CHAPTER 7 - MANAGING CHANGE AND INNOVATION

LEARNING OUTCOMES
After reading this chapter students should be able to:
1. Define organizational change and compare and contrast views on the change process.
2. Explain how to manage resistance to change. how managers can serve as change agents.
3. Describe what managers need to know about employee stress.
4. Discuss techniques for stimulating innovation.
5.
Opening Vignette—Technology Transformers
SUMMARY
Imagine lying as a patient in a hospital bed and being visited by a 5-foot robot. Methodist Hospital in
Houston, utilizes a robot to visit patients, being guided remotely by a patient’s doctor from a command
center on another floor. Other technological advancements like radio-frequency ID tags keep track of
doctors, nurses, and pieces of equipment in real time, leading to faster emergency response times and
“Smart beds automatically transfer patients’ breathing and heart rates to their charts,” quickly alerting
nurses to potential or developing problems. One of the biggest technological changes is in medical
records information keeping. Currently, only 1.5 percent of private hospitals have a comprehensive
electronic medical records system in all clinical units.
The investment that hospitals and other health care organizations are making in technology has basically
two goals: (1) to improve medical care and reduce error rates, and (2) to minimize patient stress, which
encourages healing. Robots are even found in operating rooms—the “assembly line” of a health care
system—just as they are in other organization’s assembly lines, and for the same reasons: quality control
and cost control. However, technological changes will continue to transform the industry and the
organizations and the people who make it work.
Teaching notes
1. What changes in healthcare technology have occurred in the last decade?
2. What makes this industry different from others?

I.

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II. WHAT IS CHANGE AND HOW DO MANAGERS DEAL WITH IT?

A. Introduction
1. Change is an alteration of an organization’s environment, structure, technology, or people.
2. If it weren’t for change, the manager’s job would be easy.
a) Planning would be simplified.
b) The issue of organization design would be solved.
c) Decision making would be dramatically simplified.
3. Change is an organizational reality.
a) Handling change is an integral part of every manager’s job.
4. A manager can change three things.
a) Structure.
b) Technology.
c) People.
d) See Exhibit 7-1.
5. Changing structure includes any alteration in any authority relationships, coordination
mechanisms, degree of centralization, job design, or similar organization structure
variables.
a) These structural components give employees the authority and means to implement
process improvements.
6. Changing technology encompasses modification in the way work is processed or the
methods and equipment used.
a) The primary focus on technological change in continuous improvement initiatives is
directed at developing flexible processes to support better quality operations.
b) Employees are constantly looking for things to fix.
c) Work processes must be adaptable to continual change and fine tuning.
d) This adaptability requires an extensive commitment to educating and training workers.
7. Changes in people refers to changes in employee attitudes, expectations, perceptions, or
behaviors.
a) Requires a work force committed to the organization’s objectives of quality and
continuous improvement.
b) Again, necessitates proper education and training.
c) It also demands a performance evaluation and reward system that supports continuous
improvements.
B. Introduction - Why do Organizations Need Change?
1. There are both external and internal forces that constrain managers.
2. These same forces also bring about the need for change.

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 Chapter 7—Managing Change and Innovation

C. What External Forces Create a Need to Change?

1. They come from various sources.
a) New competition.
b) Government laws and regulations.
c) Technology.
d) Economics.
D. What Internal Forces Create a Need for Change?
1. Internal forces tend to originate primarily from the internal operations of the organization
or from the impact of external changes.
2. When management redefines or modifies its strategy, it often introduces a host of changes.
a) Employees may have their jobs redesigned, need to undergo training to operate the
new equipment, or be required to establish new interaction patterns within their formal
group.
b) An organization’s work force is rarely static; its composition changes.
c) The compensation and benefits systems might also need to be reworked to reflect the
needs of a diverse work force and market forces in which certain skills are in short
supply.
d) Employee attitudes, such as increased job dissatisfaction, may lead to increased
absenteeism, resignations, and even strikes.
E. Who initiates Organizational Change?
1. Changes within an organization need a catalyst.
2. People who act as catalysts and assume the responsibility for managing the change process
are called change agents.
a) Any manager can be a change agent.
b) A nonmanager can also be a change agent.
3. For major systemwide changes, internal management will often hire outside consultants to
provide advice and assistance.
a) Outside consultants can offer an objective perspective.
b) But they may have an inadequate understanding of the organization’s history, culture,
operating procedures, and personnel.
c) They are also prone to initiate more drastic changes than insiders.
4. Internal managers who act as change agents may be more thoughtful and possibly more
cautious.

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Developing Your Change Management Skill

About the Skill
Managers play an important role in organizational change. That is, they often serve as a catalyst for the
change—a change agent. However, managers may find that change is resisted by employees. After all,
change represents ambiguity and uncertainty, or it threatens the status quo. How can this resistance to
change be effectively managed? Here are some suggestions.
Steps in Practicing the Skill
1. Assess the climate for change. Here are some guiding questions:
 Is the sponsor of the change high enough in the organization to have power to effectively deal
with resistance?
 Is senior management supportive of the change and committed to it?
 Is there a strong sense of urgency from senior managers about the need for change and is this
feeling shared by others in the organization?
 Do managers have a clear vision of how the future will look after the change?
 Are there objective measures in place to evaluate the change effort and have reward systems been
explicitly designed to reinforce them?
 Is the specific change effort consistent with other changes going on in the organization?
 Are managers willing to sacrifice their personal self-interests for the good of the organization as a
whole?
 Do managers pride themselves on closely monitoring changes and actions by competitors?
 Are managers and employees rewarded for taking risks, being innovative, and looking for new
and better solutions?
 Is the organizational structure flexible?
 Does communication flow both down and up in the organization?
 Has the organization successfully implemented changes in the past?
 Are employees satisfied with, and trust in, management?
 Is there a high degree of interaction and cooperation between organizational work units?
 Are decisions made quickly and do decisions take into account a wide variety of suggestions?
2. Choose an appropriate approach for managing the resistance to change. Review 7-4 for the
advantages and disadvantages of each approach and when to use them.
3. During the time the change is being implemented and after the change is completed, communicate
with employees regarding what support you may be able to provide.
Practicing the Skill
Read through the following scenario. Write down some notes about how you would handle the situation
described. Be sure to refer to the three suggestions for managing resistance to change.
The Situation
As the nursing supervisor at a community hospital, you are interested in moving to cross-training for the
emergency room teams and the floor nurse teams. You believe this would vary their responsibilities,
improve patient care, and lower costs. Sue, the team leader of the emergency room nurses, says they’re
needed in the emergency room where they fill the most vital role in the hospital. She says the nurses there
 Work special hours when needed,
 Do whatever tasks are needed, and
 Often work in difficult and stressful circumstances.
 Scott, the team leader of the floor nurse team, says the floor nurses have special training and extra
experience unique to their teams, and that they
 Heaviest responsibilities,

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 Do the most exacting work, and

 Have ongoing contact with patients and their families.
 Neither team wants to train to learn and/or share the work of the other team.
Questions to ask the students:
Identify the forces necessitating the change and the forces of resistance to the change.
Identify at least one strategy for dealing with the forces resisting the change. (See Steps in Practicing the
Skill listed above and review the techniques for reducing resistance to organizational change, Exhibit 7-
3).
After reviewing all of the information available to you relating to this situation and change management,
would you implement this change? Why or why not?
Teaching Tips:
1. Divide into groups of five to seven and take the role of the nursing supervisor.
2. Develop responses to items 1 – 3 above.
3. Ask teams to record key points of their responses on the board.

F. Introduction - How Does Organizational Change Happen?

1. The “calm waters” metaphor envisions the organization as a large ship crossing a calm
sea.
a) Change surfaces as the occasional storm, a brief distraction in an otherwise calm and
predictable trip.
2. The “white-water rapids” metaphor, the organization is seen as a small raft navigating a
raging river with uninterrupted white-water rapids.
a) Change is a natural state and managing change is a continual process.
G. What Is the “Calm Waters” Metaphor?
1. The calm waters metaphor dominated the thinking of practicing managers and academics.
a) The prevailing model for handling change in calm waters is illustrated in Lewin’s
three-step model. (See Exhibit 7-2.)
2. According to Lewin, successful change requires unfreezing the status quo, changing to a
new state, and refreezing the new change to make it permanent.
a) The status quo can be considered an equilibrium state.
3. Unfreezing is necessary to move from this equilibrium.
a) The driving forces can be increased (direct behavior away from the status quo).
b) The restraining forces can be decreased (hinder movement from the existing
equilibrium).
c) The two approaches can be combined.
4. Once unfreezing has been accomplished, the change itself can be implemented.
5. The new situation needs to be refrozen so that it can be sustained over time.
a) Unless this is done, there is a strong chance that the change will be short-lived.
b) The objective of refreezing is to stabilize the new situation by balancing the driving
and restraining forces.
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6. Lewin’s three-step process treats change as a break in the organization’s equilibrium state.
H. How Does the “White-Water Rapids” Metaphor of Change Function?
1. The white-water metaphor takes into consideration that environments are both uncertain
and dynamic.
a) Example, variable college curriculum.
2. Currently, the stability and predictability of the calm waters do not exist.
a) Many of today’s managers face constant change, bordering on chaos.
I. Does Every Manager Face a World of Constant and Chaotic Change?
1. Not every manager faces a world of constant and chaotic change.
2. But the number of managers who don’t is dwindling rapidly.
3. Few organizations today can treat change as the occasional disturbance in an otherwise
peaceful world.
J. How Do Organizations Implement Planned Changes?
1. Most change in an organization does not happen by chance.
2. The effort to assist organizational members with a planned change is referred to as
organization development.
3. Organization development (OD) facilitates long-term organization-wide changes.
4. Its focus is to constructively change the attitudes and values of organization members so
that they can more readily adapt to and be more effective in achieving the new directions
of the organization.
5. Organization leaders are, in essence, attempting to change the organization’s culture.
6. Fundamental to organization development is its reliance on employee participation.
7. Any organizational activity that assists with implementing planned change can be viewed
as an OD technique. (See Ethical Dilemma in Management.)
8. The more popular OD efforts rely heavily on group interactions and cooperation.
9. Survey feedback efforts are designed to assess employee attitudes about and perceptions
of the change they are encountering.
a) Employees are generally asked to respond to a set of specific questions regarding how
they view such organizational aspects as decision making, leadership, communication
effectiveness; and satisfaction with their jobs, coworkers, and management.
b) The data the change agent obtains are used to clarify problems.
10. In process consultation, outside consultants help managers to perceive, understand, and act
upon process events with which they must deal.
a) These might include workflow, informal relationships among unit members, and
formal communications channels.
b) Consultants are not there to solve these problems. Rather, they act as coaches to help
managers diagnose which interpersonal processes need improvement.
11. Team building is generally an activity that helps work groups set goals, develop positive
interpersonal relationships, and clarify the roles and responsibilities of each team member.
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a) The primary focus of team-building is to increase each group’s trust and openness
toward one another.
12. Intergroup development attempts to achieve the same results among different work
groups.
a) Attempts to change attitudes, stereotypes, and perceptions that one group may have
toward another group to achieve better coordination among the various groups.
Teaching Notes
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From the Past to the Present

“If you want truly to understand something, try to change it.” Kurt Lewin, who’s often called the father of
modern social psychology (a discipline that uses scientific methods to “understand and explain how the
thought, feeling, and behavior of individuals are influenced by the actual, imagined, or implied presence
of other human beings”), made his name in management circles through his studies of group dynamics.
His approach was based on the belief that “group behavior is an intricate set of symbolic interactions and
forces that not only affect group structure but also modify individual behavior.”
One of his research studies found that “changes were more easily induced through group decision making
than through lectures and individual appeals.” His findings suggested that changes would be more readily
accepted when people felt they had an opportunity to be involved in the change rather than when they
were simply asked or told to change. Another of Lewin’s major contributions was the idea of force field
analysis, a framework for looking at the factors (forces) that influenced a situation.
1. Do you like to participate in decision-making? Why or why not?
2. What implications does Lewin's research have for today's managers?

III. HOW DO MANAGERS MANAGE RESISTANCE TO CHANGE?

A. Introduction
1. Managers should be motivated to initiate change because they are concerned with
improving their organization’s effectiveness.
2. Change can be a threat to managers and to nonmanagerial personnel as well.
B. Why Do People Resist Organizational Change?
1. An individual is likely to resist change for three reasons: uncertainty, habit, concern over
personal loss, and the belief that the change is not in the organization’s best interest. (See
Exhibit 7-3.)
2. Changes substitute ambiguity and uncertainty for the known.
a) Employees in organizations often hold a dislike for uncertainty.
3. The second is habit. To reduce stress, we often rely on habit or programmed decisions.
4. The third cause of resistance is the fear of losing what one already possesses.

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a) Change threatens the investment in the status quo.

b) The more people have invested in the current system, the more they resist change.
c) They fear the loss of their position, money, authority, friendships, personal
convenience, or other benefits that they value.
5. A final cause of resistance is a person’s belief that the change is incompatible with the
goals and best interests of the organization.
a) If expressed positively, this form of resistance can be beneficial to the organization.
C. What Are Some Techniques for Reducing Resistance to Organizational Change?
1. Dysfunctional resistance to change can be addressed with several strategies.
a) (See Exhibit 7-3.)
2. Education and communication help employees see the logic of the change effort.
a) Assumes that much of the resistance lies in misinformation or poor communication.
3. Participation involves bringing those individuals directly affected by the proposed change
into the decision-making process.
a) Allows expression of feelings, increases the quality of the process, and increases
employee commitment to the final decision.
4. Facilitation and support involve helping employees deal with the fear and anxiety
associated with the change effort.
a) May include employee counseling, therapy, new skills training, or a short paid leave
of absence.
5. Negotiation involves a bargain: exchanging something of value for an agreement to lessen
the resistance to the change effort.
a) This technique may be quite useful when the resistance comes from a powerful
source.
6. Manipulation and co-optation refers to covert attempts to influence others about the
change.
a) May involve twisting or distorting facts to make the change appear more attractive.
7. Coercion involves the use of direct threats or force against the resisters.
Teaching Notes
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IV. WHAT REACTION DO EMPLOYEES HAVE TO ORGANIZATIONAL CHANGE?
A. Introduction
1. Stress can be the aftermath of organizational change.

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B. What Is Stress?
1. Stress is the adverse reaction people have to excessive pressure placed on them from
extraordinary demands, constraints, or opportunities.
2. It is a complex issue.
3. Stress can manifest itself in both a positive and a negative way.
a) It is positive when the situation offers an opportunity for one to gain something.
b) It is when constraints or demands are placed on us that stress can become negative.
4. Constraints are barriers that keep us from doing what we desire.
a) They inhibit you in ways that take control of a situation out of your hands.
5. Demands may cause you to give up something you desire.
a) Demands preoccupy your time and force you to shift priorities.
6. When coupled with uncertainty about the outcome and importance of the outcome,
constraints and demands potential stress can become actual stress.
C. What Are the Symptoms of Stress?
1. There are three general ways that stress reveals itself: physical, psychological, and
behavioral symptoms. (See Exhibit 7-4).
2. Most of the early discussions of stress focused heavily on physical concerns (health-
related).
a) High stress levels result in changes in metabolism, increased heart and breathing rates,
increased blood pressure, headaches, and increased risk of heart attacks.
3. In Japan, there’s a stress phenomenon called karoshi (pronounced kah-roe-she), which is
translated literally as “death from overwork.”
D. What Causes Stress?
1. Factors that create stress can be grouped into two major categories—job-related and
personal stressors.
2. The discussion that follows organizes stress factors into five categories: task, role, and
interpersonal demands; organization structure; and organizational leadership.
3. Task demands are factors related to an employee’s job.
a) Design of the person’s job, working conditions, and the physical work layout.
b) Work quotas can put pressure on employees.
c) The more interdependence between an employee’s tasks and the tasks of others, the
more potential stress there is.
d) Autonomy tends to lessen stress.
4. Role demands relate to pressures placed on an employee as a function of the particular
role he or she plays in the organization.
a) Role conflicts create expectations that may be hard to reconcile or satisfy.
b) Role overload is when the employee is expected to do more than time permits.
c) Role ambiguity is created when role expectations are not clearly understood.
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5. Interpersonal demands are pressures created by other employees.

a) Lack of social support from colleagues and poor interpersonal relationships can cause
considerable stress.
6. Organization structure can increase stress.
a) Excessive rules and an employee’s lack of opportunity to participate in decisions.
7. Organizational leadership represents the supervisory style of the organization’s company
officials.
a) Some managers create a culture characterized by tension, fear, and anxiety.
(1) Unrealistic pressures to perform in the short run, excessively tight controls, and firing
employees who don’t measure up.
8. Personal factors that can create stress include family issues, personal economic problems,
and inherent personality characteristics.
a) Some employees bring their personal problems to work with them.
b) Employee personality can have an effect on how susceptible he/she is to stress.
c) Type A personality is characterized by feelings of a chronic sense of time urgency, an
excessive competitive drive, and difficulty accepting and enjoying leisure time.
(1) Only the hostility and anger associated with Type A behavior is actually associated
with the negative effects of stress.
d) Type Bs never suffer from time urgency or impatience.
(1) Type Bs are just as susceptible to the same anxiety-producing elements.
E. How Can Stress Be Reduced?
1. Some stress in organizations is absolutely necessary. Without it, people have no energy.
2. Make sure that employees are properly matched to their jobs and that they understand the
extent of their “authority.”
3. Letting employees know precisely what is expected of them, role conflict, and ambiguity
can be reduced.
4. Redesigning jobs can also help ease work overload-related stressors.
5. Regardless of what is done, some employees will still be “stressed out.”
a) To help deal with this issue, many companies have started employee assistance and
wellness programs.
6. Employee assistance programs (EAPs) as they exist today are extensions of programs that
had their birth in U.S. companies in the 1940s.
a) It is estimated that U.S. companies spend almost $1 billion each year on EAP
programs and they save $5 to $16 for every EAP dollar spent.
7. A wellness program is any type of program that is designed to keep employees healthy.
a) These programs may include such things as smoking cessation, weight control, stress
management, physical fitness, nutrition education, high blood-pressure control,
violence protection, work team problem intervention, etc.

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b) Wellness programs are designed to help cut employer health costs, and to lower
absenteeism and turnover by preventing health-related problems.
Teaching Notes
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Right or Wrong?
One in five companies offers some form of stress management program. Although such programs are
available, many employees may choose not to participate. They may be reluctant to ask for help,
especially if a major source of that stress is job insecurity. After all, there’s still a stigma associated with
stress. Employees don’t want to be perceived as being unable to handle the demands of their job.
Although they may need stress management now more than ever, few employees want to admit that
they’re stressed.
1. What can be done about this paradox?
2. Do organizations even have an ethical responsibility to help employees deal with stress?

V. HOW CAN MANAGERS ENCOURAGE INNOVATION IN AN ORGANIZATION?

A. Introduction
1. The way organizations thrive today is through innovation or they will die!
2. The standard of innovation to which many organizations strive is that achieved by such
companies as 3M, Toyota, and Sony.
B. How Are Creativity and Innovation Related?
1. Creativity means the ability to combine ideas in a unique way or to make unusual
associations between ideas.
a) Example, Mattel.
2. Innovation is the process of taking a creative idea and turning it into a useful product,
service, or method of operation.
C. What Is Involved in Innovation?
1. Some people believe that creativity is inborn; others believe that with training anyone can
be creative.
2. Creativity can be viewed as a fourfold process consisting of perception, incubation,
inspiration, and innovation.
3. Perception involves the way you see things. Being creative means seeing things from a
unique perspective.
a) Ideas go though a process of incubation.
b) During this incubation period, employees should collect massive amounts of data that
are stored, retrieved, studied, reshaped, and finally molded into something new.

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c) During this period, it is common for years to pass.

4. Inspiration in the creative process is the moment when all your efforts successfully come
together.
5. Creative work requires an innovative effort.
a) Innovation involves taking that inspiration and turning it into a useful product, service,
or way of doing things.
b) Thomas Edison is often credited with saying, “Creativity is 1 percent inspiration and
99 percent perspiration.”
c) That 99 percent, or the innovation, involves testing, evaluating, and retesting what the
inspiration found.
D. How Can a Manager Foster Innovation?
1. There are three sets of variables that have been found to stimulate innovation.
a) They pertain to the organization’s structure, culture, and human resource practices.
b) See Exhibit 7-5.
2. How do structural variables affect innovation?
a) First, organic structures positively influence innovation.
(1) They have less work specialization and fewer rules and are more decentralized than
mechanistic structures; they facilitate the flexibility, adaptation, and cross-
fertilization that make the adoption of innovations easier.
b) Second, easy availability of plentiful resources is a key building block for innovation.
(1) An abundance of resources allows management to purchase innovations, bear the
cost of instituting innovations, and absorb failures.
c) Frequent inter-unit communication helps to break down possible barriers to innovation
by facilitating interaction across departmental lines.
E. How does an organization’s culture affect innovation?
a) Innovative organizations tend to have similar cultures.
b) They encourage experimentation.
c) They reward both successes and failures.
(1) They celebrate mistakes.
d) An innovative culture is likely to have the following seven characteristics:
(1) Acceptance of ambiguity.
(2) Tolerance of the impractical.
(3) Low external controls.
(4) Tolerance of risk.
(a) Mistakes are treated as learning opportunities.
(5) Tolerance of conflict.
(6) Focus on ends rather than on means.

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(7) Open systems focus.

(8) Provide positive feedback
F. What human resource variables affect innovation?
a) Innovative organizations actively promote the training and development of their
members so that their knowledge remains current, offer their employees high job
security to reduce the fear of getting fired for making mistakes, and encourage
individuals to become champions of change.
b) Once a new idea is developed, an idea champions actively and enthusiastically
promote the idea, build support, overcome resistance, and ensure that the innovation is
implemented.
c) Research finds that champions have common personality characteristics: extremely
high self-confidence, persistence, energy, and a tendency to take risks.
d) Champions also display characteristics associated with dynamic leadership.
(1) They inspire and energize others.
(2) They are also good at gaining the commitment of others to support their mission.
(3) Champions have jobs that provide considerable decision-making discretion.

REVIEW AND APPLICATIONS

CHAPTER SUMMARY
7.1 Define organizational change and compare and contrast views on the change process.
Organizational change is any alteration of an organization’s people, structure, or technology. The
“calm waters” metaphor of change suggests that change is an occasional disruption in the normal
flow of events and can be planned and managed as it happens using Lewin’s three-step change
process (unfreezing, changing, and freezing). The “whitewater rapids” view of change suggests that
change is ongoing, and managing it is a continual process.
7.2 Explain how to manage resistance to change. People resist change because of uncertainty, habit,
concern about personal loss, and the belief that a change is not in the organization’s best interests.
Techniques for managing resistance to change include education and communication (educating
employees about and communicating to them the need for the change), participation (allowing
employees to participate in the change process), facilitation and support (giving employees the
support they need to implement the change), negotiation (exchanging something of value to reduce
resistance), manipulation and co-optation (using negative actions to influence), selecting people who
are open to and accept change, and coercion (using direct threats or force).
7.3 Describe what managers need to know about employee stress. Stress is the adverse reaction
people have to excessive pressure placed on them from extraordinary demands, constraints, or
opportunities. The symptoms of stress can be physical, psychological, or behavioral. Stress can be
caused by personal factors and by job-related factors. To help employees deal with stress, managers
can address job-related factors by making sure an employee’s abilities match the job requirements,
improve organizational communications, use a performance planning program, or redesign jobs.
Addressing personal stress factors is trickier, but managers could offer employee counseling, time
management programs, and wellness programs.
7.4 Discuss techniques for stimulating innovation. Creativity is the ability to combine ideas in a unique
way or to make unusual associations between ideas. Innovation is turning the outcomes of the
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creative process into useful products or work methods. An innovative environment encompasses
structural, cultural, and human resource variables. Important structural variables include an organic
type structure, abundant resources, frequent communication between organizational units, minimal
time pressure, and support. Important cultural variables include accept ambiguity, tolerate the
impractical, keep external controls minimal, tolerate risk, tolerate conflict, focus on ends not means,
use an open-system focus, and provide positive feedback. Important human resource variables include
high commitment to training and development, high job security, and encouraging individuals to be
idea champions.

To check your understanding of learning outcomes 7.1 – 7.4, go to mymanagementlab.com and try the
chapter questions.

UNDERSTANDING THE CHAPTER

1. Why is managing change an integral part of every manager’s job?
Answer: Change is an organizational reality. Handling change is an integral part of every manager’s
job because it is inevitable. Change is an alteration of an organization’s environment, structure,
technology, or people. If it weren’t for change, the manager’s job would be relatively easy.
2. Describe Lewin’s three-step change process. How is it different from the change process needed
in the whitewater rapids metaphor of change?
Answer: The prevailing model for handling change in calm waters is Lewin’s three-step model. See
Exhibit 7-2. According to Lewin, successful change requires unfreezing the status quo, changing to a
new state, and refreezing the new change to make it permanent. The status quo can be considered an
equilibrium state.
 Unfreezing is necessary to move from this equilibrium.
 The driving forces can be increased.
 The restraining forces can be decreased.
 The two approaches can be combined.
Once unfreezing has been accomplished, the change itself can be implemented.
The new situation needs to be refrozen so that it can be sustained over time. Unless this is done, there
is a strong chance that the change will be short-lived.
The objective of refreezing is to stabilize the new situation by balancing the driving and restraining
forces.
The calm waters metaphor dominated the thinking of practicing managers and academics. The
prevailing model for handling change in calm waters is Lewin’s three-step model. Lewin’s three-step
process treats change as a break in the organization’s equilibrium state.
The white water metaphor takes into consideration that environments are both uncertain and dynamic.
The stability and predictability of the calm waters do not exist. Many of today’s managers face
constant change, bordering on chaos. Few organizations today can treat change as the occasional
disturbance. Most competitive advantages last less than eighteen months.
3. How are opportunities, constraints, and demands related to stress? Give an example of each.
Answer: Managers may create conditions that lead to stress. Task demands are factors related to an
employee’s job—the more interdependence between an employee’s tasks and the tasks of others, the

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more potential stress there is. Role demands relate to pressures placed on an employee as a function
of the particular role he or she plays in the organization. Interpersonal demands are pressures created
by other employees. Organization structure can increase stress. Excessive rules and an employee’s
lack of opportunity to participate in decision making can also increase stress.
Examples of each will vary based on the students' responses.
4. Organizations typically have limits to how much change they can absorb. As a manager, what
signs would you look for that might suggest your organization has exceeded its capacity to
change?
Answer: There are a number of symptoms to indicate too much change. Employee stress, fatigue,
turnover, absenteeism, etc. All of the indications of stress like physical, psychological and behavioral
changes in employees could be manifested from organizational change.
Organizational leadership is needed when change is happening. Training should be provided for
everyone affected and to the extent possible, the change could be phased in gradually.
5. Why is organization development planned change? Explain how planned change is important
for organizations in today’s dynamic environment.
Answer: Most change in an organization does not happen by chance. The effort to assist
organizational members with a planned change is referred to as organization development.
Organization development (OD) is an activity designed to facilitate long-term organization-wide
changes. Its focus is to constructively change the attitudes and values of organizational members so
that they can more readily adapt to, and be more effective in achieving, the new directions of the
organization. Organization leaders are, in essence, attempting to change the organization’s culture.
Fundamental to organization development is its reliance on employee participation.
6. How do creativity and innovation differ? Give an example of each.
Answer: Creativity means the ability to combine ideas in a unique way or to make unusual
associations between ideas. An organization that stimulates creativity is one that develops novel
approaches to things or unique solutions to problems.
Innovation is the process of taking a creative idea and turning it into a useful product, service, or
method of operation. Custom Foot, a Connecticut-based shoe manufacturer, has combined mass
production with customized customer desires. Another example, Novo Nordisk, a biotechnology
company in Denmark.
7. Research information on how to be a more creative person. Write down suggestions in a
bulleted list format and be prepared to present your information in class.
Answer: Students answers will vary. Students can challenge themselves to spend more time
brainstorming or reflecting on ideas that may be 'out-of-the-box' thinking.
8. How does an innovative culture make an organization more effective? Do you think an
innovative culture could ever make an organization less effective? Why or why not?
Answer: The innovative organization is characterized by the ability to channel its creative juices into
useful outcomes. The 3M Company is aptly described as innovative because it has taken novel ideas
and turned them into profitable products. So, too, is the highly successful microchip manufacturer
Intel. and Sony electronics.
9. When you find yourself experiencing dysfunctional stress, write down what’s causing the stress,
what stress symptoms you’re exhibiting, and how you’re dealing with the stress. Keep this
information in a journal and evaluate how well your stress reducers are working and how you

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could handle stress better. Your goal is to get to a point where you recognize that you’re
stressed and can take positive actions to deal with the stress.
Answer: Student responses will vary depending on symptoms. This type of journal will help you
throughout life to manage your personal and professional stressors better.

UNDERSTANDING YOURSELF
Am I Burned Out?
Burnout is when you’ve reached an overwhelming level of chronic and long-term stress. It can lead to
exhaustion and diminished interest in activities, both work and personal. This instrument was designed to
provide insights into whether you’re suffering from burnout.
INSTRUMENT Respond to each of the 21 items using the following scale:
1 = Never
2 = Once in a while
3 = Rarely
4 = Sometimes
5 = Often
6 = Usually
7 = Always
How often do you have any of the following experiences?
1. Being tired 1234567
2. Feeling depressed 1234567
3. Having a good day 1234567
4. Being physically exhausted 1234567
5. Being emotionally exhausted 1234567
6. Being happy 1234567
7. Being “wiped out” 1234567
8. “Can’t take it anymore” 1234567
9. Being unhappy 1234567
10. Feeling run-down 1234567
11. Feeling trapped 1234567
12. Feeling worthless 1234567
13. Being weary 1234567
14. Being troubled 1234567
15. Feeling disillusioned and resentful 1234567
16. Being weak and susceptible to illness 1234567
17. Feeling hopeless 1234567
18. Feeling rejected 1234567
19. Feeling optimistic 1234567
20. Feeling energetic 1234567
21. Feeling anxious 1234567
SCORING KEY To calculate your burnout score, add up your score for items 3, 6, 19, and 20. Then
subtract that total from 32. To this number, add your direct scores for the remaining 17 items. Finally,
divide this combined number by 21.
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ANALYSIS AND INTERPRETATION Your burnout score will be somewhere between 1 and 7. The
higher your number, the closer you are to burnout. The authors claim that scores below 3 indicate few
signs of burnout. Scores between 3 and 4 suggest the need to examine your work life and reevaluate
priorities with the intent of making changes. If your score is higher than 4, you are experiencing a number
of signs associated with burnout. You need to take some action to address your problems. Scores above 5
indicate an acute state, requiring immediate professional attention.
Overview
The average American is working longer and longer hours either and one job or combining more than one
job to make ends meet. There is enormous pressure to succeed in this new world of work. As the
analysis notes, ‘burnout is the exhibiting of chronic and long-term stress.’ The instrument is designed to
assess where one is suffering from burnout.
The existence of burnout in our society of workaholics is a sign of a lack of balance between doing and
being. It is something that organizations must deal with if they are to retain the best and the brightest. No
one can go forever nor should anyone for health reasons. However, if one is Type A, it is hard to stop
because of the chronic drive to succeed.
Teaching Notes
You might wish to go back to the survey of Type A and Type B personalities and see if there is a
correlation between burnout and Type. If you use this as the last exercise, it will probably be Finals
Week. It would make a good discussion as to what burns one out and if it is worth the effort.
Exercises
1. White Hairs. Discuss the aging of the Presidents of the U.S. and other people who assume enormous
amounts of power. Clinton had white hair after eight years and Bush was much whiter after only 100
days.
Learning Objective(s): To illustrate how power and personality can contribute to stress and burnout.
Preparation/Time Allotment: This should be about a 10-minute class discussion.
Advantages/Disadvantages/Potential Problems: Make sure to differentiate between stress and
burnout. Presidents, for example, may be under high stress, but that this is not an indication of
burnout.
2. Burnout Costs. Discuss the cost of burnout on human beings and organizations. What does burnout
do to people’s wish for both a successful career and a life?
Learning Objective(s): To explore the negative effects of burnout.
Preparation/Time Allotment: This should be about a 15-minute class discussion.
Advantages/Disadvantages/Potential Problems: Remember, many young students will not have
experienced burnout yet. You might ask them to consider their parents or to draw upon the
experiences of the older students in the class. Do not just focus on the negative effects of burnout but
also examine what people do to reduce or recover from it. Returning to school might be one example.

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FYIA (For Your Immediate Action)

To: Tina Sanchez, HR Director
From: Aaron Scott, President
Subject: Employee stress management program
Tina, we’ve made it through the initial phases of our restructuring efforts. To help minimize the pressures
on our software developers and sales staff, I think we need to develop an employee stress management
program that we could implement immediately.
1. What elements would be included in the outline?
2. Note the benefits.

CASE APPLICATION
Treasure From Trash
1-800-GOT-JUNK? based in Vancouver, British Columbia, has a vision of creating the ‘FedEx’ of junk
removal. By the end of 2008, however, the company had over 340 franchises in the United States,
Canada, and Australia, and system-wide revenues of over $125 million. Scudamore’s company has been
described as a “curious hybrid” that blends the old and new economies. Although its product—hauling
trash—has been done for hundreds of years, it relies heavily on sophisticated information technology and
has the kind of organizational culture that most people associate with high-tech start-ups.
In addition, the company’s culture is a unique blend of fun and seriousness. There’s a quote posted in the
head office that says “It’s all about people.”
Discussion Questions
1. Do you think 1-800-GOT-JUNK? faces more of a calm waters or white-water rapids
environment? Explain.
Answer: This company has created a calm waters environment amidst a very competitive industry.
They have created a new business with a unique strategy maximizing information technology and
valuing people.
Additional companies entering the field could quickly change the field to include a white-water
environment.
2. What external and internal forces might create the need for the company to change? Be specific
in describing these.
Answer: These answers may vary. External change will be driven by the competition and
technological advantage usually doesn't last more than 18 months. Therefore, the environment could
see white water coming soon. Internal forces like structure need to be dynamic to adapt to change
and people can make or break your business.

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3. Using Exhibit 7-5, how could Brian Scudamore stimulate and nurture innovation at
headquarters and with company franchisees?
Answer: The variables are structural, cultural, and human resource variables. Students will discuss
the business using these 3 areas to generate innovation for the headquarters.
Structural: • Organic Structures
• Abundant Resources
• High Interunit Communication
• Minimal Time Pressure
• Work and Nonwork Support
Cultural: • Acceptance of Ambiguity
• Tolerance of the Impractical
• Low External Controls
• Tolerance of Risks
• Tolerance of Conflict
• Focus on Ends
• Open-System Focus
• Positive Feedback
Human Resource: High Commitment to Training and Development
• High Job Security
• Creative People
4. What could other organizations learn about managing change, stress, and innovation from 1-800-
GOT-JUNK?
Answer: Others can learn from his entrepreneurial spirit and his ability to re-invent a business
through innovation, risk-taking and an emphasis on people. The owner is very creative and has
received buy-in for his vision which minimizes stress and contributes to innovation.

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