Week12 rainey chapter_13

Understanding and Managing
Public Organizations
Chapter 13
Managing Organizational Change
and Development

Overview
• Organizations undergo constant change. This chapter
addresses the challenge that organizational change and
development present for managers. It provides
• An overview of the literature on the topic
• A discussion of change in the context of public sector
environments
• Examples of successful change efforts

The Stages of Organizational Life
• Some changes are purposefully brought about, but other
changes occur naturally as organizations pass through
phases of development.
• Research on organizational life cycles has paid attention
to naturally evolving change processes.

Downs (1967)—The Three Stages of
Organizational Life
• Early stage: struggle for autonomy.
• “Zealots” and “advocates” dominate young bureaus and struggle to
build political support for their legitimacy and resource requests.
• Middle stage of rapid expansion and innovation
• Survival is assured; members focus on expansion and innovation.
• Deceleration stage
• Downs called this the rigidity cycle for bureaus.
• Bureaus grow older and larger; administrators concentrate on
elaborating rules and ensuring accountability.
• “Zealots” and “advocates” either depart for more active programs or
settle into the role of “conservers.”
• Yet Downs oversimplified the process. Large, old organizations
change markedly.

Quinn and Cameron’s (1983)
Four-Stages Framework for OD
1. Entrepreneurial Stage
• Members concentrate on marshaling resources and
establishing the organization as a viable entity. An
entrepreneurial head plays a strong leading role, pressing for
innovation and new opportunities, emphasizing open systems
model.
2. Collectivity Stage
• Members develop high cohesion and commitment. They
operate in a flexible, team-based mode, emphasizing a human
relations model as well as an open systems model.

Quinn and Cameron’s (1983)
Four-Stages Framework for OD
3. Formalization and Control Stage
• Members confront the problems of extensive control developed
during the third stage; the rational control mode predominates.
The importance of open system and human relations criteria
lessen.
4. Elaboration Stage
• This stage involves movement toward a more elaborate
structure to allow more decentralization but also corresponding
coordination processes.

Organizational Decline and Death
• Organizations may decline at various rates and in
various patterns for a number of reasons. Three main
reasons are
1. Vulnerability and loss of legitimacy
2. Environmental entropy
3. Responses to decline

Organization Decline and Death
• Vulnerability and Loss of Legitimacy
–Organizations can be vulnerable to losing resources or
support and, similarly, to losing legitimacy.
• Environmental Entropy
–An organization’s environment can deteriorate in its capacity to sup
port the organization.
• Responses to Decline
–There are several patterns for response (Whetten, 1988).

The Ultimate Decline: Organizational Death
• Vulnerability and Loss of Legitimacy
– Organizations can be vulnerable to losing resources or support,
which can also be associated with the loss of legitimacy (for
example, public funds to support an organization are no longer
available).
• Environmental Entropy
– An organization’s environment can deteriorate in its capacity to
support an organization (for example, when the social need for
an organization wanes).

• Many responses to decline
• Organizations aggressively resisting or accepting
• Negative, resistant disposition toward change
• Receptive and adaptive
• Cutback management (pressures for reduced government taxing
and spending)

Cutback management (pressures for reduced government
taxing and spending)
– Levine (1980a) suggested two groups of tactics: ones to resist decline
and ones to smooth decline.
– Rubin (1985) found that the Reagan administration cutbacks damaged
management and reduced productivity in some agencies. Yet, her
analysis implies that agencies do change and they do not necessarily
resist change as some theories suggest.
– Starbuck and Nystrom (1981) reanalyzed Kaufman’s data and found that
government agencies and industrial corporations have very similar death
and survival rates.
• These results show that public agencies do change a
great deal, including undergoing the ultimate change of
passing out of existence.

Organizational Decline and Cutback Management:
Tactics for Responding to Decline and Funding Cuts
Tactics to Resist Decline Tactics to Smooth Decline
External Political
(problem depletion)
1. Diversify programs, clients, and constituents
2. Improve legislative liaison
3. Educate the public about the agency’s mission
4. Mobilize dependent clients
5. Become “captured” by a powerful interest group or
legislator
6. Threaten to cut vital or popular programs
7. Cut a visible and widespread service a little to
demonstrate client dependence
1. Make peace with competing agencies
2. Cut low-prestige programs
3. Cut programs to politically weak clients
4. Sell and lend expertise to other agencies
5. Share problems with other agencies
External Economic
or Technical
(environmental
entropy)
1. Find a wider and richer revenue base (for example,
metropolitan reorganization)
2. Develop incentives to prevent disinvestment
3. Seek foundation support
4. Lure new public and private sector investment
5. Adopt user charges for services when possible
1. Improve targeting on problems
2. Plan with preservative objectives
3. Cut losses by distinguishing between capital
investments and sunk costs
4. Yield concessions to taxpayers and employers to
retain them
Internal Political
(political
vulnerability)
1. Issue symbolic responses, such as forming study
commissions and task forces
2. “Circle the wagons”—develop a siege mentality to
retain esprit de corps
3. Strengthen expertise
1. Change leadership at each stage in the decline process
2. Reorganize at each stage
3. Cut programs run by weak subunits
4. Shift programs to another agency
5. Get temporary exemptions from personnel and
budgetary regulations that limit discretion
Internal Economic
or Technical
(organizational
atrophy)
1. Increase hierarchical control
2. Improve productivity
3. Experiment with less costly service-delivery
systems
4. Automate
5. Stockpile and ration resources
1. Renegotiate long-term contracts to regain flexibility
2. Install rational choice techniques such as zero-based
budgeting and evaluation research
3. Mortgage the future by deferring maintenance and
downscaling personnel quality
4. Ask employees to make voluntary sacrifices such as
taking early retirements and deferring raises
5. Improve forecasting capacity to anticipate future cuts
6. Reassign surplus facilities to other users
7. Sell surplus property, lease back when needed
8. Exploit the exploitableSource: Levine, 1980b. Reproduced by permission of Chatham House Publishers,
Inc.

Innovation and Organizations
• Innovation is an organizational survival response.
• Innovative managers tend to have certain
characteristics. Linden (1990) notes seven:
1. Strategic action
2. Holding on and letting go
3. Creating a felt need for change
4. Starting with concrete change
5. Using structural changes
6. Dealing with risk
7. Using political skills

Attributes of Innovations That Affect Their Implementation
1. Cost—initial and continuing; financial and social
2. Returns on investment
3. Efficiency—improvements in efficiency offered by innovation
4. Risk and uncertainty
5. Communicability—clarity of the innovation and its results
6. Compatibility—similarity to existing product or process
7. Complexity
8. Scientific status
9. Perceived relative advantage—whether potential advantages can be demonstrated or made visible
10. Point of origin—from inside or outside the organization; from what person, unit, or institution
11. Terminality—whether the innovation has a specific endpoint
12. Reversibility and divisibility—whether the innovation can be reversed or divided into steps or components so
that the organization can return to the status quo if necessary
13. Commitment—the degree of behavioral and attitudinal commitment required for success
14. Interpersonal relations—how the innovation influences personal relations
15. Public- versus private-good attributes—whether the innovation provides public benefits or restricts benefits to a
smaller set of individuals
16. Gatekeepers—how the innovation is related to various influential persons or groups that can block or initiate
the innovation
17. Adaptability—whether users can modify and refine the innovation
18. Successive innovations—prospects for leading to additional innovations
Source: Adapted from Zaltman, Duncan, and Holbek, 1973.

Large-Scale Planned Change
• Organizations can initiate purposeful planned change.
• Resistance to change: Many authors have argued that traditional
bureaucratic forms of organization inhibit change.
• The rule-oriented characteristics and the normal human
tendency to resist change bring about resistance.

• Good reasons to resist change:
• Some new ideas are simply bad and the people with the most
experience realize it.
• Many elected officials and political appointees initiate reforms but show
a disinclination to become deeply involved in implementing them.
• Mandates can be ambiguous and their tenure short. This can deprive
the change process of essential support and leadership.
• Dilemma about organizational change in government: Successful
change requires sustained support from higher levels, participative
planning, and flexible implementation. Much literature suggests their
scarcity in the public sector.

• There are at least four types of change (Daft, 2013).
• Technology changes
• Administrative changes
• Changes in products and services
• Human resource changes
• Frequently, these changes intertwine.
• Tichy (1983) argued that strategic change should
coordinate different dimensions of changes to affect
large-scale transformations.

• Three types of change that can occur in individual
responses to an organization (Golembiewski, 1986)
1. Alpha change is a shift in assessment from one level to
another, for example, job satisfaction.
2. Beta change is a shift in the respondent’s metric, so that there
is a change in distance between scale anchors from state A to
state B.
3. Gamma change involves a general change in state, so that it
is no longer comparable from one state to the next.

Phases of an Action Research Model for Organizational Development
1. Performance gap: Key executives perceive problems.
2. Executives confer with an organizational consultant.
3. Diagnosis: The consultant begins a process of diagnosis and data gathering.
4. Feedback: The consultant communicates the results to key clients and client groups.
5. Joint action planning: The consultant works with client groups in planning the objectives and
procedures (such as team building) for the OD program.
6. Further data gathering: The consultant continues to monitor perceptions and attitudes.
7. Further feedback: In team-building sessions or other settings, the organizational members
address the problems identified in the diagnostic work.
8. The client groups discuss and work on the data from the diagnosis and earlier sessions. New
attitudes emerge.
9. Action planning: The groups set objectives for further development and develop plans for
getting there.
10. Action: The plans are carried out, and new behaviors develop.
11. Further data gathering.
12. Further feedback.
13. Further action planning.
14. Continuation and consultant departure: The cycle of diagnosis, feedback, planning, and action
continues until the appropriate point for the departure of the consultant.
Source: Burke, 1994; French and Bell, 1999.

Organizational Development
• The aim of OD is to improve the functioning of organizations,
especially along human relations and social dimensions, by applying
social scientific theory and techniques.
• OD focuses on improving communication, problem solving, conflict
airing and resolution, decision making, and trust and openness.
• OD has firm roots in the human relations orientation and in the groups
dynamics movement.
• OD practitioners tend to value personal growth for people in
organizations.
• OD interventions include a variety of techniques including surveys,
team-building techniques, process consultation, T-groups, encounter
groups, or sensitivity sessions.

Organizational Development
• The complexity of organizations and their problems
make it hard for OD consultants to establish and prove
clear success.
• Critics sometimes attack OD for this lack of substantive
theory and theory-based research.
• Tichy (1983) argued that OD concentrates on only
human resources issues when large-scale strategic
changes require coordinating these issues with
strategies for improving the organization’s technical and
political dimensions.

OD in the Public Sector
• Application of OD may present more challenges in public
sector (Golembiewski, 1969).
• Complex interests and reward structures, multiple political actors
within and outside organizations, and diffuse authority
• But OD writers say it can succeed—it’s challenging but
manageable.
• Golembiewski (1985) reported evidence that OD projects in the
public sector enjoy a relatively impressive success rate.
• Despite some controversies, these results imply that planned
change initiatives appear to succeed about as often in public
organizations as they do in private organizations.

Successful Revitalization in Public Agencies
• Greiner (1967) analyzed eighteen major change attempts and drew
conclusions about the patterns of successful change, emphasizing
the following conditions and steps:
– Widely perceived pressure for improvement
– A new change agent from outside
– The deep and sustaining involvement of top executives
– A general diagnosis initiated by the change agent
– Participation from many units and levels in diagnosis process
– Solution development by the participants and small-scale
experiment
– Use of successes for reinforcing results
• Greiner emphasizes the key role of power sharing in successful
patterns of change.

• Kotter (1995) suggested eight steps for successful
organizational transformations:
1. Establishing a sense of emergency
2. Forming a powerful guiding coalition
3. Creating a vision
4. Communicating the vision
5. Empowering others to act on the vision
6. Creating short-term wins
7. Consolidating improvements and producing further change
8. Institutionalizing the new approach

• Kotter’s observation (1995) differed from Greiner’s in
important ways.
• Kotter referred to “vision” and emphasized the role of “a guiding
coalition” in contrast to Greiner’s focus on a change leader who
comes from the outside.
• Huber and Glick (1993) also emphasized the essential role of
“shared values” and leadership teams rather than individual
leaders.

Similarities of Greiner and Kotter
• Both commonly emphasize
• Widespread belief in the need for change
• Clear, sustained leadership, including support from top
leadership
• Broad participation in diagnosing problems and planning the
change
• Flexible, incremental implementation, involving experimentation,
feedback, adaptation
• Building on prior success to institutionalize change

• Poister (1988a) provided a compilation of revitalization case
studies.
• All emphasize developing a shared vision and mission, strategic
planning, and developing the organization’s leadership and culture.
• All involve redistributions of power toward more active involvement
of the agency’s members.
• Effective revitalization campaigns also require the agency managers
to develop and maintain effective political support, to provide
resources and a mandate for the changes.
• Success requires both skillful employment of generic principles of
organizational change and skill in dealing with the political context
and administrative features of public organizations.

Two Contrasting Cases
• The “O Area” reforms in the State Department
• Modularization of claims processing in the Social
Security Administration

The U.S. State Department’s Unsuccessful
Attempt to Decentralize
• Warwick (1975) argued that failure is due to the political
and institutional context of government and the internal
cultures of public agencies that impede change. Further,
effective change in public agencies must
– Include efforts to build broad-based consensus about the need of
change within the agency and to gain support from external
controllers and allies
– Build a coordinating body to monitor and sustain the change
despite the turnover among top executives

Case of Social Security Administration
• In a contrast to Warwick study, Rainey and Rainey
(1986) discussed the success of the Social Security
Administration in the modularization of claims
processing.
• Under the right circumstances, applying sound principles of
change, skilled public managers and employees can carry out
major changes very effectively.

Patterns of Successful Organizational Change
Phase I: Pressure and Arousal
1. There is significant external and internal pressure for change. There is a widespread perception of performance gaps
and of a need for change, placing pressure on top management.
Phase II: Intervention and Reorientation
2. A new person enters as change leader. The person has a record as a successful change agent and enters as a leader
of the organization or as a consultant working with the leader.
3. The new person leads a reexamination of past practices and current problems. The newcomer uses his or her
objective, external perspective to encourage examination of old views and rationalizations and attention to “real”
problems.
4. Top management becomes heavily involved in the reexamination. The head of the organization and his or her
immediate subordinates assume a direct, heavily involved role in the reexamination.
Phase III: Diagnosis and Recognition
5. The change leader engages multiple levels in diagnosis. The change leader involves multiple levels and units in
collaborative, fact-finding, problem-solving discussions to identify and diagnose current problems. The diagnosis
involves significant power sharing.
Phase IV: Invention and Commitment
6. The change leader stimulates a widespread search for creative solutions, involving many levels.
Phase V: Experimentation and Search
7. Solutions are developed, tested, and proven on a small scale. Problems are worked out and solved. Experimentation
is encouraged.
Phase VI: Reinforcement and Acceptance
8. Successes are reinforced and disseminated and breed further success. People are rewarded. Successes become
accepted and institutionalized.
Source: Adapted from Greiner, 1967.

Steps for Successful Organizational Transformation
1. Establish a sense of urgency.
• Examine market and competitive realities.
• Identify crises and opportunities.
2. Form a powerful guiding coalition.
• Assemble a group with enough power to lead the change effort.
• Encourage the group to work as a team.
3. Create a vision.
• Create a vision to help direct the change effort.
• Develop strategies for achieving that vision.
4. Communicate the vision.
• Use all available means to communicate the new vision and strategy.
• Have the guiding coalition teach the necessary new behaviors by example.
5. Empower others to act on the vision.
• Remove obstacles to change.
• Change systems of structures that present obstacles.
6. Create short-term wins.
• Plan for visible performance improvements.
• Create those improvements.
• Recognize and reward employees involved in those improvements.
7. Consolidate improvements and produce further change.
• Use increased credibility to change systems, structures, and policies to pursue the vision.
• Hire and develop employees who can implement the vision.
8. Institutionalize the new approach.
• Articulate the connection between the new behaviors and organizational success.
• Ensure leadership development and succession.
Source: Adapted from Kotter, 1995.

Conditions for a Successful Change in a Federal
Agency
1. A durable power center, committed to successful change
• Strong, stable leadership by career civil servants
• An internal change agent (career agency executive) with sufficient authority
and resources
• Active, creative bureau staff
2. Appropriate timing for collective support
• A political “window of opportunity”
• Political overseers (congressional committee heads) who are supportive but
not interventionist
• Political sophistication of agency leaders and staff—effective management of
relations with Congress and oversight agencies (OPM, GSA)
• Strategies that blend sincere employee involvement with decisive exercise of
authority
3. A comprehensive, clear, realistic, alternative process
• A long-term change strategy, using group processes to develop new structures
• A major structural reform, focused on measurable outputs, that decentralizes
operational responsibility
• Reasonable clarity about the nature and objectives of the new structure and
process
Source: Rainey and Rainey, 1986.

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