirement plan claims that the money in the system does not belong to the teachers. Now questions become permissible. People in oversight roles seek to deﬂect the perception

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of being lax in their responsibilities and begin to question practices, such as mental health patient furloughs, the number of children being served by the family services agency, contracting procedures, or the wisdom of giving teacher retirees a 13th monthly pay check during better economic times. The boundary of such a threshold is apt to vary with factors such as agency visibility and the economic situation, but an agency cannot reach the buffeted zone until this threshold is breeched.

CHANGE-INITIATING EVENTS Events that call for change arise from new initiatives, the need to stabilize funding, the desire to grow, expanded roles, legal mandates, leaders with new ideas, and the need for integration (Wilber, 1982; Ansoff, 1988; Shortell, Morrison, & Friedman, 1988; Nutt & Backoff, 1996a; Budros, 1999). Legislative bodies continually create new programs, drop old ones, and modify others. Such initiatives force change (Rainey, 1997). Leaders feel pressure to quickly put in place a new strategy before the inevitable criticism of spending without doing anything useful begins. Public organizations feel pressure to diversify and stabilize their funding sources (Dilulio, Garvey, & Kettl, 1995). Selling services can often be limited or prohibited. Public leaders need to think strategically as they ﬁnancially reposition their organization. And a ﬁnancial crisis or an impending one raises questions about change. Oversight bodies may see a need to reach more people (Rosen, 1986). To do this, leaders must make changes to expand services or offer more service variety with branches or afﬁliates. An organization must embrace the need to change before leaders expand services. Many public organizations are experiencing demands to enlarge their role (Jones, 1988; Nutt, 2001). An addition of new service activities can bring new clients with special needs. This poses issues as leaders question how to change agency practices to accommodate them. Many public organizations have mandates that require some form of planning (Bozeman, 1987; Nutt, 2001). Plans must be skewed to ﬁt the categories demanded by regulators and funding agents. Leaders that embrace change try to get the most from such efforts. Calls for renewal often lead to leadership changes (Moon, 1999). The new leader gropes for a way to revitalize services and operations and to challenge a bored and underused staff that is accustomed to lethargy and inertia. New leaders often bring with them a vision for the organization and try to get oversight bodies and key staff members to buy into their ideas (Wheatley, 1992). Others seek to create a vision by working with these same groups

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(Bennis, 1989). The vision clariﬁes what the organization stands for, its values, and centers of excellence with distinctive competencies, to ensure that these values and competencies will be preserved (Nutt & Backoff, 1997a). The vision opens the door to change. The need to integrate services across departments is getting more attention (Bardach, 1993). The motivation is to prevent people in need from falling into the abyss created by the lines of authority that separate departments offering related services. To ensure follow through, separate ofﬁces are called for to coordinate the planning required to integrate clusters of departments. These ofﬁces seek to reduce duplication of effort and ﬁnd gaps in services. Departments with complementary missions are brought together to jointly fashion services and improve the efﬁciency of service provision. Severe buffeting is required before such needs become visible. Only when this creeps onto the agenda of the key players does integration become possible. A few states have attempted integration by formed cluster groups around topics, such as youth services, economic development, environmental protection, utility regulation, taxation and budget, physical resources, and health services. The leader of a cluster group is called on to develop strategic plans that integrate the cooperating agencies delivery efforts, calling for radical changes in historical patterns of service delivery. Organizational leaders facing turbulence must grapple with the scope of change required to respond to these events. With this in mind, two crucial types of change are considered.

SCOPE OF CHANGE Two change types are considered: repositioning and transformation. A strategic repositioning focuses on current clients and their needs, which limits the scope of change. A strategic transformation deals with the future clients and their predicted needs, and thereby has a much greater scope, like integrating with a cluster group. To transform an agency, leaders create greater variety, more skill, and increased ability to serve customers/clients in new and different ways, allowing the organization to cope more effectively with a changing world (Senge, 1990; Pauchant & Mitroff, 1992). Repositioning alters current practices so it is not considered transformational (Wheatley, 1992). A transformation requires a vision. A vision provides energy (Block, 1991), has inspirational qualities (Nanus, 1989), and brings organizational distinction (Covey, 1990). Transformations result when leaders act on

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visionary possibilities, drawing on their knowledge of their organization: its sources of funds, services, customers, and human resources, to mobilize action with an idea (Galbreath, Lawler, & Associates, 1993). The vision suggests ways to make radical changes in an organization’s strategy. To ﬁnd a radical change, leaders abandon an orientation rooted in the present and adopt one focused on the future (Hamel & Prahalad, 1994; Rodgers, 1995). This goes to the core of the difference between a strategic transformation and strategic repositioning. Public leaders reposition strategically by forming ideals and asking hard questions about how to improve their current strategy (Nutt, 2001). This involves changes in current services; customers served today, current service provision channels and skills, the basis for today’s collaborative advantage, current sources of funding, and image (Hamel & Prahalad, 1994; Nutt & Backoff, 1997b). To carry out a transformation, leaders seek answers to these same questions in a future context. The leader forms a vision that suggests what future services, customers, channels, skills, bases for collaborative advantage, sources of funding, and persona might be (Wheatley, 1992). The transformation called for in such a vision goes beyond projecting today’s thinking into the future to imagining what a desired future would look like. A transformation takes place when creative and coherent changes in the services, clients, etc. in current strategy are integrated with core capabilities (Nutt, 2001). For instance, the Ohio Department of Natural Resources (ODNR) was transformed with a vision that incorporated critics into its programs to build joint interests. Conﬂicts between sportsmen and environmentalists were managed by opening up new hunting and ﬁshing areas and using fees for hunting and ﬁshing licenses and park use to support wildlife, environmentally threatened areas, and state parks. Cooperation between historically antagonistic groups, representing sportsmen and environmentalists, was created and resulted in broad support for tax-based funding to protect endangered areas and wildlife and to support recreation programs. Recreational areas were expanded. The increased revenue from user fees provided the funds to support other initiatives. The synergy of protection and use programs lead to an ODNR budget that relied on the state funding for less than one-third of its programs, making it take on the characteristics of a private-nonprofit organization. The transformation allowed ODNR to move to a higher order of organized complexity in which change, such as new services, was not just added on but emerged from the integration of old and new services. As a result, a transformed organization is able to respond in new and different ways to emergent demands and opportunities that arise

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from turbulent environments. Public organizations with a vision that anticipates client needs can use these needs to make changes in their core services and procedures, and produce a similar result. Synergy between the organization’s new and old services and other aspects of its strategy increase ﬂexibility and adaptability (Nutt & Backoff, 1996b). There are many other ways to calibrate change. Here the types that capture dominant themes in strategic thinking transformation and repositioning – are considered. The paper now shifts to showing how the structural factors dictate the scope of change that is feasible. The process of change calls on leaders to make several well-orchestrated moves, such as creating a vision to guide a transformation or articulating ideals as a target for strategic repositioning. The model suggests that leaders would be wise to determine how the organization responds to its clientele and identify how this stance inﬂuences the scope of change. First, leaders ask if strategic repositioning is possible and then whether a transformation is feasible.

BALANCING CAPACITY AND RESPONSIVENESS Organizations experience buffeting, as events align capacity and responsiveness. Questions can now be posed about how an agency’s capacity is used to be responsive. The attempt to match capacity with responsiveness poses questions. Critics can now question whether the organization’s strategy is producing hope – for outcomes or serving the new clientele. Questioning ﬁrst arises externally through the expressions of stakeholders, shifts in political agendas, public support, budget shortfalls or windfalls, and legal rulings. It can be complemented internally with a shift in the views of agency insiders about the value of their service practices or by changes in leadership. External pressures, with or without internal support, lower the barriers erected by the protected and professional postures and the routinized agency’s processing. This leads to a buffeted organization.

The Buffeted Organization Organizations became buffeted when an erosion of competence and/or increased demands to serve their clients is experienced. Fickle public support, changing legal mandates, shifting political agendas, new client expectations, and a loss of key benefactors begin to pull the buffeted organization about. As mandates shift budget support may shrink, which prompts questions

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about the use of limited resources. As budgets decline, priorities shift to become moving targets. Organizations experiencing such a buffeting are susceptible to change. Proposition 5. Strategic repositioning becomes feasible when demands for greater client responsiveness pose questions about how organizational capacity is used. Consider the IRS after the disclosures of the late 1990s. Responsiveness was increased in several ways, including new forms of agency oversight, shifting burden of proof from the taxpayer to the IRS, and changes in IRS staff prerogatives that prohibited them from taking property without due process. This was followed by the attempts to show that agency resources were being put to better use, such as purchasing upgraded computer systems, monitoring employee behavior, taking steps to increase the accuracy of advice given to taxpayers, and staff training. Strategic change can help the buffeted organization come to grips with the forces at work in its environment. Capacity to act is built by ﬁnding ways to increase responsiveness. This responsiveness can lead to happier and more challenged staff and reduce turnover. As capacity is built and the need for responsiveness to clients is established, the organization develops an increased interest in strategically repositioning the agency to serve them. Transformation requires an even greater responsiveness and an infusion of resources to build needed capacity. Let us turn our attention to what makes such a transformation feasible.

The Proactive Organization High capacity balanced with high responsiveness requires a ‘‘proactive’’ environment. A leader in such an environment acquires an acute understanding of needs and potentials to act. Before the call for radical change is accepted, these understandings must be recognized and accepted by key stakeholders. Changes producing events gain the leader of the ODNR an opportunity to become proactive. Leadership stems from acting on the opportunity. He did so by folding key stakeholders who had expressed criticisms into task forces to deal with issues, such as wildlife protection, natural areas, hunting and ﬁshing rights, waterways, and recreation. Programs and funds sought to operate were gleaned from licensing the use of wild areas, park-use programs, and through new types of ﬁshing and hunting licenses. The fees collected were turned back to fund program development, which

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produced more fee-generating activities until two-thirds of the ODNR’s funding was outside the state’s budget process. By responding to stakeholders in this way, ODNR became a self-sustaining proactive state department that is highly responsive to stakeholders as well as high in action. Proposition 6. A transformation becomes feasible when organizational leaders are allowed to be responsive to latent/emergent demands and develop capacity within an appropriate set of cooperating agencies to meet the demands. The required actions far exceed those in Proposition 5, which are limited to altering agency practices to correct faults. Here, a leader looks for unmeet needs and offers ways to fundamentally change the agency(s)-delivering services, so these needs can be meet.

CRAFTING PROACTIVE ORGANIZATIONS WITH MUTUALIST LEADERSHIP Leaders and oversight bodies reach an accommodation on the allowable level of proaction (Daft & Weick, 1984). Such agreements can be upset by turbulence that highlights unmet needs. First, a strategic repositioning is considered. Leaders launch a change process to modify the current strategy. Pressure must continue before a transformational change is possible. When this pressure becomes intense, the same questions are asked but they are now posed about the future. For example, what future clients can be imagined and how can they be served, using what channels? To carry out such an effort calls for an agency leader to become a ‘‘Mutualist’’ (Nutt & Backoff, 1995). A ‘‘Mutualist leader’’ creates collaborative arrangements to meet important needs expected to arise. Capacity is sought outside of the leader’s organization to meet these new needs. Umbrella organizations, such as National Kidney Foundation and the Highway Safety Consortia, are needed to carry out mandates that exceed the prerogatives of a single organization. Attempts by the Ohio Department of Mental Health (ODMH) to fold county mental health boards into a partnership to pursue quality care and better insurance coverage describe a contemporary effort by a state agency director to become a Mutualist leader (Nutt & Hogan, 2003). Mutualist leadership goes beyond the transformational leadership ideas ﬁrst suggested by Burns (1978) and elaborated by Bennis and Nanus (1985),

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Kouzes and Posner (1987), and Kotter (1995). Burns called for a deeper and wider set of values to guide change. His successors added several key attributes of a transformational leader, stressing coalition building. In each case, the coalitions are inward looking, seeking to mobilize internal resources, and align them with the planned change. A Mutualist leader has a far more challenging task. Such leaders must look outward and mobilize the outer world made up of independent organizations, often with very different points of view about needs and holding onto their prerogatives. Knitting together such a coalition calls for skills that go beyond forging internal momentum for change. Mutualist leaders must fashion collaborative arrangements with the leaders of these organizations and their oversight bodies, pulling the collaborating parties together to form a working body committed to a new order of things. This focus on mobilizing external resources, outside of the Mutualist leader’s control, makes the task much more difﬁcult than that facing the transformational leader. Forging partnerships and alliances in the private sector is similar but less demanding because partnerships are limited to organizations with like aims, with the negotiation seeking a way to share profits. The goals of a consortium provide new services for emergent needs that can be controversial and may cut into funds traditionally set aside for the clients of the collaborating organizations. Mutualist leadership calls for novel arrangements that provide capacity to meet needs not yet widely recognized or accepted. The Mutualist leader sets the tone by subordinating personal and organizational interests, focusing on client needs, building a consortium that draws together key stakeholders into an umbrella organization to address emergent needs, offering a vision on how to meet the needs, providing win–win arrangements for all affected parties, and creating trust so that partners can cooperate; guiding them away from competition toward cooperation (Nutt & Backoff, 1995a). Mutualist leadership takes shape as a quest that mounts new initiatives to realize a grand vision. Mutualist leaders help their partners search for new ways to meet needs and to collaborate to meet crucial needs. The Mutualist leader substitutes collaboration for competition. The best outcome of a competitive posture results where each partnering agency serves all people under their jurisdiction. Such an approach can resolve jurisdictional squabbles, but leaves important needs unmet or undeserved and permits duplication. A collaborative posture calls for negotiation with oversight authorities and sister agencies to parcel out service areas so that all service responsibilities can be met. The Mutualist leader manages with resources and programs drawn from the collaborating partners. The

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self-interests of these partners and their supporters are subordinated to the greater interest of servicing people’s needs. The Mutualist leader creates consortia and other kinds of umbrella organizations to guide such an effort. To initiate a Mutualist approach, a strategic leader must have vision, commitment, and leadership qualities. Vision is needed to anticipate important needs with a transformational strategy (Vail, 1989). Commitment is required to set an example for others (Bennis, 1989). To set the tone called for by a Mutualist leader, personal aims and parochial interests are sacriﬁced. Leadership skill is needed to strike a posture that avoids being pretentious but takes a moral position to call for collective action. Many are apt to interpret such a posture as a clever way to promote the Mutualist leader’s interests. Success depends on putting things into a frame in which Mutualist values are believable so that others will adopt and emulate these values. Many may aspire to being a Mutualist leader but few are given the endorsements required to create a proactive organization that can realize this aim. Proposition 7. A Mutualist leader, with the support of oversight bodies, must create a proactive organization to initiate a transformation. Proposition 7 has two key qualiﬁcations. To act out Mutualist urges, a leader needs authorization from his/her oversight bodies. If given, the leader must then get concurrence from partnering agencies, and their oversight bodies. A proactive organization emerges when interagency cooperation is endorsed by participating agencies and their oversight bodies. The level and magnitude of cooperation required to create a proactive organization is difﬁcult to fashion. And creating a proactive organization is essential, but not sufﬁcient. Before settling on a transformational plan, key players in the cooperating organizations must offer pieces to the puzzle and the Mutualist leader must integrate them, ﬁnding ways to ﬁll in missing pieces to fashion a vision. This makes a transformation in the public arena difﬁcult to mobilize and even harder to sustain. Mutualist leaders must be recognized as needed, or be in place when the opportunity for transformation arises. The serviceproviding organizations must be buffeted, making them susceptible to change. Experimenting with repositioning must have been carried out. The need for more pervasive change must be recognized and supported by leaders. This recognition must be shared by the cooperating agencies. Leaders of cooperating agencies must be supported by their oversight bodies. The likelihood that all of these factors will be favorable seems remote, making transformation seem a very rare event. Most leaders must be satisﬁed with

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changes that deal with current strategic arrangements not future ones. And external turbulence is required before any change is feasible. This may explain why few leaders in public organizations carry out change and why transformations are exceedingly rare. By their actions, if not their public pronouncements, elected ofﬁcials support only small-scale efﬁciency improvements, such as TQM, and seem to fear change. The commitments required for a transformation go way beyond what most elected ofﬁcials are willing to risk. Agency leaders in such a situation can only rethink their current strategy and by doing so set the stage for a transformational change should forces allow it. For example, for over a decade, ODMH has been guided by a vision of treating people in the least restrictive setting, close to family and friends, which has been called ‘‘deinstitutionalization.’’ A new vision of integrated care that merges acute and mental health care and their insurance coverage frightens Ohio’s governor and other state politicians, who have blocked such initiatives. Until leaders are allowed to push for such a vision, ODMH can only reposition its current strategy. This suggests that the window of opportunities for transformation may open and close quickly. To be ready, leaders must be prepared to initiate such an effort when the opportunity arises.

DIFFICULTIES IN SUSTAINING A PROACTIVE POSITION Some recent history of the Ohio BWC illustrates the difﬁculty of sustaining the proactive posture required to realize a transformation. During the past three decades, Ohio’s BWC has moved from a cabinet position in state government, to an independent agency, to being privatized, and back again. A state BWC is like an insurance agency, collecting funds from employers to insure workers injured on the job and dispensing these funds when an injured worker substantiates a claim. When our story begins, Ohio operated its BWC as a state agency. During this period, Democrats had control of most elective ofﬁces in the state. For several years, unions, a key constituency of the party in power, had questioned the fairness of BWC claim adjudications, the time required, agency management, the monies being paid for legal and medical consultation, fund investments, and use of fund balances. There were rumors that BWC reserves had been tapped for pet projects under the previous administration and there were reports of inadequate care and limited sources of rehabilitation for frequently

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occurring injuries. Several egregious cases in which workers injured on the job were nearly bankrupted by medical bills before their claims were resolved and others seemingly denied due process or unable to get adequate care made agency reform an issue. The speaker of the state house of representatives became alarmed and led a charge for change. The speaker was a long-term Democrat and was considered the single most powerful politician in the state. Reforming Ohio’s BWC became his personal quest, creating sustained pressure for change. This pushed BWC into the buffeted zone. The speaker promoted radical change. He called for removing BWC from a cabinet position and making it a semi-autonomous organization. He introduced legislation that established a bipartisan board to oversee the agency. The board was made up of representatives of the two political parties, unions, and companies operating in the state. He also called for the board to hire a new agency director, thereby removing the leader’s appointment from the political arena. The legislation established criteria to select the leader, demanding unquestioned integrity and expertise in the management of an insurance enterprise. The bill also provided funds to build rehabilitation centers in Columbus and Cleveland and to construct a new ofﬁce complex for BWC, with up-to-date information processing capability. With the speaker’s considerable inﬂuence, the reform legislation passed. A board of seasoned veterans was appointed that balanced the interests of unions and ﬁrms. The board hired a turnaround expert from the private sector that met the selection criteria with a salary that topped all in state government at the time. The new BWC head was given considerable latitude to make changes and was allowed to report through the board to the legislature on his progress. The new BWC head (hereafter leader) came up with a vision to partner with key interests. He devised win–win arrangement for the two agency protagonists: unions representing workers and employers who must pay into the system. Unions were promised fast actions on claims and ﬁrms a reduction in their costs. The leader reengineered the agency to speed claim processing, realizing a substantial reduction in processing time, and operating cost with state-of-the art computers and computer training. He trimmed the fees being paid to lawyers and physicians and streamlined the process of claim adjudication. The agency was reengineered to cut cost and improve service. Firms were offered a 50 percent reduction in fees. Steps were taken to make the BWC actuarially sound. The fee structure was matched with projected claim cost and plans were made to build reserves, according to standards found in the insurance industry. The centers and the new headquarters, known as the ‘‘green

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building,’’ were built. However, the leader did not fully realize a consortium of interests, preferring to work within his board. This proved to be a fatal misstep. The board remained a loosely coupled group and never fully embraced the collective interest being served by the leader. The leader may have been able to move the agency to the protected zone, drawing on patronage from the speaker. Instead, he believed in the speaker’s desire for change and set out to reposition BWC strategically. He then went further, seeking more radical change in BWC by investing the fees collected in ﬁnancial markets. Middlemen and their huge fees were eliminated and the task of investing was taken inside. The aim here was to improve returns and create the reserves called for by a well-run insurance agency. The leader provided a detailed list of actions to be taken and a timetable for their implementation. The leader agreed to make quarterly reports to the board, outlining his accomplishments. All the scheduled commitments were met during the next few years. The board signed off on the reforms but the legislature balked at doing so, claiming that no other agency asked for endorsing actions according to results. During the change process, term limits were imposed on politicians and the speaker had to leave the house after his term expired. In the following election, the front-running Republican for governor based his campaign on job creation, education reform, and alleged BWC corruption. The corruption claim stemmed from actions of the leader’s predecessor. She had arranged a sole-source contract with her ﬁrm, one of many involved with injured worker claims and adjudication, for information services. Such arrangements pose conﬂict of interest questions and many are prohibited by law. Nevertheless, many former agency heads enter into such arrangements, but most remain under the radar. This arrangement was discovered by the media and exposed as the campaign was commencing. The ensuing controversy provided a basis to call for BWC reform. The consulting arrangements of the former BWC head were used to raise questions about agency management, as this had occurred in the previous Democratic administration. The ensuing out roar raised questions about what the BWC was doing. Firms chimed in and claimed that their fees were excessive. Many small companies were smarting under a BWC fee structure based on high-cost injuries that could never take place in their places of business. The Republican gubernatorial candidate launched his campaign in front of the ‘‘green building,’’ pointing to it as he talked about excessive spending and waste in government. These claims were made even though BWC had been reengineered, usually a republican mantra, and the current leader had nothing to do with the questionable contracting.

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The leader attempted to keep BWC in the proactive zone by resisting this buffeting. The pressure pushing the agency to the buffeted zone won out. Firms operating in the state saw an opportunity for an even bigger reduction in their worker compensation insurance costs and lobbied for more control of BWC. A governor friendly to business would make this possible. The industrial commission, attracted by the fund balance created by the BWC leader, mobilized to call for a roll back in fees. The leader contended that further reduction in fees would derail plans to make the agency solvent and violate the agreements made with him to operate BWC outside of the political arena. Attempts by the leader to present his transformation plan and accomplishments were rebuffed. The Republican candidate for governor was committed to the ﬁrms and their promises of jobs. Bringing these funds back into the fold also served his budget-cutting agenda. Although a bipartisan selection had been made, the leader was painted as a Democratic appointee. His salary was made public and labeled excessive. The leader saw a choice: He could enter the political arena and lobby for the reforms or resign. Seeing the altered position on change as a breach of trust he resigned, moving on to a similar position in Florida when he successfully instituted similar reforms. The Republican candidate was elected and used the turbulence he created to change BWC. He ignored the statute, which required the board to balance the interests of unions and local companies. New board members were selected who were friendly to the new governor and his agenda, which packed the board with pro-business interests. The board responded on cue and questioned the actions taken, even though all had been approved by their predecessors. The fate of the leader and his attempt at transforming the Ohio BWC gets little press. The leader persisted with his Mutualist posture but found it difﬁcult to scale the slippery slope of dealing with a hostile governor and a lost patron while maintaining the agreed-upon responsiveness and cost cutting. He failed to create a consortium committed to reform. The organizations represented on the board never fully abandoned a watchdog role to support the leader’s quest. Without unqualiﬁed board support, he was unable to get out a message that detailed his many accomplishments, or those still in the planning stage. The Republican candidate for governor saw BWC as a cash cow that could be tapped to fund some of his promised budget cuts. Note how ideology did little to harness these urges. Republicans typically run on reforming government. In spite of this, a call for more government was made. This scuttled a potentially valuable transformation before it could be realized.

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During the next 15 years, Republicans controlled the state house and the legislature. BWC was made a cabinet position. A Republican loyalist was appointed as the head of BWC, who shifted the agency to a protected position by providing just what was asked for by the governor and his successor. Fees paid by ﬁrms were slashed, making the agency insolvent from an insurance perspective. The rehabilitation centers were sold to private interests. Investing was contracted out to private companies, although this was not made public at the time. In 2005, a new scandal erupted when the investment strategy of BWC was found to involve purchasing rare coins. The rare coin investment was handled by a prominent and generous contributor to the current and past governor’s campaigns as well as many to other state and national Republican-elected ofﬁcials. The coin dealer regularly feted politicians with lavish dinners and golf outings. After it was shown that the governor had accepted a large number of unreported gifts from the coin dealer, he was convicted of ethics violations and ﬁned. The scandal prompted a review team, made up of current state department heads, to be appointed to look into BWC investment practices. A Chicago-based investment ﬁrm was hired by the review team to assess the performance of investments. Investigations found that the coins were grossly overvalued and some of the more valuable coins could not be found. It was estimated that liquidating the $50 million investment would result in a $14 million loss. The BWC, following directives from the governor’s ofﬁce, had outsourced fund investments to some 70 private ﬁrms, paying them $36 million annually. Investment losses of $215 million from an unauthorized hedge fund were documented. Over the past 10 years, estimated losses of up to $850 million in the $15.7 billion portfolio were tied to high-risk investments in mutual funds, known to have poor track records. Many of the investment ﬁrms being contracted with were out-of-state and of questionable standing. No one can account BWC’s failure to implement the ‘‘buy Ohio’’ mandate imposed on Ohio’s state-run retirement funds by the Republican legislature. Investment managers in the investment ﬁrms were allowed to make any investment they chose without BWC approval and had been operating for years without accountability. An audit by a review team called for the mass resignations of the investment managers. All were ﬁred, reducing the fees being paid from $36 million to $3 million. Currently, BWC spends $1.31 for every dollar taken it, indicating how the agency has slipped into insolvency. The industry norm calls for a three to one surplus, suggesting the extent of irresponsible fee cutting and the logic behind the leader’s transformational plan. As review team chief noted: it’s a very bleak situation.

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All this has created considerable buffeting, and consequently pressure for change. Critics in the Republican-controlled legislature are calling for the privatization of all BWC operations. The rationale cited was the need to return for ﬁscal accountability and that most states have such arrangements. The movement back and forth from public to private in BWC gets little press. The BWC experience illustrates how organizational postures are imposed by outside pressures that are difﬁcult to control (see Fig. 1). First, pressure came from unions and their constituency of injured workers. Buffeting became intense after a powerful politician took an interest in reform. Change followed. Years of routine processing by BWC with modest accountability were no longer acceptable. Once such forces arose BWC experienced buffeting. Sustained pressure by the speaker of the house led to new agency leadership. The new leader believed that the timing was right to pursue both strategic repositioning and more radical change. He adopted a Mutualist leadership posture and began a transformational quest. Key partisans were mobilized and win–win created, with the promise of more for each should the radical change be realized. Assurances were made by the leader and lived up to. Still, the change process was derailed by the political agenda of an elected ofﬁcial running on claims of an ethics violation by a former agency head. The pressure pushed BWC from a proactive to a buffeted posture. An ongoing transformation was blocked and the leader replaced. After the turbulence subsided, BWC sought a posture consistent with the pressures being experienced. Not surprisingly, the political crony appointed BWC leader sought refuge in patronage to batten down the hatches and protect the agency. Patronage was subsequently upset by a new and far bigger scandal when ethics violations by the sitting governor came to light. This made patronage untenable and BWC shifted from a protected to buffeted position. BWC was tossed into the political arena and experienced buffeting, again opening the door to change. Whether pressure will be sustained is yet to be determined. Even if buffeting is experienced by BWC until strategic repositioning is realized, the barriers to a transformation are formidable. A Mutualist leader must be selected and have the support of competing interests as well as several oversight bodies before such a change will be possible. A retired Nationwide insurance executive has been selected as the new agency head. His expected tenure seems limited, making the pursuit of radical change unlikely. Without sustained pressure for radical change the new leader is apt to do little more than reposition by coping a friendly state’s privatization approach. And the extent of privatization is controversial. If pressure subsides, even a modest

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change may fail. With a new election looming, elected ofﬁcials appear to be calling on the new leader to limit radical action taking, hoping that the controversy will abate and BWC will slip from view. If this occurs, BWC would again become a routinized agency limiting its activities to routine claim processing with a few activities, such as investing, contracted out. The new agency head has admitted that the glowing reports of investment returns were grossly inﬂated. Further dividends (cuts in fees) were put on hold to study their ﬁscal impact. Current plans call for investing in more predictable ﬁxed income bonds and rehiring some of the previous outside investment managers to do the investing. This modest repositioning would require that the current buffeting subsides. If not, more extensive strategic change will be called for. Many more trips through Fig. 1 can be expected over the life of an agency like BWC.

RESEARCH QUESTIONS The propositions in Table 1 can be investigated with several kinds of studies, ranging from descriptive to empirical. Empirical studies attempt to validate relationships posited in the propositions. For instance, a particular type of public organization with large numbers, such as academic programs in public universities or services in university hospitals, could be surveyed to determine whether the organizations have, and have not, gone through change in the past several years. Such as a study would determine whether organizations that changed had a balance between capacity and responsiveness and if organizations that resisted change lacked balance in these same factors (Proposition 1). The information collected could also determine whether change was prompted by a loss of capacity, loss of patrons, or both. To test Propositions 2, 3, and 4, agency types and factors prompting change could be correlated. The number of examples and counter examples provide a contingency table that could be examined with statistical methods. Organizational units, in which recent change has occurred, such as MBA programs, could be investigated to determine whether questions about capacity and new expectations were present. Scales that measure both the extent of capacity concerns (the number of outstanding MBA teachers to staffing needs) and the extent of pressure for change (MBA evaluations used by rating agencies that consider such factors) could be developed. A pressure to change index could be computed in which polar coordinates can be used to measure the magnitude and extent of balance between the factors.

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The extent of buffeting should correlate with speed of change, providing a test of Proposition 5. Testing Propositions 6 and 7 poses several challenges because a transformation appears to be a rare event. And, if observed, transformations may be a special case found in one-off organizations. Assuming such problems can be overcome, the data suggested to test Proposition 5 could be used in Proposition 6. First, the nature of the change would be investigated to verify that it was transformational by comparing the change to that required by the definition offered here. Strategic re-positioning and transformational change episodes could be correlated with the index described above. If a transformed agency experienced more capacity and responsiveness pressures than those that carried out strategic re-positioning, Proposition 6 would be supported. Proposition 7 could be examined by studying the transformation to determine whether leaders exhibited Mutualist traits by engaging in consortium building, as well as the extent of delegation by oversight bodies and whether the lead organization could be considered proactive. Descriptive efforts could be mounted with case studies of strategic repositioning and transformation, such as those being developed by IBM (formerly PricewaterhouseCoopers) in their Business of Government studies. This type of work could explore how responsiveness develops and the way capacity erodes. The CEO and TMT members of these agencies could be interviewed to uncover how the agency responded to these factors. The interviews reconstruct historical events by tracing the changes made to antecedent conditions. Responses are triangulated to ﬁnd the most plausible interpretations (e.g., Patton, 1990; Denzin, 1989). Also, simulations could be used to test the impact of key factors (Nutt, 1993). Tracing the movement of public organizations through time could be revealing, as demonstrated by the BWC case. Do public organizations move from a protected or professionally dominated posture to one that is routinized? Can they make the reverse move? The former seems more likely than the latter. Is there an analogy to a private organization’s bankruptcy with a public organization moving into the routinized zone? Does each require a bailout to be revitalized? The history of such shifts could be revealing, offering a life cycle for certain agency types. This could show how an agency responds to buffeting and whether it snaps back to its previous state or one of the other types when buffeting subsides. Looking for the steady-state condition of an agency would be interesting. The steady-state condition indicates whether an agency type gravitates toward a posture that resists change. A proﬁle of such changes suggests equilibrium positions for public

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organizations. When pressures for change subside, do such organizations always move to a position off the diagonal in Fig. 1 for self-preservation as the model predicts? If self-protection moves are typical, it may suggest why public agencies resist change. Such change-resistant postures suggest the reforms required before widespread change is possible. Identifying the number of leaders who have adopted a Mutualist stance, measured by leaders that exhibit Mutualist traits, suggest when transformations have been attempted.

IMPLICATIONS FOR OD PRACTICE IN PUBLIC ORGANIZATIONS Why do the heads of public agencies seem reluctant to embrace change? The usual suspects of backwardness, poor leaders, and a preference for the status quo may apply. But this reluctance also stems from elected ofﬁcials who appoint agency leaders and give three directives – do as little as possible, spend as little as possible, and avoid getting in the newspaper (Nutt & Backoff, 1996b). Seeking change in such a situation is courageous, and perhaps foolhardy. Many agency leaders are expected to be little more than a ﬁgurehead; someone to be abused by frustrated clients, service advocates, contemporary reactionaries, and elected ofﬁcials as they run for ofﬁce. Electioneering often leads to bogus claims and disillusioned agency leaders. Still some push ahead for what they believe to be right. They are repelled at posturing when needs are not being met and resent being labeled an obstructionist when all that is expected of them is to make exaggerated claims that ‘‘good things’’ are being done. Such a leader faces many additional challenges. After decades of contracting out, many public agencies are left with dispersing funds, coordinating services, and collecting data on the service contract (Nutt & Backoff, 1996b). Critics have little understanding of the need for such activates and see them as low value. The resistance to new taxes subjects a service-providing agency to budget cuts whenever declines in business activity reduce tax revenue. Idealistic service providers depart when the prospect of offering essential services become unlikely, leaving the disgruntled and forcing leaders to ‘‘do more with less.’’ As missions erode, service capacity declines, and good people leave the ineffectiveness of the public sector becomes a self-fulﬁlling prophecy. This is intensiﬁed by capricious media oversight, unworkable merit systems, collective bargaining, and limited leader discretion.

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The ‘‘public servant’’ is abused by elected ofﬁcials. Expectation of servitude has displaced championing effective services. Agency heads with few expectations often respond with a defensive reaction that produces a selfperpetuating rut. However, the source of failure is outside the agency and rooted in the failures of oversight. Furthermore, accountability for an illadvised change is apt to be shouldered by the public leader, not by the elected ofﬁcial who called for it. Proponents who exaggerate the value of a program to get it approved evade responsibility when it fails. And this is my point – accountability in the public sector is so distorted that the public interest is not being served. What I call ‘‘oversight’’ needs to be rethought and radically restructured before the public interest can emerge in public agency actions. Despite all this, some agency heads strive to become change agents. But can they succeed? There may be a difference of view. Some (e.g., Caiden, 2004) contend that ‘‘bureaucracies reinvent themselves without urging.’’ The barriers to change discussed here and elsewhere make this seem highly unlikely. Change demands excellent leaders with long tenures. Few have the needed time as the average tenure of public leaders is very short, often less than 2 years (Card, 1992). Incrementalism may occur, but can strategic change? As in the private sector, strategic change takes many years to fully realize (Porter, 1985). The frequent turnover of leaders makes this difﬁcult, if not impossible. Even more radical change will not happen without longstanding external pressures that result in new legislative mandates for an agency, with funding. Only agencies with such a mandate can move into the buffeted zone. A further move to the proactive zone to realize a transformation requires even more resources. This places many limitations on the public leader seeking to act as a change agent, far more than that found in the private sector. These dilemmas prompted my research. Why do we see so little change in well-led public agencies? Maybe it is the structure imposed on these agencies that limits change? Perhaps, attention should be directed away from the beleaguered agency head and toward these structural limitations? Many difﬁculties cited, coupled the unwillingness of elected ofﬁcials to support change, put a host of weighty constraints on a public sector change agent. My purpose is to identify of these limitations and show how they inhibit change.

CONCLUSIONS One of the enduring dilemmas of change was explored: the origins of change resistance and how to cope. Structural forces were identiﬁed that dictate

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agency posture. The forces show how timing is crucial, dictating when action is possible and the leadership stance of agency heads. Also offered are the steps to initiate and sustain change, should these forces become favorable. Professionally dominated, protected, and routinized public organizations resist change. Resistance stems from an imbalance between responsiveness and capacity; or little responsiveness or capacity. Change emerges as a possibility when such organizations experience buffeting. Buffeting arises when a public organization losses its patrons or experiences an erosion of perceived capacity, opening a window to change. To change such an organization, its leaders strategically reposition by seeking ways to better serve current clients through existing service centers, center reorganizations, funding and staffing reallocations; hoping to improve their service image. When this has been carried out, agency leaders can turn to a transformation; moving to consider latent demands with new servicing arrangements. Considerable external pressure is required to get things moving and the pressure must be sustained for a considerable period to realize a change. Leaders who adopt a Mutualist stance fashion a transformation that folds un-served clients into proposed servicing arrangements. But the Mutualist leader will fail in this quest unless given the latitude by oversight bodies to increase responsiveness by building capacity. Transformation is possible only when a culture of high responsiveness is created by drawing of the collective capacities of agencies with related missions, replacing independent servicing organizations with a proactive consortium. A transformation requires that each of the consortium members and their oversight bodies support such a stance. The difﬁculties in creating these commitments explain the rarity of public agency transformations. Change theory relevant to public organizations must account for vision creation and coalition building. Vision creation has a long-standing role in change theory but qualiﬁcations are required for the public organization. Both strategic repositioning and transformation of a public organization require a vision. A strategic vision is formed by answers to hard questions about services, clients, channels, advantages, skills, source of funds, ways to organize, and image. Transformation seeks similar answers for questions posed about the future. This shift from current to future arrangements seems lost in many articulations of change theory. Moreover, emphasis in the questioning shifts by posing different quires. Public agency clients are not customers. The agency’s market is oversight based. Oversight bodies acting on behalf of the agency clients become its customers. Thus, oversight relations are paramount for an agency head. But, oversight bodies have political agendas that coax them to push actions that may not be in the best interest of

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agency clients. To cope with this, collaborative advantage replaces competitive advantage. Preserving service channels is vital and many channels are under-funded with insufﬁcient capacity to meet current let alone projected needs. Services can be contracted out moving attention from service provision to the contracting process and contractor accountability. Funds to support service demand are often inadequate, posing questions about ﬁnancing using deductibles, co-payments, and other fees; and the impact of such charges on low-income clients. Certain organizational forms are discouraged and others are not permitted. Aggressively pursuing collections, offering performance incentives, and cost consciousness can be difﬁcult or even prohibited. Image is inﬂuenced by political pronouncements. The public has little information to recognize and reward exemplary agencies. Such factors must be considered to fashion a change theory useful to the public setting. Coalition building is vastly different in the private as compared to the public organization. In the public organization, leaders must reach out and not merely shepherd bottom-up mobilization activities. The issue for the public organization is inter-agency management as compared to the intraorganizational focus found in most change theories. Managing the interface between agencies that must cooperate toward a shared goal is seldom considered, even in discussions of strategic alliances. Competitive advantage often dominates alliance formation when cooperative advantage is the key consideration. Both Thompson (1967) and March and Simon (1958) speak to this, Thompson in his alignment ideas and March and Simon in their ﬁnal chapter on federations. Neither set of ideas has received the attention deserved in formulating change theory. The notion of aligning confederations has been shunted aside to dote on a singularized board of directors. Adopting such ideas would be disastrous for the public organization with a market made up of overseers with political agendas. And the private organization is no longer being served by a ﬁxation on competitive advantage. As private sector organizations become more global, the management of a pluralistic market, containing governments as key players, will become more the rule than the exception. To be successful, the agendas and commitments of governments in these markets must be understood and serviced. Managing organizational boundaries and expanding them to incorporate the interests of governments in the locals of company operations will be a key to success. Sustainable cooperative advantage will push out a competitive posture and change theory must account for this in prescriptions for managers and management. In addition, it is crucial to deal with change barriers particular to public organizations. Structural limitations imposed on public agencies make

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strategic change difﬁcult and transformational change all but impossible. The failure to change can be laid at the doorstep of oversight, either elected ofﬁcials or people acting for them. This poses several questions. Why is there so little discussion of the failures of oversight? What explains such hubris on the part of elected ofﬁcials and their abject posturing in the face of obvious needs? And what can be done to improve matters? Such questions go to the heart of public agency reform. Change theory must expose those holding back change in public organizations and show that this posture is self serving, with destructive effects on the agency, its leadership, and ultimately on its clients. People in oversight roles limit what public leaders can do to meet the needs of agency clients and demand actions to cater to interests that got them appointed to the oversight position. This is a disservice to agency’s clients and to the taxpayers who expect their tax dollars to be used to meet peoples’ legitimate needs. These needs are not being attended to and tax dollars are being squandered on patronage and professionally driven values. This waste far exceeds that found in the claims of public agency mismanagement made by elected ofﬁcials who run against government. Some suggestions for reform are offered. First, reduce the political motivations that currently rule oversight. Make the oversight selection process nonpartisan, as some states approach judicial selection. The ‘‘Missouri plan’’ has the state bar association provide a list of qualiﬁed judicial candidates. The Governor must choose judges from this list. Why not do the same for oversight? Recognized experts, such as client advocates, service professionals, and the like (depending upon the agency to be overseen) offer lists of qualiﬁed people. Elected ofﬁcials choose from this list to create Public Utility Commissions, University Boards of Regents, and other oversight bodies. Pay those selected well and impose term limits. Allow public leaders to hire people whose oversight terms have expired to serve as agency consultants. This would give agency leaders a modest amount of countervailing power in what is now a power vacuum. Second, have the oversight authority report to a legislature on agency needs and progress. The head of the reconstituted oversight body would report to the legislature in budget hearings and the like, not to the agency leader. This would buffer the agency from politics and allow a clearer statement of need to be trust onto the scene. Elected ofﬁcials must still decide which needs are to be met and which ignored, but can no longer endorse vested interests while blatantly disregarding people’s needs. The information offered helps to facilitate public debates about which needs are to be met. The ‘‘public good’’ is more apt to survive such questioning. It also provides a mechanism for agency evaluation, looking for agencies that are doing little in the public interest to

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pinpoint those in need of change. It also would make agencies doing exemplary things with limited resources more visible. A GAO kind of agency could be used to help with the evaluations at state and local levels. Additional voices need to be heard. The views of elected ofﬁcials are missing. Seldom is there a thoughtful elected ofﬁcial, involved in the formation of change ideas. This is unfortunate and points to a disconnect between change theory advocates and elected ofﬁcials. Academics often have a jaundiced view of elected ofﬁcials and picture them as ‘‘spin doctors’’ saying whatever will get them elected without a shed of accountability. This ignores the practicalities of getting elected and the ‘‘politics of doable.’’ We academics are often seen as irrelevant by elected ofﬁcials, speaking gibberish to power. We see our positions as carefully articulated, but ignored. We are dismissed because we seem to ignore the art of compromise that is essential before action can be taken in a pluralistic society. Before we have a viable public sector change theory this chasm must be breached. Public leaders also need a voice. The practical demands of running an agency must be incorporated into managing strategic change. And we may not fully appreciate the insights of the public leaders into change barriers and ways to scale them. Highly effective public leaders hearing my view of patronage and professionalism object. Do they fear an expose of patronage? If so why? Does professionalism have hidden beneﬁts? If so, what could they be? We need to know more about how patronage and professionalism play out in agency operations to answer such questions. Accounting for these views in a public sector change theory would be insightful for all.

ACKNOWLEDGMENT Thanks to Robert W. Backoff for his many contributions to my work, here, and elsewhere.

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TOWARD A COMPREHENSIVE DEFINITION OF READINESS FOR CHANGE: A REVIEW OF RESEARCH AND INSTRUMENTATION Daniel T. Holt, Achilles A. Armenakis, Stanley G. Harris and Hubert S. Feild ABSTRACT Although the measurement of organizational readiness for change has been encouraged, measuring readiness for change poses a major empirical challenge. This is not because instruments designed to do this are not available. Researchers, consultants, and practitioners have published an array of instruments, suggesting that readiness can be measured from various perspectives and the concept of readiness has not been clearly defined. This paper reviews the history of the readiness concept, the perspectives used to assess readiness, and the psychometric properties of readiness instruments. Based on the review, an integrated definition of readiness is presented along with the implications of the definition for research and practice.

Successful implementation of organizational changes generally proceeds through three stages: readiness, adoption, and institutionalization (cf. Lewin, Research in Organizational Change and Development, Volume 16, 289–336 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16009-7

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1947). Readiness occurs when the environment, structure, and organizational members’ attitudes are such that employees are receptive to a forthcoming change. Adoption occurs when the organizational members temporarily alter their attitudes and behaviors to conform to the expectations of the change. Institutionalization occurs when the change becomes a stable part of employees’ behavior. Although many factors contribute to the speed and effectiveness with which organizations move through these stages (Damanpour, 1991), creating readiness for change has been regarded as particularly critical (e.g., Jansen, 2000; Simon, 1996). By assessing readiness for change, change agents, managers, human resource management professionals, and organizational development consultants can identify gaps that may exist between their own expectations about the change effort and those of other organizational members. If significant gaps are observed and no action taken to close those gaps, resistance would be expected and change implementation would be threatened. In essence then, assessment of an organization’s readiness for change can serve as a guide as a strategy for implementing organizational changes is developed. A preliminary, key question, however is how should organizational members’ readiness for change be assessed? To address this question, we conducted a review of the change literature to identify existing measures of readiness for change. Our review revealed a number of instruments purporting to measure readiness for change (referred to simply as readiness throughout this chapter). Researchers in disciplines ranging from education to the organizational sciences offered instruments that measure readiness by assessing what is involved (i.e., change content), how changes occur (i.e., change process), where changes occur (i.e., internal context), who is involved (i.e., individuals’ attributes), and the responses of those involved (i.e., reactions). The breadth of existing readiness instruments’ content suggests that the concept of readiness has yet to be deﬁned clearly. Readiness has been deﬁned simply as the extent to which individuals are prepared to participate in organizational development activities (cf. Hanpachern, 1997; Huy, 1999; Powelson, 1995). Readiness has been deﬁned in terms of the social, technological, and systemic ability of an organization to try new things and change (Beer, 1987). Beckhard and Harris (1987) argued that readiness is reﬂected in the willingness, motives, and aims that organizational members have regarding a proposed change. Similarly, Armenakis, Harris, and Mossholder (1993) suggested that readiness is manifested in organizational members’ beliefs that the proposed change is needed and that the organization is capable of changing. Later, Armenakis, Harris, and Feild (1999) expanded

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this definition to include employees’ beliefs regarding the appropriateness of, support for, and value of the change. The contrasting definitions of readiness and varied instruments used to measure it prompted our attempt to clarify how readiness is conceptualized in an effort to assist organizational researchers, consultants, and practicing managers. We do this by drawing inferences about the readiness concept from the content of the instruments that have appeared in the literature. Through this approach, we provide those who are interested in measuring readiness the information they need to select scales and build an instrument that suits their speciﬁc purpose. Our manuscript unfolds in the following way. First, the origins of the readiness concept are discussed. Second, we set forth a strategy for examining existing readiness assessment instruments. Then, we systematically select and compare these instruments, focusing on the instruments’ content and psychometric properties. Finally, based on our assessment of these instruments, we distill a comprehensive definition of the readiness for change construct and discuss its implications for both practice and research.

ORIGINS OF THE ORGANIZATIONAL READINESS FOR CHANGE CONSTRUCT Historically, the idea of readiness has been discussed within the context of managers’ efforts to avoid or overcome employees’ resistance to change. The idea that managers could avoid employees’ resistance to change (hence, create readiness) might have been ﬁrst suggested in the seminal work of Coch and French (1948). Investigating why employees resist change and what managers can do to overcome their resistance, Coch and French conducted a series of experiments with groups working in a pajama factory. They found that employees tended to resist changes when they did not participate in planning and developing the changes. Based on this observation, Coch and French suggested that resistance might be avoided completely if managers stressed the need for changes during meetings with employees and involved the employees in the planning process. Since this early study, the literature has been replete with articles attempting to explain employee resistance to change and prescribe strategies to prevent, overcome, and mitigate that resistance (e.g., Berry, 1983; Caruth, Middlebrook, & Rachel, 1995; Kotter, 1995; Lawrence, 1954). Yet, it has been argued that these strategies, designed to help managers avoid resistance, are effective only to the extent to which they facilitate employee

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readiness (e.g., Armenakis et al., 1993). Even as early as 1957, Jacobson questioned the emphasis that many researchers and managers were putting on the concept of resistance, claiming that Coch and French’s (1948) research suggested a ‘‘complementary construct of readiness to change’’ (Jacobson, 1957, p. 239). Essentially, Jacobson suggested that employees’ attitudes toward an impending change could extend beyond resistance into the realm of welcoming or, even, seeking change. In a reinterpretation of Coch and French’s (1948) study, Bartlem and Locke (1981) echoed Jacobson’s conclusion by suggesting that the methods Coch and French used to implement the changes did more than simply prevent resistance. Instead, the methods facilitated a condition (i.e., a state of readiness) where employees self-discovered the seriousness of competition and recognized the necessity of the changes. Thus, the absence of resistance behavior may be a necessary but insufﬁcient requirement for the successful implementation of planned changes. In more recent literature, readiness has emerged as a construct that is distinct from resistance (e.g., Armenakis et al., 1993). In the education literature, Clarke, Ellett, Bateman, and Rugutt (1996) explicitly distinguished readiness from resistance. They posited that individuals’ receptivity to change, a concept synonymous to readiness, should be viewed as one’s internal attitudes that precede the behaviors that one takes when adopting or resisting change. They described resistance, on the other hand, as external behaviors or actions taken to stop, delay, or otherwise undermine the successful implementation of an organizational change. This has reinforced the notion that readiness is a concept distinct from resistance and should be conceptualized as the precursor to behaviors that are associated with adoption or resistance (c.f. Armenakis et al., 1993; Eby, Adams, Russell, & Gaby, 2000).

ANALYTIC STRATEGY As readiness has emerged as a distinct construct with practical importance, it was not surprising that a comprehensive search of the change literature produced over 45 ‘‘unique’’ instruments designed to measure readiness. As noted, these instruments were discovered in a wide array of popular business magazines, practitioner publications, and academic journals. Furthermore, the topical focus of the instruments varied. For example, Stewart (1994) provided one instrument which suggested that readiness could be gauged by rating characteristics of an organization’s climate and culture that included

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leadership, morale, and communication. Davis (1973) gauged change readiness of employees working in a mental health facility by measuring their perceptions with regard to change-speciﬁc variables such as ability, values, information, and timing. Finally, Trumbo (1961) presented a scale that suggested that individuals’ disposition toward change could be used as an indicator of readiness. Because of their diversity, a detailed examination of the instruments that purportedly assess readiness was undertaken. By using facet analysis, we were able to systematically classify and describe the existing instruments that have been used to measure readiness and to identify trends and highlight areas where potential improvements can be made.

Selection of Instruments for Facet Analysis Because of the breadth and number of these instruments, three criteria were used to select the instruments to include in the analysis. Inclusion decisions were based on the instrument’s purpose, measurement approach, and response format. Purpose First and foremost, the developer(s) of an instrument had to make an explicit claim that the instrument was designed to gauge an individual’s or organization’s readiness for or receptivity to change. Thus, many instruments that measured socio-psychological factors, such as attitudes, management practices, and organizational culture were excluded because the primary purpose of these instruments was not the assessment of change readiness. Rather, these instruments were intended to conduct some kind of organizational diagnosis that may or may not have been related to a change initiative. One such instrument that was excluded was the Management SelfImprovement System (MSIS) that enables leaders to assess 21 elements of their organization’s climate (Keith, 1986). While these elements of the organization’s climate may be indicators of readiness, the intent of the instrument is to diagnose an organization’s climate, not determine whether the organization or its members are ready for change. As noted, culture-like instruments were included when instrument developer(s) explicitly stated that the instrument was designed to measure readiness. Belasco’s (1990) Readiness Mini-Quiz and Stewart’s (1994) Readiness for Change Quiz were two examples. Belasco and Stewart presented instruments that were organization-centered, measuring leaders’ or consultants’

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perceptions of the organization’s general atmosphere (e.g., competitor benchmarking efforts, organizational structure). The authors of each instrument, however, explicitly state that the instruments are designed to tap readiness to implement organizational change. Measurement Approach Existing conceptualizations of readiness suggest that it is a multi-level organizational construct (Armenakis et al., 1999; Beckhard & Harris, 1987; Beer, 1987; Hanpachern, 1997; Huy, 1999; Powelson, 1995). That is, individuals, work-groups, and organizations may have unique levels of readiness as change is introduced. While it would seem plausible that unique measures would exist for each level of analysis (i.e., individual, group, or organizational), our search for readiness instruments did not support this. Pfeiffer and Jones’ (1978) OD Readiness Checklist was the only instrument that appeared to measure readiness using organizational-level variables such as size and growth rate. Instead, instrument developers approached the measurement of readiness by gauging individual members’ attitudes and cognitions, suggesting that higher levels of readiness (work group or organizational readiness) could be represented by aggregating the attitudes and cognitions at the individual level. Therefore, we restricted our analysis to those instruments that approached the measurement of readiness through individual responses. Three points are worth noting. First, the individual focus is consistent with recent literature that has made calls for a more person-centered look at organizational change (e.g., Judge, Thoresen, Pucik, & Welbourne, 1999; Wanberg & Banas, 2000). Second, an individual level of analysis is consistent with a realization that resistance or support and implementation are ultimately based on individual decisions and acts. Finally, an individual focus allows for the exploration of differences in readiness between individuals and groups comprising the organization. Response Format In order to meet the requirements for scientiﬁc rigor, some indication of the reliability and/or validity of instruments was deemed important. Therefore, to be included, instruments had to include close-ended items with a response format appropriate for assessing the instruments’ psychometric properties. One that did not meet this criterion, developed by Dalziel and Schoonover (1998), offered nothing more than a list of critical factors (e.g., history of the change and clarity of expectations) that are to be considered and quantiﬁed by leaders as they develop plans for organizational change. Gaylord’s (1995) re-engineering

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readiness assessment, another example of an excluded instrument, was designed to initiate discussion about change and users were even warned that it ‘‘y should not be viewed as offering an absolute set of standards against which respondents can judge their organization’s readiness’’ (p. 181). Bennis’ (1969) State of the Client System Questions, Moravec’s (1995) Change Readiness Elements, and Weeks, Helms, and Ettkin’s (1995) TQM Readiness Assessment Methodology were excluded. These instruments were deemed to be more pertinent to planning change than assessing readiness. In other words, the developer(s) did not intend for these instruments to be administered to employees to ascertain an organization’s readiness. Rather, they were designed simply to facilitate discussion about organizational change or stimulate the planning of a change effort. After subjecting the instruments to these criteria, 32 instruments remained for the facet analysis. Facet Theory McGrath (1968) suggested that facet analysis is a useful method for integrating and comparing research information regarding a speciﬁc topic. In this analysis strategy, a facet is a relevant conceptual dimension or property that underlies a group of objects and should be relevant to all of the objects in a given set (McGrath, 1968). The elements of a facet are the different values or the points that describe the variation on that particular dimension or property (McGrath, 1968) and make it possible to systemically examine relevant aspects of a group of interest and describe it. For instance, if a researcher wanted to systematically analyze a group of human beings, one relevant facet might be gender, where the elements that describe this facet would be male and female. White and Mitchell (1976), for instance, employed this technique to classify organizational development strategies along three facets; i.e., (a) the change target (e.g., individual, total organization), (b) the level of change (e.g., conceptual, behavioral), and (c) the relationships involved in the change (e.g., interpersonal, intergroup). Their facet analysis of organizational development strategies allowed them to proﬁle methods, identify trends, and recommend improvements. In this paper, the speciﬁc objects that we examine are the measurement instruments that have been designed to assess readiness. Facets of Analysis The instruments designed to measure readiness can be compared and contrasted along a number of facets that highlight their similarities and

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differences. The facets we used to compare and contrast the instruments are summarized in Table 1 along with the elements that were used to describe each of the facets. First, the instruments were compared based on their content and how they operationalized readiness. For example, some instruments emphasized individual readiness traits while others focused on the change process. Second, the academic discipline from which the instruments emerged was examined. Third, the process used to develop the instruments’ items was examined where Hinkin (1998) suggests that a deductive (i.e., items developed using an existing theoretical framework) or inductive (i.e., items emerge through the qualitative analysis of subject matter experts’ input) approach is followed. Moreover, because our discussion focuses on the instruments used to measure readiness and because the legitimacy of any measurement instrument is embedded its psychometric properties (Schriesheim, Powers, Scandura, Gardiner, & Lankau, 1993), several facets summarize these properties. Consistent with the literature on psychometric theory (American Psychological Association, 1985; Messick, 1995; Nunnally & Bernstein, 1994), the facets that were appropriate for the analysis of measurement instruments included (a) content validity (i.e., evidence of systematic scale development), (b) predictive validity (i.e., evidence of postdictive, concurrent, and predictive validity), (c) construct validity (i.e., evidence of convergent and discriminant validity), and (d) reliability (i.e., evidence of test-retest reliability and internal consistency). Finally, the latent constructs measured by each instrument are listed along with citations from studies exploring the instrument’s validity and reliability.

A TYPOLOGY OF CHANGE READINESS INSTRUMENTS Examining the content of the 32 readiness instruments revealed that they operationalized readiness (Facet 1) in diverse ways, consistent with the change categories suggested by Armenakis and Bedian (1999). These categories are depicted in Fig. 1. This model portrays the idea that readiness is the attitudinal precursor to behaviors associated with acceptance or rejection of change (Armenakis et al., 1993; Clarke et al., 1996; Tepper et al., 1998). It also graphically captures the general content covered by the readiness instruments. The diverse content of the instruments available to gauge readiness indicates that the following factors may inﬂuence readiness: change-speciﬁc content, the process employed to implement change, the

Facet of Analysis

Facets Used to Describe, Compare, and Contrast Readiness for Change Instruments. Description

1. Readiness operationalization

Perspective that the instrument’s developer(s) used to assess readiness based on the instrument’s content

2. Research discipline

Academic area of research or discipline where an instrument was most commonly observed Approach used to develop an instrument’s content and items

3. Item development 4. Content validity

5. Predictive validity

6. Construct validity

Evidence reported in the literature regarding the extent to which an instrument’s items have been tested to ensure that they are a proper representation of the domain they are designed to assess Evidence reported in the literature regarding the extent to which an instrument’s constructs have been tested to ensure that they systematically related to relevant outcome variables Evidence reported in the literature regarding the extent to which an instrument’s items have been tested to ensure that they measure distinguishable constructs and these constructs are systematically related to relevant other known concepts Evidence reported in the literature regarding the extent to which an instrument’s items and constructs are stable overtime and dependable

8. Scales 9. Key citations

Latent constructs that an instrument purportedly assesses List of key studies (other than the study that presents the instrument) that have explored instrument validity and reliability

a

Change-speciﬁc content (see Table 2) Process (see Table 3) Internal context (see Table 4) Individual abilities (see Table 5) Individual traits (see Table 5) Intentions and reactions (see Table 6) Education medicine Organizational sciences Deductive Inductive Review by expert judges Q-factor Analysis substantive validity test Postdictive Concurrent Predictive Convergent Divergent Known-group Exploratory factor analysis (EFA) Conﬁrmatory factor analysis (CFA) Coefﬁcient alpha or KR-20 Parallel forms Split-half (with or without corrections) Test-retest No a priori elementsa No a priori elementsa

The details for each of these facets are instrument-speciﬁc precluding the identiﬁcation of a priori elements.

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7. Reliability estimates

Elements

Defining Readiness for Change

Table 1.

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Internal Context Ask, “Where is the change occurring?” Consider assessing the discrepancy and peer support.

Change-specific Content Ask, “What is being changed?” Consider assessing the appropriateness of the change

Readiness for Change

Intentions & Reactions

Outcomes Time

Process Ask, “How is change being implemented?” Consider assessing leadership support for the change.

Fig. 1.

An Integrated Model of Readiness for Change that Includes Content, Process, Context, Individual, Reactions, and Outcome Variables. Source: Model was adapted from Armenakis and Bedeian (1999).

DANIEL T. HOLT ET AL.

Individual Attributes Ask, “Who has to implement the change?” Consider assessing efficacy and valence.

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internal organizational context, and the characteristics of the individuals who make up the change target. In addition, readiness is ultimately reﬂected in the members’ intentions and reactions toward the change. The change-speciﬁc content is best understood as the what factor of the change. That is, one should consider what is being changed. Common organizational changes include changes in strategy and structure, innovations in human resource practices, and revisions in physical settings. Change process refers to the how; that is, the way in which the change is implemented by leaders. Process encompasses the speciﬁc strategies change agents use to implement organizational changes. Internal context is the circumstances that describe the organization as it embarks on change. Internal substantive context was described by Mowday and Sutton (1993) as organizational conditions external to individuals that inﬂuence their beliefs, attitudes, intentions, and behavior. The readiness instruments reviewed assessed an array of these conditions. Individual attributes refer to the who that describe the organizational members that are required to change. Individual attributes represent conditions internal to individuals that inﬂuence their beliefs, attitudes, intentions, and behaviors when confronted with change. Common individual factors that might inﬂuence readiness are individuals’ general disposition toward change and their skills or abilities. Finally, readiness inﬂuences intentions and reactions. Intentions and reactions represent the attitudinal outcomes or actual behaviors that individuals may engage in to show their acceptance or rejection of the change initiative. The facet analysis of the 32 instruments is summarized in Tables 2–6. Each table presents the analysis of a particular readiness operationalization corresponding to Fig. 1 (i.e., change-speciﬁc content, process, internal context, individual attributes, or intentions and reactions) and includes a summary of the constructs measured by each instrument and the evidence related to the instrument’s psychometric properties. We had two primary concerns as we attempted to classify instruments according to their operationalization of readiness. First, not all of the instruments explicitly deﬁned the constructs they measured. This meant we had to determine the operationalization based on our interpretation of items used. For instance, Burke, Corruzi, and Church (1996) measured a dimension termed management practices. This might be considered a process variable. However, the items (e.g., ‘‘Do managers inspire people to act?’’) and frame of reference (i.e., participants were told to take a general perspective rather than a change-speciﬁc perspective) suggested that a more general organizational characteristic was being tapped, suggesting that this was a measure of internal context. In addition, instruments sometimes

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included content that might have tapped multiple aspects of readiness (i.e., content, process, context, individual, and reactions). One case in point was Harvey’s (1990) Checklist for Change that included one scale designed to assess organizational context along with three change process dimensions (i.e., planning for implementation, understanding the change, and dealing with resistance). In all, for sake of presentation, we classiﬁed instruments based on the preponderance of the instruments’ content.

Instruments Assessing Change-Specific Content Table 2 lists the instruments that assess the content of the change initiative. These instruments suggest readiness is reﬂected in the type of change or the inherent attributes of the change as perceived by organizational members. One such instrument from the education literature is the Modiﬁed Receptivity to Change Inventory (MRCI; Loup, 1994) which evolved from the Receptivity to Change Inventory (RCI) initially developed by Hennigar (1979). The MRCI and similar instruments (cf. Chauvin & Ellett, 1993a; Crisafulli, 1982; Hennigar, 1979) were developed to assess overall receptivity of school employees (e.g., teachers or administrators) to particular changes. Specifically, an analysis of the responses indicated that receptivity, or readiness, was determined by understanding whether the change was superﬁcial (i.e., directed toward procedures and preserved teacher autonomy and authority) or cultural (i.e., directed toward deep-seated structures and values; Chauvin & Ellett, 1993b). While a number of studies have replicated the factor structure of the MRCI and modiﬁed versions (e.g., Chauvin Ellett, 1993a; Clarke et al., 1996; Crisafulli, 1982; Hennigar, 1979; Loup, 1994), the MRCI’s widespread use is limited because of the items’ education-speciﬁc content. First, the items’ content dictates that it must be used in school settings because each item on the many versions of the instrument refers to particular changes in a school’s policies, rules, or conditions (e.g., provide one-half day per week inservice for all school staff). That is, participants are asked to consider each change as if they are being confronted for the ﬁrst time with the idea and to make judgments about the idea. Second, the items’ content dictates that the instrument can only be used at certain times because innovations referred to in the items may not represent innovations in all schools or settings (e.g., ‘‘instituting a breakfast program for students’’). As with the MRCI, another instrument, originally developed by Velicer, DiClemente, Prochaska, and Brandenburg (1985), is setting-speciﬁc,

Facet Analysis of the Instruments Focusing on Change-speciﬁc Content.

Modiﬁed Receptivity to Change Inventory 1. Source of the instrument 2. Research discipline 3. Item development 4. Content validity evidence 5. Predictive validity evidence 6. Construct validity evidence 7. Reliability estimates 8. Scales, example item, and estimate of reliability (when available)

Decisional Balance Inventory

Semantic Differential Scale

Decision Determinant Questionnaire (DDQ)

Unit Curriculum Receptivity Scale

Faculty Readiness Survey

Velicer et al. (1985)

Giacquinta (1975)

Bedell et al. (1985)

Waugh and Godfrey (1995)

Willey (1991)

Education

Medicine

Education

Organization sciences

Education

Education

Deductive None

Deductive None

Deductive None

Deductive None

Inductive Review by expert judges

None

None

None

Deductive Review by expert judges Concurrent

None

None

EFA

Convergent EFA

None

None

None

Coefﬁcient alpha

Coefﬁcient alpha

EFA (inconsistent factor structure) None

Coefﬁcient alpha

None

None

Receptive to cultural change. ‘‘Lengthen the school year to 200 student attendance days.’’ (10 items, a ¼ .65) Receptive to superficial change. ‘‘Involve parents, teachers, students, and administrators in a total needs assessment of the school system.’’ (8 items, a ¼ .79)

Pros of the change. ‘‘I would feel better if I made this change.’’ (10 items, a ¼ .91) Cons of the change. ‘‘I would be less productive in other areas if I tried to make this change.’’ (10 items, a ¼ .84)

Rate attitudes toward the introduction of a speciﬁc change initiative using adjective pairs (e.g., introducing sex education in the schools or reorganization of the school) Evaluation. ‘‘Ineffective – effective.’’ (15 adjective pairs)

Ability. ‘‘We are conﬁdent in the ability of our staff to utilize the innovation.’’ (4 items, a ¼ .75) Value. ‘‘The innovation was consistent with our staff’s beliefs and values.’’ (7 items, a ¼ .76) Idea. ‘‘Our staff understood the changes involved if we implemented the innovation.’’ (5 items, a ¼ .69) Circumstances. ‘‘Our organization was

Cost of the change. ‘‘In weighing up the balance between the work generated by the [change] and your satisfaction with [your job] is the [change] worthwhile?’’ (5 items) Practicality of the change. ‘‘Is the [change] tuned with the needs of the [customers]?’’ (8 items) Alleviation of fears. ‘‘The [organization’s leader] is supportive in solving [change-related] problems.’’ (7 items) Perceived improvements. ‘‘In comparison to previous systems, the [change] provides for better

Operational style. Measures commitment to change (4 items), supportive leadership (4 items), sense of team (4 items), innovative atmosphere (5 items), and organizational pride (6 items) Procedural emphasis. Measures systematic listening (5 items), need-focused planning (4 items), careful preparation (5 items), contact with constituency (4 items), and training (3 items)

301

Loup (1994)

Defining Readiness for Change

Table 2.

302

Table 2. (Continued ) Modiﬁed Receptivity to Change Inventory

Chauvin (1992) Clarke (1997) Clarke et al. (1996) Crisafulli (1982) Hennigar (1979)

O’Connell and Velicer (1988)

Semantic Differential Scale

Kazlow (1977)

Decision Determinant Questionnaire (DDQ)

Unit Curriculum Receptivity Scale

Faculty Readiness Survey

too set in its ways to be able to implement the innovation.’’ (5 items, a ¼ .69) Timing. ‘‘We had the ﬂexibility as to when we could implement the innovation.’’ (5 items, a ¼ .44) Obligation. ‘‘The innovation focused on one of our identiﬁed priorities.’’ (3 items, a ¼ .67) Resistance. ‘‘There was staff resistance to implementing the innovation.’’ (7 items, a ¼ .78, Yield. ‘‘We desired the innovation’s promised beneﬁts.’’ (6 items, a ¼ .83) Kiresuk et al. (1977) McKenna (1993) Studer (1978)

[performance].’’ (6 items) Principal support. ‘‘In your opinion, your best [coworker] friend supports the [change].’’ (5 items)

Value orientations. Measures commitment to quality (5 items), emphasis on results (6 items), focus on mission (6 items), involvement with people (4 items), and creation of a positive image (4 items) Emotional resistances. Measures hesitant attitudes (3 items), self-protection (6 items), preference for the status quo (5 items), and internal tension (7 items) Motivation to change. Measures desire to change (5 items)

No other studies were identiﬁed

Buckley (1984)

DANIEL T. HOLT ET AL.

9. Key citations

Decisional Balance Inventory

Defining Readiness for Change

303

exclusively measuring the readiness of an individual to diet. Labeled the Decisional Balance Inventory, this instrument assesses readiness for making changes to one’s diet by gauging individuals’ perceptions of these changes, namely, the pros and cons associated with dieting. It is assumed that an individual’s evaluation of the pros and cons reﬂects readiness where individuals are more ready for changes that have more pros and fewer cons. While there is considerable evidence of the instrument’s reliability and construct validity (see Table 2; O’Connell & Velicer, 1988), its use is limited as it was originally presented. However, the items suggest it might be easily tailored for organizational settings. For instance, one item, ‘‘I would be able to accomplish more if I carried fewer pounds,’’ could be modiﬁed to, ‘‘I would be able to accomplish more if we made this change.’’ Another instrument, that also measured change content readiness in school systems, might be modiﬁed for other organizations more easily. This instrument, published by Giacquinta (1975), used semantic differential scales to have participants describe their feelings regarding speciﬁc changes (e.g., the use of an education council was ‘‘progressive’’ or ‘‘regressive’’). Clearly, organizational members are more ready for initiatives that are viewed in a positive light (i.e., changes viewed to be good, progressive, wise, effective, valuable, or positive). Unfortunately, no information was provided regarding the reliability and validity of this instrument. Beyond the psychometric shortcomings, this assessment does not provide leaders with any speciﬁc information as to why organizational members view a change in a particular light. The Decision Determinate Questionnaire (DDQ; Bedell, Ward, Archer, & Stokes, 1985) is a content-speciﬁc instrument that seems applicable to a number of settings. The DDQ followed Davis’ (1973) A-VICTORY Model and appears to provide leaders with change-speciﬁc information. The DDQ posits that eight speciﬁc evaluations of a change (represented by the acronym A-VICTORY) predict readiness. The eight essential attitudes toward change are: (a) ability, the resources and capabilities necessary to implement and sustain the change; (b) values, the consistency of the change with the existing beliefs and philosophy of the organization; (c) idea, the accuracy of the information related to implementing the change; (d) circumstances, the relevant features of the organization’s environment that inﬂuence adoption; (e) timing, the particular combination of events that may help or hinder the change; (f) obligation, the belief that there is a need to change from the present way of operating; (g) resistance, inclinations to inhibit the change; and (h) yield, the perceived rewards or payoff for changing. Essentially, when employees assessed a change favorably along these dimensions, they are inferred to be ready.

304

DANIEL T. HOLT ET AL.

In their study, Bedell et al. (1985) took care to establish an initial level of content validity for the DDQ by having judges independently review the items. In addition, they administered the instrument to two independent samples to estimate the internal consistency, reﬁne the items, and explore the factor structure. With regard to predictive validity, Bedell and his colleagues found a relationship between change acceptance and (a) existing beliefs (i.e., value), (b) needs (i.e., obligation), and (c) beneﬁts (i.e., yield). Unfortunately, there was little evidence regarding the measures’ predictive or construct validity beyond the original study (cf. Kiresuk, Lund, Schultz, & Larsen, 1977; McKenna, 1993; Studer, 1978). Overall, the change content measurement perspective appears promising for several reasons. First, the concept behind the A-VICTORY scales was based on an extensive research program (Davis, 1973), and the instrument appears to be content valid. Second, the instrument seemed to provide organizational leaders with information that they could actually use to set up a plan of action in order to effectively intervene in the change process and facilitate a smooth and desirable transition. For instance, a low score on the yield dimension, which reﬂects the beneﬁts employees perceive to be associated with the change, guides leaders as they develop the message to share with members at the onset of change. However, regardless of these promising aspects, the measure’s psychometric shortcomings should not be overlooked. The last two content instruments are the Unit Curriculum Receptivity Scale (Waugh & Godfrey, 1995) and the Faculty Readiness Survey (Willey, 1991). Both measure the extent to which a speciﬁc change is aligned with goals and beneﬁted members. However, apparently neither of these instruments has reported any psychometric properties (see Table 2). Therefore, their use would not be recommended without further investigation. In summary, all of these change-speciﬁc content instruments assess readiness with respect to speciﬁc organizational changes, giving change agents an indication of readiness by determining how participants feel about speciﬁc changes. Moreover, the measures have suggested speciﬁc characteristics of changes that might be important for readiness. First, a change might be evaluated in view of the current organizational practices where individuals are more ready for changes that are more consistent with the culture than those that are dramatic departures from the culture (Loup, 1994). Velicer et al. (1985), and Giacquinta (1975) have suggested that changes be evaluated in terms of the personal advantages (i.e., pros) and disadvantages (i.e., cons) they present. Moreover, organizational members will consider very speciﬁc beneﬁts, values, and needs (Bedell et al., 1985). Collectively, these instruments suggest that the deviation of a change from current culture, its

Defining Readiness for Change

305

perceived appropriateness, and the anticipated costs and beneﬁts of the change inﬂuence readiness of those making the change.

Instruments Assessing Change Process As shown in Table 3, two instruments were classiﬁed as change process instruments (Harvey, 1990; Human Resource Development Press, 1995). These instruments assessed readiness from the perspective of evaluating the processes used by leaders to facilitate the adoption and implementation of change. The instrument developed by Harvey (1990), labeled Checklist for Change, assesses ﬁve dimensions: planning for implementation, organizational context, potential for motivation, understanding the change, and dealing with resistance. Four dimensions are considered process dimensions, capturing the extent to which speciﬁed change steps or activities are executed. For example, potential for motivation assesses the extent to which the value of the change was clearly explained to organizational members, thus, contributing to their readiness. Similarly, the ChangeAbilitator instrument (Human Resource Development Press, 1995) assesses respondent concerns that can be satisﬁed largely by change processes that generate adequate information about the change. For example, the information dimension assesses the extent to which the respondent is aware of the resources that will be made available if the change is adopted. The transforming dimension refers to a process whereby employees can express opinions about modifying the change. In other words, if an individual’s responses to these items are less than favorable, the processes employed to prepare the members of the organization for the change may have been faulty. While these two instruments highlight the importance of the change process in creating readiness, complete data addressing their psychometric properties are not available (see Table 3). The content validity of these instruments was considered adequate by expert judges. The construct validity and reliability of the ChangeAbilitator was judged adequate (Hall, George, & Rutherford, 1998); however, the construct validity evidence with respect to Harvey’s Checklist for Change is far less positive because the factor structure could not be replicated (cf. England, 1990; Mahler, 1996; Test, 1991). Finally, no information addressing the predictive validity of either instrument was available. Despite these limitations, these two change process instruments offer some important insights into the assessment of readiness. In all, the process

Facet Analysis of the Instruments Focusing on Change Process. Checklist for Change

1. 2. 3. 4. 5. 6. 7.

Source of the instrument Research discipline Item development Content validity evidence Predictive validity evidence Construct validity evidence Reliability estimates

8. Scales, example item, and estimate of reliability (when available)

Harvey (1990) Education Deductive Review by expert judges None EFA (inconsistent structure) None Planning for implementation. ‘‘An action plan was created in which there was a clear order of procedures to be followed.’’ (5 items) Organizational context. ‘‘The change ﬁt logically into the patterns created by other changes made by the organization.’’ (7 items) Potential for motivation. ‘‘The value of the change was clearly identiﬁed.’’ (4 items)

9. Key citations

England (1990), Mahler (1996), Test (1991)

ChangeAbilitator (Revision of the Stages of Concern Questionnaire) Human Resource Development Press (1995) Education Inductive Review by expert judges None EFA convergent Coefﬁcient alpha test-retest (2 weeks between administrations) Information. ‘‘I would like to know what resources are available if we decide to adopt this change.’’ (5 items, a ¼ .78) Personal. ‘‘I would like to know who will make the decisions in the new system.’’ (5 items, a ¼ .83) Operational. ‘‘I am concerned about the time spent working on the problems related to this change.’’ (5 items, a ¼ .75) Impact. ‘‘I am concerned about employees’ attitudes toward this change.’’ (5 items, a ¼ .76) Collaboration. ‘‘I would like to develop working relationships with both our employees and others outside of the organization using this change.’’ (5 items, a ¼ .82) Transforming. ‘‘I would like to modify our use of this change based on the experiences of our employees.’’ (5 items, a ¼ .71) Hall et al. (1998)

Note: Deductive item development implies that an a priori theory guided the development of items whereas the inductive approach implies that items and content emerged from a qualitative process with no a priori theory as a guide. EFA ¼ Exploratory factor analysis.

DANIEL T. HOLT ET AL.

Understanding the change. ‘‘The change was clear and understandable.’’ (4 items) Dealing with resistance. ‘‘A strategy for dealing with resistors was consciously designed.’’ (3 items)

306

Table 3.

Defining Readiness for Change

307

instruments (a) emphasize the importance of the process employed to create readiness and (b) assess the effectiveness of strategies used to create readiness. Their content suggests that readiness is reﬂected in the actions taken by leaders to demonstrate overarching ‘‘leader support’’ for the change and engage in speciﬁc procedures such as allowing participation, planning, and communicating. Before a change is implemented, these instruments can direct leaders to the deﬁcient aspects of the process, in hopes of further enhancing readiness.

Instruments Assessing Internal Context When classifying the readiness operationalization across the instruments, it became apparent a number of researchers and consultants proposed that readiness may be reﬂected in the organizational members’ perceptions of the organization’s internal context. In all, 13 instruments, all from the organizational sciences discipline, were grouped in the category of internal context instruments and are shown in Table 4. Considering the number of instruments that assessed readiness from this perspective, it was not surprising that the content of these instruments overlapped considerably. Three primary areas of internal context were assessed with these instruments: (a) overall change climate, (b) task climate, and (c) relationship climate. The organization’s overall change climate refers to the organization’s general propensity to embrace or accept change. Therefore, these scales were developed to measure beliefs that the organization is generally disposed to be innovative and change-oriented without regard to a speciﬁc change initiative (e.g., Bollar, 1996; Eby et al., 2000; Keith, 1986). Presumably, an organization that is more innovative and open to change will react more favorably to all changes regardless of change content or process. Similarly, certain task environments (i.e., characteristics that reﬂect the formal aspects of the organization that provide the necessary coordination and control for organized activity) are viewed as more facilitative of readiness. For instance, the Lay of the Land Survey (Burke et al., 1996) suggests that respondents’ positive ratings of the jobs/skills match and organization’s performance dimensions will bolster readiness. Similarly, the RapidResponse Readiness Checklist (Deevy, 1995) measures a knowledge of business dimension (i.e., the extent to which respondents have an overall understanding of customers’ needs) and a position in the marketplace dimension (i.e., the extent to which respondents feel the organization is pursuing an acceptable goal).

1. Source of the instrument 2. Research discipline 3. Item development 4. Content validity evidence 5. Predictive validity evidence 6. Construct validity evidence 7. Reliability estimates 8. Scales, example item, and estimate of reliability (when available)

308

Table 4.

Facet Analysis of the Instruments Focusing on Internal Context.

Lay of the Land Survey

Empowermentreadiness Survey

Management Selfimprovement Survey

Vision Progress Survey

Organizational Readiness Scale

RapidResponse Readiness Checklist

Henkel et al. (1993)

Keith (1986)

Bollar (1996)

Jones and Bearley (1996)

Deevy (1995)

Organization sciences Deductive Review by expert judges Concurrent predictive EFA

Organization sciences Unclear Review by expert judges None

Organization sciences Unclear None

Organization sciences Inductive Review by expert judges

Organization sciences Unclear None

None

Organization sciences Deductive Review by expert judges None

None

None

None

EFA

None

None

None

Coefﬁcient alpha

None

Coefﬁcient alpha

Coefﬁcient alpha

Coefﬁcient alpha

None

Measured 12 constructs. A few examples of areas assessed and items are offered Leadership. ‘‘Do leaders’ actions match their words?’’ Organizational culture. ‘‘To what extent are people anticipating problems?’’ Management practices. ‘‘Do managers inspire people to act?’’ Job/skills match.

Communication. ‘‘Decisions that directly affect employees should not be made without employee input.’’ (9 items) Value of people. ‘‘People are an organization’s most valuable resource.’’ (13 items) Ambiguity. ‘‘It is better to continue as is, as long as the job gets done, than it is to make changes.’’

Readiness for change scale. ‘‘Would the leadership in your work group support or resist employee efforts to develop improved procedures?’’ (5 items, a ¼ .60) Climate for innovation. ‘‘Are new ideas from employees given consideration by management?’’ (5 items, a ¼ .74) Morale. ‘‘How is your work group

Readiness for change. ‘‘My company is quickly taking steps to become more competitive.’’ (14 items, a ¼ .90)

Structural readiness. ‘‘Show the ability to institutionalize and regularize changes?’’ 21 items, a ¼ .79) Technological readiness. ‘‘Invest in the development of technology.’’ (6 items, a ¼ .71) Climatic readiness. ‘‘Show commitment to excellence.’’ (19 items, a ¼ .81) Systemic readiness. ‘‘Have effective communications.’’ (13 items, a ¼ .73) People readiness. ‘‘Stress

Knowledge of business. ‘‘Employees have a good understanding of the customers’ needs.’’ (5 items) Free flow activity. ‘‘The customer is clearly the focus of all activity.’’ (5 items) Employee stake. ‘‘Each employee can see how his or her work contributes to the success of the organization.’’

DANIEL T. HOLT ET AL.

Burke et al. (1996)

(4 items) Concepts of power. ‘‘Decision-making authority in an organization can be spread to all levels.’’ (8 items) Information. ‘‘Input from front-line employees is valuable in organizational planning and decision making.’’ (8 items) Learning. ‘‘The bottom line should be given the greatest priority in organizational decision making.’’ (8 items)

Fox (1990) Anderson-Rudolf (1996)

One other study was identiﬁed – it did not study validity or reliability

as a place to work compared with other groups you know?’’ (5 items, a ¼ .80) Fairness of management. ‘‘Are people treated fairly with regard to training opportunities, length of lunch periods, leave, etc.?’’ (5 items, a ¼ .74) Co-worker cooperation. ‘‘Do your co-workers work together to achieve the goals of your unit?’’ (5 items, a ¼ .81) Communications. ‘‘Is the information ﬂow between your work group and other parts of the organization effective?’’ (5 items, a ¼ .75) No other studies were identiﬁed

that every employee is in the marketing business.’’ (17 items, a ¼ .81)

No other studies were identiﬁed

No other studies were identiﬁed

(5 items) Positioned in the marketplace. ‘‘We are united in pursuit of a common goal.’’ (5 items) Mangers who lead. ‘‘We feel challenged to live up to our potential by the leaders of the company.’’ (5 items) Commitment from the middles. ‘‘Middle management does not feel threatened by efforts to increase involvement by line staff.’’ (5 items)

Defining Readiness for Change

9. Key citations

‘‘To what extent do people’s skills match their jobs?’’ Individual needs and values. ‘‘Do people feel a sense of pride in the organization?’’ Performance. ‘‘Is the organization profitable?’’

No other studies were identiﬁed

309

Siegel Scale for Support for Innovation 1. Source of the instrument

(Continued )

Readiness for Change Scale

Receptivity to Change Instrument

TQM Readiness Index

Readiness Scale: Manager Rating Scale

Eby et al. (2000)

Zmud (1984)

Hay and McBer Company (1993)

Ireh (1995)

Stewart (1994)

Belasco (1990)

Organization sciences Deductive

Organization sciences Deductive

Organization sciences Unclear

Organization sciences Deductive

Organization sciences Unclear

Organization sciences Unclear

Readiness for Change Index

Readiness for Change Questions

Review by expert judges None

None

None

None

None

None

None

None

None

None

None

None

None

EFA

None

None

None

None

None

None

Split-half reliability

Coefﬁcient alpha

Coefﬁcient alpha

None

None

None

Support for creativity. ‘‘The organization is always moving toward the development of new answers.’’ (24 items, r ¼ .94) Tolerance for differences. ‘‘I help make decisions here.’’ (32 items, r ¼ .94) Personal commitment. ‘‘I really don’t care

Readiness for change. ‘‘When changes are made in this organization, employees usually lose out in the end.’’ (9 items, a ¼ .86)

Receptive to change. ‘‘Perceptions of the organization to be adaptive and ﬂexible.’’ (4 items, a ¼ .86)

Managerial style. ‘‘Makes a special effort to explain to subordinates the purpose of their work.’’ (8 items) Managerial competencies. ‘‘Finds better, faster, less expensive or more efﬁcient ways to do things.’’ (11 items) Climate. ‘‘Takes steps to improve

Test retest reliability Job readiness. Consider the past job experiences of the teachers in your school district and ‘‘rate their ability to implement a district wide change.’’ (5 items where what is considered varies) Psychological readiness. Consider the achievement motivation of the

Measured 17 constructs. A few examples of areas assessed and items are offered Competitor benchmarking. ‘‘Give yourself one point if knowledge of competitors’ abilities is primarily anecdotal – what salesmen say at the bar’’ Customer focus. ‘‘Three points if

Includes four multiple-choice items. Each choice is weighted and the weighted responses are summed. Example: ‘‘An employee from three levels down calls [the CEO’s] secretary and urgently requests to talk with [the CEO] about a recently made decision.

DANIEL T. HOLT ET AL.

2. Research discipline 3. Item development 4. Content validity evidence 5. Predictive validity evidence 6. Construct validity evidence 7. Reliability estimates 8. Scales, example item, and estimate of reliability (when available)

Siegel and Kaemmerer (1978) Organization sciences Deductive

310

Table 4.

9. Key citations

None

work group performance.’’ (6 items)

None

None

None

teachers or majority of teachers in your school district & ‘‘rate their ability to implement a district wide change.’’ (5 items where what is considered varies)

None

everyone is in the work force knows who his customers are, knows their needs, and has had direct contact with them.’’

None

Is it practice in your organization to a. [See the CEO] take the call [2 points] b. [See the CEO] ask the employee to send a memo to his/her manager [0 points] c. [See the CEO] contact the employees boss and let him/her handle the problem [0 points]’’

Defining Readiness for Change

what happens to this organization.’’ (7 items, r ¼ .84)

None

Note: Deductive item development implies that an a priori theory guided the development of items whereas the inductive approach implies that items and content emerged from a qualitative process with no a priori theory as a guide. EFA ¼ Exploratory factor analysis.

311

312

DANIEL T. HOLT ET AL.

The elements of the relationship context were another area of the internal context that was emphasized by the internal context instruments. For the purpose of this discussion, the relationship context is the patterns and processes of interaction among organizational groups and members. Generally, the dimensions of the relationship context have suggested readiness is reﬂected in the way (a) information is exchanged (cf. Deevy, 1995; Henkel, Repp-Begin, & Vogt, 1993; Jones & Bearley, 1996), (b) decisions are made (cf. Hay and McBer Company, 1993; Henkel et al., 1993), and (c) management behaves (cf. Hay and McBer Company, 1993; Henkel et al., 1993). The instruments’ content suggests that readiness is reﬂected in speciﬁc aspects of the organization. For instance, the organization’s task climate is important. In particular, the idea that change should be some step toward the overall goal of the organization seems clear; in terms consistent with the change literature, the initiative should redress some ‘‘discrepancy’’ or move the organization toward some desired end-state goal. Also, aspects of the relationship climate are important. Thus, the way organizational leaders interact with members and how members interact with one another would shape readiness where those members that have positive interactions or relationships tend to be more ready than others. Therefore, investigators might explore the extent to which opinion leaders or an individual’s coworkers support change as readiness is assessed, analogous to the leader support idea suggested by the change process instruments. As with the change process instruments, the information regarding the psychometric properties of internal context instruments is not complete. Content validity as determined by a review of expert judges was reported for ﬁve of the instruments, namely, the Lay of the Land Survey (Burke et al., 1996), Empowerment-readiness Survey (Henkel et al., 1993), Vision Progress Survey (Bollar, 1996), Organizational Readiness Scale (Jones & Bearley, 1996), and the Siegel Scale for Support for Innovation (SSSI; Siegel & Kaemmerer, 1978). The only instrument reporting predictive validity was Burke’s Lay of the Land Survey. Construct validity, determined with exploratory factor analysis, was reported for Burke et al.’s (1996) Lay of the Land, Keith’s (1986) Management Self-improvement Survey, and Siegel and Kaemmerer’s (1978) SSSI. Of the 11 instruments included in Table 4, 8 reported estimates of reliability. Finally, the Lay of the Land Survey, unlike the other instruments, had two additional research studies (both dissertations) supporting the psychometric properties of the instrument (AndersonRudolf, 1996; Fox, 1990).

Defining Readiness for Change

313

Instruments Assessing Individual Attributes Seven readiness instruments in our sample treated organizational members’ readiness as a function of their individual attributes. These instruments emphasize different aspects or characteristics of the individual, namely, individual abilities and psychological traits. Table 5 contains the facet analysis of an ability-focused instrument along with the facet analysis of six psychological trait instruments. Abilities Instrument The ﬁeld of education provides several insights into the measurement of readiness for organizational change through the assessment of students’ readiness to learn new classroom material. Readiness to learn has been viewed as a psychological construct that indicated the extent to which the student is prepared for upcoming material. As such, readiness in the classroom setting was originally seen as a cognitive ability that develops as a child matures (Nurss, 1979). Therefore, readiness to learn certain subjects was determined by the student’s age. However, more recent instruments of readiness have implicitly suggested that students’ readiness to learn new material is embedded in the minimum knowledge, skills, and abilities that the student must have to meet the demands required of the upcoming material. Therefore, readiness instruments have been designed to gauge students’ skills in speciﬁc areas that have been deemed necessary for success in a given learning situation (e.g., Barnhart, 1991). One such instrument is the Metropolitan Reading Test (see Table 5 for the facet analysis of this instrument). This instrument contains items that are designed to assess the fundamental skills (e.g., letter recognition and word recognition) necessary to successfully engage in formal reading instruction (e.g., Barnhart, 1991; Nurss, 1979). While this instrument (and those like it) cannot be extrapolated to an organizational setting, the assessment of readiness from the minimum knowledge, skills, and ability perspective suggests that readiness in organizations may be explicitly related to an individual’s actual abilities. Consider an organizational initiative that is designed to outsource a number of mundane tasks that are accomplished by organizational members so they can refocus their efforts on more salient tasks. While the outsourcing initiative may simply afford members time to dedicate to the salient tasks that are well within their abilities to perform, the outsourcing initiative may be accompanied by some job redesign where new skills and abilities are required. Thus, the readiness to undertake such an initiative would be shaped by the

314

Table 5.

Facet Analysis of the Instruments Focusing on Individual Attributes.

Metropolitan Reading Testa

Change Attitude Scale

Innovativeness Scaleb

Change Attitudes

Reviewed by Nurss (1979)

Trumbo (1961)

Hunt et al. (1977)

Al-Khalaf (1994)

2. Research discipline 3. Item development 4. Content validity evidence 5. Predictive validity evidence 6. Construct validity evidence 7. Reliability estimates 8. Scales, example item, and estimate of reliability (when available)

Education

Organization sciences Deductive None

Organization sciences

Deductive None

Organization sciences Unclear None

Predictive

Concurrent

None Split-half Auditory skills Discrimination of beginning consonant sounds Visual skills. Matching letters or numerals and locating letters and numerals in larger contexts

Change Value Scale Neal (1965)

Index of Values Toward Change

Inductive None

Johnson and Kerckhoff (1964) Organization sciences Unclear None

Kaluzny, Veney, and Gentry (1974) Medicine

Organization sciences Unclear None

Unclear None

Concurrent

None

None

None

None

None

Convergent EFA

None

None

None

None

Split-half testretest General attitude toward change. ‘‘I like a job where I know that I will be doing my work about the same way from one week to the next.’’ (8 items, corrected oddeven reliability

Coefﬁcient alpha

Coefﬁcient alpha

None

None

None

Willing to try. ‘‘I am suspicious of new inventions and new ways of thinking.’’ (8 items, a ¼ .84) Creative. ‘‘I am an inventive kind of person.’’ (7 items, a ¼ .86) Opinion leader. ‘‘I feel that I am an inﬂuential

Change attitudes. ‘‘I will resist change because I like the way we do things around here.’’ (5 items, a ¼ .71)

Acceptance of change. ‘‘When you come right down to it, the old ways are always the best.’’ (6 items)

Change value scale. ‘‘There is really something refreshing about enthusiasm for change.’’ (8 items)

Values toward change. ‘‘I prefer a practical man any time to a man with ideas.’’ (4 items)

DANIEL T. HOLT ET AL.

1. Source of the instrument

Acceptance of Change

estimate was .79)

Faunce (1960), Hardin (1967), Kirton and Mulligan (1973)

Defining Readiness for Change

9. Key citations

Comprehension skills. Listening comprehension and understanding language structure Note. Example items were not provided Reliability estimates reported: 29 item, auditory skills test, r ¼ .93. None

member of my group.’’ (3 items, a ¼ .65) Ambiguities and problems. ‘‘I am challenged by unanswered questions.’’ (2 items, a ¼ .63)

Goldsmith (1991)

None

None

Brown (1981), Hage and Dewar (1973)

None

Note: Deductive item development implies that an a priori theory guided the development of items whereas the inductive approach implies that items and content emerged from a qualitative process with no a priori theory as a guide. EFA ¼ Exploratory factor analysis. a There are a number of instruments designed to measure readiness to read (see a review by Nurss, 1979). However, these instruments are not included because they are not related to organizational readiness; instead, the Metropolitan Reading Test is included to provide an example of an instrument where speciﬁc cognitive capabilities are measured as an indicator of readiness b There are a number of instruments designed to measure traits such as innovativeness or openness. However, these instruments are not all included because they were not all developed or designed to assess dispositions related to readiness for organizational change exclusively; instead, the Hunt et al. (1977) instrument is included to provide an example of an instrument like this.

315

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skills they have to fulﬁll their new roles. Based on this idea, change agents may want to measure actual abilities to perform in the environment that comes about after a change as an indicator of readiness. In addition, readiness to learn instruments overlook individual attitudes and perceptions that may significantly inﬂuence successful performance. For example, student attitudes and interests are ignored in reading-readiness instruments (Nurss, 1979). Students may not be willing to spend the time necessary to master the material being taught although the scores on the readiness instrument suggest that the students were equipped with the necessary skills to do so. These instruments suggest another factor that may be critical to an individual’s readiness in an organizational setting – a minimum level of perceived capability (i.e., self-efﬁcacy). There is considerable empirical support demonstrating the importance of self-efﬁcacy in a organizational settings as well as those settings where change is involved (Judge et al., 1999). In sum, the employees’ perceptions regarding their existing abilities and trust in the organization’s systems to equip them with the necessary knowledge and skills through training programs may be keys to readiness. Trait Instruments From this perspective, individuals in organizations relate to organizational changes in a way that is consistent with dimensions of their personal makeup, which are stable over time. Researchers using this personality-based perspective have generally discussed readiness in the context of an individual’s general or dispositional outlook on change itself (see Table 5). Therefore, investigators have constructed scales purporting to measure a person’s general disposition toward innovation (e.g., Flynn & Goldsmith, 1993) while others have focused on the extent to which an individual values change (e.g., Neal, 1965). One frequently used individual characteristics instrument is Trumbo’s (1961) Change Attitude Scale. First called a readiness scale by Hardin (1967), Trumbo’s scale taps a person’s general attitudes toward change rather than the person’s readiness to embrace a speciﬁc organizational change. For example, one item states, ‘‘One can never feel at ease on a job where the ways of doing things are always being changed’’ (Trumbo, 1961, p. 339). Although data have suggested that Trumbo’s (1961) change-readiness-scale was correlated with an individual’s social status (Faunce, 1960) and demographic characteristics (Trumbo, 1961), the evidence regarding the measure’s overall validity is mixed. Trumbo did not specify how the items were developed or screened in order to determine the measure’s content validity and there was no evidence that addressed the instrument’s construct

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validity. However, the evidence of predictive validity is more complete (Hardin, 1967; Trumbo, 1961). Another trait instrument, the Innovativeness Scale (Hunt, Joseph, & Cook, 1977) assesses four dimensions considered to comprise the basis for an individual’s innovativeness. These dimensions are labeled willing to try new ways of thinking, creative, opinion leader, and ambiguities and problems (i.e., whether the person is challenged by unanswered questions). This instrument has reported acceptable levels of predictive validity, convergent validity, and internal consistency (see Table 5). The remaining trait instruments, with the exception of Al-Khalaf (i.e., Change Attitudes; Al-Khalaf, 1994), did not report psychometric properties (see Table 5). For instance, Johnson and Kerckhoff (1964) presented an instrument that purportedly assesses an individual’s propensity to accept change; however, no evidence of content, construct, or predictive validity was presented. Moreover, an estimate of the instrument’s internal consistency was not reported, a minimum requirement for instruments used in the social sciences (Hinkin, 1998). The trait and personality approach to the measurement of readiness is useful for determining the proportion of organization members who have an aversion or predisposition to change. This approach may be helpful in determining the variety of strategies that would be suitable for creating readiness and in determining the speed with which an organizational change effort should be implemented. In his original study, Trumbo (1961) proposed ‘‘an employee’s response to change is probably conditioned by his perception of the way in which the effects of change relate to his needs. If change as a general phenomenon is to be accepted, its effects must be perceived as generally more rewarding than unrewarding, that is they must provide need satisfaction’’ (p. 343). Thus, while a person’s general attitude or disposition toward change may be important, these attitudes will probably vary as a function of the speciﬁc situation and the speciﬁc change.

Instruments Assessing Intentions or Reactions Because readiness is reﬂected in the behavioral intentions or reactions individuals have toward change, instruments have been developed to gauge subordinates’ intentions to behave in ways that reﬂect adoption or resistance (see Table 6). Hanpachern (1997), for instance, implied that readiness could be evaluated by assessing speciﬁc intentions of the change target to promote, participate in, or resist organizational change. Another instrument intended

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Table 6.

Facet Analysis of the Instruments Focusing on Intentions and Reactions. Promoting– Participating–Resisting Instrument

1. Source of the instrument 2. Research discipline 3. Item development 4. Content validity evidence

University of Rhode Island Change Assessment (URICA)

Commitment to Change Inventory

Hersocovitch and Meyer (2002) Organization sciences Deductive Review by expert judges (based on well established measure of commitment) Concurrent

Hanpachern (1997)

Moore (1993)

Organization sciences Deductive None

Education Deductive None

McConnaughy et al. (1983) Medicine Deductive Review by expert judges

None

None

Predictive

None

None

Coefﬁcient alpha Promoting. ‘‘Selling ideas about the change isy’’ [respond from Very unlikely to

None Denial. ‘‘I won’t worry; it’ll be over soon.’’ (4 items) Resistance. ‘‘I can ﬁnd

Convergent Divergent EFA CFA Coefﬁcient alpha Precontemplation. ‘‘As far as I am concerned, I don’t have any problems that need

EFA CFA Coefﬁcient alpha Continuance commitment to change. ‘‘I feel pressure to go along with this change.’’

DANIEL T. HOLT ET AL.

5. Predictive validity evidence 6. Construct validity evidence 7. Reliability estimates 8. Scales, example item, and estimate of reliability (when available)

Denial–Rresistance– Exploration– Eommitment Instrument

ways to make it fail.’’ (4 items) Exploration. ‘‘Lets explore the possibilities.’’ (4 items) Commitment. ‘‘I’m eager to begin.’’ (4 items)

None

None

changing.’’ (8 items, a ¼ .88) Contemplation. ‘‘I think I might be ready for some selfimprovements.’’ (8 items, a ¼ .88) Action. ‘‘I am doing something about the problems that have been bothering me.’’ (8 items, a ¼ .89) Maintenance. ‘‘I am here to prevent myself from having a relapse of my problems.’’ (8 items, a ¼ .88) McConnaughy et al. (1989) Prochaska et al. (1992)

(6 items, a ¼ .94) Normative commitment to change. ‘‘I feel a sense of duty to work toward this change.’’ (6 items, a ¼ .86) Affective commitment to change. ‘‘I believe in the value of this change.’’ (6 items, a ¼ .94)

Defining Readiness for Change

9. Key citations

Very likely]. (4 items, a ¼ .80) Participating. ‘‘Willing to be part of the change program isy’’ [respond from Very unlikely to Very likely]. (6 items, a ¼ .79) Resisting. ‘‘I can ﬁnd ways to make it fail.’’ (4 items, a ¼ .62)

None (replicated by Hersocovitch and Meyer, 2002)

Note: Deductive item development implies that an a priori theory guided the development of items whereas the inductive approach implies that items and content emerged from a qualitative process with no a priori theory as a guide. EFA ¼ Exploratory factor analysis. CFA ¼ Conﬁrmatory factor analysis.

319

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to assess readiness by examining individuals’ reactions to the change was developed by Moore (1993) based on work by Jaffe, Scott, and Tobe (1994). Jaffe et al. proposed a four-stage model consisting of (a) denial, (b) resistance, (c) exploration, and (d) commitment. Unfortunately, no psychometric properties were reported for the Moore instrument (as summarized in Table 6). Furthermore, no research studies were found using the instrument. In contrast, the University of Rhode Island Change Assessment (URICA) is far more developed and measured change reactions that were analogous to those suggested by Jaffe et al. (1994). McConnaughy, Prochaska, and Velicer’s (1983) URICA is based on Prochaska and DiClemente’s (1982) transtheoretical model of behavior change. The transtheoretical model of change conceptualizes four, ordered change reactions as pre-contemplation (not intending to make changes, analogous to denial), contemplation (considering changes, analogous to rudimentary exploration), action (engaging in new behaviors, analogous to advanced exploration), and maintenance (sustaining changes over time, analogous to commitment). By using this reactions model as a guide to the development of their instrument, McConnaughy and her colleagues theorized that clients enrolled in psychotherapy who believed they did not have a problem (i.e., they were precontemplators, reacting negatively to the change efforts) were not likely to discuss relevant issues with the therapist and probably would not beneﬁt from the therapy. In contrast, those who had acknowledged they had a problem and considered changes (i.e., they were contemplators, reacting favorably to the change efforts) were more likely to beneﬁt from the assistance offered by the therapist. In reviewing the psychometric properties of the URICA (see Table 5), the instrument appears psychometrically sound. An initial level of content validity was established by the systematic review of the original pool of items by three graduate students who were familiar with the transtheoretical model of change. With respect to predictive validity, one study indicated that the URICA accurately predicted attendance and actual weight loss for a work-site, weight control program (Prochaska, Norcross, Fowler, Follick, & Abrams, 1992). In addition, construct validity has been established by data, conﬁrming that individuals move through the stages of the change process in the order suggested (although this may be cyclical as individuals relapse, moving through certain stages repeatedly) (McConnaughy, DiClemente, Prochaska, & Velicer, 1989). Also, the data have consistently supported the original four-factor structure using both exploratory (DiClemente & Hughes, 1990; McConnaughy et al., 1989; McConnaughy et al., 1983) and conﬁrmatory (Rossi, Rossi, Velicer, & Prochaska, 1995)

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factor analytic methods. Harris and Cole (1999) have adapted this instrument to assess readiness to learn in executive development programs. Another reactions instrument is the Commitment to Change Instrument (CCI), a modiﬁed version of a well-respected organizational commitment scale (cf. Allen & Meyer, 1990). The CCI, developed by Hersocovitch and Meyer (2002), assesses individuals’ commitment to change in terms of continuance commitment to change (i.e., being pressured to go along with the change), normative commitment to change (i.e., feeling obligated to support the change), and affective commitment to change (i.e., positive feelings about the change and a desire to be part of it). Construct validity and internal consistency reliability have also been provided for the CCI (see Table 5).

SUMMARY OF THE FACET ANALYSES This review of readiness instruments indicates that educators, physicians, organizational researchers, and organizational consultants have operationalized and attempted to assess change readiness. These groups have done so by presenting instruments that gauge readiness from a number of different perspectives, including different variables to represent the concept. However, no instrument tended to assess readiness comprehensively. For instance, assessing an organization’s readiness using an internal context instrument would mean that change agents are potentially overlooking the importance of (a) the change content, (b) the process followed to create readiness, and (c) characteristics of the individuals asked to make the change. Therefore, it might be unreasonable to assume that a complete picture of an organization’s readiness could be captured with an instrument that assesses readiness by gauging only internal contextual factors. Based on this idea, these instruments have collectively suggested the importance of a more comprehensive measurement model that is comprised of four factors, namely, the change content, change process, internal context, and individual characteristics (see Fig. 1). Beyond an understanding of the general factors that inﬂuence readiness, the instruments reviewed offer promising insight to the speciﬁc variables that might be measured by an ‘‘ideal’’ readiness instrument. For instance, the instruments designed to assess readiness by examining the change content have indicated that ‘‘appropriateness’’ of the change will be considered as individuals evaluate and react to changes. Those exploring change process have suggested that the perceptions of support offered, planning done, and information conveyed by leaders may be important factors as readiness

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is measured. The internal context instruments suggested, among other things, that perceptions of general support offered by leaders and organizational management systems may inﬂuence readiness. Instruments measuring readiness by looking at the traits of individuals involved have suggested that a recognized need for change (i.e., discrepancy) and a belief in one’s ability to implement change (i.e., self efﬁcacy) may be critical to readiness. Still, some theoretical issues need further attention before these instruments should be integrated into a single readiness instrument. First, the diversity in instrument content suggests that the content domain of readiness must be reﬁned. Second, the reliability and validity of any new instruments must be a focal point. Table 7 lists the instruments that were reviewed alphabetically and, as a quick reference, summarizes the reliability and validity evidence associated with each. Of the 32 instruments included in this facet analysis, only two instruments, Burke et al.’s (1996) Lay of the Land Survey and McConnaughy et al.’s (1983) URICA, presented evidence of content, construct, and predictive validity. Only eight other instruments went through a discernable process to develop and review items, a necessary ﬁrst step in the development of a new instrument, so that content validity could be established. Similarly, only nine others reported evidence of construct validity where exploratory factor analysis was the most common method of providing this evidence. While this technique provides evidence of construct validity, other methods are recommended to supplement this analysis where researchers explore relationships with other known constructs (e.g., convergent and divergent validity) and assess differences between two groups that would be expected to differ (Hinkin, 1998). Even fewer instruments (i.e., four of the other instruments analyzed) reported evidence of predictive validity. In addition to summarizing the reliability and validity evidence, Table 7 includes an overall instrument rating. Drawing on the empirical literature that has rated the quality of research (cf. Donovan & Radosevich, 1999; Scandura & Williams, 2000), a straight-forward checklist was developed to quantify the extent to which evidence exists toward each instrument’s reliability and validity. The checklist included nine items that were simply scored yes or no, assessing the presence of content validity evidence (i.e., Has the content of the instrument been evaluated: (1) by expert judges and (2) quantitatively?), reliability evidence (i.e., Have researchers presented evidence of (1) internal consistency and (2) test-retest reliability), construct validity evidence (i.e., Have researchers presented evidence of (1) predictive validity; (2) convergent or divergent validity; (3) factor structure tests using

Instrument Ratings and a Summary of the Reliability and Validity Evidence for each of the Instruments Reviewed.

Instrument

Overall Instrument Scorea

Instrument Focus

Al-Khalaf (1994)

1

None

None

None

Coefﬁcient alpha

Bedell et al. (1985) Belasco (1990) Bollar (1996) Burke et al. (1996)

4 0* 2 6

Individual attributes Change-speciﬁc Internal context Internal context Internal context

SME review None SME review SME review

None None None EFA

Coefﬁcient alpha None Coefﬁcient alpha Coefﬁcient alpha

Deevy (1995) Eby et al. (2000) Giacquinta (1975)

0* 1 1*

Internal context Internal context Change-speciﬁc

None None None

Hanpachern (1997) Harvey (1990)

1

None

None

Coefﬁcient alpha

3*

Intentions and reactions Change process

None None EFA (Inconsistent factor structure) None

Concurrent None None Concurrent Predictive None None None

SME review

Hay and McBer Company (1993) Henkel et al. (1993)

0*

Internal context

1*

Internal context

Content

Construct

Summary of Reliability Evidence Predictive

None Coefﬁcient alpha None

None

None

None

EFA (Inconsistent factor structure) None

None

None

SME review

None

None

None

SME review

EFA CFA

Concurrent

Coefﬁcient alpha

323

6

Validity Evidence

Defining Readiness for Change

Table 7.

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Table 7. (Continued ) Instrument

Hersocovitch and Meyer (2002) Human Resource Development Press (1995) Hunt et al. (1977)b

Overall Instrument Scorea

6

5

Instrument Focus

Validity Evidence Content

Intentions and reactions Change process

Individual attributes Internal context Individual attributes

1 0*

Metropolitan reading testc (reviewed by Nurss, 1979) Moore (1993)

3

Individual attributes

0

Intentions and reactions

Predictive

SME review

Convergent EFA

None

Coefﬁcient alpha

None

Concurrent

Coefﬁcient alpha

None None

Convergent EFA None None

None None

Test-retest estimates None

2

Internal context

SME review

None

None

Coefﬁcient alpha

0*

Individual attributes Internal context Change-speciﬁc Intentions and reactions

None

None

None

None

None None SME review

None None Predictive

Coefﬁcient alpha Coefﬁcient alpha Coefﬁcient alpha

None

None EFA Convergent and divergent EFA and CFA None

Predictive

Split-half estimates

None

None

None

None

2 3 7

DANIEL T. HOLT ET AL.

Ireh (1995) Johnson and Kerckhoff (1964) Jones and Bearley (1996) Kaluzny et al. (1974) Keith (1986) Loup (1994) McConnaughy et al. (1983)

Construct

Summary of Reliability Evidence

1*

Siegel and Kaemmerer (1978) Stewart (1994) Trumbo (1961)

3

Velicer et al. (1985) Waugh and Godfrey (1995) Willey (1991) Zmud (1984)

0* 4

Individual attributes Internal context

None

None

None

None

SME review

EFA

None

Split-half estimates

None None

None None

None Concurrent

4

Internal context Individual attributes Change-speciﬁc

None

None

0*

Change-speciﬁc

None

Convergent EFA None

None Split-half estimates test-retest Coefﬁcient alpha

None

None

2* 1

Change-speciﬁc Internal context

SME review None

None None

None None

None Coefﬁcient alpha

Defining Readiness for Change

Neal (1965)

Note: SME ¼ Subject matter expert or expert judge; EFA ¼ Exploratory factor analysis; CFA ¼ Conﬁrmatory factor analysis a Represents a checklist score (ranging from 0 to 9) where higher scores indicate more complete evidence regarding the reliability and validity of the instrument. Those scores marked with an asterisk (*) have an absence of reliability evidence, highlighting the high risk these instruments present to potential users because of the importance of reliability is in the establishment of the instrument’s validity. b There are a number of instruments designed to measure readiness to read (see a review by Nurss, 1979). However, these instruments are not included because they are not related to organizational readiness; instead, the Metropolitan Reading Test is included to provide an example of an instrument where speciﬁc cognitive capabilities are measured as an indicator of readiness. c There are a number of instruments designed to measure traits such as innovativeness or openness. However, these instruments are not all included because they were not all developed or designed to assess dispositions related to readiness for organizational change exclusively; instead, the Hunt et al. (1977) instrument is included to provide an example of an instrument like this.

325

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DANIEL T. HOLT ET AL.

exploratory techniques; and (4) factor structure tests using conﬁrmatory techniques), and replication (i.e., Has the validity and reliability been assessed using multiple samples?). Although the highest possible score was nine points, the average score for the instruments was 2.2 and the highest score observed was 7. More importantly, the summary table highlights the risks posed to managers, organizational development consultants, and organizational researchers as they select instruments to tap the readiness of individuals and organizations. For instance, 12 instruments fail to report any evidence of reliability. The use of these instruments would pose significant risks to those who choose to use them because reliability is a necessary condition to establish validity. Six additional studies present an equally high risk because they present no evidence of validity beyond the initial estimates of reliability.

SYNTHESIZED DEFINITION OF READINESS FOR CHANGE The concept of readiness must be formally deﬁned in a way that captures the general essence of the term and provides a solid foundation to operationalize and measure the concept. In order to eliminate any confusion and standardize the definition, we suggest readiness be conceptualized as an individual’s attitude toward a particular change. Undoubtedly, this attitude is shaped and evolves over time based on individuals’ experience with the organization and its culture, thus capturing aspects of the organizational orientation indicated in some of the instruments and definitions that have been discussed. We therefore propose the following definition: Readiness for change is a comprehensive attitude that is inﬂuenced simultaneously by the content (i.e., what is being changed), the process (i.e., how the change is being implemented), the context (i.e., circumstances under which the change is occurring), and the individuals (i.e., characteristics of those being asked to change) involved and collectively reﬂects the extent to which an individual or a collection of individuals is cognitively and emotionally inclined to accept, embrace, and adopt a particular plan to purposefully alter the status quo. The definition of readiness presented incorporates many features that are present in the extant definitions. For instance, the words that make up the concept underlie the definition by reasserting that readiness is reﬂected in a persons’ propensity to respond favorably or unfavorably to a speciﬁc

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change event (cf. Hanpachern, 1997; Huy, 1999). In addition, by suggesting that readiness is inﬂuenced by a set of distinguishable factors, this definition acknowledges the contributions made by those that have operationalized readiness in terms of the change content, change process, internal context, and individuals’ attributes. Considering practitioners, readiness is deﬁned as a state, not a trait, which implies that readiness does not occur in a vacuum; instead, it is an integral part of the organization as a complete system. At any particular time or in any particular organizational setting, an individual may be more or less ready for a particular change. These different levels of readiness are due to the change (i.e., content), the facilitation strategies (i.e., process), the environment (i.e., context), the people (i.e., individuals’ attributes), or a combination of the four. This is important to organizational leaders or change agents who are trying to initiate changes because the definition implies that readiness may vary or be altered over time. For instance, leaders could more effectively employ suitable processes to facilitate readiness and change adoption when they have a complete understanding of the traits of the organization (i.e., context) and the organizational members (i.e., individuals’ attributes), typically viewed as unvarying characteristics, that may facilitate or stymie the change effort.

OPERATIONALIZING READINESS This definition has certain theoretical implications that should be considered as researchers attempt to operationalize readiness. The differences in the various methods to assess readiness imply that readiness is a multi-dimensional construct inﬂuenced by an array of factors. In addition, these differences suggest that further synthesis is needed to derive a meaningful gauge of readiness that can then be used across organizational settings so that irrelevant dimensions are omitted and relevant dimensions are tapped. Before this synthesis occurs, researchers must consider the level of analyzing readiness; then, an appropriate strategy to reﬁne the construct’s content domain can be examined.

Level of Analysis The definition of readiness presented implies readiness is a construct that should be assessed at the individual level. This individual-level analysis of

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readiness seems especially appropriate for two primary reasons. The ﬁrst stems from a fundamental notion that organizations are complex human systems and no one individual seems to have complete information about all of the things that take place within them. Therefore, the meaning of organizational events and the description of organizational states such as readiness would tend to vary, depending on the perspective of those describing them (i.e., manager vs. hourly employee). Sackmann (1992), for instance, found that the attitudes with regard to work and environment varied across organizational subunits and among individuals within particular subunits. Given this understanding of organizations, these differences might be magniﬁed during situations where change is being implemented because of the inherent uncertainty often associated with change and the incomplete information available regarding change. The second reason for assessing readiness at an individual level arises from the fundamental characteristics of organizational change itself. Generally, organizational change, when initiated, must be implemented through people. That is, organizational members must implement change by actually altering the way they do their own work – a thought being expressed commonly in the current change literature (e.g., Eby et al., 2000; George & Jones, 2001; Judge et al., 1999). Given this reality, it seems appropriate to gauge readiness by assessing the attitudes of those same people who must actually change their behavior in order to implement the change. With this said, the theoretical and practical issues revolving around the interpretation of the data warrant further investigation. There needs to be some basis of comparison to determine ‘‘how ready’’ or ‘‘how resistant’’ an organization’s members might be expected to be if some meaning is to be garnered from the data collected. Two alternatives are available to help practitioners interpret the data. These include (a) judgmental norms and (b) group comparisons. In a practical setting, leaders might rely on judgmental norms that represent response levels that are tolerable before corrective actions are taken. Thus, leaders can indicate the ‘‘level of readiness’’ desired; then, by comparing actual questionnaire responses to this norm, differences can be identiﬁed and change facilitation strategies can be directed toward minimizing those differences. Many would argue that these judgmental norms may be more useful than intergroup comparisons because leaders are actually deﬁning an ideal state of the organization rather than limiting the organization’s potential based on some numerical comparisons. While the use of judgmental norms would permit the immediate use of a valid and reliable readiness instrument, it would also allow researchers to

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empirically test important questions that might give change agents, consultants, and other researchers a more honed understanding of readiness creation and change diffusion. For instance, researchers have suggested that change can be diffused by enlisting the support of opinion leaders (cf. Armenakis et al., 1993), suggesting that an organization might be ready if these individuals are ready. While an attractive proposition, the extent to which this holds true deserves empirical investigation where the use of a readiness measure coupled with the ﬁndings in research on social networks could bolster the credibility of such a recommendation.

Method of Developing Scales With an understanding of the level of analysis, a clear understanding of the factors that inﬂuence the construct must be gained if a more comprehensive instrument to assess readiness is to be developed effectively. One way of identifying the factors that inﬂuence readiness is to select an existing theoretical framework and then develop scales to assess the conceptual components based on that theory. For instance, Armenakis et al. (1993) outlined a model of readiness based on social learning theory; however, they did not develop scales or test this model empirically. This approach has the advantage of providing an explicit rationale and theoretical basis for the inclusion or exclusion of particular content. The disadvantage of this approach is that content beyond the theoretical framework that is selected may be omitted, imposing a restriction on the content of the instrument and potentially limiting the measure’s usefulness among members of the organizations studied. A second approach is to scan the existing literature in search of constructs and scales that have some established evidence of empirical reliability, validity, and utility, giving little regard for their places in some coherent theoretical framework. Finally, a third approach is to consult organizational members who have experienced changes and then build a questionnaire that reﬂects the information that emerges through this consultation. In the development of a comprehensive instrument to assess readiness, a strategy that blends each of these methods should be used. First, there are many existing conceptualizations of readiness based on sound theoretical frameworks (cf. Armenakis et al., 1993). There are also a number of existing readiness instruments that identify a number of the factors that inﬂuence readiness; a point highlighted throughout this review. Finally, members of many organizations have recently experienced change giving them great

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insight to the factors that are most important to readiness, adoption, and institutionalization of change in organizations.

CONCLUSION Over the past four decades, the concept of readiness has emerged as a distinct construct and played a major role in the literature of medicine, education, and organizational development and change. Despite this, there seems to be considerable ambiguity regarding the measurement of the concept with over 40 instruments available to anyone interested in assessing an organization’s or an individual’s readiness. Although each of these instruments offers some gauge of readiness, they typically assess readiness from one of four perspectives to include the change content, the change process, the organization’s context, and the attributes of individuals. Still, these instruments offer promising insights to the content domain of readiness. For instance, those instruments focused on change-content suggest that organizational members should recognize the extent to which the change would be aligned with organizational goals and beneﬁcial to the organization and its membership. Process instruments suggest that overarching support from leadership should be considered along with speciﬁc actions that demonstrate that support such as communication, planning, and participation. Instruments that suggest readiness is reﬂected in the organization’s internal context indicated that readiness should be assessed in terms of the perceived need for change, the task climate, and the relationship climate. In turn, the instruments that assess readiness from the individual attributes perspective indicates that there is a cognitive component to readiness where employees may need to have some ability and efﬁcacy for change. In closing, we have proposed an overall model that can be used to guide the integration of these ideas and subsequent empirical efforts to further develop theories and measures of readiness. By gaining a better understanding of this ﬁrst phase of the change process (i.e., readiness), we suggest that more general theories of organizational change that explore other phases of the process (i.e., adoption and institutionalization) could be further developed and empirically tested. This not only enhances our knowledge of the change process; it may serve as the foundation for a comprehensive theory of organizational change. Considering the magnitude of organizational commitment and resources often required to initiate and implement changes, this effort warrants attention.

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BUILT TO CHANGE: HIGHPERFORMANCE WORK SYSTEMS AND SELF-DIRECTED WORK TEAMS – A LONGITUDINAL QUASIEXPERIMENTAL FIELD STUDY Barry A. Macy, Gerard F. Farias, Jean-Francois Rosa and Curt Moore ABSTRACT This chapter reports on a longitudinal quasi-experimental field study within an organizational design of a global consumer products manufacturer moving toward high-performance work systems (HPWSs) in North America by integrating business centers and self-directed work teams (SDWTs) coupled with 13 other action-levers within an integrated and bundled high-performance organizations (HPOs) re-design. The results of this organizational design effort are assessed using different types and levels of organizational outcomes (hard record data, behavioral, and attitudinal measures) along a 5-year temporal dimension punctuated by multiple time periods (baseline, during, and after). The organization, which was ‘‘built to change’’ (Lawler & Worley, 2006), in this research had already highly superior or ‘‘exemplar’’ (Collins, 2001) levels of organizational performance. Consequently, the real research question Research in Organizational Change and Developement, Volume 16, 337–416 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0897-3016/doi:10.1016/S0897-3016(06)16010-3

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becomes: ‘‘What effect does state of the art organizational design and development have on an exemplar organization?’’ The study also calls into question the field’s ability to truly assess exemplar organizations with existing measures of organizational change and development.

INTRODUCTION Sustaining positive outcomes in a hyperturbulent and extremely competitive landscape (Bettis & Hitt, 1995) is a challenge that executives face daily with the hope of reaping emerging beneﬁts while sustaining current profits. To comprehend this global and volatile environment, and anticipate future business needs and constraints, executives and their organizations must posses a proactive ﬂexibility that stretches far beyond a simple adjustment to an ever-changing environment (Brown & Eisenhardt, 1997). Moreover, the search for innovative ways to improve organizational performance is central to the work of a large number of scholars and practitioners. At the same time, we live in a ‘‘Good to Great’’ (Collins, 2001) era in which profitable organizations are trying to improve, after having already implemented total quality management (TQM), re-engineering, work teams, six sigma and business process re-design (BPR). For many organizations, other than offshoring to reduce costs, there is not much they can do except to take the leap of faith to greater employee engagement, self-governance, more involvement in decision-making, and other work aspects that characterizes high-performance work systems (HPWS). As Lawler and Worley (2006, p. 3) indicate, ‘‘ y companies should seek a string of temporary competitive advantages through an approach to organization design that assumes change is normal.’’ Furthermore, they suggest that organizations should be built (designed) to change on the basis of improved human capital, knowledge creation, and designing organizations with the ability to constantly change. Lawler and Worley (2006, p. 6) further state that ‘‘There is a growing evidence that the way [organizations] are organized can in fact provide a competitive advantage.’’ We too argue that organizations that are able to design HPWS (the bundling and ﬁt of macro- and micro-structures, systems, and processes) are central to providing organizations with the ﬂexibility to adapt to constant change. There is a growing body of evidence (Arnett, Macy, & Wilcox, 2005; Macy & Moore, 2004; Collins, 2001; Farias, 2005; Huselid, 1995; Huselid,

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Becker, & Beatty, 2005; Lawler & Worley, 2006) indicating that organizational design is a critical issue for competitive advantage. Our longitudinal ﬁeld study examines an organization that was ‘‘built to change’’ over a 20-year period, or in other words, that was designed to acquire the capability to change. The main design features used by this changing organization were a business center design coupled with self-directed work teams (SDWTs), themselves coupled with 13 other key action-levers. In essence, this was the organization’s way to design for change. It seems many organizational change interventions are unsuccessful or less well accepted. Most organizations are built for stability rather than adaptability and ﬂexibility. Organizational leaders have been coached and trained to create organizational stability. Many organizations, except maybe those in the public sector (city, state, and federal governments, most hospitals and care-giving institutions, school systems, etc.) and maybe even energy ﬁrms (Exxon-Mobil, Royal Dutch Shell, B.P., etc.), need to be constantly changing their structures, systems, and processes to meet global competition. Eventually, even those in the public sector as well as energy ﬁrms will be required in the future to change (as the environment changes) – just not as often nor as radical. Moreover, organizational leaders, as well as rank and ﬁle employees, tend to resist change. They have been schooled (mostly at business schools) to design structures, systems, and processes for permanency. Our view, like Lawler and Worley (2006), indicates that leaders and rank and ﬁle employees must be involved in designing organizations that will constantly evolve and be built for change. Our definition of an innovative HPWS is an organization that has successfully bundled and integrated speciﬁc sets of design features or actionlevers, which are comprised of macro- and micro-organizational structures, systems, processes, technologies, and information/knowledge-sharing mechanisms. Specifically, macrostructures consist of autonomous business units or centers that have been restructured from the front to the backend of the value chain. Microstructures consist of operations with SDWTs along both ends of the value chain – the supply and the demand sides. Within these types of SDWTs, team members perform formalized work tasks (not jobs) and formalized rotated leadership roles within and outside their respective teams. Coupled with the micro operations SDWT structure would be the macro business center and connected process white-collar supply chain SDWTs utilizing coordinators, coaches, team leaders, or resource people instead of supervisors and managers. Second, organizations that are built to change utilize critical supporting systems, such as multi-skilling, job/task rotation and cross-training,

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information and knowledge sharing, and people development systems. Included in these built to change systems would be minimum job/task levels or a common job/task classiﬁcation system and appropriate innovative pay systems coupled with a qualiﬁcation/certiﬁcation/re-certiﬁcation system. The third element in an organization that is built to change is its organizational processes. Such processes include employee involvement in decision-making, formalized and rotated leadership roles within the SDWTs, and self-governance. Other processes include direct participation in the organization’s design, direct work with suppliers and customers along the value chain, and TQM. In summary, our definition of HPWSs is one that is intentionally designed to change and bring out the best in people, structures, systems, and processes thereby producing organization capability that delivers sustainable leadership and business results. In turn, these bundled design features or action-levers holistically ‘‘ﬁt’’ together to be a competitive advantage and produce superior to exemplar performance. Moreover, these bundled design features that ﬁt together seemingly have great difﬁculty in being copied. In essence, the relationship between these design features becomes a ‘‘competitive advantage’’ (Black & Boal, 1996). The difﬁcult and complex aspect about designing HPWSs to change is that there is no one design and no one way to do it! The organizational innovation, organizational transformation, organizational development, organizational design, and change management literatures provide many insights on potentially profitable organizational change alternatives. However, Armenakis and Bedeian (1999, p. 311) observe that the scope of these contributions remains, for now, limited and that ‘‘future studies should evaluate content, contextual and process issues so as to make predictions about how and why organizations change.’’ Some authors have raised concerns about the identiﬁcation and assessment of the fundamental factors required to implement successful organizational change efforts. For example, how do organizations unbundle the various design features and unveil the dynamic ‘‘processes and mechanisms responsible for initiating change’’ (Pettigrew, Woodman, & Cameron, 2001, p. 705). Moreover, ‘‘the question of ‘‘how’’ change emerges, develops, continues, and terminates over time remains largely unanswered’’ (Armenakis & Bedeian, 1999, p. 311). However, responsive to the urging demands from organizations, research studies have mainly reported on speciﬁc organizational design change efforts, such as quality circles, BPR, re-engineering, TQM, and six sigma, to name only a few of these design features. Most practitioners and even some academics believe that TQM, six sigma, re-engineering, and business process design will improve quality and service

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while reducing cost and cycle time. The literature on TQM (Deming, 1986) suggests that TQM (now popularly called six sigma) is a way to improve organizational results. However, there have been numerous studies (Fisher, 1992; Gilbert, 1992; Macy & Izumi, 1993; Wruck & Jensen, 1994; Mohrman, Tenkasi, Lawler, & Ledford, 1995; Hackman & Wageman, 1995; CoyleShapiro, 1999) that indicate the TQM approach has little to no scientiﬁc evidence for organizational improvement. In fact, one meta-analysis study of 1,800 North American organizations from 1961 to 1991 found no evidence of improvement in organizational performance using TQM (Macy & Izumi, 1993). In contrast to TQM, many consultants and consulting ﬁrms have popularized BPR and re-engineering for its organizational beneﬁts. Reengineering and BPR started with Hammer (1990), in his landmark article in the Harvard Business Review (HBR). It was then followed by Davenport (1993), Hammer and Champy (1993), Johansson, McHugh, Pendlebury, and Wheeler (1993), and Mink, Esterheysen, Mind, and Owen (1993). However, even Hammer conceded to only a 30 percent success rate for the use of BPR or re-engineering (Vansina & Taillieu, 1996). Further, scientiﬁc evidence on the low success rate of TQM, BPR, and re-engineering can be found in Smith (2002), which indicated that TQM efforts had a success rate of 37 percent, while BPM and re-engineering had only 30 percent. Smith’s study indicates that the higher success rate was from strategy deployment (58 percent) and restructuring and downsizing (46 percent). In summary, these highly popularized change efforts (TQM, six sigma, BPR, and reengineering), designed mostly by large consulting ﬁrms and a few academics, are based upon little scientiﬁc evidence, and rely more on case studies and anecdotal evidence. Their collective impact on organizational effectiveness seems to be little to none! Woodman (1989) observes the development of the ‘‘high performance– high commitment work systems’’ (Holbeche, 2005; Pasmore, 1994) as a type of organizational transformation effort that impacts the organization’s core. Associated with the HPWS perspective, the implementation of these innovative work systems requires a comprehensive and holistic or bundled design approach that integrates macro- and micro-organizational design perspectives into a single integrated framework in which the interdependence and ﬁt of organizational design features are critical (Becker & Huselid, 1998; Hanna, 1988; Ketchum & Trist, 1992; Lawler, 1996; Nadler & Gerstein, 1992; Pasmore, 1988; Risher & Fay, 1995). The entire organization becomes a ‘‘burning platform’’ on which these different but interdependent design features will be designed to ﬁt altogether to change as suggested by

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the HPWS design philosophy. Successful HPWS implementations are allencompassing, so that the new intricacies formed by technologies, processes, systems, and structures will exhibit the most congruence among the elements and with the external environment (Galbraith, 1977). These ‘‘open system’’ (Katz & Kahn, 1978; Trist, 1981) organizational design features include ‘‘practices such as rigorous selection procedures, internal merit-based promotions, innovative grievance procedures, crossfunctional and cross-trained teams, high levels of training, information sharing, participatory mechanisms, group-based rewards, and skill-based pay’’ (Datta, Guthrie, & Wright, 2005, p. 136). For example, the implementation and results of SDWTs, sometimes considered as a competitive advantage by some organizations (Ault, Walton, & Childers, 1998) are but one of these design features that has drawn the attention of business magazines and case studies as being critical to many ﬁrms’ performance (e.g., Procter & Gamble, Harley-Davidson, International Paper, Goodyear, Rohm & Hass, S.C. Johnson and Sons, Colgate, Harman International, etc.). However, despite the fact that HPWS (sometimes called high-performing organizations – HPOs) and SDWTs have been in the work innovation and change literatures for 20–50 years, they surprisingly remain under the skeptical scrutiny of those claiming that these self-managing teams are an unveriﬁed organizational improvement means, or in extreme cases, just another management ‘‘fad’’ (Gibson, Whitney & Tesone, 2001). We identify three issues that provide possible explanation for this skepticism. First, among the few potential explanations of why the HPWS concept and its open systems value perspective remains weak is the one provided by a review of the different HPWS and SDWTs-related literatures. While some empirical ﬁndings exist on some HPWS organizational key design features or action-levers, like the effectiveness of SDWTs, a closer look at more than ﬁve decades of research on SDWTs shown in Table 1 reveals that only 19 (from 1951 to 2005) scientiﬁc and empirically based studies investigating the effects of SDWTs are available in the organizational innovation, change, design, and development literatures. Furthermore, this lack of scientiﬁc evidence is aggravated by weak empirical support of SDWTs positive impact on organizational performance since the results range from ‘‘positive’’ to ‘‘no change,’’ or ﬁlling a ‘‘mixed bag’’ that might conclude for no overall significant improvement in organizational performance. Similarly, the vast majority of the literature on HPWS designs has been largely prescriptive and has approached the HPWSs holistic concept mainly by only assessing isolated design features or action-levers; rather than accounting for the overall

Author(s)

Study Description

Trist and Bamforth (1951)

Report of early experiment of sociotechnical systems

Miller (1975)

This was a revisit to one of the ﬁrst studies in socio-technical design 15 years after it was started The Volvo experiment at Kalmar and Torsland

Gyllenhammar (1977)

Cummings et al. (1977)

Critique of 58 work innovation studies. Eighty-six percent used autonomy and discretion. Results reported here are on all work innovations

Trist et al. (1977)

Rushton quality of work life quasiexperiment – coal mining – independent evaluation Rushton quality of work life quasiexperiment – coal mining – independent evaluation

Goodman (1979)

Pasmore, Francis, Haldeman, and Shani (1982)

Review of 134 studies

Organizational Performance Criteria

Results

Group cohesiveness Personal satisfaction Sickness reduction Absenteeism reduction Productivity Sustained over 15 years

Improvement Improvement Improvement Improvement Partial support Partial support

Productivity Attitudes to the new design Diffusion Quality Cost reduction Attitudes Withdrawal reduction (turnover and absenteeism) Productivity Safety violations reduction Cost reduction Productivity Safety Attitudes Cost–Beneﬁt Productivity

Improvement Improvement Yes Improvement Improvement Improvement Improvement

96%a 80%a 90%a 77%a

No change Improvement Improvement No change Improvement Improvement Slight improvement Improvement 89%b

High-Performance Work Systems and Self-Directed Work Teams

Table 1. Summary of Results from Prior Semi-Autonomous and Autonomous Self-Directed Work Teams Studies: 1951–2005.

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Table 1. (Continued ) Author(s)

Study Description

53% of the studies used autonomous teams.

Wall et al. (1986)

Quasi-experiment – ‘‘greenﬁeld’’ versus ‘‘brownﬁeld’’ site of same company. No changes at brownﬁeld site

Beekun (1989)

Meta-analysis of socio-technical design (17 studies) – comparison of SDWTs with other types of teams Meta-analysis of socio-technical design (17 studies). Only social change versus social and technical change. Sociotechnical change with and without pay system Quasi-experiment – ‘‘greenﬁeld’’ versus ‘‘brownﬁeld’’ site of same company. No changes at brownﬁeld site Meta-analysis of previous empirical studies of organizational change and design – semi-autonomous and autonomous work teams

Beekun (1989)

Cordery et al. (1991)

Macy and Izumi (1993)

Results

Cost reduction Quality Absenteeism Turnover reduction Safety Attitudes Intrinsic job satisfaction Extrinsic job satisfaction Internal work motivation Organizational commitment Mental health Employee turnover Productivity Escape behaviors reduction

Improvement Improvement Improvement Improvement Improvement Improvement Betterc No change No change No change No change Worsed Betterc Betterc

Productivity Escape behaviors

No change No change

Work attitudes Absenteeism Employee turnover Overall performance Financial performance Behaviors Attitudes

Betterc Worsed Worsed Improvement Improvement No change No change

85%b 100%b 86%b 81%b 100%b 100%b

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Pasmore (1988)

Organizational Performance Criteria

Cohen and Ledford (1994)

Uhl-Bien and Graen (1998)

Erez, Lepine, and Elms (2002)

Fredendall and Emery (2003)

Meta-analysis of 131 studies organizational change and design – holistic and integrated change/redesign (structural, human resources, and technological) Quasi-experiment (service company) selfmanaging teams compared to traditional teams

Comparative analysis of professional’s use of individual self-managing activities in functional and crossfunctional teams Quasi-experiment of 38 self-managed undergraduate teams

Improvement Improvement Improvement Improvement

Performance (survey measures) Job satisfaction Growth satisfaction Group satisfaction Organizational commitment Perceived positive change in group Employee ratings of performance (self) Supervisor ratings of performance Manager ratings of performance Job satisfaction Unit effectiveness

Betterc Betterc Betterc Betterc No change Betterc

Team performance and team member satisfaction

Higher. Partially due to peer evaluations and rotated leadership (partially mediated by workload sharing, voice, cooperation) Higher in for SDWT

Productivity

Betterc No change Betterc Better Better in functional units

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Comparison between garages using SDWTs compared to garages having traditional teams

Overall performance Financial performance Behaviors Attitudes

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Macy and Izumi (1993)

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Table 1. (Continued ) Author(s)

Study Description

Organizational Performance Criteria

Tata and Prasad (2004)

Assessment of SDWTs effectiveness under different organizational structure types

Effectiveness

Arnett, Macy, and Wilcox (2005)

Structural equation modeling of the macro and micro elements of buyer– supplier relationships utilized selfdirected ‘‘business or enterprise teams’’

Objective sales growth and dyadic data from both buyers and seller

Results

Higher under low levels of centralization and/ or formalization Hypothesized model versus rival model explained over 32% variance in sales growth over 5-year period

a

These are percent of all studies reviewed reporting improvements. These are percent of studies using autonomous work groups reporting improvements. c Indicates that autonomous teams were better than other type. d Indicates that autonomous teams were worse than other types of team. b

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positive, no change, or negative effects on the full organizational system (Whittington, Pettigrew, Peck, Fenton, & Conyon, 1999). Moreover, several authors point out the evidence regarding the ﬁnancial, behavioral, and attitudinal outcomes in organizational change efforts as being scarce and often unreliable (Goes & Meyer, 1990; Kahn, 1974; Macy & Mirvis, 1982; Pettigrew, 1985; Zucker, 1987). While some progress has been made, Pettigrew et al. (2001) suggest that the literature remains underdeveloped on several fronts – namely, the contribution of economic, behavioral, and attitudinal data utilized in a longitudinal change program. A second issue of concern is the implementation decision of HPWS in an actual work organization. Executives often consider that implementing such profound changes is a huge organizational and personal risk that can reveal itself useless or being a remedy worse than the wound itself. Inertia and inadequate decision-making processes within a currently successful and ‘‘tightly coupled’’ ﬁrm creates a negative anticipation about the uncertainties related to the organizational change effort such as the direct negative impact on performance (the J-curve effect or the J-effect), (see Katz & Kahn, 1978, p. 297), or the indirect and unpleasant consequences experienced by the members (i.e., coordination confusion, shift in intra-organizational power, routines, changes in customer relationships) (Greve, 1999; Hannan & Freeman, 1977; Katz & Kahn, 1978; Miller, 1992; Weick, 1979). However, as stated by Lawler and Worley (2006, p. 283) ‘‘In an increasingly complex world, organizations built on traditional assumptions of stability, equilibrium, alignment, and predictability will, more and more, be out of touch and ineffective.’’ Third, the relevance of the organizational change and development ﬁeld is questioned along with its processes, the pertinence of its results, and the practical implications of its ﬁndings. Nested within different organizational levels and a speciﬁc contextual environment, the synergetic effects of the different HPWS design features should be assessed by a comprehensive array of measurement concepts and indicators. The overall implementation procedure should unfold in a sequentially ordered way, and as well be subject to the use of a punctuated time frame long enough to provide a continuous feedback about critical events and their pacing. These are the essential characteristics of the organization’s transformational journey. Responding to these calls by various authors, this quasi-experimental ﬁeld study addresses some of the concerns by not only assessing the added-value that HPO/HPWS and SDWTs might add over time but also as they are being implemented and integrated, even if the organizational innovation, design, development, and change literatures often treat and measure each of

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them independently. The challenge is to strengthen the work innovation and change ﬁelds by ascertaining the truth, whatever it may be. Through scholarly methods and longitudinal evidence, we address the scarcity of scientiﬁc support regarding the real impact that the design of a HPWSs has on organizational performance, especially when the ﬁrm is an ‘‘exemplar’’ or ‘‘great’’ organization (Collins, 2001). The subsequent impact will be assessed throughout the whole organization and linked to ﬁnancial, behavioral, and attitudinal outcomes. To do so, this chapter reports on a quasi-experimental longitudinal ﬁeld study in one large manufacturing site of a large multinational consumer products company (ABC Company) and their 20-year organizational transformation effort to implement HPWSs and SDWTs within their entire North American manufacturing division. HPWSs and SDWTs were formed throughout all ABC’s North America manufacturing operations including their largest manufacturing site (Site A). The ABC Company is and was very profitable and deemed very responsible to its community. However, it undertook the challenge to evolve from a traditional organizational structure leading a mature industry to HPWSs capable of competing and changing in new competitive rivalry markets. Moreover, after the 10-year US supplychain effort to design built to change HPWSs, they subsequently began to design some parts of their demand chain and some staff units. Currently, ABC Company in North America has re-designed over 30 business units or staff functions. Distinguishing the organizational content from the organization’s context (Armenakis & Bedeian, 1999) should better expose the mechanisms, interactions, and rhythm of the change content and process, along with their effects on performance. Therefore, we introduce our HPWS assessment model (shown in Fig. 1). This open system theory (OST) (Katz & Kahn, 1978) assessment model consists of six contextual organizational input domains, (both internal and external),1 15 design features in the transformation or execution part, and three sets of organizational output or result indicators (ﬁnancial performance, employee behaviors, and employee engagement). Consequently, this study focuses on the effects that state-of-the-art organizational transformation and change efforts have on an ‘‘exemplar’’ organization that was built and designed to change. This 5-year ﬁeld study at Site A of the ABC Company adopts a quasiexperimental design. Typically, a quasi-experimental design includes either two time periods (‘‘before’’ and ‘‘after’’) (Pettigrew et al., 2001) or three time periods (‘‘before,’’ ‘‘during,’’ and ‘‘after’’). We chose to use three major time

Internal & External Business Environmental Factors: 1. ABC Company Vision Direction 2. ABC Company Organizational Strategies: Great Deal of Decentralization and HPWS 3. Manufacturing wide Vision Direction and HPWS Transformational Effort 4. Parallel Structures & Processes for Direct Employee Participation: -Business Support Group; -Steering Group; -Design Team; and, -Implementation Teams

II) TRANSFORMATION/EXECUTION : THE FIFTEEN ACTION-LEVERS:

A) Macro: A1. Business Center/Focused Factory/ Product Alignment Structure A2. Direct SDWT Work with Key Internal and External Customers & Suppliers A3. Connected White-Collar Process Resource SDWT’s A4. Management Team as a SDWT A5. Coaches for the SDWT’s B) Micro: B1. Operations Semi-Autonomous SDWT’s

Design FIT

SYSTEMS C) People & H.R.M:

E) Shared Leadership & DecisionMaking/ Empowerment E1. Direct Participation in Decision-making / ProblemSolving (Empowerment / Direct Employee Involvement) E2. Formalized & Periodically Rotated SDWT Leadership Roles

5. Site A Vision Direction 6. Site A Organizational Strategies: HPWS

A) Organization Financial Performance: • Quantity/Productivity • Product Quality

B) Employee Behaviors: • Turnover • Accidents/Safety

STRUCTURES PROCESSES

III)

ORGANIZATIONAL OUTPUTS / RESULTS:

C1. Multi-Skilling C2. Job / Task Rotation / Cross Training C3. Information & Knowledge Sharing C4. Training / Re-training & Development D) Recognition & Financial Rewards Systems: D1. Common Job / Task Classification D2. Pay-for-Skills D3. Qualification / Certification of Operations SDWT members

C) Employee Engagement: • Job Satisfaction • Job Involvement • Job Motivation • Pay Satisfaction • Team Cohesiveness

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I) CONTEXTUAL ORGANIZATIONAL INPUTS:

(feedback)

The HPWS Assessment Model.

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Fig. 1.

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periods (baseline, during, and after) for the ﬁeld study because the use of only two time periods would eliminate the ability to empirically examine the entire change process. Different types and levels of organizational performance outcomes were measured across these time periods, such as hard performance measures (e.g., productivity, product quality), behavioral (e.g., employee turnover and safety), and employee engagement (e.g., job satisfaction, employee motivation). All data (except for attitudinal) were collected over 54 consecutive months from hard company records. The data were then analyzed using a time series regression analysis. Rather than simply focusing on ‘‘before’’ and ‘‘after’’ results, the data were segmented into six 9-month time periods to provide a ﬁner grained analysis of the entire change process. In fact, if the data was analyzed using just the ‘‘before’’ and ‘‘after’’ time periods, all results would be significant (po0.01). However, the ability to measure and explain the entire change process (before, during, after) would have been lost, thereby failing to meet one of the primary goals of the study.

LITERATURE REVIEW To survive and perform, an organization must achieve the best ﬁt and integration arrangements among its internal elements, themselves displaying an optimal congruence with the external elements of its speciﬁc business environment (Galbraith, 1995). Stemming from the socio-technical principles (Trist, 1981), the successful integration of the organization’s social and technical systems is achieved by the harmonious ﬁt between the external environment and among its interdependent technologies, systems, structures, and processes (Pasmore, 1988). For example, a generic model of organizational design conceptualizes ‘‘a set of distinct but interrelated and bundled Human Resource Management (HRM) practices that together select, develop, retain, and motivate a workforce y and produces superior ﬁrm performance. Employees are encouraged to apply their superior abilities, skills and behavior scripts in their work related activities so to provide the ﬁrm with superior results’’ (Way, 2002, p. 765). Therefore, these holistic HPWS design features integrate interrelated work systems, processes, and structures, and deﬁnes their degree of interaction. This design bundling enables the emergence of unique and complex organizational characteristics linked to its business context and can thus be considered a competitive advantage. As suggested by Lawler (1982), each organization needs to make the appropriate set of design choices that specifically ﬁt (see Katz & Kahn,

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1978) the context in which the HPWS design is being implemented. These organizational choices arise from an extensive and sometimes overwhelming array of design features that will be carefully considered, assembled, and chiseled into interconnected HPWS structures, systems, and processes. These systems, structures, and processes include the 15 design features and others shown in Fig. 1. For example, a meta-analysis of work innovation and organizational change in 1,800 North American organizations from 1961 to 1991 (Macy & Izumi, 1993) identiﬁed and categorized 61 common design features or action-levers into four categories: structure (organization capacity), human resources, technologies, and TQM. However, over this 30-year period, only 14 ‘‘best practice’’ design features had significant positive impact on an organization’s performance. Again, this meta-analysis reinforces the notion of interdependence and bundling among HPWS structures, systems, and processes, and is reinforced by Armenakis and Bedeian (1999, p. 299) in the following: ‘‘a successful change effort may depend more on the congruency of ﬁt between content, contextual, and process considerations than the nature of a change.’’ The literature reviewed thus far has only alluded to the concept of ‘‘systems ﬁt,’’ ‘‘interdependence,’’ or the need for ‘‘bundling’’ HPWS design features to improve organizational effectiveness (Galbraith, 1977; Katz & Kahn, 1978; Mohrman & Mohrman, 1997; Nadler & Tushman, 1988; Pil & Macdufﬁe, 1996). Moreover, Huselid (1995), Lawler, Mohrman, and Ledford (1995), Macy and Izumi (1993), and Pil and Macdufﬁe (1996) provide empirical support for this argument; however, prior research has mainly reported isolated individual HPWSs, while ‘‘conventional wisdom would predict that ﬁrms, SBUs [Strategic Business Units], and worksites adopting high performance work practices in one area are more likely to use them in other areas as well’’ (Huselid, 1995, p. 641). The next section of this chapter discusses SDWTs, one of the main design features of the HPWS change effort at the ABC Company.

Semi-Autonomous SDWTs According to the complex team terrain classiﬁcation system (see Fig. 2) developed by Macy (1996, pp. 10–11), semi-autonomous SDWTs are but one of the 15 types or kinds of blue- and white-collar work teams operating in North America (10 different types of operations work teams, four different types of ‘‘demand and supply chain’’ work teams, and one ‘‘virtual’’ work team) found in benchmarking 105 innovative organizations in North America from

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DETAILED OVERVIEW OF The COMPLEX WORK TEAM TERRAIN Continuum of 15 Team Structures Team Complexity, Autonomy, Decision-making, and Leadership Increases Across the Team Continuum TEN SUPPLY CHAIN TEAMS: Vertical White- and Blue-Collar Operations Teams (0-100%)

Early-Stage Teams:

Traditional Natural Work Work Teams Teams 1 2

Quality Circles 3

High-Performance Teams:

Ad Hoc Problem Solving Teams 4

Quality Process Improve- ImproveManufacturing ment ment Teams Teams Cell Teams 5 6 7

• Hierarchical reporting relationships • Low to some decision-making, • accountability & responsibility Teams work in small units Traditionally Designed Organizations: 19% 15%

Self-Directed WorkTeams:

“Pilot” SemiAutonomous Teams 8

SemiAutonomous Teams 9

Autonomous Teams 10

FIVE DEMAND/SUPPLY CHAIN TEAMS: Horizontal Multifunctional White-Collar Teams (0-100%)

Matrix Teams (Limited Life) Demand/ SupplyChain CrossFunctional Enterprise Teams

Customer, Channel, Product, or Process Focused CrossFunctional Enterprise Teams

11

12

• Hierarchical reporting

• Reduced hierarchy & wider relationships • Low to some decisionspans of control • Moderate to great decision-making, making, accountability & responsibility accountability & responsibility • Teams work in small to • Teams work in identifiable units moderately complex units 8%

0.5% 0.5%

40% 45%

Aligned SDWT’s (Permanent Life) Customer, Channel, Demand/ Product, Supplyor Process Chain Focused CrossCross Functional Functional Enterprise Enterprise Teams Teams

13

Virtual Teams R&D or Risky Foreign Joint Ventures

15

14

• Reduced hierarchy & Much wider spans of control • Moderate to great decision-making, accountability & responsibility • Teams work in moderate to complex customer, channel, product or process units

13%

2%

<1%

72% 15%

21%

39%

9%

41%

9%

28%

20%

2%

- Top percentages refer to work team prevalence in North America; -Bottom percentages refer to work team prevalence in S.I.O.-R (1996-2004) Note: Semiautonomous teams are defined as work teams with a coach, but without first-line and/or second-line supervisors, making significant work decisions and solving work and product/service related problems. Autonomous teams are defined as work teams working without a coach and without a first-line and/or second-line supervisor, making significant decisions and solving work and product/service related problems. TEXAS TECH’S TEAM CONTINUUM The Texas Center for Innovative Organizations at the Rawls College of Business at Texas Tech is conducting best practice researches research. regarding various types, prevalence and impact of teams in North American (NA) corporations. The Survey of Innovative Organizations (S.I.O.-R ) is the benchmarking instrument from which the Texas Center has gathered Organizational Best Practice Data from 107 Fortune 500 organizations in 6 different sectors. The team’s continuum presented here depicts increasingly sophisticated organizational use of teams and increasing impact of teams on the organization. For example, according to Barry Macy, a professor at the Rawls College of Business, Texas Tech University, high-performance teams in vertical structures on average add $2.5 million in organizational value while fully aligned permanent self-directed teams along both the supply and demand chains add approximately $10 million in value.

Fig. 2.

The Texas Tech’s Complex Work Team Terrain. Source: Macy (1996, pp. 10–11; with updated data).

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Innovative H.P.W.S.Organizations:-

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1991 to 2006. Approximately, one-third of these 105 innovative organizations were found to be ‘‘traditionally designed and profitable,’’ while two-thirds were ‘‘HPWSs and were very profitable’’ over the 15-year time period. Of the two-thirds of the organizations that were HPWSs, approximately one-half were ‘‘new design’’ and approximately one-half were ‘‘re-designed’’ businesses. Notice that along the operations section of the complex team terrain, there are 10 teams whose percentage (out of 100 percent) of successful implementation varies greatly from a traditionally designed organization to an innovative HPWS. Macy (1996) indicates that SDWT implementation dramatically increased from the 1970s to the early 1990s from about 1 percent of traditional organizations having successfully implemented SDWTs to the year 2006, where about 9 percent of the traditionally organized ﬁrms are successfully employing SDWTs (1 percent autonomous and 8 percent semi-autonomous SDWTs). However, during that same time period, more profitable HPWS organizations have successfully implemented SDWTs in their supply-chain operations much more than traditional organizations (69 percent versus 9 percent) [either pilot SDWTs (21 percent), semiautonomous SDWTs (39 percent); or autonomous SDWTs (9 percent)]. In retrospect, truly autonomous SDWTs are still very rare in North American business, even after their initial introduction in the mid-1960s. Data from the Survey of Innovative Organizations (S.I.O.-R, 1991–2005) indicate there are usually two types of SDWTs: (1) semi-autonomous SDWTs and (2) autonomous SDWTs. As indicated above, autonomous SDWTs are rare in ‘‘both’’ traditional organizations and innovative HPWSs. Design characteristics of these two types of self-directed or selfregulated work teams are listed below: Selected SDWT Design Characteristics 1. Shared leadership linked with different types of managerial core values, philosophies, and principles of management

Semi-autonomous SDWTs

Autonomous SDWTs

Coaches are present for a period of time (maybe always) – usually for at least 12–18 months

No coaches present; teams report directly to higher management (possibly to business center leader or director) – very rare (only 9 percent of NA ﬁrms: 1 percent traditional ﬁrms, while innovative HPWS have 8 percent)

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Continued Selected SDWT Design Characteristics 2. Degree of multiskill exhibited by the SDWT members

3. Number of rotated and formalized leadership roles performed by SDWT members

Semi-autonomous SDWTs

Autonomous SDWTs

Some degree of multiskill in the team typically 5–7 different tasks performed by SDWT members (operations, maintenance, quality, etc.) Some, usually 5–7 different formalized and rotated leadership roles performed by SDWT members

Great deal of multiskill in the team (typically 8–10 different tasks performed by team members)(usually takes about 9–10 years) Many (10–14) different formalized and rotated leadership roles performed by SDWT members (usually takes 7–10 years to be an autonomous SDWT)

Source: Taken from the Texas Center’s Survey of Innovative Organizations (S.I.O.-R, 1991– 2006). See Macy (forthcoming, 2008).

Implementing SDWTs requires knowledgeable (about the entire business value chain – both the supply and the demand chains) team members and effective coaches or team leaders (in the case of semi-autonomous SDWTs) (Wageman, 1997) to fulﬁll formal, rotated, and shared leadership roles different from those traditionally performed by supervisors and members of traditional work teams. Because SDWTs are so central to the holistic and integrated HPWS strategy, prior research on this aspect of the design is reported in this section of the study. These ‘‘traditionally designed’’ organizations included in the complex team terrain have not changed their hierarchical reporting relationships with or without work teams implementation. In addition, they have not changed the decision-making, accountability/responsibility relationships between workers and management. Lastly, technology and/or their physical work space typically deﬁne a small work team. In contrast, ‘‘innovative HPWS’’ have drastically changed their hierarchical structures and work relationships to have wider spans of control and a

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ﬂat/lean structure when they implement SDWTs. In addition, decisionmaking and accountability/responsibility relationships also have changed to accommodate SDWTs. All of these 10 types of work teams on the supply side of the value chain (operations) have both hourly and professional white-collar staff members. On the right-hand side of Macy’s complex team terrain (to the right of the bold vertical dotted line in Fig. 2) is the lateral or horizontal (Galbraith, 2005; Macy, Arnett, & Wilcox, 2003; Arnett et al., 2005) multifunctional white-collar work teams across both the ‘‘supply side’’ (non-operations) and the ‘‘demand side’’ of the ﬁrm’s value chain. Once again, ‘‘traditionally designed businesses’’ display ‘‘limited life’’ (depending on the project or problem the team faces) cross-functional work teams that report on a matrix basis (reporting to two or more bosses). These traditional supply and/or demand cross-functional work teams have not changed their structures, decision-making, or accountability/responsibility relationships. In this situation, the work teams work in small to moderately complex work teams. These traditionally designed work teams are once again matrixed and have limited life. Eighty-ﬁve percent of traditionally designed work team organizations fall into this category. In contrast, ‘‘innovative HPWSs’’ have 50 percent of their work teams designed like traditional organizations along their supply and demand chains. The real distinguishable difference in HPWSs is their 48 percent implementation of permanently aligned customer, channel, product, or process professional white-collar semi-autonomous SDWTs. For example, Procter and Gamble have over 100 customer business development teams or ‘‘customer enterprise teams’’ (teams ranging from 12 to over 200 members with sales revenue that ranges from $27 million to over $3 billion) totally dedicated and aligned to one or more large customers. Innovative HPWSs, operating along both the supply side and the demand side of their value chain, have reduced their hierarchical structure, have wider spans of control, have moderate to great decision-making authority, have changed their accountability/responsibility system and their work systems and processes in moderate to very complex working relationships with customer, supplier, distribution channel, product, and process (R&D, marketing, etc.) and have designed horizontal or lateral teams within and across the business. Chart 1 (see next page) depicts these ‘‘traditional’’ versus ‘‘HPWS’’ organizational teams along both the supply and demand chains of the total value chain. In summary, implementation of linked and connected blue- and whitecollar operations SDWTs and aligned cross-functional white-collar value chain SDWTs requires the organization to change its organizational

Traditional versus HPWS Organizational Teams (*Both sides of the Value Chain have 100% Represented).

Supply Chain/Operations Work Teams*

Traditional Organizations (White- and BlueCollar Teams) (%)*

Innovative HPWS (White- and BlueCollar Teams) (%)*

19

15

72

15

9

70

Traditional work teams; natural work teams; quality circles; ad hoc problem-solving teams Quality improvement teams; process improvement teams; manufacturing cell teams; high performance teams ‘‘Pilot’’ semi-autonomous teams; semiautonomous teams; autonomous teams

Horizontal/Lateral Multifunctional Supply and Demand Value Chain Work Teams*

Innovative HPWS with White-Collar Teams (%)*

40

41

45

9

13

28

2

20

o1

2

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Matrix work teams (limited life) Demand/supply chain; cross-functional enterprise teams Matrix work teams (limited life) Customer, channel, product, or process-focused crossfunctional enterprise teams Aligned SDWTs (permanent life) Demand/supply chain cross-functional semi-autonomous enterprise teams Aligned SDWTs (permanent life) Customer, channel, product, or process-focused crossfunctional semi-autonomous enterprise teams Virtual work teams R&D and/or foreign ventures teams

Traditional Organizations with WhiteCollar Work Teams (%)*

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Chart 1.

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structure and to shift authority for several types of decision-making and accountability/responsibility relationships to white-and-blue collar SDWTs. Moreover, it requires the organizational structure to change its systems and processes to support this new structure. First and second levels of supervision become redundant and the organization structure is ﬂattened. Thus, SDWTs represent a paradigm shift in ways to organize work (Trist, 1981). While still relatively rare in the research literatures, studies have shown that SDWT’s (in supply chain and demand chain settings plus operations) are being adopted more often (Arnett et al., 2005; Macy et al., 2003; Macy & Moore, 2004; Cotton, 1993; Goodman & Associates, 1986; Fisher, 1993; Lawler, Mohrman, & Ledford, 1992, 1995, 1998; Wageman, 1995). In addition, the organization’s critical support systems and processes (performance appraisal, reward and recognition systems, etc.) need to be changed. These key support systems and processes seem to be the ‘‘Achilles heel’’ of successfully implementing SDWTs on either the supply or the demand side of the value chain. Some of these support systems and processes plus other SDWTs design characteristics are depicted in Appendix A. Especially relevant in this data are the following SDWT design elements: average span of control for a SDWT coach or team leader 1:34; 54 percent of the sample used innovative pay systems with SDWTs; average number of meetings a year for a SDWT ¼ 127 (4,898 minutes per year); and the SDWT design resulted from an organizational re-design (59 percent) rather than team evolution (16 percent). Other SDWT design features are referenced in Appendix A. Furthermore, SDWTs seem to be associated with improved ﬁnancial, behavioral, and attitudinal outcomes. However, some previous studies have found ‘‘no change’’ or hardly any ﬁnancial improvements. Macy, Izumi, Hurts, Norton, and Smith (1986) found that self-regulating work teams have a general positive impact on ﬁnancial performance but more speciﬁc, selective, and mixed effects on attitudes (also seen in Macy & Izumi, 1993). While the effectiveness of participative management has been debated (e.g., Locke & Schweiger, 1979; Wagner, 1994), some authors argue that direct (versus indirect) participation is effective when true decision-making power and authority shifts (Cotton, 1995; Macy, Peterson, & Norton, 1989) and not when participation involves mere suggestion or consultation without the corresponding decision-making power. Macy and Izumi (1993), in their meta-analysis studies of 1,800 ﬁrms from 1961 to 1991, report that autonomous and semi-autonomous SDWTs are associated with significant improvements in ﬁnancial performance, but not employee behaviors such as turnover and accidents nor employee engagement.

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The results of an extensive 50-year review of the empirical literature on SDWTs are summarized in Table 1. The ﬁrst striking feature of Table 1 (see pages 345–348) is that there were only 19 scientiﬁc and empirical ﬁeld studies over 50 years (1951–2005) investigating the effectiveness of SDWTs. In addition, the results or the impact of the use of SDWTs are in the positive direction, but not unequivocal! Some studies indicate the lack of positive results by reporting no significant change – a positive event given the ‘‘J-effect’’ or the ‘‘J-curve’’ literature (Katz & Kahn, 1978, p. 297). Only a few empirical research studies in Table 1 found negative results from implementing SDWTs. In general, however, the SDWT inspired literatures and meta-analyses indicate positive and significant ﬁnancial and behavioral performance results and to some degree selective positive results in employees engagement from SDWTs (e.g., Beekun, 1989; Cummings, Molloy, & Glen, 1977; Goodman, Devadas, & Hughson, 1988; Guzzo & Shea, 1992; Hackman, 1986; Macy & Izumi, 1993; Pasmore, 1988). While many studies have not made much reference to the overall organization design and system ﬁt, many authors (e.g., Cohen, Ledford, & Spreitzer, 1996; Galbraith, 1994; Huselid, 1995; Lawler & Worley, 2006; Macy & Izumi, 1993; Pfeffer, 1998; Pfeffer & Veiga, 1999; Pil & Macdufﬁe, 1996) report that an integrated and bundled design approach to HPWS design and the creation of the appropriate context are associated with improved organizational effectiveness.

THE FIELD STUDY: THE ABC COMPANY AND SITE A Our 5-year HPWS ﬁeld study at one large manufacturing site of the ABC Company aims for a better general understanding of HPWSs by integrating issues and concerns raised in the ﬁelds of organizational design, development, transformation, innovation, and change management. The 5-year change process is punctuated by six assessment time frames measuring the impact of the change effort on different performance outcomes. The sequence of events that describes how and when critical design features change attempts to link context with action taken and people involved, while concomitantly considering the effects of the change process and mechanisms through the use of temporal analysis. The empirical assessment of the real impact that these implementations have is conducted in different units of analysis on their respective levels of performance outcomes. The following section describes the contextual setting and background, such as the three hierarchical units involved within the ABC Company,

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prior to the transformation effort at Site A, the location of our study. This part represented by the ‘‘contextual organizational inputs’’ (see Fig. 1, p. 351), is essential to understand the ‘‘transformation part’’ at Site A, which will detail the speciﬁc set of 15 bundled and integrative design features that was implemented during the 54 months of our study. Furthermore, this section attempts to sequentially explore the actions taken within the organizational design to expose their relevant context in order to highlight the interaction and ‘‘ﬁt’’ within and between the 15 design features.

ABC Units Involved There are three main organizational units and levels involved in the ABC Company’s HPWS organizational design and change processes: Corporate Level: The ABC Company ABC Company manufactures and distributes several hundred consumer and industrial products all over the globe and has been in operation for more than a century. This high performing and paternalistic ﬁrm with a very long history of good employee relations at all levels has consistently been ranked in the ‘‘Top 100’’ of the preferred ﬁrms to work for since the early 1990s in the United States by Fortune magazine. A long history of proﬁt sharing with employees and other such benchmarking practices has served to develop a strong sense of loyalty between the company and its employees. The highly sustained level of ABC’s historical organizational performance results, such as product quality (98 percent or better); employee turnover (less than 2 percent); and employee satisfaction (85th percentile or better), would qualify the ABC Company as being an ‘‘exemplar’’ or a ‘‘great’’ organization according to Collins (2001). At the beginning of the study, ABC’s sales revenue had increased 12 percent from the previous year to reach approximately $4 billion. Approximately, 3,000 (75 percent of total United States workforce) employees were employed within ABC’s manufacturing division, the support staff, and the corporate headquarters. Division Level: ABC’s Manufacturing Division About 1,000 employees are employed in the ABC manufacturing division, which has 10 separate autonomous businesses located under one roof at one large, complex worksite. The manufacturing division level is the intermediary level between the corporate level and the Site A located on the ABC’s central manufacturing site. Because of the successful HPWS transformation

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effort in manufacturing, the company later took on other businesses that needed to be designed. Subsequent to the HPWS manufacturing design, the company re-designed their total supply chain. Later too, they re-designed some parts of their demand chain organization. Site A The focus of our ﬁeld study, one of the ten businesses at this central manufacturing worksite, is the largest of ABC’s manufacturing plants. On average, about 240 employees have worked there for the last 15 years. Both white-collar connected process resource SDWTs and blue-collar operations SDWTs coupled with 13 other HPWS design features were implemented and assessed in this multi-business worksite.

Change Processes A Continuous Change Process From the ABC corporate level to the Site A manufacturing worksite level, the change process occurred in an ‘‘ongoing, evolving, and cumulative’’ effort deﬁned under the notion of ‘‘continuous change’’ (Weick & Quinn, 1999, p. 375). This notion stems from the idea that ‘‘small continuous adjustments, created simultaneously across business units, can cumulate and create substantial change y as interdependencies that are tightly coupled.’’ This ‘‘changing’’ process is orderly sequenced to reﬂect the sequences of the change intervention and their consequences on the next steps (Armenakis & Bedeian, 1999; Pettigrew et al., 2001). Overall, the researchers account for six different time sequences, which could be assimilated in three major parts corresponding to ‘‘unfreeze, transition, refreeze’’ sequence (Argyris, 1990; Weick & Quinn, 1999). A Longitudinal Coupling along Site A’s Assessment Process Site A’s 54-month assessment process was divided in six equal time frames of 9 months each. These measurement periods along the course of action assess the evolution of organizational performance (at month 0, 9, 18, 27, 36, 45, 54). These six assessment time frames are described in Fig. 3 (see p. 363). The organizational design and change process, as well as its implementation, unfolded over the course of 54 months and was theoretically based on two complementary organizational change perspectives: (1) values-based management (Collins, 2001; Collins & Porras, 1994); and, (2) direct

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Design Implementation #1 phase at Site A: (A1) Business Center/ Focused Factory / Product Alignment/ (A2) Direct SDWT Working with Key Customers & Suppliers (B1) Eighteen Operations SDWT’s (A3) Four Connected White–collar Process Resource SDWT’s (A4) Management Team as a SDWT (A5) Coaches for the twenty-three SDWT’s (E1) SDWT Decision-Making/ Empowerment Design Implementation #2 phase at Site A: (D1) Common Job/ Task Classification System (E2) Formalized & Rotated SDWT Leadership Roles (D2) Pay-for-Skills (D3) Qualification/Certification of Operations SDWT members (C3) Information &Knowledge Sharing (C4) Training/re-training & Development (C1) Multi-Skilling (C2) Job/ Task Rotation/ Cross Training

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participation (Cotton, 1993; Lawler, 1996; Lawler & Worley, 2006; Macy et al., 1989; Nadler & Gerstein, 1992; Trist, 1981; Trist & Bamforth, 1951). Consequently, the ﬁrm’s core values, philosophies, and principles, especially regarding employee autonomy, employee participation, and business autonomy, were critical in the creation and communication of the site’s business vision direction. Therefore, the HPWS design paid particular attention to the ‘‘design ﬁt’’ (see Fig. 1) between structures, processes, and systems. It also took into consideration the additional core values, philosophies, and principles of the site and relied on direct employee participation throughout the change process. Following the company’s, the manufacturing division’s, and Site A’s vision direction setting process, the Site A design team assessed the external business environment and internal work environment of Site A. Following these analyses, speciﬁc design strategies and action-levers or design features were recommended by the Site A design team. Finally, implementation and communication strategies were developed and approved by the Site A steering groups. In accordance with current views of employee participation and organizational improvement, four months were devoted to foster acceptance of the HPWS design and its complex implementation strategies by employees and management of Site A. Hourly employees, professional staff, and management were not merely assumed to want to participate, but were trained and coached in various participative behaviors. Two phases of the speciﬁc design implementation were developed with the goal to create and ultimately work directly with key customers and suppliers. Prior to actual implementation of these SDWTs, a business center structure was designed and implemented. Then, connected white-collar process SDWTs were designed and implemented by the coaches (these coaches were composed of former supervisors, staff managers, professional staff, and hourly employees). After the connected resource teams were implemented, the operations SDWTs were implemented. This ﬁrst phase of the implementation took eight months after the decision-making/empowerment training was completed. The second phase of the design implementation took thirteen months (see Fig. 3) and began with formalizing and rotating SDWT leadership roles. A pay-for-skills system for hourly employees was implemented (mandated from ABC’s top management) and accompanied by a qualiﬁcation/certiﬁcation system, which was determined by hourly employees selected by their peers based on their skill level, business information knowledge, and their training/re-training and development skills. Employee multi-skilling was developed with the required job/task rotation and cross-training. After many

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months, this preparation stage ﬁnally resulted in SDWTs that were capable of working directly with the business center’s key customers and suppliers.

Contextual Organizational Inputs: The Internal and External Business Environmental Factors To understand and comprehend the ABC Company’s 20-year transformational change journey, the study exposes the following itinerary and its particular contextual map. This contextual background is composed by a series of design events prior to the Site A change effort. ABC Company’s transformation effort (from a very good ‘‘traditional’’ organization to an ‘‘exemplar’’ organization (Collins, 2001) was ﬁrst initiated ﬁfteen years before the HPWS design strategy was implemented at Site A, which corresponds to the start of the ﬁeld study. In addition, the ABC manufacturing division began the initial HPWS re-design in their ﬁrst businesses at the worksite, ﬁve years before the design effort began at Site A. The ﬁrst author of this chapter was also involved in this initial change effort. Site A was the last of the ten worksites at the central manufacturing division to be re-designed and it was believed that it would be the most difﬁcult. The sheer number of products, the toxicity of the raw materials used in the manufacturing process, the highest employee seniority level of any of the ten businesses at the central manufacturing site, and the largest number of employees all forced Site A to be the last business to be designed. Furthermore, any employee who did not want to remain in his/her business at the central manufacturing complex after their business had been designed, could ‘‘opt out’’ and transfer to any of the other nine businesses at the centralized manufacturing division. At the end of the HPWS manufacturing effort, employees could either voluntarily quit working at the ABC Company (hardly any did ) or accept being transferred to Site A. Consequently, many employees who had opted out of the previous nine HPWS designs over the previous ﬁve year period eventually transferred to Site A (this site being the last HPWS re-design). In essence, many of the older and more vocal employees at the other nine businesses at the centralized site became members of the Site A workforce. Grounded on decades-old foundations, the ABC Company was designed and managed utilizing the same traditional, paternalistic, and centralized way it had inherited from its strong manufacturing past of the mid-20th century. One exception was the commitment and loyalty that this privately

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owned ﬁrm showed to its employees, asserting that ‘‘the goodwill of its employees is the only enduring thing the company can count on!’’ (internal ABC Company public document). A well-deﬁned set of bureaucratic rules and regulations had created, over time, a fairly tall, multi-tiered, traditional management hierarchical structure, in which employee growth and development (for hourly and professional staff employees) typically took place by seniority. The ABC Company embodied the image of a paternalistic company with a tradition of lifetime, local employment driven by a centralized and ‘‘Tayloristic’’ view of its manufacturing activities. ABC’s niche-positioning strategy in different consumer product markets remains a prime factor to explain its steady growth during the previous decades, leading to a dominant position in market share against a scattered group of small and large, specialized and often regional competitors. Being an older high performing and very successful organization, ABC may have been more likely to undergo changes in their product-market strategy. On the contrary, ABC was more likely to experience inertia (Greve, 1999; Miller, 1992) in the organizational evolution process due to its paternalistic philosophies and 100 years of successful performance. ABC Company Vision Direction Most of the past and current literatures on the design of HPWSs have discussed the need to ﬁrst develop a ‘‘vision direction’’ (e.g., Beckhard & Harris, 1987; Bliss, 1992; Collins, 2001; Collins & Porras, 1994, 1996; Lawler & Worley, 2006; Macy & Izumi, 1993; Macy, forthcoming, 2008). Vaill (1982, p. 29) deﬁned purposing of high-performance systems as ‘‘that continuous stream of actions by an organization’s formal leadership that has the effect of inducing clarity, consensus, and commitment regarding the organization’s basic purposes.’’ A ‘‘future state’’ vision direction provides an enduring statement of the organization’s core values, philosophies, principles, and employee expectations that organization designers may return to for clariﬁcation, decision–making, and design parameters (Bliss, 1992; Collins, 2001; Collins & Porras, 1994, 1996). The sustainability of any organizational change mandates the importance of consistency between an organization’s current identity or envisioned image and the envisioned transformations (Fox-Wolfgramm, Boal, & Hunt, 1998). Consistency was demonstrated when ABC, ﬁfteen years previous to the start of our ﬁeld study, held a ‘‘3-month long meeting’’ with more than 200 hand-selected management, professional staff, support staff, and hourly employees from all over the globe reﬂected on ‘‘What the Company needs to do to compete in the 21st century?’’

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This intense and critical visioning process resulted in an ‘‘ever-green’’ company-wide vision direction document that was built to change and reafﬁrmed ABC’s core values, philosophies, and principles such as the commitment to its employees, already asserted by a long history of proﬁt sharing with employees and other such innovative practices that had helped develop a strong sense of loyalty between the company and its employees. The ABC Company decided that to stay very profitable, they needed to proactively transform their organization and all its resources to have a competitive advantage through improved capabilities over their core competition. They needed to build the organization to change! However, entering new markets also signiﬁed facing an intense rivalry from more experienced and larger consumer products ﬁrms. In addition, ABC went head to head with the giants of the consumer products business around the world. To stay as a high performer in this aggressive competitive landscape, ABC’s top management team decided that the only way was to match the competitors’ production capacity while developing ﬂexibility and innovative organizational and team capabilities. The kind of transformational changes envisioned with the HPWS design effort would represent a major paradigm shift in ABC’s philosophy going from paternalistic (Block, 1994) with traditional management practices to the self-regulating powersharing philosophy of an HPWS built on the principle of ‘‘always changing – always evolving’’. One of the main ingredients of the ABC ‘‘future state’’ visioning process was the principle that all employees (management included) must perceive change as a ‘‘never-ending on-going process.’’ In other words, ‘‘A journey – not a destination!’’ ABC Company Organizational Strategies Organizational strategies are usually developed in the context of both the internal and external business environments while specifying the goals and objectives that the organization plans to achieve within the framework of the vision direction that has previously been deﬁned. The strategies also specify how these goals and objectives may be achieved (Macy, Thompson, & Farias, 1995). One key choice, to be made at this point by the organization’s leaders, is the selection of organization design features and the degree of centralization or decentralization. Five organizational design strategies were chosen by ABC’s management: (1) a substantial business decentralization (a great deal of decentralization with some centralization) of ABC’s current organization structure; (2) the formation of global and autonomous strategic business units (SBUs) (Hosskisson, 1987; Lawler, Mohrman, & Ledford, 1992, 1995; Macy &

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Izumi, 1993); (3) autonomous business centers reporting structures (i.e., proﬁt/loss business center and not a cost center) to ensure that integration, coordination, and communication and business autonomy would be implemented and coupled with decentralized staff support; (4) employees would be empowered and directly involved in the decisions made in the HPWS transformation change effort via parallel power sharing structures for decisionmaking (Cotton, 1993; Lawler et al., 1995; Macy & Izumi, 1993; Macy, 1982; Macy et al., 1989); and, (5) SDWTs composed of white- and blue-collar employees would be formed (Goodman et al., 1988; Kirkman & Rosen, 1997; Trist & Bamforth, 1951; Trist, Susman, & Brown, 1977). These ﬁve design strategies resulted in 15 speciﬁc design features that needed to be ‘‘bundled’’ together to ﬁt an integrative and holistic HPWS design framework (see Fig. 1). This business center concept, sometimes called a ‘‘focused factory’’ or ‘‘product alignment’’ in a manufacturing setting, typically results in a significant reduction in the number of management layers in an organization (Macy et al., 1989) and is significantly associated with improved ﬁnancial performance when implemented with other hierarchical changes (Macy & Izumi, 1993). Lawler and Worley (2006) indicate that the business center structure provides all business center employees with real-time external supplier and customer focus. In essence, each of the 10 business centers (approximately 1,000 employees) in ABC’s manufacturing division was to be both externally and internally work focused. These ﬁve holistic and bundled design strategies resulted in changes in both the ABC parent company structure and in their manufacturing division’s organization structure. Furthermore, the number of ABC Company/Site A management layers was planned to be reduced from six to three (VP of manufacturing, business leader of Site A, and autonomous SDWTs as a consequence of the business center design). Fig. 4 depicts the three (baseline, during, and after) planned stages of hierarchical layers reduction over time within Site A. At baseline, Site A started the HPWS design effort with six hierarchical decision-making layers. To achieve their layer-reduction goal of the three decision-making layers, a transition stage or ‘‘design implementation #1 phase’’ of ﬁve decision-making layers was needed. However, after the ‘‘design implementation #2 phase’’ was reached, four decision layers were deemed necessary from the vice president of manufacturing for the ABC Company to the semi-autonomous SDWTs at Site A. Over the two years of design implementation, the site was never able to eliminate the coaches’ roles. Therefore, they were never able to obtain the planned state of autonomous SDWTs. This is like many other change efforts in other organizations.

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Baseline/Beginning State

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Both the design literature and change management theory indicate it is possible to reach the stage of autonomous SDWTs; however, Site A’s operational and organizational complexity linked with the human risks associated with self-management often prevent it. From our previous experience with designing SDWTs, there are some business and worksites (low complexity and low risk), where autonomous SDWTs can be implemented. By the same token, there are other businesses and worksites (high complexity and high risk – e.g., oil extraction from the frozen tundra in northern Canada) where only semi-autonomous SDWTs made good business sense! The job titles, roles, accountability, and responsibilities of the heads of the businesses within the entire manufacturing division were changed at the corporate level, the central manufacturing level, and at the worksite level (consisting of 10 separate businesses including Site A). There was a major reduction in the number of central manufacturing and business middle-level managers, from 141 to 38 (without any layoffs), and a 28 percent reduction in support staff (also without any layoffs). These actions resulted in 38 percent reduction of manufacturing overhead costs for the ABC Company. The ﬁrst step toward a re-distribution of power and control through employee empowerment was the reconﬁguration and decentralization of the quality control function, which was the responsibility of a centralized quality control department. This centralized product quality and incoming raw

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material responsibility was shifted to the manufacturing line employees and resulted in a reduction in the size of the central quality control department from 37 to 6 employees (once again – no layoffs). Layoffs at the ABC Company were prevented by natural attrition, reassignment, and early retirement fostered by incentive packages. This reduction in workforce did not significantly affect, (neither positively nor negatively), the remaining employee attitude as measured by our periodic survey (see the ‘‘Results’’ section of this chapter). However, this assertion cannot be made without some employee perspective qualiﬁers. Qualitative research interviews with about 25 employees and 5 coaches of Site A indicated that some employees felt that the HPWS design effort placed too many business and personal demands on them. These leadership demands were in terms of business complexity and self-regulating accountabilities and responsibilities. They were also expected to act ‘‘like leaders and not hourly employees’’! Now, they had to assume new leadership responsibilities over and above the regular operation of the manufacturing lines and attend leadership meetings on shifts other than their own. From a design perspective, of course, this was one of the intended outcomes that ABC’s management wanted from the HPWS transformation effort. In addition, Site A was forced to receive all the other nine businesses’ employees who ‘‘opted-out’’ of their respective HPWS designs. Moreover, the new pay system was perceived, by some, to be unfair because relatively newer employees could potentially earn as much as an employee who had been with ABC Company for a long time. These types of employee complaints have been associated with other ﬁrm’s attempts to increase employee participation and are quite common in HPWS efforts (Pasmore & Fagans, 1992). Other contextual changes in addition to the HPWS design were also implemented. As a ﬁrst attempt to become more cost-efﬁcient, ABC Company’s employee post-retirement health care package was modiﬁed to give older employees an incentive to retire early. The company previously paid 100 percent of the health care premium for the employee and spouse after retirement. Under the new health care plan, the company would pay only 50 percent for the employee and 25 percent for the spouse. In addition, ABC’s entrance in a new market became ofﬁcial when it purchased another company’s established product line about one year after the beginning of our study. This product line was originally manufactured by the previous company at three separate manufacturing plants employing approximately 1,750 employees. After the purchase was completed, the ABC Company closed the previous company’s three plants and subsequently transferred (via targeted selection) only 155 of the original ﬁrm’s workforce. Once

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again, this indicates ABC’s high-performance capabilities to change and adapt simultaneously. ABC Manufacturing Division-Wide Vision Direction About nine years after the ABC Company completed its revised global vision direction, the North American manufacturing division, of which Site A is an integrated part and its largest business in terms of sales volume, started their vision direction work under the ‘‘ever-green’’ umbrella of ABC Company’s overall vision direction document. Enhancing and restructuring the manufacturing organizational capabilities to cut cost and become more effective while maintaining employee commitment and loyalty were the HPWS goals. Gaining the ﬂexibility needed to bring to market new and innovative products more frequently (decrease turnaround), while at the same time protecting the current performance level from being impacted negatively by the upcoming HPWS transformation efforts, were also goals of the ABC Company and manufacturing division in initiating a HPWS strategy. Direct Employee Decision-Making and Direct Employee Participation: Parallel Structures and Processes Parallel change or employee decision-making power-sharing structures and processes (i.e., the direct participation and decision-making of management, staff, and hourly employees in the HPWS transformation effort) are a common design feature directly linked to improved organization performance (Macy et al., 1989; Macy & Izumi, 1993) and seems to be a key design feature for an organization to ensure long-term survival of the design (Bushe & Shani, 1990; Cotton, 1993; Macy, 1982; Macy & Izumi, 1993; Sherwood, 1988). These parallel and adjacent decision-making structures and processes are in ‘‘addition to’’ the traditional organizational structures of the organization and usually consist of cross-sectional, diagonal slices of employees representing all functions and hierarchical levels. These parallel employee decision-making forums (see left side of Fig. 3) allow for direct (versus indirect) participation in the HPWS design and are associated with higher levels of organizational performance and employee commitment as well as lower levels of employee resistance to change (Coch & French, 1948; French, Israel, & As, 1960; Macy et al., 1989; Macy & Izumi, 1993; Weisbord, 1989). Site A created a site design steering group and a site design team for the HPWS design. Both of these teams were comprised of management, staff, and hourly employees. In addition, both of these teams were a ‘‘diagonal slice’’ of the Site A organization. More will be said about these teams later.

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After the completion of the 14 months Site A design proposal phase, an ‘‘Implementation Steering Group’’ (this second leadership steering group had emphasis on the design implementation versus the initial design steering group, which had emphasis on the design proposal) was created in order to provide employee diagonal-slice decision-making throughout the two design implementation phases during the next 21 months at Site A. This new diagonal-slice decision-making group had considerable membership overlap from the initial Site A design steering group and their ‘‘design team.’’ In addition, this ‘‘direct participation’’ in the change effort by those employees affected by the HPWS design included a significant number of Site A’s management, professional staff, and hourly employees. Over 30 percent (approximately 70 employees) of Site A’s total workforce were directly involved and directly participating in the HPWS design and implementation efforts (via steering groups, design teams, or implementation teams). The next section corresponds to the beginning of our ﬁeld study as the transformational effort has trickled down from the corporate headquarters to be implemented, starting by the visioning process, at the Site A level.

The First 14 Months at Site A Site A Vision Direction To manage the process of HPWS design and the subsequent critical implementation efforts, an initial diagonal-slice steering group (from top to bottom within Site A) of operation employees, professional staff, and management representing all functions and hierarchical levels was created. This ‘‘cross-functional and diagonal-slice leadership steering group’’ (Macy, 1982; Macy et al., 1989; Sherwood, 1988) for the HPWS design was led by the director2 of the manufacturing division and consisted of business center employees from all levels at the Site A workplace. The main role of the site steering group was: (1) to determine Site A’s vision direction (5 years in the future – not an ‘‘end state’’ but a ‘‘future state’’ that always changes); and, (2) to charter (what’s ‘‘in’’ and what’s ‘‘out’’ for the design) the HPWS design at the worksite by specifying the organization’s boundaries and to make the necessary resources available in order to guide and support the design and the subsequent implementation efforts. The resulting Site A ‘‘future state’’ vision direction consisted of additional site speciﬁc core values, principles, and philosophies for the worksite and listed speciﬁc objectives and key success factors (customer, business and people) that the business wished to achieve as a result of the HPWS transformational effort.

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A cross-functional, diagonal-slice (different levels and functions) ‘‘site design team’’ (Macy, 1982; Macy et al., 1989; Pasmore, 1988) was then created and became responsible for: (1) assessing the external business environment; (2) assessing the internal work environment of the business; (3) recommending speciﬁc design features; (4) developing the HPWS implementation strategies; and, (5) developing communication strategies before, during, and after the HPWS design effort. This 12-member site design team was full-time and was led by a full-time Site A design project manager that coordinated the various analyses, assisted the design team in developing the design proposal, participated in developing the implementation plan, and coordinated the external consultants work with the steering group and the site design team. These full-time site design team members were selected by the site steering group after internal ABC Company advertisements were made and a design team selection process was developed. An important criterion that governed the selection process was the wide representation from all employee levels and functions at the Site A worksite. These site design team members were to be the ‘‘best employees’’ in the business – not the employees that could be made available without any pain for the business!

Site A Organizational Strategies After the Site A vision direction had been determined by the site steering group, a present state analysis was undertaken by the site design team through a series of diagnostic efforts in four phases. The following analyses were performed: (1) an external ABC Company and Site A business analysis (Adler & Docherty, 1998; Macy et al., 1989) was conducted to take into consideration the competitive dynamics of the company environment; (2) a ‘‘technical analysis’’ to identify variances or bottlenecks and recommend solutions to improve (Pasmore, 1988); (3) a ‘‘social analysis’’ to identify people and human resources management (HRM) systems that were needed to change; and, (4) an ‘‘information and knowledge systems analysis’’ to determine the verbal, electronic, and paper information and knowledge requirements and needs from and to the external business, the various internal business centers, the SDWTs, and others at the multi-business worksite. To perform these four analyses, the site design team had to understand how their own business operates, the implications of the change effort for both external and internal customers and suppliers, the ﬁnancial performance of their business, and the HRM systems (Pasmore, 1988). Subsequently, these four analyses enabled the site design team to identify major technical,

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business, information and people-related issues and barriers to organizational performance within the ABC Company and Site A. In addition, the design team and external consultants developed an employee attitude survey to assess social and organizational issues drawing mainly from the Michigan Organization Assessment Questionnaire (Camman, Fichman, Jenkins, & Klesh, 1983). Measures were developed to address other organizational issues unique to the worksite. Data from these four analyses were periodically fed back to employees at Site A during a series of informational small groups ‘‘ﬁreside chats’’ (parallel informal communication systems between employees and their management) by the site design team and the site steering group. These four social–technical systems (STS) analyses ensured that the HPWS design effort considered not only social and technical needs, but also the needs of the business and the costs of the product/service being produced. These analyses, in addition to the up-front organizational scan, took approximately 14 months to perform and resulted in the basic technical, business, information and knowledge, and social analyses for the Site A design proposal. Fourteen months (full time) for a design team to complete these ﬁve (four separate analyses and the design proposal) difﬁcult and complex design tasks is indeed a very long time. The company, in hindsight, agreed that the business complexity and the risks involved were the main time constraints. Furthermore, the ABC Company continued to use fulltime (rather than part time) design teams. All the other design teams at the manufacturing site were able to accomplish their design tasks in approximately 6–8 months - - some part-time and some full-time.

The Next 19 Months: The Design and Acceptance Phases This organizational design phase included the diagnostic efforts described above, as well as creation of the actual HPWS design proposal by the site design team. This was followed by the ‘‘approval, acceptance and/or modiﬁcation’’ phase (by the site steering group composed of management, professional staff, and hourly employees). During this time, the HPWS proposed design features were communicated face to face via ‘‘ﬁreside chats’’ with all Site A’s employees and discussed with all functions and staffs at the multi-business worksite level. Overall, 90 percent of the HPWS design proposal was specifically recommended to the site steering group (the other 10 percent of the design proposal was eliminated after discussions with the site steering group). With

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little or no modiﬁcations, the Site A leadership steering group agreed upon and recommended to the manufacturing division that almost all the elements of the HPWS design proposal be implemented. However, some employee resistance (Coch & French, 1948; Cummings & Worley, 1997) to the change effort was to be expected and remained a difﬁcult issue for the management and workforce to deal with, especially given the fact that there was ‘‘nowhere to opt out’’ anymore for employees who did not like the design. This critical time period is when the design features and the sequencing of various parallel direct employee participation structures and processes in the HPWS design effort were very important. Also critical in the design process was the constant and ongoing communication with all employees in the organization about the HPWS design process to be followed to implement the transformational changes at Site A, to not only alter the perception of change, but also the involvement of those affected and the sequencing of the design features. These HPWS design features were mutually supportive of one another and emphasized the philosophies of fewer hierarchical layers (from the initial six hierarchical levels to the four subsequent levels of the business center), a large degree of decentralization with an autonomous business center, employee and organization autonomy, and employee empowerment. Site A’s practical operationalization of their HPWSS design features are found in the following 15 ‘‘key action-levers’’ section and was shown in Fig. 1.

The Final 21 Months: The Two Design Implementation Periods The 15 Bundled and Integrated Action-Levers or Design Features: The Fit between Organization Structures, Systems, and Processes The HPWS design and acceptance or modiﬁcation phase incorporates the following 15 bundled and integrated design features or action-levers being part of the organization’s structures, systems, or processes (see Fig. 1). In the following section, we will provide a detailed description of the five macro and one micro organization structure design features (A1, A2, A3, A4, A5, and B1); the four people and HRM systems design features (C1, C2, C3, and C4); the three recognition and ﬁnancial reward systems design features (D1, D2, and D3); and ﬁnally, the two shared leadership and decision-making/ empowerment processes design features (E1 and E2). This HPWS organizational design plan (with its integrated and bundled 15 action-levers) was separated by two equally important design

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implementation phases – called ‘‘design implementation #1’’ and ‘‘design implementation #2.’’ At the same time, both the Site A design team and the initial steering group were disbanded. A second Site A ‘‘Implementation Steering Group’’ (with a great deal of overlap of employees from the previous two groups) was organized to implement the new HPWS organization design at Site A. In addition, 15 diagonal-sliced ‘‘implementation teams’’ (one for each design feature) were formed, each of them reporting directly reporting to the second Site A implementation steering group. All operation (blue collar) and connected process resource teams (white collar) SDWTs were simultaneously implemented over a period of 9 months (see Fig. 3). The 15 integrated and bundled HPWS organization design features implemented at the ABC Company/Site A are classiﬁed and referenced by the numbers on the reduced assessment model shown in Fig. 1. These 15 HPWS design features or action-levers are viewed from a holistic, integrative, and ‘‘bundled’’ perspective as they must harmonize and ﬁt with one another (Huselid, 1995; Kirkman & Rosen, 1997; Macy & Izumi, 1993; Trist, 1981; Wageman, 1995). Macro Structure Action-Levers: Business Center/Focused Factory/Product Alignment Structure (A1). Skinner (1974) argued that a manufacturing unit that focuses on a narrow line of products or business mix, for a particular market niche, will outperform a conventional or traditional manufacturing plant. The structural implications of the business center concept involves an organization by product line or technologies to ‘‘bring into the business’’ the critical organizational functions, work and various tasks and activities that are key to their business processes. The business centers at the ABC Company mirrors a small focused factory usually with a single technology but with multiple products (Harmon & Peterson, 1990; Skinner, 1974) enabling a close proximity between organizational functions and work tasks. Recently, Arnett, Macy, and Wilcox (2005) found self-directed white-collar professional mini-business teams (mentioned earlier and called ‘‘customer enterprise teams’’) to be positively related to increased sales volume. These customer mini-business teams were modiﬁed proﬁt and loss centers operating very autonomously serving one to two large retail customers. These would be very similar to an autonomous business center operating with semi-autonomous, cross-functional SDWTs or Enterprise Teams in a sales organization. The business center concept is to develop a balance between power and control and to gain from the synergy between the lower costs achieved by economies of scale and the gains sustained by a more effective service,

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delivery, cycle turnaround time, quality, and value to both the internal and external customers. Lawler and Worley (2006, p. 305) indicate that business centers ‘‘allow people to see more of a whole business; employees are not physically or psychologically ‘far away’ from the organization’s capabilities or its work. The result is that there is much more focus on getting work done’’ (i.e., ﬂow to the work). One critical organizational design issue in the context of business centers is the determination of the reporting relationships of the product or business manager to higher management. There are usually two overall possible organizational structures in a business center design: (1) the implementation of a two solid-lines reporting relationships (one solid-line for product/business issues from the business manager to higher management and the other solidline from the same site manager for personnel, safety, labor issues, etc.) or (2) one solid-line for business and one dotted-line for personnel, safety, and labor issues (Macy, forthcoming, 2008). This ‘‘solid-line’’ dual-reporting structure (two solid-lines rather than one solid and one dotted, the latter being the traditional matrix structure) of the business center is highly beneﬁcial because of the direct linkage and understanding of the entire value chain (from back-end suppliers to front-end customers). The business center design in Site A allowed all 240 employees a better information and knowledge sharing of their suppliers and customers (both internal and external). This two solid-lines dual reporting structure enables the business center to directly link and communicate with suppliers and customers. In addition, having two solid-lines (i.e., the business center manager reporting to the ‘‘business’’ team and to top management for human resources) have additional beneﬁts, such as mutual goals, joint performance appraisals, power sharing between the two bosses, and alignment of goal and reward systems. These two solid-line reporting relationships formed the business center structure at Site A. This kind of two solid-lines dual reporting organizational structure was critical to the success of ABC company’s decentralization strategy, in that it allowed Site A to exert autonomous power and control over its structures, people, systems, processes, and technologies. In addition, this autonomous business center design provided a ‘‘seamless’’ value chain. The Site A business center structure, along with their four connected white-collar SDWTs process teams, and their 18 operations SDWTs is shown in Fig. 5. This ﬁgure indicates that there were 23 (one at the business-center level, four at the process level, and eighteen at the operations level) semiautonomous SDWTs within the total business center structure at Site A. The

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One SDWT with 6 Management Employees

Business Leader (1) and Coaches (5)SDWT

Business Resource SDWT (8*)

Quality/Supplier SDWT(6*)

Maintenance SDWT (14)

Operations SDWT (blue and white collar) 1st Shift of Six Operations SDWTs

Clerical/Secretarial Support (2)

Four Process SDWTs with 32 Employees (*Indicates White Collar Professional Staff)

Eighteen Operations SDWT’swith 204 Employees

Administration with 2 Employees Total Focus Factory = 23 SDWT’s employing 244 Employees

Fig. 5. ABC Company/Site A: Business Center/Focused Factory/Product Alignment Design – Management, Process and Operations SDWTs. Source: B. A. Macy, Successful Strategic Change, San Francisco, CA: Berrett-Koehler Publishers (forthcoming, 2008).

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Note: Figures in parentheses indicate the number of employees

2nd Shift of Six Operations SDWTs

3rd Shift of Six Operations SDWTs

Technical Resource SDWT (4*)

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ﬁgures in parentheses within Fig. 5 represent the actual number of employees in each SDWT (the average number of employees per team was 11). At the process level, there were four SDWTs, with on average eight employees per team. The management SDWT had six members – the business center manager and ﬁve coaches. The coach for the management team (the team leader, the developer, and the mentor of the team) and the four process SDWTs was the Site A business manager. As Purser and Cabana (1998, p. 44) indicate ‘‘y that if they (the management) didn’t learn to coordinate work across functional boundaries, then how could the rest of the organization learn how to do it?’’ The four white-collar connected process SDWTs were: (1) business resource team (planning, scheduling, training, IT/IS); (2) quality/supplier team (responsible for all incoming raw materials and ﬁnished goods quality); (3) the maintenance team (light to medium complexity for mechanical and electrical maintenance for Site A, while heavy or complex maintenance was handled by a centralized maintenance organization); and, (4) technical resource team (process engineering, technology, and physical layout and equipment/technology design for Site A). The maintenance teams were comprised of hourly employees, while the other three processes for SDWTs were composed of professional and degreed white-collar employees. At the operations level, there were 18 SDWTs operating across the three shifts (six SDWTs per shift). There were ﬁve operating coaches responsible for these 18 operations SDWTs. In addition, there were two clerical and secretarial support staff for the 23 SDWTs at Site A.

Macro Structure Action-Levers: Direct SDWTs Working with Internal and External Customers and Suppliers (A2). Like six sigma, the decentralization of a centralized quality control function provides those directly responsible for making the product accountable and responsible for all incoming raw materials and outgoing ﬁnished goods from their business. Typically, the structural design change involves both ‘‘internal’’ as well as ‘‘external’’ customers. The TQM (Dean & Bowen, 1994; Lawler et al., 1992, 1995) practices require direct key customer and key supplier contacts, which were introduced at Site A to enable the exchange of key business information and feedback from the business to their key external partners. Some SDWTs directly processed their own customer complaints. Manz and Sims (1993) observe a link between SDWTs and improved product or process quality. At Site A, this HPWS design feature was implemented as part of the manufacturing division’s central-wide decentralization effort. Site A implemented

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this design feature at design implementation #1 phase, along with the business center structure and other macro structural features (see Fig. 3). Macro Structure Action-Levers: Connected White-Collar SDWT Process Resource Teams as Area Mini-Business Teams (A3). Already mentioned in the ‘‘organizational strategies’’ section above, connected professional whitecollar SDWT process resource teams were an integrated part of the HPWS design. These totally dedicated, full-time, multi-functional, mini-business teams (Arnett et al., 2005) were composed of mainly degreed professional team members that were truly cross-functional in nature (Lam, Biscboff, Higgins, & Persing, 1999; Purser, Pasmore, & Tenkasi, 1992). They provided direct support and leadership to the operations-related shift SDWTs in the business center. Such connected process SDWTs provide certain expertise for the shift SDWTs (resources, technical maintenance, engineering, incoming raw material and ﬁnished goods, quality control, and business information and knowledge) to improve in the areas of product/service delivery, product/service quality, costs, production, technology, and safety. These connected resource professional SDWTs are typically directly linked to key customers and suppliers, the central manufacturing division, and the SBU. These cross-functional SDWTs addressed issues like line/layout modiﬁcation and other issues beyond the skill levels of the operations SDWTs and provided business information, training, planning, and scheduling support. For example, a resource team would provide assistance to shift SDWTs to make engineering design changes to equipment used on a manufacturing line. Macro Structure Action-Levers: The Management Team as a SDWT (A4). As was stated earlier by Purser and Cabana (1998), the management of Site A (the one business center leader and the ﬁve coaches or team leaders) must be able to operate as a SDWT if they are expected to coach and develop the rest of the organization to be self-managing. Over a period of about 12 months, the outside consultant and others above the business center manager developed and coached the ﬁve coaches and the business leader to be self-managing. This was indeed a key design feature in the re-distribution of power and control at Site A. This coaching, development, and mentoring of the management team consisted of site visits outside and inside ABC Company where business centers and SDWTs had already been implemented, coupled with having a dialogue regarding the re-distribution of power and control within Site A (i.e., various decisions to be made by management versus the

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SDWTs versus individual team members). In addition, the ABC management person above Site A’s business leader (i.e., vice president of manufacturing) also coached Site A’s business leader. He was very familiar with self-management. In his previous position with the ABC Company, he was the European VP for manufacturing and in charge of their European transformational effort involving SDWTs and business center designs. These SDWTs were designed to empower employees closest to the business’ key internal and external customers and suppliers in order to create an organizational capability that the business could leverage upon entering highly competitive markets. This HPWS organizational design feature was also consistent with the ﬁrm’s core values, philosophies, and principles related to its employees and the ﬁrm’s commitment to high performance. Finally, the employees (hourly employees, professional staff, and coaches who were members of these SDWTs) were trained and developed in accordance with participation theory. Pasmore and Fagans (1992) refer to this participation as ‘‘organizational citizenship.’’ Macro Structure Action-Levers: Coaches for Management, Operations and Process SDWTs (Rather than Supervisors) (A5). As part of the site’s HPWS design, ﬁrst- and second-line management layers were eliminated (without any layoffs). A new role of a ‘‘coach or team leader’’ for the SDWTs emerged to replace the old role of supervisor or manager. The new role of a SDWTs coach was introduced and new shared leadership roles among and between the coaches, and the SDWTs were incorporated into the new roles of the coach and team members. In addition, ‘‘formalized, rotated, and required’’ leadership roles were performed within each operations and some process SDWTs by team members. Within the HPWS design, SDWTs were empowered to make certain work-related decisions and solve problems as a self-managing team that would normally be the responsibility of supervisors in traditional organizations. In the early stages of the SDWTs’ maturity and development, former supervisors may perform the role of a ‘‘coach’’ or ‘‘coordinator’’ or ‘‘team leader’’ fulﬁlling the need of the semi-autonomous teams for training, guidance, and support as SDWT team members learn to work in a self-directed fashion. In typical HPWS designs with self-regulating teams, the coach of SDWTs performs four primary roles: (1) being an active team member; (2) observer and team monitor; (3) team facilitator; and, (4) being an active intervener or ‘‘the boss.’’ To be successful and effective, coaches in organizations with SDWTs must be able to effectively wear these four ‘‘hats’’ and practice shared leadership and control with their SDWT. This process of

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training, mentoring, and shared leadership is very difﬁcult; this is a very different type of shared leadership role for former supervisors and managers to assume and many cannot make this transition (Perry, Pearch, & Sims, 1999; Wageman, 1997). In a benchmarking study of North American Organizations from 1991 to 2006, 105 organizations indicated that over 66 percent of former supervisors or managers cannot perform the new role of coach or team leader for an SDWT (Macy, forthcoming, 2008). Micro Structure Action-Levers: Operations SDWTs (B1). Initially, Site A at the ABC Company had 18 operations semi-autonomous SDWTs that were designed with an up-front planned phasing from semi-autonomous to autonomous SDWTs to be designed later in the HPWS transformation effort.3 In addition, each semi-autonomous SDWT had responsibility for speciﬁc products and technologies. Operations SDWTs that spanned all three shifts (retained from the old structure) enabled the teams to address issues that affected each line and their technologies across the three shifts. Each operations and process SDWTs was authorized to spend up to $50,000 (without any management approval) per year on improvements to their business. Moreover, each SDWT member could spend $1,000 per year on his/her business needs without management’s authorization. In summary, the business center structure, the management team as a SDWT, the quality control functions decentralized and placed into the business center, the connected process resource SDWTs, and the operations SDWTs were simultaneously implemented over an 8-month period. At the end of this period, the ABC Company’s upper management decided that the operations SDWTs (NOT the white-collar connected process SDWTs) were ‘‘never’’ going to be autonomous SDWTs. They would remain semi-autonomous SDWTs! Furthermore, c oaches or team leaders would remain. People and HRM Systems Action-Levers: Multi-Skilling (C1). Redundancy of task and skill is achieved through the development of multiple skills (Lawler et al., 1995; Morgan, 1997; Trist, 1981). Multi-skilling requires SDWT members to learn all the technical, team, and business skills that are needed within the SDWT to produce the desired outcomes. Macy and Izumi (1993) found multi-skilling to be positively and significantly associated with ﬁnancial organizational performance improvement. A skills mastery system at Site A was designed so that hourly SDWT members could acquire and maintain proﬁciency in all deﬁned tasks (not jobs). Eventually, they were able to perform seven (i.e., production, quality control, light to medium maintenance, scheduling, etc.) different types of operations tasks. It is

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important to note that all SDWT members had speciﬁc tasks and leadership roles to perform. They did not have speciﬁc jobs! Their motto was: ‘‘Flow to the Work!’’ Consequently, this enabled the required employee job rotation to be successfully implemented. People and HRM Systems Action-Levers: Job/Task Rotation and CrossTraining (C2). While multi-skilling enhances the skill levels of SDWT members, the ‘‘required’’ job/task rotation helped to maintain these technical, team, and business skill levels. This job/task rotation and cross-training provides opportunities for more task variety (Hackman & Oldham, 1980) and for an increased information and knowledge of the entire business and manufacturing processes. Macy and Izumi (1993) and Macy (forthcoming, 2008) found job/task rotation and cross-training to be positively associated with improved ﬁnancial performance. As part of the HPWS design, hourly employees were required to periodically rotate ‘‘task areas’’ within their six shift-operating SDWTs. The process SDWTs did not require job/task rotation – although some minor job/task rotation and cross-training did take place, especially in the engineering and maintenance areas. People and HRM Systems Action-Levers: Information and Knowledge Sharing (C3). Business information and knowledge sharing (Castrogiovanni & Macy, 1990; Daft & Lengel, 1986; Galbraith, 1977; Lawler et al., 1992; Mohrman & Cummings, 1989; Nadler & Tushman, 1988) within a particular SDWT and across SDWTs enables them to make appropriate decisions and solve business problems (Lawler et al., 1992). Attempts were made to provide and communicate as much of ABC and Site A business information as possible throughout all employees at Site A. Business information was shared at quarterly business meetings and at monthly SDWT ‘‘ﬁreside chats.’’ In addition, each employee had access to a computer at work and many had company-provided computers at home. For example, every Site A employee had an e-mail account. Moreover, each SDWT had a ten minute meeting each day before their work began. Their design motto was, ‘‘You cannot over communicate!’’ People and HRM Systems Action-Levers: Training/Re-Training and Development (C4). Skill development is important to fulﬁll the SDWT principle of redundancy of task and skill as well as to rotate tasks and leadership roles (Trist, 1981). Macy and Izumi (1993) found multi-skill training and re-training and team building/group problem-solving (but not general education and training) to be best practices and significantly related to

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improved ﬁnancial performance. A new full-time professional training manager was appointed and dedicated for Site A. In addition, the operations SDWT crew sizes were augmented each with one additional full-time training slot (18 total slots), enabling team members to be rotated through training and re-training on a regular basis. The average Site A training/retraining and development time per employee was 192 hours per employee per year during the 54-month period of study. Most of their training and retraining (approximately 75 percent) was for technical tasks (other operations tasks, maintenance, quality, etc.). In addition, softer-type training skills (like group dynamics, leadership, team training and business training) were part of the training/re-training and development plan. After the two design implementation periods, Site A’s training/re-training numbers decreased to around 150 hours per year per employee. This is indeed a quite high number; however, the leadership, multi-tasking, and business requirements were also quite high for all employees. However, the results seemed to justify these high training, re-training, and development numbers. Recognition and Financial Reward Systems Action-Levers: Common Job/ Task Classification (D1). A common job/task classiﬁcation system composed of many operational and technical tasks (not a ‘‘job’’) and leadership roles (not common pay) and removal of status differences is important for the effective rotation of technical skills, leadership development, and team decision-making to be implemented. Implementation of a common job/task classiﬁcation system is coupled with Hackman and Oldham’s (1980) concept of a broad rather than a narrow task description. Macy and Izumi (1993) found a common job/task classiﬁcation system to be related to improved ﬁnancial performance. All hourly employees at Site A were given the title of ‘‘Associate’’ (not same pay) regardless of their tasks and leadership roles. All connected SDWT process resource team members were given the title of ‘‘Resource Associates Staff Person.’’ None of the SDWT members had speciﬁc jobs to perform; they had tasks and leadership roles to perform! Recognition and Financial Reward Systems Action-Levers: Financial Reward Systems versus Pay-for-Skills (D2). The Site A design team proposed and received approval from their steering group for a pay-for-versatility (PFV) system. PFV is a ﬁnancial reward system, where employees increase their pay on the basis of their technical skills, their team and business responsibilities, and performing their formal and rotated leadership roles. Therefore, PFV goes beyond the technical skills-based pay (SBP) (Jenkins, Gupta, & Ledford, 1992) system, where SDWT members are paid based on their

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technical knowledge and skills. PFV rewards employees for their technical/ operations skills, their leadership abilities, and their business acumen. Macy (forthcoming, 2008), Risher (1999), Risher and Fay (1995), and Lawler et al. (1995) all indicate an increasing popularity in the work systems trend of PFV and SBP systems, as these ﬁnancial reward systems are expected to enhance organizational and employee ﬂexibility and produce higher levels of performance. Because of the developmental nature of these reward systems and their potential to enrich work (Hackman & Oldham, 1980), they are also expected to be associated with higher levels of employee engagement. Jenkins et al. (1992) report that most of the respondents in their study rated the SBP system as highly successful. Murray and Gerhart (1998) found SBP associated with improved productivity, labor cost, and product quality, but warn that its effectiveness is contingent upon adopting a holistic and integrated design. The PFV system was designed at Site A by their site design team; however, the ABC Company’s previous 21 skill block pay system (originating from the previous nine manufacturing designs at the ABC worksite and composed of technical, social, and team activities) was mandated from ABC’s top management for Site A. This was required to maintain locationwide pay equity with the other nine business units located at the central manufacturing worksite. Therefore, the PFV that was proposed by the Site A design team and approved by their design steering group was not implemented at Site A. This was indeed a severe blow to all the employees at Site A. This ‘‘other pay system’’ (SBP instead of pay for business versatility or contribution) was a definite long-term design ﬂaw. The required SBP system did not specifically recognize nor reward formalized leadership roles of SDWT members. In the long run, the hourly employees did not feel rewarded for their business knowledge and their required rotated leadership roles. This continues to be a problem at the site. Recognition and Financial Reward Systems Action-Levers: Qualification/ Certification of SDWT Operations Members (D3). Both of the PFV and SBP systems require skill veriﬁcation and/or certiﬁcation to insure that the SDWT members have indeed acquired the technical, team, and leadership skills mastery for which he or she is being paid and trained for. In most cases, the technical skills and formalized leadership roles are certiﬁed by other SDWT peers (not their own team) that include team and non-team member (The American Compensation Association & Wallace, 1990; Risher, 1999). Each Site A SDWT member appraised each of their peer team members on all of his/her tasks, team, and leadership skills to enable

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placement in the new designed SBP system. This qualiﬁcation and assessment system took approximately three months for Site A to implement and was very difﬁcult and very emotional for the operations SDWTs and management to accomplish. In hindsight, this employee assessment system of every Site A operations SDWT employee was probably too early in the maturity and development process for each individual team member and the SDWTs as a whole. Shared Leadership and Decision-Making/Empowerment Processes ActionLevers: Decision-Making, Problem Solving, Empowerment, and Employee Involvement (E1). SDWTs need to be given clear and speciﬁc autonomy regarding their decision-making powers. Usually, SDWTs are given ‘‘limited’’ decision-making powers in the early stages of their technical, social, and business maturity. This shared leadership through re-distribution of power and control to make work and business-related decisions was gradually enhanced to match their levels of SDWT maturity and problemsolving capabilities. The SDWTs autonomy and freedom ranged from the control over work to the design and implementation of equipment changes on the production line. In some cases, this may even involve decisionmaking powers with limits placed on the monetary value of the decisions. Personnel decisions ranged from targeted selection (by which SDWTs choose their team members) to disciplinary issues. SDWTs can recommend severe disciplinary sanctions, such as placing employees on probation or even recommend ﬁring them; however, management is responsible for making the ﬁnal call on all disciplinary actions. The decision-making matrix diagram shown in Appendix B describes how the Site A decision-making process was gradually shifted from higher management and professional staff to the 23 SDWTs. The ‘‘S’’ indicates, where the decision was made at the start of the HPWS design effort. The ‘‘X’’ indicates, where the decision was to be made at the end of the design implementation #2 phase (21 months later). Some decision categories may have more than one ‘‘S’’ or ‘‘X’’ as some decisions are, and will always be, made at different levels depending on the business issue. In addition, some decisions (like price, formula mix or products, etc.) will always be made by management and professional staff and never by SDWTs. The levels of decision-making authority ranged from ‘‘10’’ representing the decisions that are made by management; level ‘‘5’’ being the decisions made by the SDWTs; and, ﬁnally level ‘‘1’’ representing decisions made by individual team members. This was indeed an important design element in that this decision-matrix grid explicitly indicated the level and degree of employee

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empowerment at Site A. To quote the senior vice president for HR of ABC Company from a local newspaper, ‘‘Better decisions get made if in fact you can move those decisions closer to where the actual work is performed.’’ Each of the 23 SDWTs was empowered to make decisions and solve problems that affected its work including daily planning schedules and work assignments. SDWT members performed personnel and administrative roles and recommended action to management when disciplinary procedures were called for. The management took all formal disciplinary actions at Site A. Shared Leadership and Decision-Making/Empowerment Processes ActionLevers: Formalized and Periodically Rotated Leadership Roles for Operations and Process SDWTs (E2). To take the important step toward self-regulating team maturity (Goodman & Associates, 1986; Ketchum & Trist, 1992; Manz & Sims, 1987, 1993; Orsburn, Moran, Musselwhite, & Zenger, 1990; Shonk, 1992; Wheelan, 2005), each hourly employee and professional staff SDWT member from the 18 operations SDWTs, and some of the process whitecollar SDWTs (see Fig. 5) were trained in formalized and rotated ‘‘inside the business’’ leadership roles to be performed at the business center in order to enable self-regulation to be implemented. A major portion of the coaches’ initial coaching and development task was to train SDWT members to effectively perform the following eight formalized and rotated leadership roles: (1) work assignor/administrator; (2) product/service quality; (3) preventive maintenance; (4) training/retraining/coaching/development; (5) personnel; (6) business communications; (7) process technology specialist; and, (8) safety and environment. All of these eight leadership roles were formalized and periodically rotated among team members. Also, the safety and environment leadership role was performed ‘‘inside’’ and ‘‘outside’’ their team and the business. This leadership role in each SDWT involved coordination and communication across the other nine business centers and across the different shifts at the large manufacturing site for site-wide safety/environment responsibility. Altogether, these eight formalized leadership roles were periodically rotated among all operations and some connected process SDWT members (operations SDWTs: every 9–12 months for operations SDWTs and every 6–9 months for process SDWTs). Some of these design processes and systems created for the HPWS design are indicated in Appendix A. Coupled with the ‘‘decision-making matrix’’ (Appendix B) and redistributing the former supervisors or managers role into these eight rotated leadership roles performed by all of the operations and some of the process SDWTs were certainly two of the major design mechanisms for employee empowerment to occur.

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This ends the detailed review of the 15 action-levers designed and implemented at Site A as part of their HPWS transformation effort. The next section reports on the results or outcomes of the study.

ORGANIZATIONAL OUTPUTS/RESULTS Any organizational transformation effort must eventually result in improved organizational performance and employee engagement. Many authors have prescribed appropriate measures for the assessment of organizational change (e.g., Cummings et al., 1977; Kling, 1995; Macy & Mirvis, 1982; Nadler & Tushman, 1988; Seashore, Lawler, Mirvis, & Camman, 1983). This literature suggests that a multiple stakeholder perspective is essential in assessing organizational transformation and design. However, organizational transformation ﬁeld studies are often constrained by unique contextual situations that researchers have little control over. This HPWS ﬁeld study concentrates on three different types of organizational effectiveness outcomes (see Fig. 1): 1. Hard organization performance (productivity and product quality); 2. Employee behavioral (turnover and accidents) measures; and 3. Some aspects of the employee engagement. The objectives of the ABC Company transformation effort were clearly stated in the vision direction developed by the steering group for Site A. Some key organization performance results4 that the ABC Company hoped to achieve by the HPWS transformation effort were the following: (1) excellence in cost, quality, and customer service; (2) excellence in safety; (3) minimizing harm to the environment; (4) business partnership and commercial astuteness for each employee; (5) decision-making at the most effective level; and, (6) a motivated workforce where the SDWTs would assume ownership and direct responsibility for business results. These outcomes or performance indicators match Nadler and Tushman’s (1988) recommendations for assessing organizational performance and effectiveness. All these indicators had various forms of both quantitative and qualitative measures. However, because of issues related to timing and coverage (discussed later), we refer to this data and analysis in the discussion section of this chapter. Our hypotheses for this longitudinal quasi-experimental ﬁeld study follow in the next section of this chapter.

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THE HPWS HYPOTHESES On the basis of the theoretical and empirical literatures presented above as well as the contextual issues unique to the ABC Company, the research hypotheses for this SDWT and HPWS ﬁeld study are proposed and discussed. The time frame for the ABC transformation and implementation phase, as well as the time for which data were available determined the time frames used to test the study’s hypotheses. Typically, one common but key indicator of organizational performance is labor productivity. Improvements in labor productivity can be a key objective in the implementation of a HPWS design. However, learning curve effects (Epple, Argote, & Devadas, 1991) could be expected to have played a role in the early stages of the ABC Company design implementation, and thus resulted in initial ﬂuctuations of ABC Company labor productivity levels. Overall, assessing improvement in ‘‘hard’’ labor productivity data (as a measure of organizational effectiveness) has been rare in the organizational change and design literature. Often, self-reports or supervisory reports of productivity have been used as a measure of organizational performance improvement. Both the theoretical and empirical literatures suggest that the HPWS design effort is associated with improved labor productivity. The following hypothesis is therefore proposed in relation to the ABC Company/Site A labor productivity: Hypothesis 1. Site A will have improved labor productivity over 54 months. Many organizational change and design studies reported in Table 1 indicate that product or service quality improved as a result of the change effort. In fact, improved product quality could be considered the most consistent result of HPWS design efforts. Hypothesis 2. Site A will improve its product quality over 54 months. Hard employee behavioral outcomes may be measured by absenteeism, employee turnover, safety, and several other behavioral measures (Macy, 1982; Macy & Mirvis, 1982). Literature on SDWTs suggests that the safety level has improved and the number of accidents has decreased, particularly when safety is an important objective of the change effort, as in the Rushton experiment (Goodman, 1979; Trist et al., 1977). According to Macy and Mirvis (1982), safety is measured by the ratio of the number of incidents that took place within a speciﬁed time to the number of employees. The incidents that have taken place are classiﬁed into OSHA5 recordable (i.e., major and

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minor incidents). The number of hours lost due to the incident is indicative of both its severity as well as the costs incurred by the organization. Given the above definitions and literature, the following hypotheses are proposed: Hypothesis 3A.1. Site A will have fewer safety incidents (minor) after implementing the HPWS design changes (over 54 months). Hypothesis 3A.2. Site A will have fewer safety incidents (OSHA recordable) after implementing the HPWS design changes (over 54 months). Hypothesis 3A.3. Site A will have fewer days lost due to accidents after implementing the HPWS design changes (over 54 months). Organizations have experienced increases in employee turnover in some of the empirical ﬁeld studies reported in Table 1. While some authors (i.e., Cordery, Mueller, & Smith, 1991; Wall, Kemp, Jackson, & Clegg, 1986) have suggested that increases in employee turnover may be due to external factors (such as the labor market and location of the organization), it is necessary to recognize that all employees do not view employee involvement, empowerment, and self-regulation positively. Arguments presented by Hulin and Blood (1968), Locke and Schweiger (1979), and Wagner (1994) indicated that individual differences may exist and employees may opt out of the organization. We expect employee turnover to rise in the initial stages of the ABC transformation effort at Site A and stabilize later. Therefore, the following hypothesis is proposed: Hypothesis 4. Site A will experience reduced total employee turnover over 54 months.

Research Assessment Data Several types of research data were obtained for this longitudinal quasiexperimental ﬁeld study. These include hard record data of production and product quality over 54 months6 and employee behavioral data consisting of safety data and employee turnover data over 54 months. Speciﬁc definitions of the hard performance data indicators are described in Appendix C. Assessing Changes and Change Processes A clear identiﬁcation of the change outcomes, the criteria to be measured, and the frequency of the assessments are necessary in any change effort. Moreover, the dissemination of the results to the employees involved in this

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ongoing effort is also important as their judgments are an essential factor to assert the real success of an organizational change effort (Pettigrew et al., 2001). Since the impact of the HPWS design feature bundle is expected to provide superior results as a whole more than the sum of its parts, three types of organizational outcomes are assessed. The productivity and quality of the products manufactured at the Site A level are assessed according to the six time frames timeline described above in order to assert the overall and intermediary impacts of the 5-year transformation effort. The individual level is utilized with behavioral indicators such as employee turnover and safety. Finally, employee engagement outcomes such as job satisfaction and employee motivation are examined once the HPWS action-levers are implemented at Site A. A baseline employee attitude survey was administered to all Site A employees as part of the diagnostic efforts, and a Time 2 Site A employee survey (with 63 matched cases) was administered about 14 months later. Due to business constraints, the Time 2 employee survey could not be administered to all Site A’s employees. The measures used in the survey and analyzed in this longitudinal ﬁeld study are available from the authors.7 Because the Time 2 survey was administered to a limited number of employees during the implementation phase, the survey data was analyzed in an exploratory fashion and the results are reported in the discussion section of this chapter.

Research Methods As discussed earlier in this article, several types of organizational performance, employee behaviors, and employee engagement data were collected in this longitudinal quasi-experimental research study. Production, product quality, and behavioral data were analyzed using the time-series regression method (Pindyck & Rubinfeld, 1991) because of the relatively short time series. Based on the longitudinal quasi-experimental nature of the research study and the time frame of the HPWS organizational transformation and design effort, ABC Company/Site A performance data were split into six separate time periods, each of which were 9 months (see Fig. 3). Some preliminary HPWS change and design work was done during the initial two stages. Of the remaining four time periods, one period coincided with the organization design phase, while two coincided with the implementation phase. The last period was pre- and post-implementation. A time-series regression analysis

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was performed to compare each of the above time periods with each of the other time periods to determine if any change had occurred. This analysis was performed on total absolute production, labor productivity, product quality, and the employee behavioral data. The SAS Autoreg procedure was used to analyze the data. This procedure analyzes time series data and tests for autocorrelation in the data. If autocorrelation exists, the data are lagged by the ﬁrst level at which they exist. Each time period was dummy coded for each comparison. The time series regression was run with this dummy-coded variable as an independent indicator. Each time period was thus compared with every other time period. The models were ﬁrst run with only the change indicator as the independent measure, and the Durbin-Watson statistic (Pindyck & Rubinfeld, 1991) obtained. The appropriate level to which the data was to be lagged was thus obtained. Given that monthly ABC Company/Site A hard performance data were being used, lagging the data to the 12th level would have accounted for seasonality. However, this would have resulted in the loss of several data points in a relatively short time series. Pairwise t-tests were used to determine if there were significant changes in employee attitudes from the baseline measurement at Time 1 compared to Time 2. There were only 63 matched employee cases between the Time 1 and Time 2 measurements. The analysis included only these matched cases.

RESULTS The HPWS change effort resulted mostly in non-significant changes (no change in 13 comparisons; significant declines in 2 comparisons) in labor productivity. However, the signs of the change coefﬁcients were negative for 14 of the 15 comparisons made. Therefore, Hypothesis 1 was not supported. The results of the test for Hypothesis 1 are shown in Table 2. However, the above ‘‘no change’’ results focused on direct labor productivity. Since a transformation effort may involve the use of additional resources in the short term, a similar analysis was performed using the indicator ‘‘absolute case quantities.’’ This additional analysis (not shown here) also indicated mostly non-significant change (significant improvements in three comparisons; non-significant improvements in eight comparisons; non-significant declines in four comparisons). However, Site A did see a 30,000 case production increase (from approximately 190,000 to 220,000 cases) per month over the 54 months (before and after period) of the

Labor Productivity and Product Quality Results at Site A of ABC Company.

Labor Productivity Results at Site A of ABC Company Comparison Time Periods

Labor Productivity Change Coefﬁcients and Significance Level

Product Quality Change Coefﬁcients and Significance Level

1. Month (0–9) to month (9–18) 2. Month (0–9) to month (18–27) 3. Month (0–9) to month (27–36) 4. Month (0–9) to month (36–45) 5. Month (0–9) to month (45–54) 6. Month (9–18) to month (18–27) 7. Month (9–18) to month (27–36) 8. Month (9–18) to month (36–45) 9. Month (9–18) to month (45–54) 10. Month (18–27) to month (27–36) 11. Month (18–27) to month (36–45) 12. Month (18–27) to month (45–54) 13. Month (27–36) to month (36–45) 14. Month (27–36) to month (45–54) 15. Month (36–45) to month (45–54)

24.88 5.33 20.99 28.20 28.21 30.21 35.85 53.09 (t ¼ 2.6) 53.09 (t ¼ 1.9) 5.63 22.87 22.88 17.24 0.30 0.01

0.01 (t ¼ 2.7) 0.01 (t ¼ 1.9) 0.01 (t ¼ 2.1) 0.01 (t ¼ 2.6) 0.01 (t ¼ 2.4) 0.002 0.003 (t ¼ 1.8) 0.01 (t ¼ 6.2) 0.01 (t ¼ 5.6) 0.01 (t ¼ 2.3) 0.01 (t ¼ 4.8) 0.01 (t ¼ 4.4) 0.003 (t ¼ 1.9) 0.002 0.001

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Table 2.

po 0.10 po 0.05 po 0.01

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study. This was indeed a key positive performance indicator for the company and the business at Site A. Product quality was expected to improve over the period of analysis according to Hypothesis 2. Three types of product defects deﬁned in Appendix C were recorded to measure product quality. Data obtained from the measurement of the three types of defects were aggregated to determine the ‘‘percentage free of defects,’’ a measure of total product quality (TPQ). The analysis was performed on all three types of Site A’s product quality defects as well as on TPQ. Results of the analysis on TPQ are presented in Table 2. There were significant positive product quality improvements (significant improvements in twelve comparisons; no significant declines; three nonsignificant decline comparisons) in the ‘‘percentage free of minor defects’’ and in the aggregate TPQ measure. These product quality improvements took place throughout the study. Since overall product quality improved at ABC Company/Site A, Hypothesis 2 was supported. However, quality change coefﬁcients were very small. These results will be discussed in the next section of the chapter. Analysis of the safety data, both in terms of the number of accidents and the number of days lost due to accidents indicated that there were nonsignificant changes in safety (i.e., no improvements nor declines). This lack of support for hypotheses 3A.1, 3A.2, and 3A.3 is both good and bad news! In many instances, SDWTs implementation can have a negative impact on employee accidents (Macy, 1982). On the other hand, Goodman (1979) found coal mine safety to have improved through the implementation of SDWTs at Rushton. The change coefﬁcients for each of the three types of accidents (minor, OSHA recordable, and days lost) were also very small. Therefore, ABC Company/Site A’s safety performance did not change. The reader must remember that Site A’s safety rate at the beginning of the change effort was excellent (less than 2 percent OHSA recordable). These results are discussed in the next section. Hypothesis 4 stated that the ABC Company would experience reduced employee turnover. Voluntary, involuntary, and total employee turnover data were analyzed. Analysis revealed that there were non-significant changes (no significant increases or declines) in all three employee turnover categories. Once again, the coefﬁcients in all behavioral cases were small or near zero. Hypothesis 4 was therefore not supported. Once again, remember — Site A’s turnover rate at the beginning of the HPWS effort was exemplar (below 2 percent per year in all turnover categories).

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DISCUSSION OF RESULTS A summary of the hard organizational performance and employee behaviors results at Site A is presented in Table 3. Out of six hypotheses tested in this longitudinal HPWS ﬁeld research study, only one (the hypothesis 2 on improved product quality), was scientifically significant and entirely supported. The remaining ﬁve hypotheses tested exhibited no significant change – ‘‘neither decline nor improvement’’! Even in the product quality improvement data, the change coefﬁcients, though significant, were small. This discussion must therefore focus on these surprising organizational transformation results. Each result will be discussed individually followed by an overall summary and conclusion. First, the lack of scientiﬁc and significant positive changes in labor productivity may be explained by the initial increase in the labor (employee) pool sizes for each SDWT (to provide enough training time for employees to become multi-skilled and learn the required rotated leadership roles). Following this initial employment increase, the organization design called for a gradual decrease in labor pool sizes to below pre-change levels. Analysis of absolute case quantities resulted in mostly positive change coefﬁcients. There were significant overall production improvements between the following three comparisons: months (0–9) compared to months (36–45); months (18–27) compared to months (36–45); and months (27–36) compared to months (36–45). Three change coefﬁcients were negative, two of which involved months (9–18). As shown in Fig. 6, the mean number of cases produced per month at Site A increased initially from 190,000 cases to about 209,000 cases. During design months, 13 to 23, the number of absolute cases decreased (from 209,000 to about 185,000). However, during implementation months, 31 to 54, the number of cases improved from about 185,000 to approximately 220,000 cases. After an initial improvement in productivity, this is the classical ‘‘J-effect’’ mentioned earlier (Katz & Khan, 1978, p. 297). In summary, this trend line (the dotted line in Fig. 6), even though there was an improvement from approximately 190,000 to 220,000 cases per month, was not scientifically significant.8 However, to the company, this was a great improvement worth several million dollars! The hypothesis on improved product quality at ABC Company/Site A was supported. Product quality did significantly improve with the minor quality category accounting for the gains. Even these improvements came while the change effort was being implemented. The reader may recall that the company shifted the responsibility for product quality to the line

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Table 3. No.

Summary of Site A HPWS Transformation Results. Description

Resultsa

Comments

I. Financial Performance: Production and Productivity No change (13); Negative (2)

Direct Labor Pool sizes temporarily increased for training Exploratory analysis of absolute production quantities indicated no changes in 12 comparisons, and positive significant change in 3

2a. Percent Free of Major Defects 2b. Percent Free of Critical Defects 2c. Percent Free of Minor Defects 2d. Percent (all) Free of any Defects

Positive change (12); No change (3)

Total Product Quality improvements were found because of improvements in the minor defects category. Both critical and major defects categories did not improve because of ceiling effects

II. Financial Performance: Product Quality

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1. Labor Productivity

3a. Minor Accidents

No Change

3b. OSHA Recordable Accidents 3c. Man-hours lost due to Accidents

No Change No Change

Ceiling Effects (already very close to exemplar) Ceiling Effects (already very close to exemplar) Ceiling Effects (already very close to exemplar)

IV. Behavioral Performance: Employee Turnover 4. Total Employee Turnover

No Change

Ceiling Effects (already very close to exemplar)

5. Employee’s Engagement

No Change

Ceiling Effects (already very close to exemplar)

V. Employee Engagement: Employee Attitudes

Number of product cases produced (actual)/direct labor hours. (a) Number of critical defects/inspected sample of the number of cases produced. (b) Number of major defects/inspected sample of the number of cases produced. (c) Number of minor defects/inspected sample of the number of cases produced. (d) Total number of product defects/inspected sample of the number of cases produced. (Number of accidents incidents/total monthly hours worked) 200,000/12. (Number of accidents incidents/total monthly hours worked) 200,000/12. Number of employee days lost/total workforce size number of monthly working days (for each month, for regular employees). a + Indicates significant positive change; indicates significant negative change; in rows 1and 2, the results of 15 comparisons each are summarized. The numbers in the parenthesis indicates the number of comparisons that fall into that category (e.g., in row 1, there were three significant declines and 12 ‘‘no changes’’).

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III. Behavioral Performance: Safety

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Absolute Case Quantities

2300000 2200000 2100000 2000000 1900000 1800000 1700000 1600000 0

9 Baseline

18

27 During

36

45

54

After

Six Time Series Periods vs. "Before" & "After" in Months

Fig. 6. ‘‘J-Curve’’ of Mean Absolute Case Quantities per Month Produced at Site A/ABC Company Over Six Time Periods – 54 Months. Note: Actual Case is the Solid Line.

employees during the HPWS change process at Site A. The other product quality categories (percent free of critical and major defects) were already very close to 100 percent (the classical ceiling effect) and therefore had very little to no room for improvement. Recall that the Site A worksite was operating at an extremely high exemplar production and quality levels prior to the intervention and would be considered ‘‘great’’ by Collins (2001) based on the ﬁrm’s extensive history of high performance (e.g., safety – less than 2 percent OSHA accident rate; employee turnover – less than 2 percent); and employee satisfaction – 85th percentile or better). Therefore, ‘‘ceiling effects,’’ sometimes called ‘‘survival analysis,’’ (Greene, 1995; Kalbﬂeisch & Prentice, 1980; Nunnally, 1967; Tobin, 1958) were in evidence at the ABC Company and the Site A worksite with regard to OHSA recordable accidents, minor accidents, and employee turnover. Fig. 7 depicts the minor and OHSA recordable accidents at Site A. After an initial rise from about 3.5 percent to about 4.5 percent, minor accidents declined to below 2 percent. At the same time, there was a steady decrease in OSHA accidents to below 1 percent. Both of the trend lines shown in Fig. 7 were non-significant. We believe that both of the accident trend lines are tending toward zero (meaning zero accidents), which is due to the ceiling effect that was present from the start of the change effort.

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Accident Rate Percent

5 4 3 2 1 0 0

9

Baseline

18

27

During

36

45

54

After

Six Quasi Experimental Design Phases in Months

Fig. 7. Ceiling Effect of Minor and OSHA Recordable Accidents at Site A/ABC Company Over Six Time Periods – 54 Months. Note: Dashed Line is Minor Accidents, and the Solid Line is OSHA Accidents.

The ABC Company, given its long-time employee focus, had very low (tending toward close to zero) employee turnover and accident rates, which was maintained during and after the HPWS transformation effort. This is a good result! The reader must remember - - the ABC Company had been independently judged by Fortune magazine (over many years) to be one of the top 100 US based organizations to work for! In addition, all of their past performance indicators would indicate that they had already achieved ‘‘exemplar’’ (Collins, 2001) status. To gain a better understanding of the effectiveness of the transformation effort, the researchers analyzed employee survey based data to determine if there were any significant changes in employee engagement measures, like job satisfaction, job involvement, job (work) motivation, team cohesion, and pay satisfaction. As indicated in Table 4, there was no change (nonsignificant improvements or declines) in employee attitudes regarding their engagement in the organization. Given that the Time 2 employee survey was administered only 14 months after the baseline survey, an initial employee attitudinal downturn in the form of the ‘‘J-effect’’ or curve (Katz & Kahn, 1978, p. 297) seems to have been avoided at ABC. Once again, this is a good employee result, especially due to the fact that employees were able to

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Table 4. No.

1 2 3 4 5

Results of Employee Engagement Measures at Site A of ABC Company: Descriptive Statistics, Pairwise t-Tests and Regression Results.

Employee Engagement Indicators

N

Mean at Time 1

SDa at Time 1

Mean at Time 2

SD at Time 2

t-valueb

Sig.c

Nd

R2

Time 1 Coefﬁcient

t-value

Sig.e

Job Satisfaction Job Involvement Job Motivation Pay Satisfaction Team Cohesiveness

63 63 63 63 63

6.0 4.0 6.1 4.4 5.1

0.75 0.96 0.77 1.58 1.15

5.9 3.9 6.2 4.3 5.1

0.75 0.87 0.57 1.55 1.19

0.708 0.347 0.317 0.614 0.321

0.482 0.073 0.752 0.542 0.749

63 63 63 63 63

0.12 0.26 0.30 0.34 0.24

0.35 0.46 0.41 0.57 0.51

2.9 4.6 5.1 5.5 4.4

0.01 0.01 0.01 0.01 0.01

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SD indicates the standard deviation. t-value is the computed test statistic. c Sig. indicates the significance level. d N is the matched number of respondents at time 1 and time 2. e Sig. means significance. b

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‘‘opt out’’ of their initial ABC design effort and then be transferred to Site A, which had not yet begun their transformational effort. In a purely exploratory fashion, and based on the analysis of covariance (ANCOVA) concepts, a simple regression was run, using the Time 2 employee engagement score as the dependent variable and the Time 1 employee engagement score as the independent variable. Our expectation here was that the Time 1 score would be a significant predictor of the Time 2 score. A high R2 would imply that little change had taken place, whereas a low R2 would indicate that something had really happened. However, the lack of a covariate would make it impossible to pinpoint the source of the change. Once again, the results of this analysis are presented in Table 4. The R2s are all moderate to low, and range between +0.12 and +0.34 on all ﬁve employee engagement measures. These employee engagement results indicate that at an aggregate level, some compensatory effects account for the lack of significant differences between means at Time 1 and Time 2. These results may indicate that those ABC employees who were relatively happy with the status quo prior to the change effort were now relatively unhappy or vice versa. These results are also a possible indicator of beta or gamma change (Golembiewski, Billingsley, & Yeager, 1976; Thompson & Hunt, 1995) rather than alpha change. The pairwise t-test is useful in detecting alpha changes, but not beta or gamma changes. In addition, another key lesson is the effect of employee turnover at the top of ABC management. The original US manufacturing vice president, the change champion who initiated the HPWS design efforts, subsequently moved up the ABC Company management ladder to be responsible for worldwide manufacturing for the entire ABC Company. The managerial replacement for the North American champion was never able to either accept or adopt the necessary core values, philosophies, and principles of the HPWS transformation effort. Therefore, this lack of a ‘‘consistent’’ top management champion during the two design implementation periods was detrimental to the long-term HPWS change and design effort. And ﬁnally, ABC Company’s long-standing focus on its employees provided a ceiling effect on the behavioral and employee engagement indicators. Recall that this research was initiated to question the role of organizational design, transformation, development, and change efforts in an exemplar ﬁrm. One could argue that based on our ﬁndings, a ﬁrm can only be ‘‘so good’’! However, this would assume that the ultimate goal of any change effort is to affect productivity, safety issues, employee turnover, and product quality. The ﬁrm in this study had pre-existing core values, philosophies and principles relating to the importance of its employees in

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conjunction with maintaining high levels of performance. This HPWS transformation effort brought the worksite more into alignment with these core values, philosophies, and principles, while simultaneously bringing the ﬁrm’s key internal and external customers and suppliers closer to the business. By changing the organizational structure from a tall and mechanistic structure to a ﬂatter and organic structure (e.g., two layers of management were removed from the original structure) and by empowering employees in these SDWTs, the ﬁrm was able to sense changes in the environment quicker than ﬁrms without the HPWS integrated and bundled design described herein; thereby creating an organizational capability that fosters quicker reaction to the environment (Galbraith, 1994, 2005). This was accomplished without any significant negative changes in its exemplar high performance, or any employee turnover by using state-of-the-art direct employee participation processes and parallel employee involvement structures implemented with the site’s bundled 15 design features. Therefore, the ultimate performance effects of this massive organizational transformation effort are difﬁcult to account for, but should be interpreted positively. Again, the HPWS and SDWT integrated and bundled design was implemented without any significant negative effect on previous company or Site A high-performance metrics.

CONCLUSIONS This 5-year quasi-experimental ﬁeld study while contributing to the work innovation, transformation, and design ﬁelds also illuminates an area of organizational design and change research that has not been effectively addressed and has implications for future research. Perhaps, our view of organizational performance has been too focused. On one hand, many of the existing measures of organizational performance were not found to be significantly and positively changed in this study. However, on the other hand, qualitative data suggests that the intervention was considered successful by the organization and their employees. New research should address this gap in the ODC literature. How do we assess the effects of organizational transformation efforts in exemplar organizations? Do traditional transformation measures apply when we consider ceiling effects on HPWSs, especially when the transformation effort is of the scale described in this chapter? How do we build and design organizations for constant change? These questions are especially relevant if we are to take Farias’ (2005) and Lawler and Worley’s (2006) recent thesis seriously: that organizational

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effectiveness can only be sustained when organizations are ‘‘built to change.’’ An organization that is being built and designed to change requires the coordination of multiple and integrated non-permanent structures, systems, and processes that are constantly changing while producing high levels of current performance. Lawler and Worley’s (2006) argument is especially relevant when we consider the historical inability of many visionary and the so-called ‘‘high performing ﬁrms’’ to sustain their levels of effectiveness and to seek temporary competitive advantages. Additionally, this longitudinal quasi-experimental design ﬁeld study of integrated and bundled HPWS and SDWTs transformation effort presents an analysis of hard organizational performance data and employee behaviors together with some employee engagement data from the ABC Company and thus makes an important contribution to the organizational innovation, change management, organizational transformation and design, and development literatures. Indeed, the variety in terms of types of hard organizational performance data used in this study is rather rare in the literatures on SDWTs and HPWSs. Our ﬁeld study also took a holistic, integrated, and bundled view of organizational transformation and design. Rather than isolate the effects of SDWTs on organizational performance, this ﬁeld study investigated what prior research had called for – the overall HPWS-bundled organization design perspective and focused on organization integration and ﬁt of the various design features (Huselid, 1995; Woodman, 1989). Based on the ﬁndings of our research, the ABC Company was able to move toward a HPWS by integrating a business center design directly linked to 23 (connected white-collar resources and operations) then directly coupled to the other 12 design features to form an integrated and bundled HPWS design. This was accomplished without any significant negative changes and many positive changes in ABC’s overall performance. The reader must remember that each of the 18 operations SDWTs increased their team size by one or two team members (due to the training and development requirements) during the two design implementation phases (the 21 last months) to enable the multiskilling, leadership roles, and business training to be accomplished. In the long term, beyond the formal assessment period, these SDWT crew sizes were reduced and became smaller than the original crew sizes before the design effort started. This later period is not included in the labor productivity data and consequently the increased number of cases per month would have been positively significant using the time-series analysis. While these research and design issues are a cause for concern, they do provide some valuable lessons for practitioners, managers, and

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academicians. A key lesson from this research study was the need to manage the process of transformation appropriately. ABC Company took care to ensure that a very large and significant number of employees had direct employee involvement and participation in the HPWS design and the implementation phases. There was by design, formal and direct employee participation via parallel employee decision-making structures and processes. The goal was to create self-directed work teams and a HPWS and this approach was leveraged from the onset. All in all, the beneﬁts of this ‘‘built to change’’ organization (Lawler & Worley, 2006), that the ABC Company continues to realize at the Site A worksite into the 21st century from the HPWS design, seemed to be worth the cost. Site A reached and surpassed the six (excellence in cost; quality; safety; business partnerships and commercial astuteness for employees; lowering of decision-making; and a motivated workforce) objectives set for the HPWS transformation effort. However, without the overall bundled, holistic, and integrated HPWS approach to organizational design at the ABC Company, the results could have been very disappointing at best. At the end of the two design implementation periods, the following organizational performance results were evident: (1) product quality improved; (2) the number of absolute cases produced increased by 30,000 per month; (3) safety (both OSHA and minor accidents) improved; (4) costs were lowered by reducing the number of management and staff employees (all without any layoffs), and product manufacturing costs were lowered by 6.5 percent; (5) the number of management levels and the number of management personnel layers decreased by two (from six to four9 hierarchical layers); (6) both management, professional staff, and hourly employees were much more commercially astute about the business and their external business environment; (7) management had successfully shared leadership roles (re-distribution of power and control) with the SDWTs; (8) employees were more multi-skilled; and, (9) accountability, responsibility, and decisionmaking had been lowered in the organization. It is important to note that the use of the usual two or three time periods would have removed our ability to study both the ‘‘J-effect’’ and the ‘‘ceiling effects’’; however, we found evidence for both of these. We analyzed both the ‘‘before’’ and ‘‘after’’ time periods, and this increase in labor productivity was indeed significant (30,000 absolute cases per month). In our view, ceiling effects regarding the previous organizational performance data at the ABC Company prevented most of the hypotheses from being scientifically and significantly supported in this study. The lack of significant improvements in labor productivity is explained by the timing of the measurement

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and the temporary addition of employees per SDWT. Again, one of the goals of the study was to examine the entire change process effort (e.g., 54 months versus two or three points in time) and its consequences. We believe the above nine success factors seem to have made the integrated and bundled HPWS transformation effort a success. SDWTs by themselves, we believe, without the other 14 action-levers (especially the business center concept), would have been a failure! If the shift to SDWTs has made the work much harder for many employees as witnessed earlier, workers also found it more intrinsically rewarding. One of the Site A operations SDWTs saved $100,000 in the ﬁrst year of implementation by taking over the use of temporary workers, while another operations SDWT saved $700,000 when two team members took on the task of expediters! We think the ABC Company and its manufacturing division, especially Site A, has become a built to change organization for the 21st century. As Lawler and Worley (2006, p. 304) state, ‘‘To become a built to change organization, a ﬁrm must shift its members perceptions about the importance, frequency, ease and desirability of change. Further, it must implement changeable forms of each organizational design features.’’ We believe the ABC Company did just that and therefore continues to be an ‘‘exemplar’’ organization with great organizational effectiveness. As of 2006, the ABC Company continues to be ranked in the Fortune top ‘‘100 companies to work for’’! Overall, at this ‘‘after’’ stage (20 years after the ABC Company transformation effort began and 11 years after the complete implementation of the HPWS design at Site A), it seems that the integrated and bundled HPWS transformational design effort of Site A was successful.

NOTES 1. No confounding or extraneous changes in the company or worksite during the study’s time period was present (e.g., manufacturing technologies, information systems). For example, the company purchased a product line from another ﬁrm, but only added 155 employees. Finally, no social, political, or economic upheavals occurred during this time. This can be veriﬁed by the fact that the researchers were present throughout the study period. 2. Later became the vice-president for North American manufacturing. During the 5-year project time period, the work site had two steering groups: one for the design phase, and the second for the implementation phase. 3. ABC Company never implemented autonomous operations SDWTs because of a decision by ABC’s top management. 4. Speciﬁc quantiﬁable goals were set.

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5. OSHA stands for Occupational Safety and Hazards Administration, which requires organizations in the United States to record and report all accidents of a major nature. 6. Because this is a ﬁeld study, 10 months of this data had to be extrapolated due to the fact that some of the data prior to the change effort could not be obtained. 7. All scales were 0.60 or greater. All items and scales were taken from the Michigan Organization Assessment Questionnaire (see Camman et al., 1983). 8. Recall that multiple time periods were used rather than solely using ‘‘before’’ and ‘‘after.’’ Had we used only ‘‘before’’ and ‘‘after’’ time periods, this 30,000 cases per month increase would have been a significant increase in productivity (see Fig. 6). 9. The HPWS design planned for the site to go from six to three hierarchical levels; however, the site never managed to eliminate the coaches and have autonomous operations SDWTs. This was due to top ABC Company management unwillingness to risk personal and organizational assets and resources.

ACKNOWLEDGMENTS 1. Support for this work was provided by the Texas Center for Innovative Organizations, Rawls College of Business, Texas Tech University; and the multi-international consumer products company, and its employees. 2. The authors would like to thank the editors, especially Dr. William Passmore, for their constructive comments. 3. The quantitative data were taken from a Texas Tech University, Rawls College of Business, Area of Management, dissertation while the second author was a Ph.D. student there.

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APPENDIX A Table A1. Critical Demographic, Process, and System Characteristics of Successful SDWTs in Supply-Chain Organizations: Benchmarking 105 North American Traditionally Designed and HPWOs (SIO: 1991–2005)a. Percent or Other Indicator 1. Average age and range of SDWTs (semiautonomous and autonomous) 2. Hourly or non-exempt employees performing required leadership roles in SDWTs 3. SDWTs leadership roles: How handled – required rotated bias 4. Length of SDWT required leadership roles rotated: when rotated: a. More than 12 months b. 9–12 months c. 3 months or less 5. Average percent of total business’s workforce covered by SDWTs: a. Total system workforce b. White-collared salaried workforce c. Wage/hourly workforce 6. Integration of Maintenance (light to medium – NOT heavy) into the operations SDWTs 7. Average Size of SDWTs 8. Average number of semi-autonomous SDWTs per coach 9. Average span of control per coach

13 years (range ¼ 4 to 32 years) 69

53

32 27 27

61 39 67 74

17 People 2 Teams/per coach 34 People

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Table A1.

413

(Continued ).

10. Average number of total coaches per business (wage and white-collar SDWTs) 11. Semi-autonomous SDWT coach responsibilities deﬁned as: a. A ‘‘process area’’ across shifts b. Around a shift across a process area c. A line within a shift 12. Does semi-autonomous SDWT coach work on same shift as (his/her) SDWT? 13. SDWT: a. Average number of technical tasks performed by SDWT b. Average number of business/team activities performed by SDWT c. Average number of team administrative roles performed by SDWT d. Average number of formal leadership roles performed by SDWT (previously by supervisors or managers) 14. Business SDWTs resulted from: a. Re-design of Business b. New Design of Business c. Work Team Evolution 15. Of a typical workday, what percent of SDWT team members time spent on: a. Operating/maintenance/technology b. Leadership, business administration and other important non-operating work activities 16. How often do SDWTs meet? a. Monthly b. Weekly c. Daily d. Quarterly e. Annually f. Semi-annually 17. Average number of SDWT meetings per year 18. Average number of minutes of SDWT meetings per year

24 Coaches

46 21 17 100 (Yes)

9 Tasks (hard skills) 12 Activities (projects, etc.) 7 Roles (scribe, facilitator, etc.) 8 Roles (work assignor, etc.)

59 25 16

44 56

49 44 39 35 9 4 127 Meeting/year 4,898 min/year

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Table A1.

(Continued ).

19. Percent of work year hours spent in SDWT meetings? 20. Pay systems for SDWTs: a. Traditional b. Non-traditional: innovative pay system If the business has an innovative pay system: a. PFDS (pay-for demonstrated skills) b. Gain sharing c. PFV (pay-for-versatility) d. PFK (pay-for-knowledge) e. Team bonus 21. Average number of pay systems per SDWT 22. All salaried workforce and SDWTs (non-exempt) 23. Has the business changed other processes and systems in support of SDWTs? a. Changed other support systems and processes b. Measurement/evaluation system 24. Barriers to successful SDWT implementation: a. Time/resources for training/re-training b. Resistance from supervisors c. Resistance from managers d. Resistance from unions e. Increased costs f. Other Average number of barriers per worksite (out of 5) 25. Coaching/training/re-training and development hours a

Source: Taken from Macy (forthcoming, 2008).

4

46 54

27 27 23 8 7 2 45

44 30

62 52 37 14 13 11 ¯ ¼ 2:6 X 160 hours per employee per year for businesses with SDWTs

Table B1.

ABC Company/Site A Decision-Making Matrix to Ensure Employee Empowerment.

Example Categories of Operations and Process Decisionsb

Levels of Decision-Making Authoritya 10

1 Vacation schedule 2 Overtime (packaging) 3 Overtime (Proc./TRT) 4 Training of associates (tech)b 5 Training of associates (business)b 6 Training of associates (social/team)b 7 Task/role assignment 8 SDWT safety problems/issues 9 Site A business safety rules 10 Corporate safety rules 11 Initiate work orders (repairs) 12 Initiate work orders (changes/DCAs) 13 Signing of hot work permits 14 Breaks and lunch (running 480 min) 15 Team/individual standards 16 Update old/purchase new equipment 17 Update procedures (quality) 18 Update procedures (tech – i.e., LOIs) 19 Physical layout of machines

9

8

7

6

5

4

S S

X X

S S

X X X

3

2

1

SX

S S

X SX SX

SX S S S S S S S S S

X

X X X X X X

High-Performance Work Systems and Self-Directed Work Teams

APPENDIX B

X X

415

S ¼ Beginning or baseline state; X ¼ Design implementation # 2 phase scale where: 10 ¼ Performed by management; 5 ¼ Performed by SDWTs; and 1 ¼ Performed by individual team members. a There were a total of 98 separate decisions on the Site A decision-making grid. Only the ﬁrst 19 are listed here. b Some associates will initiate and train on their own.

Table C1.

Definition of ABC Company/Site A Organization Performance.

Corresponding Criteria in the Literature

I. Productivity II. Product Quality

Labor Productivity Product Quality

III. Employee Accidents

Employee Safety

IV. Employee Turnover

Employee Turnover

Computational Formula

Number of cases of product produced (actual)/direct labor hoursa,b Percent free of criticalc defects: Number of critical defects/inspected sample of the number of cases produced Percent free of majorc defects: Number of major defects/inspected sample of the number of cases produced Percent free of minorc defects: Number of minor defects/inspected sample of the number of cases produced Percent free of defects (all): Total number of product defects/inspected sample of the number of cases produced Minor: (number of accidents incidents/total monthly hours worked) 200,000/12 OSHA recordable: (number of accidents incidents/total monthly hours worked) 200,000/12 Days lost per employee: Number of employee days lost/Total workforce size number of monthly working days (for each month, for regular employees) Voluntary: Number of voluntary turnover incidents/Workforce size (for each month, for regular employees) Involuntary: Number of involuntary turnover incidents/workforce size (for each month, for regular employees) Total employee turnover: Total number of turnover incidents/workforce size (for each month for regular employees)

Direct labor hours indicate actual hours spent by line employees who are directly involved in production. Determined by engineering standard of the line production. c Critical defects result in the entire batch being checked. Products with critical defects are scrapped; major defects result in rework; minor defects require investigation of the causes. b

BARRY A. MACY ET AL.

ABC Company Performance Indicators

a

416

APPENDIX C

ABOUT THE AUTHORS Achilles A. Armenakis is the James T. Pursell, Sr. Eminent Scholar in the Department of Management at Auburn University. Achilles has published research on diagnosis, implementation, and evaluation of organizational change. His current research efforts are focused on the readiness, adoption, and institutionalization processes. He is a fellow of the International Academy of Management and of the Southern Management Association. David M. Brock is a graduate of the University of South Africa, University of Cape Town, and North Carolina State University; and currently senior lecturer in International Organization and Strategy in the Department of Business Administration, Ben-Gurion University of the Negev. His research interests include the management and organization of complex organizations like professional service ﬁrms, multinationals and their subsidiaries. Recent work of his has been published in International Business Review, Management International Review, Journal of Organizational Change Management, International Journal of Management Reviews, and Journal of International Management. Marie E. Di Virgilio (PhD, Organization Development, Benedictine University) is an adjunct professor in the College of Management and Business at National-Louis University. She has over 30 years of corporate experience with assignments in human resources, education, sales, accounting, and information technology. She is currently building an independent practice, Change Management Strategies, Inc., focusing on enterprise-wide change management. Gerard F. Farias is an associate professor in management and the executive director of the Institute for Sustainable Enterprise at the Silberman College of Business at Fairleigh Dickinson University. He earned a PhD from Texas Tech University in 1997 and prior to joining FDU, served on the faculty at Loyola University Chicago. His core areas of expertise are organizational design, organizational change and High Performance Work Systems. He has published in journals like the Journal of Applied Behavioral Science, Human 417

418

ABOUT THE AUTHORS

Resource Planning Journal and Organizational Development Journal. He has presented his work at major conferences like the Academy of Management. Hubert S. Feild is a Torchmark Professor of management in the Department of Management at Auburn University. He has published articles in numerous journals such as the Journal of Applied Psychology, Personnel Psychology, and the Academy of Management Journal and has consulted with organizations such as SONY, GE, and PPG Industries. His research focuses on human resource selection and research methods in human resource management. Jacqueline Fendt is a professor of strategy and entrepreneurship at ESCPEAP European School of Management in Paris, France. Prior to that, she was dean of Graduate School of Business Administration (GSBA), Zurich, Switzerland. Jacqueline had come to academia from a longstanding corporate career, inter alia as an executive at CIBA-GEIGY Ltd., Digital Equipment, and chief executive (CEO) of Swiss Shipping Ltd., and Expo 01. After internalizing six major mergers, Jacqueline decided to study the nature and role of CEOs in merger situations. Jacqueline holds a PhD in organization science from Leiden University, Netherlands and an MBA from GSBA, Zurich, Switzerland. Stanley G. Harris is a professor of management, director of Organizational Analysis & Change and Human Resource Management graduate programs, and director of the physicians Executive MBA Program at Auburn University. His research focuses on change management, organizational culture, and organizational cognition and emotion. Bob Hinings is a professor emeritus and senior research fellow in the Department of Organizational Analysis, Faculty of Business, University of Alberta. He is currently carrying out research on strategic organizational change in health services in Alberta and on institutional processes in the Canadian wine industry. He is a fellow of the Royal Society of Canada and of the U.S. Academy of Management as well as an honorary member of the European Group for Organizational Studies. He has published eight books and more than 120 papers. Daniel T. Holt is an active duty Air Force ofﬁcer and assistant professor of management at the Air Force Institute of Technology in Dayton, OH. He has served as an Air Force civil engineer in Central America, Asia, and throughout the Middle East. He received his PhD in Management from

About the Authors

419

Auburn University. His research interests focus on organizational change and development, human resource management issues, and measurement theory. Mary S. Logan is a senior lecturer at the London School of Economics and Political Science. After a successful career in business management she received her PhD in organizational behavior from the University of Arkansas. She has presented papers at the Academy of Management and other regional conferences and published in management and human resource management journals. She has served as an ad hoc reviewer for several journals. Her research interests include organizational change, organizational identiﬁcation, and front-line supervision. James D. Ludema (PhD, organizational behavior, Case Western Reserve University) is a professor in the PhD Program in Organization Development at Benedictine University. He is the author of many articles, book chapters, and books, on positive organizational change. His work has appeared in Human Relations, Journal of Applied Behavioral Science, Research in Organizational Change and Development, Handbook of Action Research, Advances in Appreciative Inquiry, Organization Development Journal, among others. His most recent book is The Appreciative Inquiry Summit: A Practitioner’s Guide for Leading Large Group Change with Diana Whitney, Bernard J. Mohr, and Thomas J. Grifﬁn. Barry A. Macy (PhD in administrative sciences, The Ohio State University) is the director and founder of the Texas Center for Innovative Organizations, and professor of organizational design, Area of Management, Jerry S. Rawls College of Business, Texas Tech University. Previously on the faculty of the University of Michigan, Institute for Social Research, he is a specialist in the ﬁeld of large systems transformation. He has been involved for over 30 years in employee and employer cooperative efforts to improve ﬁnancial performance and enhance employee engagement while specializing in strategic change planning, organizational and S.B.U./G.B.U. transformation, new design and re-design of existing facilities, horizontal/lateral design across the value chain, customer and supplier enterprise teams, self-directed work teams, ﬁnancial reward systems, and direct employee involvement. He has published in Administrative Science Quarterly, Academy of Management Review, Business Law Review, Evaluation Review, Group and Organizational Studies, Human Relations, Journal of Applied Psychology, Monthly Labor Review, and other academic and professional journals. In addition, he is the author of 16 book chapters, including Research in Organizational Change

420

ABOUT THE AUTHORS

and Development, Volume 5, 1991. (You can contact him at [email protected] or visit the Texas Center for Innovative Organizations at http://texascenter.ba.ttu.edu.) Curt Moore is an assistant professor of entrepreneurship and strategy in the Department of Management for the Neeley School of Business at Texas Christian University. He received his PhD from Texas Tech University. His research focuses on the intersection of entrepreneurship and strategy. Paul C. Nutt is a Professor of Management Sciences in the Fisher College of Business at The Ohio State University. He received a PhD from the University of Wisconsin – Madison and a BSE and MSE. from the University of Michigan. Publications of interests in organizational decision-making, strategic management, and radical change have appeared in Decision Sciences, the Academy of Management journals, Management Science, and others. He is a fellow in the Decision Sciences Institute and a charter member of the Academy of Management’s Hall of Fame. Recent books are Why Decisions Fail for Berrett-Koehler and the Blackwell Handbook of Decision Making (in press). His work has appeared in Newsweek, Wall Street Journal, Fast Company Magazine, and NPR/PRI’s Marketplace. Anne M. O’Leary-Kelly is the William R. and Cacilia Howard chair in management in the Department of Management at the University of Arkansas. She received her PhD in Organizational Behavior and Human Resource Management from Michigan State University in 1990. Her research interests include the study of aggressive work behavior (violence, sexual harassment) and individual attachments to work organizations (psychological contracts, identiﬁcation). Her work has appeared in, among others, the Academy of Management Review, the Academy of Management Journal, the Journal of Applied Psychology, the Journal of Management, and the Journal of Organizational Behavior. Michael J. Powell is pro vice chancellor (Business) of Grifﬁth Business School, Grifﬁth University, in Queensland, Australia. He has published several books and articles in the area of professions and professional services ﬁrms and is currently engaged in research and writing in leading and managing change in health organizations as well as trying to practice what he preaches! Jean-Francois Rosa is a management graduate student at the Rawls College of Business, Texas Tech University. His main area of interest includes the

About the Authors

421

identiﬁcation and implementation at multiple levels of factors or combinations of factors that promote development and change in organizations. Raymond Saner has 20 years of experience as an OD consultant to the United Nations and its specialized agencies, multinational enterprises and NGOs in OECD and Developing countries. He is a professor of Organization and International Management at Basel University, Switzerland and a partner of Organizational Consultants Ltd., a HK-based consulting ﬁrm specializing in international management, organization development and business diplomacy. He also teaches at Sciences Po, Paris in the new Master of Public Affairs program and is director of Diplomacy Dialogue, a branch of the Centre for Socio-Eco-Nomic Development in Geneva, Switzerland, a Not-for-Proﬁt foundation focusing on socio-economic research and public sector reform. Barry Sugarman was a professor of management at Lesley University for 20 years and chaired the All-College Faculty one year. Later he was a research coordinator at the Society for Organizational Learning (SoL). There he produced three research conferences and supervised two collaborative research projects among member organizations. He earned his PhD (sociology and anthropology) from Princeton University. He has published four books and over 50 articles. At SoL he has been an avid learner from the experienced change leaders who gather there as a community of practice. As a recent grandfather he is learning about human nature all over again. See photos and papers at his website: http://web.mac.com/barrysugarman/. Richard W. Woodman (PhD, Purdue University) is the Fouraker professor of business and professor of management at Texas A&M University where he teaches organizational behavior, organizational change, organizational creativity and innovation, and research methodology. He is editor of the Journal of Applied Behavioral Science and co-editor of the annual series Research in Organizational Change and Development published by Elsevier. His research interests focus on organizational change and organizational creativity. In a previous life, Dr. Woodman was a military intelligence ofﬁcer in the U.S. Army, worked in both the petroleum and banking industries, and served for several years as vice-president of a ﬁnancial institution. Lichia Yiu is co-founder and president of the Centre for Socio-Eco-Nomic Development, a Geneva-based research and development institute (CSEND, since 1993). She has designed and developed institutional development

422

ABOUT THE AUTHORS

architecture to support public sector reforms in China, Slovenia, Vietnam, Russia, and English-speaking African countries for the United Nations, WHO, ILO, EBRD and bilateral development aid agencies (SDC, GTZ, DANIDA, SIDA, NORAID, CIDA). She has published seven books and more than 40 articles in publications such as American Academy of Management Executive, Advances in International Comparative Management, Human Resource Quarterly, Performance Improvement Quarterly, Public Sector Management, and International Journal of Human Resource Management. Her current research interests are human capital formation and quality of training and education, chaos and complexity theory and its application to large social system change, business diplomacy and multi-stakeholder relationships, and global leadership. She holds an MA and Ed.D in counselling psychology from Indiana University, Bloomington, and a Post-doctoral Fellowship in organizational psychology from Teachers College, Columbia University. Feirong Yuan (PhD, Texas A&M University) is an assistant professor of management at The University of Kansas. She is an active member of the Academy of Management, Academy of International Business, and International Association for Chinese Management Research; and is currently serving on the editorial review board for the Journal of Applied Behavioral Science. Her research interests are mainly in the areas of organizational change, employee creativity and innovation, and cross-cultural studies.