03 Ch 2 - Organisational Change

7/24/2019 03 Ch 2 - Organisational Change

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2.1. Introduction

Contemporary authors of works pertaining to and practitioners specialising in organisational

change often utilise maxims such as change is the only constant, and the only thing that does

not change is change to emphasise the omnipresence and importance of this phenomenon 1.

Others cite the pre-Socratic philosopher Heraclitus, who purportedly declared that everything in

nature is in constant fluxall things are in process and nothing stands still (Allen, 1966, p. 42)

in his famous The sun is new every day and You could not step twice in the same rivers; for

other and yet waters are ever flowing on (Smith, 1956, p. 11) to express the dynamic nature of

contemporary organisations. As was argued in Chapter 1, then, it is apparent that change is a

phenomenon that needs to be strongly considered by most if not all contemporary

organisations.

Given the above statements, the primary objective of this chapter is to provide a discussion

regarding the notion of organisational change. The purpose of this discussion is to provide

insight into the context in which the proposed logotherapy-based OD intervention will function,

thereby initiating a business case for the importance of developing this intervention for thefacilitation of organisational change. In order to fulfil the objective of this chapter, a number of

secondary objectives will be addressed. 1) Organisational change is to be defined. 2) Some of

the foremost catalysts of organisational change are to be identified and discussed. Here, both the

organisations external and internal environments are to be explored. 3) Some of the major ways

in which organisations respond to these catalysts are to be investigated. 4) It is to be ascertained

what impact these responses may have on the human element within the organisation. 5) The

contrasting phenomena of resistance to change and readiness for change are to be discussed.

1This postulation is consistent with Elvings (2005) indication that the line The only thing constant within organisations is thecontinual change of these organisations is widespread and famous within organisational and management literature (p. 129).

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2.2. Conceptualising organisational change

In order to really understand something, try changing it(Kurt Lewin).

Traditional definitions describe an organisation as a purposeful coordination of people and their

activities to reach explicit and shared objectives or goals2 (see Robbins, 1990; Schein, 1994).

Change, at its most basic level, may be denoted as present when there is an alteration of the

status quo (Bartol & Martin, 1998, p. 500), or the new state of things is different from the old

state of things (French & Bell, 1999, p. 2). Thus, organisational change generally involves a

situation where a different state of things is created with regard to the goal-directed coordination

of people. The intention of such changes, then, is to move the organisation from its current

state to a more desirable, improved state (Ragsdell, 2000, p. 105; see Figures 2.2, 2.4, and 3.3).

From the above, it may be inferred that people are central to organisational change.

Accordingly, Dalton (1970, p. 231) viewed organisational change as any significant alteration

of the behavior patterns of a large number of the individuals who constitute the organization.

However, others view organisational change as involving more than employee behaviour. For

example, Gibson, Ivancevich and Donnelly (1988, p. 19) defined organisational change as the

planned attempt by management to improve the overall performance of individuals, groups, and

the organization by altering structure, behavior, and processes. Greenberg and Baron (1993), in

turn, emphasised different foci by claiming that organisational change affects structure,

technology, and/or people (p. 633). Whereas Robbins (1990) included both of these

perspectives by stating that organisational change involves four organisational levels, namely

people, structure, technology and processes, and Waldersee and Griffiths (2004) emphasised that

the categorization of change as behavioral-social or technical-structural has long been

recognized (p. 426), Stiles (1999) emphasised an additional dimension of organisational change,

namely shifts in organisational strategy. By integrating the viewpoints presented here, then, it

2Of importance here is that more contemporary views recognise organisations as inherently multi-layered and multi-faceted

and denote the dynamics both inside and outside organisations as flexible, dynamic and competitive (Iedema, Rhodes &Scheeres, 2005, p. 327). This is in line with the general view taken in this study that most if not all organisations areconstantly changing.

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may be inferred that organisational change involves the significant alteration of any number of

levels in the organisation, including behaviour, structures, technology, processes and strategy3.

Stickland (1998) posited that the problem with studying change is that it parades across many

subject domains under numerous guises, such as transformation, development, metamorphosis,

transmutation, evolution, regeneration, innovation, revolution and transition to name but a few

(p. 14). In order to overcome this caveat, then, the concept of organisational change will be

used as an umbrella term in the current study, thus encompassing all concepts related to

modifications and transitions within organisations, including organisational transformation (see

Section 2.2) and organisation development (OD)(see Chapter 3).

Despite the above contentions that organisational change exceeds behavioural change, a deeper

investigation reveals support for Daltons definition. For example, Gratton and Hope Hailey

(1999) indicated that structural changes (see Restructuring, Section 2.4.2) often result in one of

three types of attitudinal or behavioural responses, namely get safe (obeying any orders due to

fear of redundancy); get out (leaving the organisation), or get even (reducing ones

contribution to the firm). Similarly, research has shown that technology may have a significant

influence on the social dynamics in the organisation (Bridgman & Willmott, 2006; Davidson,

2006; Jackson & Schuler, 1999), whereas changing processes to obtain a competitive advantage

is often aimed at changing employee behaviours (Gratton, 1999). Furthermore, Stiles (1999), as

well as Rosenthal and Peccei (2006), cited a shift towards a customer focus as an example of

strategic change. Such a focus, then, requires behaviours fundamentally different from a

production (Bowen, Gilliland & Folger, 1999) or shareholder (Stiles, 1999) focus, implying that

strategic changes will also require fundamental changes in employee behaviours. Accordingly,

Jimenez-Jimenez and Sanz-Valle (2005) maintained that different strategies will require

different employee skills, knowledge and behaviours to be implemented (p. 375).

The above arguments thus suggest that although organisational change may take place on various

levels other than behaviour, these changes still requireor result inbehavioural alterations.

Given the centrality of people assumed in both the definition of an organisation, and in obtaining

3See Figure 3.1 for a graphic representation of these organisational levels or subsystems.

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a competitive advantage (Section 1.1), employee behaviour should thus be considered when

change initiatives are planned (see Chapter 3). In this regard, Ghoshal and Bartlett (1996)

contended that organisational change is as much a function of individuals behaviors as it is of

the strategies, structures and systems that top management introduces (p. 23). Similarly, Porras

and Robertson (1992) maintained that change in the individual organizational members

behavior is at the core of organizational change (p. 724, emphasis in original), whereas Elving

(2005) argued that since an organisation's functioning depends on the actions of its members,

the organisation can change only when members behavior changes (p. 131). Accordingly, the

intervention developed in this study revolves around the attitudes and behaviours of

organisational employees.

The previous discussions clearly indicate that the effective management of change must be

based on a clear understanding of human behaviour at work (Mullins, 1999, p. 734). The study

of human behaviour at work, to ultimately bring about improvements for both the individual and

the organisation, is then the fundamental concern of industrial psychology 4 (Berry & Houston,

1993; Dipboye, Smith & Howell, 1994; Muchinsky, 2000). This centrality of human behaviour

converges with the central role of people in change, which suggests that industrial psychology

can be instrumental in facilitating organisational change. In fact, a survey of publications in

industrial psychology since the early 1990s (see, for example, Aamodt, 2004; Cascio, 1995;

Heller, 1998; Muchinsky, 2000; Porras & Robertson, 1992; Schein, 1994; Thierry, Koopman &

De Gilder, 1998; Van der Vlist, 1998; Warr, 1996) revealed that change is acquiring increasing

importance in this field. This potential role of industrial psychologists in organisational change

therefore substantiates Cascios (1995) claim that this field may make significant contributions

towards human welfare amidst the [d]ramatic changes affecting the world of work (p. 937).

These postulations, then, clearly reflect the rationale behind positioning the current study within

the discipline of industrial psychology.

4Known as Industrial and Organisational (I/O) Psychology in the United States of America (USA), as Work and Organisational

Psychology in Europe, and as Occupational Psychology in Great Britain (Lunt, 2000). In SA, there also seems to be a movement

towards the I/O Psychology title, particularly since the renaming of the Society of Industrial Psychology (SIP) to the Society for

I/O Psychology of South Africa (SIOPSA).

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Greenberg and Baron (1993) postulated three preconditions for successful organisational change,

namely a high need for change, low resistance to change, and high readiness for change. The

subsequent sections address contextual factors that may increase the needfor change (Section

2.3), as well as organisational responses to these factors (Section 2.4) and the human impact such

responses may have (Section 2.5). This is followed by discussions of resistance to change

(Section 2.6) and readiness for change (Section 2.7).

2.3. Catalysts for organisational change

Faced with changing markets and increased competition, more and more companies are

struggling to ensure their survival. Many have come to understand that the key to

competitive success is to transform the way they function(Beer, Eisenstat & Spector, 1990,p. 158).

The citation above serves to introduce the main objectives of the current and subsequent

sections: whereas Section 2.3 aims to demonstrate some of the primary contextual factors that

increase the need for organisational change, the objective of Section 2.4 is to discuss a number of

ways through which organisational change takes place as firms attempt to survive in rapidly

changing environments. Regarding the latter, the discussion centres on planned organisational

change that is, organisational change based on a deliberate, purposeful, and explicit decision to

implement a change programme (Levy, 1986). This differs substantially from unplanned

change, which is typically driven or forced upon organisations, by forces outside of the

organisational system5(Johnson, 2004; Porras & Robertson, 1992).

Organisations are viewed as open systems (Robbins, 1990; see Figure 3.1) complex units

consisting of a number of interdependent subsystems that are dependent on the environment for

inputs (Jackson & Schuler, 1999). At its most fundamental level, system theory postulates that

within an organisation, inputs are transformed during throughput to outputs, which are then

exchanged in the environment (Morgan, 1994; Schein, 1994; Verwey, 1983). Regarding

5Although this discussion centres on planned organisational change, it is assumed that the human consequences (Section 2.5)will be similar in the event of unplanned change and hence, the planned intervention (Chapters 5 and 6) will be applicable in suchinstances as well.

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organisational change, systems theory implies that changes in organisational subsystems and/or

the external environment will necessitate changes in other subsystems. It is therefore apparent

that the need for change may originate from both the organisations external and internal

environments (Mullins, 1999). In this regard, Robbins, Odendaal and Roodt (2003)

distinguished between the organisations internal and external environments in a four-tier model

of forces for change, as illustrated in Figure 2.1 below.

Global Arena

Regional and Sub-Regional Arena

National Context

Organisation

Individual Level

Group/Team Level

Organisation Level

Figure 2.1. A four-tier model of forces for change(Adapted

fr bbins et al., 2003, p. 24)om Ro

Whereas the internal environment involves aspects such as people, structures, processes,

strategy, and life cycle stages (Gibson, et al., 1988; Jackson & Schuler, 1999), the external

environment refers to everything outside the organisations boundaries. More specifically,

Robbins (1990, p. 206) referred to the organisations specific environment that part of the

environment that is directly relevant to achieving organisational goals. As is evident from Figure

2.1 above, this specific environment is present in the organisations national, regional/sub-

regional, and global contexts. What follows is an overview of a number of changes in the

organisations external and internal environments that may serve as catalysts for organisationalchange.

2.3.1. Catalysts for change in the organisations external environment

Mullins (1999), as well as Stoner, Freeman and Gilbert (1995) indicated that forces in the

organisations external environment (or contextual pressures, Brock & Powell, 2005) are

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critical antecedents to organisational change efforts. Similarly, Pettigrew (in Armenakis, Harris

& Mossholder, 1993) contended that the legitimacy of changes in the organisation can be

established by emphasising the effects that contextual factors have on organisational

performance. These contextual factors may emerge from a number of sub-environments external

to the organisation, including the technological, political/legislative, economic, and socio-

cultural environments (Fink, Jenks & Willits, 1983). Changes in these sub-environments may

require changes in organisational subsystems (Mohrman & Lawler, 1999; see Figure 3.1 and

Table 3.7). This may then, consistent with the open systems approach, require other subsystems

to change, thereby serving as a catalyst for large-scale organisational change.

McGreevy (2003b) and Smit and Cronj (2002) provided support to these arguments by stating

that constant and increasingly rapid environmental changes inevitably impact upon

organisations, most notably by creating a need for change6. According to Pfeifer et al. (2005),

research indicates that the speed, frequency and intensity of changes in the business

environment will continue to increase in coming years, and that it will become increasingly

difficult to foresee environmental changes (p. 297). This indicates that as a result of dynamic

environments, organisational change will not only persist, but also become more prevalent in

years to come.

Technological developments are regarded as the most significant source of change to which

organisations must adapt (Bridgman & Willmott, 2006; Cronj, du Toit, Mol & Van Reenen,

1997; Davidson, 2006; Francis et al., 2003), and are subsequently the most frequently cited

reason for the initiation of change programmes (Herzog, 1991). These changes require of

organisations to adapt at an increasing rate (Gil et al., 2005; Smit & Cronj, 2002): due to the

technology revolution, change has become a way of life in todays organizations (Hacker &

Washington, 2004, p. 52). Technological developments include progress in aspects such as

communicationwhere information technology has played a dominant role (Ahn et al., 2004;

Burnes, 2003; Davidson, 2006; Gardner & Ash, 2003; Hellriegel, Slocum & Woodman, 1998;

Iedema et al., 2005), e-commerce (Rashid et al., 2004), and transportation (Ives, 2005; Kudray &

Kleiner, 1997). Apart from influencing human behaviour (see Section 2.2), technology has also

6See the discussion on the importance of a high need for change in attaining successful transformation (Section 2.2).

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resulted in substantial social changes. In this regard, Gibson et al. (1988) indicated that

technology has led to the creation of a number of new jobs, but has also made a number of others

redundant (see discussion on obsolescence, Section 2.5.4). For example, whereas cellular

phones and on-line shopping are respectively threatening conventional phone companies and

shopping malls, airlines, rental car firms and hotels are suffering losses due to teleconferencing

(Brown, 1996) all of which have implications for employment in these companies. Such

redundancies, then, often bring about higher unemployment and the resulting plethora of social

ramifications (see Sections 2.5.1, 4.2, and 5.2) that may have further implications for

organisations. These include decreased company income (due to a decrease in public buying

power), as well as adapted human resource management (HRM) practices (Jackson & Schuler,

1999).

Organisational change is also often a result of the political/legislative environment. In this

regard, research indicates that the reasons often cited for organisational change include

complying with new legislation (Herzog, 1991, p. 7), privatisation (Wu, 2007), as well as

government regulations and deregulation (Brock & Powell, 2005; Cappelli, 1999; Cusick, 2005;

Jackson & Schuler, 1999). In SA, the influence of the political/legislative environment is

illustrated by, amongst others, affirmative action prescriptions in the Employment Equity Act, 55

of 1998, aimed at transforming organisations to remove unfair obstacles to employment

(Finestone & Snyman, 2005; Tinarelli, 2000; see also Section 5.3).

Economic pressures (Heller, 1998) and competitive conditions (Counsell et al., 2005) are also

regarded as powerful catalysts for organisational change. Uncertainties in the economic sub-

environment have resulted in many organisations repositioning themselves to secure a

competitive advantage (Appelbaum, Close & Klasa, 1999, Counsell et al., 2005). Sono (2001)

contended that such repositioning is at the core of organisational transformation; transformation

that is evident in the increasing number of organisations taking a leaner approach in order to

enhance competitiveness (see also discussions on second-order change, Sections 2.4 and 3.2).

This approach involves laying off employees in an attempt to cut costs and sustain a competitive

advantage (Appelbaum et al., 1999; see downsizing, Section 2.4.1).

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Closely related to the economic sub-environment is the phenomenon of globalisation, which is

considered a primary characteristic at the onset of the 21st century (Tetenbaum, 1998). Koch

(1999) held that globalisation encompasses the process whereby global tastes and product

offerings converge and are increasingly satisfied by global products rather that local ones (p.

875). Increasingly, organisations are viewing their market areas as global rather than domestic

or even foreign. Every corner of the world has become a potential source of raw materials,

labour or new market for products and/or services (Lundy & Cowling, 1996, p. 1). Dramatic

developments in information technology, together with electronic media and the Internet, are

regarded as some of the central contributing factors to globalisation (Robbins et al., 2003;

Rossouw, 2002). Other influences include the emerging markets in newly industrialised

countries (e.g. Spain, Korea and Taiwan) and the previous Second World countries (e.g. Russia,

China, and Eastern-European countries), as well as the development of new power blocks of

international traders such as the European economic unification and the yen block (Japan

and its Pacific Rim trading partners) (Hellriegel et al., 1998, p. 576).

According to Rothwell (1999), globalisation has emerged as perhaps the single-most important

trend of the 1990s (p. 7). This author contended that from the 1960s to the 1980s, the

percentage of the US economy that was exposed to international competition has increased from

six to 70 per cent, and it continues to grow. As pointed out by Khatri (1999), this increase in

international competition has major implications for companies7:

The forces of globalization are sweeping across the world and national borders are

disappearing. One major outcome of this change is that competition has intensified greatly.

In the past, inefficient companies could survive because they were protected by national

boundaries. This may not be possible any more. In the global era, companies have to be

able to take on other companies located in any part of the world. They need to be supple

and adaptable to meet the competitive challenge (p. 516).

Thus, as a countrys economy is opened up to international competition and [g]overnments

find it increasingly difficult to regulate international competition through protective measures,

7The impact of these factors on SA organisations specifically, is discussed in Section 1.4.

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organisations are under pressure to continuously change and adapt if they are to attain a

competitive advantage: Businesses have to become more competitive and raise their products or

services, as well as their customer service, to world-class standards (Robbins et al., 2003, p.

25). In this regard, Youndt and Snell (1996) pointed out that globalisation is a primary

contributor to the weakening of traditional sources of competitive advantage such as financial

capital and scale economies. Consequently, HRM is increasingly expected to fulfil the

organisations competitive requirements (Tang & Fuller, 1995, see Section 1.1), particularly as

people are one of the most important factors providing flexibility and adaptability to

organizations one needs to bear in mind that people are the adaptive mechanism in

determining how the firm will respond to the competitive environment (Khatri, 1999, p. 516).

Apart from the above factors, various other aspects external to the organisation may necessitate

change. Related to the organisations socio-cultural environment, Kudray and Kleiner (1997)

stated that change is often triggered by societal changes like shifts in attitudes, beliefs and

lifestyles. Robbins et al. (2003) contended that the changing nature of the workforce, like greater

focus on quality of work life 8 (QWL) and greater diversity require large-scale changes in

organisations. In SA, as in the rest of the world, HIV/AIDS has further become a looming

challenge to organisations, often necessitating extensive adaptation and change (Lessing &

Maritz, 2001; Sunter & Whiteside, 2000). Finally, a number of other external catalysts include

social trends, shifts in national and international politics, changing customer needs and demands,

product obsolescence, professional regulatory bodies, and labour union influences (Brock &

Powell, 2005; Gibson, et al., 1988; Johnson, 2004; Kudray & Kleiner, 1997; McGreevy 2003a;

2003b; Mullins, 1999; Naidu & Van der Walt, 2005; Szilagyi & Wallace, 1983).

In the SA context, research by Veldsman and Roodt (in Robbins et al., 2003) found that

companies perceive a number of forces in their external environments as major catalysts for

change many of which are related to the challenge of remaining competitive in the

international arena in terms of the quality and prices of products and services (Meyer & Botha,

2004, p. 5). These forces are socio-political transformation, different client service delivery

mechanisms, changing regulations/legislation/agreements, technological innovation and

8The concept of QWL is related to the notion of meaning in work, as discussed in Section 5.2.1.

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changing customer expectations/demands (Veldsman & Roodt, in Robbins et al., 2003, p. 25).

Robbins et al. (2003) went on to identify a number of forces for change in SA within the levels

identified in Figure 2.1, including societal and political changes (global arena), HIV/AIDS and

trade agreements such as SADC and NEPAD (regional/sub-regional arena), and the changing

age distribution and education levels (national context). Furthermore, these authors singled out

globalisation as a particularly threatening challenge to SA companies, for reasons indicated in

Table 2.1 below. This postulation was largely affirmed by a large-scale study conducted by the

International Labour Organisation (ILO)(1998) into the social impact of globalisation on SA. It

is thus apparent that the factors in the organisations external environments that necessitate

change are also of decisive significance in the SA context.

Table 2.1.

Globalisation and implications for SA organisations competitiveness (Adapted from Robbins et al.,

2003, p. 24)

Global Southern African

Most companies are used to trading either on a

multinational or a global scale

SA companies have only recently entered the

global arena

These companies grow and prosper due to their

world-class performance levels

A large proportion of SA companies is not

ready to engage international competition

effectively

Multinational and global companies are used to

competition and culturally diverse business

contexts

Although part of a wider, culturally diverse

community, some SA companies still have

homogenous workforces

Most multinational and global companies have

diverse workforces

Diversity in the workplace is enforced mainly

by means of employment legislation

Such companies have fully explored the

benefits of culturally diverse workforces

Most companies are not fully aware of the

potential benefits of a diverse workforce

2.3.2. Catalysts for change in the organisations internal environment

In addition to factors present in the organisations external environment, change may also be

necessitated by internal factors. According to Gibson et al. (1988), internal catalysts for change

relate to process and behavioural problems, both of which may result in poor performance. Poor

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performance (Schaefer, 1998) or declining effectiveness (Organ & Bateman, 1986), then, is

frequently cited as a catalyst for organisational change. Process problems involve issues such as

poor decision-making and communications (Gibson et al., 1988). For example, restructuring

(see Section 2.4.2) and business process re-engineering (BPR) (Section 2.4.3) are often

implemented to reduce the layers in the organisation in an attempt to improve communication.

In terms of behavioural problems, increased turnover and decreasing employee morale are often

cited as determinants of organisational change (Robbins, 1990).

According to Kudray and Kleiner (1997), new organisational goals constitute an important

internal source of change (p. 18). Similarly, much organisational change can be ascribed to

changing strategies and objectives (Hacker & Washington, 2004; McGuinness & Morgan, 2005;

Organ & Bateman, 1986). This is affirmed by Hellriegel et al.s (1998) contention that strategic

changes are designed to alter the organizations intended courses of action to attain its goals (p.

605), as well as by the structure follows strategy school of thought (Robbins, 1990).

Furthermore, a crisis, such as a large-scale strike, the death of a senior manager (Organ &

Bateman, 1986), corporate scandals or employee violence has the potential to fundamentally

alter the form, structure and direction of an organization (Seeger, Ulmer, Novak & Sellnow,

2005, p. 78).

Power relations and politics within organisations may also have a significant impact on

organisational change (Buchanan & Badham, 1999; Brock & Powell, 2005; Cao et al., 2003;

Saka, 2003; Voronov & Yorks, 2005). For example, Newman (1991) claimed that change is

often initiated if it may further the personal objectives of management. Moreover, it has been

argued that a pathology of power exists in many modern organisations, resulting in changes to

fulfil the power-lust of those in control (Butts, 1997, pp. 118-120). This is to some extent

confirmed by research which found that changes in management often drive organisational

changes (Schiemann, 1992). Similarly, the Power-Control perspective posits that organisational

structures are largely determined by the choices of those in power (Robbins, 1990), which

suggests that changes in the organisational power structure will result in structural changes.

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Beer and Nohria (2000) pointed out that [n]ot since the Industrial Revolution have the stakes of

dealing with change been so high. Most traditional organizations have accepted, in theory at

least, that they must change or die (p. 133; emphasis added). Accordingly, research by the

American Management Association over a number of years found that 84 percent of US

companies have undergone at least one major change, whereas 46 percent reported that three or

more change initiatives were in progress in their companies (Weber & Weber, 2001; Vakola &

Nikolaou, 2005). Whereas Bews and Rossouw (2002) contended that [this] situation is not

unique to the United States, as there have been substantial [organisational changes] reported

from the United Kingdom, Europe, Australia, Africa, and even Japan (p. 2), Tsang (2003)

pointed out that organisational changes are also taking place in China, Russia and countries in

Central and Eastern Europe. The subsequent section, then, is aimed at providing an overview of

the initiatives most commonly implemented to change organisations in order to adapt to their

environments.

2.4. Organisational responses to catalysts of change

Spicer (in Swart & Van Vuuren, 1998) contended that organisations could respond to catalysts of

change in one of three ways regression, first-order change, or second-order change.

Regression encapsulates resistance to changes in an effort to maintain the status quo. As is

discussed in Section 2.6, such resistance often constrains change to such an extent that

organisational survival is threatened. The dominant distinguishing characteristics of first- and

second-order change is presented in Table 2.2 below (see also Table 3.3). It may be noted that

despite the focus on radical (second-order) change in much of the literature (see, for example,

Hamel, 2000), no evaluative stance is taken in this study regarding the relative value of either

approach to change in the organisation. What may be evident from the subsequent discussions,

however, is that second-order change places substantially greater demands on both the

organisation and its people. As a result, these changes then have a greater probability of failure

than first-order change. What may also be evident is that if organisations succeed in ensuring

constant and effective first-order change, a smaller probability exists that the need will arise for

second-order change to remain competitive.

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Table 2.2.

Characteristics of first- versus second-order change(adapted from Levy, 1986, p. 11)

First-order change Second-order change

A change in one or a few dimensions,

components, or aspects

Multidimensional, multicomponent, and multi-

aspectual

A change in one or a few levels (individual and

group levels)

Multilevel change (individuals, groups, the

whole organisation)

A change in one or two behavioural aspects

(attitudes, values)

Changes in all the behaviourial aspects

(attitudes, norms, values, perceptions, beliefs,

world view, behaviours)

A quantitative change A qualitative change

A change in content A change in context

Continuity, improvements, and development in

the same direction

Discontinuity, taking a new direction

Incremental changes Revolutionary leaps

Logical and rational Seemingly irrational, based on different logic

Does not change the world view, the paradigm Results in new world view, new paradigm

Within the old state of being (thinking and

acting)

Results in a new state of being (thinking and

acting)

As is apparent from Table 2.2 above, first-order change involves incremental modifications

within an organisation, most often with regard to processes and procedures (Breu & Benwell,

1999). This encompasses the modification of behaviour to conform to the organisations

established beliefs concerning appropriate actions (Bartunek & Moch, 1994). Thus, first-order

change initiatives are aimed at improving the status quo through changes on a limited number of

organisational levels (Cummings & Worley, 2001; Carbery & Garavan, 2005). Encapsulated

within such change, then, are both alpha change, where employees merely expand their currentactivities, and beta change, which involves the modification of the standards used to assess

behaviour (Chapman, 2002). Examples of first-order change could include the implementation

of diversity management programmes in response to the changing nature of the workforce

(Greenhaus, Callanan & Godshalk, 2000), the initiation of training programmes aimed at

equipping employees with the capabilities demanded by rapidly changing environments (Gratton

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& Hope Hailey, 1999), and an increase in (rather than the initiation of) participative decision-

making (Bartunek & Moch, 1994; Bartunek & Reis Louis, 1988). Thus, first-order change

leaves the individuals dominant frames of reference or interpretation schemes (Breu & Benwell,

1999), as well as the core of the organisation (Levy, 1986), unaffected: improvements take

place within already accepted frameworks (Bartunek & Reis Louis, 1988, p. 100).

However, as was alluded to above, incremental changes are sometimes inadequate in

contemporary turbulent environments in attaining or preserve a competitive advantage (Hamel,

2000; Heller, 1998). What is required under such circumstances is second-order change, which

involves a paradigm shift in the organisation (Breu & Benwell, 1999; Spicer, in Swart & Van

Vuuren, 1998), or discontinuous shifts in frameworks (Bartunek & Reis Louis, 1988, p. 100),

which involve radical departures from past practices and major shifts in leadership, values,

culture, and strategy to the point where such shifts constitute a re-creation of the organization

(Scroggins, 2006, p. 84). This then corresponds to gamma change, which implies a quantum

shift in the way that work and its purpose is understood (Chapman, 2002, p. 16), as well as with

transformational change, which involves a situation where current ideas are no longer sufficient

to deal with the challenges faced by the organisation (Carbery & Garavan, 2005) and ultimately

leads to a process of altering radically the organizations strategic direction, including

fundamental changes in structures, processes, and behaviors (Cummings & Worley, 2001, p.

674).

According to Breu & Benwell (1999), the influence of second-order change reaches beyond the

organisational level to impact on the individual (particularly by transforming his or her frame of

reference, or redefining the relevant psychological space, Golembiewski, 1979, p. 413), the

group, and society at large. Whereas Figure 2.2 below provides a graphic representation to

illustrate the differences between developmental, transitional (both first-order) and

transformational (second-order) change, Sections 2.4.1 to 2.4.4 briefly address four dominant

contemporary examples of large-scale organisational change, namely downsizing, restructuring,

business process re-engineering, and mergers and acquisitions (M&As). The organisational

subsystems in which these changes occur are graphically represented and discussed in Section

3.4.

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Improvement of what isDevelopmental change

Implementation of a known

new state. Management of

the interim transition state,

over a controlled period of

time.

Transitional changeOld

StateNew

StateTransition State

Emergence of a new state,unknown until it takes

shape, out of the remains of

the chaotic death of the oldstate. Time period not easily

controlled.

Transformational

change

Birth

Growth

Plateau

Chaos

Death

Re-emergence

Figure 2.2. Developmental, transitional and transformational change(Adapted from

Ackerman, 1997, p. 46)

2.4.1. Downsizing

Every week more employees learn that they are being let go. In offices and factories around

the world, people wait, in fear, hoping to be spared one more day. Like a deadly epidemic

inexorably working its way through the marketplace, the strange, seemingly inexplicable

new economic disease spreads, destroying lives and destabilizing whole communities in its

wake (Rifkin, 1995, p. 3).

Redundancy is probably the most evocative and fear-inducing form of organisational change

(Worrall & Cooper, 2004, p. 41).

Downsizing involves a radical reduction in the size of an organization (Koch, 1999, p. 867) by

laying off large numbers of managerial and other employees (Byars & Rue, 2000, p. 9).

Downsizing is most often assumed to be a business strategy aimed at ensuring competitiveness in

a globally competitive environment by means of the increased flexibility, improved decision-

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making, and more effective communication associated with a reduction in bureaucratic structures

(Mirabel & DeYoung, 2005).

Also known as right-sizing, de-layering and staff reductions, downsizing is a pervasive

phenomenon: research by Mishra, Spreitzer and Mishra (1998) found that in North America

alone, it has brought about the loss of 43 million jobs between 1979 and the time in which the

study was conducted. These changes are also evident in most other industrialised countries,

including SA. For example, Bews and Rossouw (2002) cited research indicating that 40,6 per

cent of the industrial companies listed on the Johannesburg Stock Exchange (JSE) had fewer

employees at the end of the 1997 financial year than they had had a year earlier.

The most common causes of downsizing include restructuring (Ambrose, 1996), business

process reengineering (Grey & Mitev, 1995), mergers and acquisitions (Cartwright & Cooper,

1995; Hymowitz, 2007), outsourcing9and reductions in bureaucratic functions (Dolan, Belout &

Balkin, 2000), attempts to stay competitive by reducing people-related costs and technological

developments making jobs obsolete (Appelbaum, Everard & Hung, 1999), changes in the focus

of the business and/or skills required (Vallance, 1995), economic conditions, cost constraints,

structural changes, slow growth and intense competition (Ugboro, 2006; Zeffane & Mayo, 1994).

Furthermore, McKinley, Sanchez and Schick (1995) maintained that three social factors lead to

downsizing. Firstly, constrainingrefers to pressures exerted on the organisation to conform to

institutional rules concerning legitimate structures and managerial activities. Secondly, cloning

encapsulates pressures exerted on companies to clone those organisations that serve as industry

benchmarks in terms of effectiveness. Finally, learningrefers to the exacerbation of downsizing

by the continuous discussion thereof in academic institutions.

According to Zeffane and Mayo (1994), downsizing has become a popular and seemingly easy

method of coping with current conditions, with many businesses of all sizes endorsing trimming

their workforce as the easiest way of responding to competitive pressures and recession fears (p.

9Outsourcing involves the handing over or subcontracting of certain functions (most often non-core business functions or supportdepartments) to an external organisation in order to reduce operational costs, improve service, enhance skills, and facilitate

effectiveness and flexibility by allowing a more explicit focus on the organisations core business processes (see, for example,Aktas & Ulengin, 2005; Beaumont & Sohal, 2004; Distorted outsourcing decisions, 2005; Hyatt, 2004; Linder, 2004; Power,Bonifazi & Desouza, 2004).

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5). Thus, downsizing is generally regarded as a strategic decision (Lms, 1999) aimed at

achieving or enhancing market competitiveness by reducing people-related costs (Appelbaum et

al., 1999; Hellgren, Nswall & Sverke, 2005). This is affirmed by Worrall and Cooper (2004),

who found that downsizing-driven redundancy and delayering programmes are utilised as a

means of strategic transformation in order to change organisations corporate cultures and to

drive down costs, and that [i]n the 1990s, the conventional wisdom was that workforce

reduction through downsizing would bring about reduced costs, increased flexibility, smoother

communications and faster decision making (p. 41).

However, despite downsizing being aimed at cost reduction, the literature indicates that this is

often not realised. In fact, not only do costs often increase (McKinley, Sanchez & Schick, 1995;

Morris, Cascio & Young, 1999), but downsizing often also has severe consequences for the

organisations vitality and competitive ability (Hellgren et al., 2005, p. 87). In this regard,

renowned industrial/organisational psychologist Wayne Cascio, in association with the Office of

the American Workplace (1995), carried out extensive research into the costs associated with

downsizing. Some of these costs are summarised in Table 2.3 below.

Table 2.3.

Direct and indirect costs of downsizing (Adapted from Cascio & The Office of the American

Workplace, 1995, p. 3)

Direct costs Indirect costs

Severance pay, in lieu of notice

Accrued vacation and sick pay

Supplemental unemployment benefits

Outplacement

Pension payoffs

Benefit payoffs Administrative processing costs

Recruitment and employment cost of new hires

Low morale among remaining employees

Increase in unemployment tax rate

Training and retraining

Potential charges of discrimination

Heightened insecurity Reduced productivity

Furthermore, whereas proponents of downsizing maintain that it will result in advantages, others

contend that downsizing is ineffective in achieving organisational goals (Appelbaum, Close &

Klasa, 1999) such as increased productivity and competitiveness (Doherty, Tyson & Viney,

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1993) particularly due to reductions in morale and lost talent and organisational memory 10

(McGreevy11, 2003a; 2003b) and increased job insecurity (Section 2.5.7) (Bean & Hamilton,

2006); Hellgren et al., 2005; Ugboro, 2006). Studies also show that downsizing has a

significantly negative impact on organisational commitment12 (see Section 5.2.3.2) (Devine,

Reay, Stainton & Collins-Nakai, 2003) particularly as lay-offs are often viewed as an

indication of reduced organisational commitment to employees (Rousseau, in Fiorito, Bozeman,

Young & Meurs, 2007). Not only lower-level employees are negatively affected: redundancy is

a particularly damaging form of change on surviving managers (Worrall & Cooper, 2004, p. 41;

emphasis added). Kaye (1999), then, expressed dissatisfaction with downsizing by stating that

rather than putting people first and [gaining an] enduring competitive advantage through the

way they manage people, organizations continue to seek solutions to their competitive challenges

by downsizing, outsourcing and weakening their organizational culture13 (p. 580).

In addition to individual (see Section 2.5) and organisational costs, downsizing also has

devastating effects on local communities, such as a reduction in tax revenue, loss of business,

greater loan defaults, and increases in social issues (such as crime, alcoholism and divorce)

(Aamodt, 2004). Finally, Baumohl (1992) illustrates why downsizing is often called

dumbsizing (or corporate anorexia; Brown, 1996) by stating that

[downsizing] was supposed to be the fastest and easiest was to cut business costs, be more

competitive and raise profits or at least thats what many top executives thought. But there

is mounting evidence that this slash-and-burn labor policy is backfiring. Studies now show

that a number of companies that trimmed their workforces not only failed to see a rebound

in earnings but found their ability to compete erode even further (p. 55).

Research evidence thus clearly indicates that downsizing is not only often ineffective, but that it

is exceptionally rare to find cases where victims and survivors thereof did not suffer significant

10According to Kets de Vries and Balazs (1997), this relates particularly to competences such as problem-solving.11 McGreevy argued that downsizing often results in the loss of the key individuals who could have made a substantialcontribution to organisational revitalisation.12 Such a reduction in commitment is associated with an increase in intention to turnover often among high performing

survivors on whose long-term commitment, motivation and loyalty, the success of restructuring and downsizing depends(Ugboro, 2006, p. 232).13See discussions on organisational culture in Sections 2.4.4. and 5.2.2.4.

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detrimental effects (Cascio, 2001). Nevertheless, studies show that many organisations persist in

this strategy. In fact, Worrall and Cooper (2004) indicated that [r]edundancy, delayering,

downsizing and various other forms of organisational change, often accompanied by the

managerial fad of the moment, have become increasingly prevalent over the last ten years (p.

41, emphasis added).

2.4.2. Restructuring

Restructuring involves creating flatter organisational structures (or hierarchies) to facilitate

greater flexibility, responsiveness and cost-efficiency (Anstey, 1999). According to Cummings

and Worley (2001, p. 280), rapidly changing environments are forcing organizations to

restructure themselves from rigid bureaucracies to leaner, more flexible structures. Similarly,

Lester, Piore and Malek (2002) contended that turbulent markets have spurred organisations to

abandon old hierarchical structures, which are too rigid to survive in these environments, in

favour of flatter models.

These leaner structures are mostly brought about by means of downsizing (Ambrose, 1996;

Carbery & Garavan, 2005; Watson, 2003; see Section 2.4.1 above)in some cases, entire levels

of the structure are eliminated, resulting in many people losing their jobs. Whereas such layoffs

were traditionally associated with production-line-type jobs, Greenberg and Baron (1993)

contended that these days, even middle managers and executives find themselves

unemployed (p. 582).

2.4.3. Business process re-engineering

Business process re-engineering (BPR) has received substantial attention in the past decade due

to its perceived importance (Burnes, 2003, p. 628) and has been promoted as one of the major

modern techniques of change management within organisations (Tennant & Wu, 2005, p. 537).

According to BPR pioneers Hammer and Champy (1993), this approach involves the

fundamental rethinking and radical redesign of business processes to achieve dramatic

improvements in critical, contemporary measures of performance, such as cost, quality, service,

and speed (p. 32). Business processes are combinations of activities that deliver value to the

customer (Coulson-Thomas, 1999; Hammer, 1996). BPR is technology driven particularly

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information technology is utilised (Gardner & Ash, 2003; Thomas, 1994). Its purpose, then, is

to eliminate or prevent the erection of barriers that separate employees and customers

(Hellriegel et al., 1998, p. 471). However, this objective is frequently not fulfilled, as managers

are often driven simply by reducing staff numbers or the cost base rather than delivering value

to customers (Coulson-Thomas, 1999, p. 234).

The eventual outcomes of BPR resemble those of restructuring (see Section 2.4.2) flatter

hierarchies, redundancy and job losses (Grey & Mitev, 1995). Outsourcing plays a crucial role

here, as it allows organisations to focus on the core competencies that drive profit margins

(Thomas, 1994, p. 28). Adelstein (1994) argued that a number of symptoms may justify BPR in

organisations. These symptoms, together with the central characteristics of BPR and essential

management skills to make such efforts a success, are summarised in Table 2.4 below.

Table 2.4.

Primary characteristics and causes of and required skills for BPR (Adapted from Adelstein, 1994;

Coulson-Thomas, 1999, p. 228; Crainer & Obeng, 1999; Tennant & Wu, 2005)

Primary characteristics Symptoms justifying BPR Necessary management skills

Radical transformation

Led by a vision

Requires a review of existing

frameworks

Introduces new technologies

Changes employee attitudes

and behaviour

Led by directors, rather than

managers

Insufficient employee or

vendor skills

A lack of managerial vision

Autocratic management

structures

Slow responses to customers

Red tape and/or politics

Excessive interdependence

Goals too departmentally

focused

Inertia

Activities that do not add

value

Interpersonal skills

Project management skills

(planning, controlling,

learning, organising and

people skills)

Leadership and flexibility

Managing and improving

processes

Managing strategy

Managing own development

Teamwork

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However, despite some of these arguably sufficient reasons for the implementation of such

radical changes, BPR often fails (Burnes, 2003). In fact, Hammer and Champy (1993)

themselves admitted that up to 70 per cent of BPR efforts result in organisations being worse off

than before their implementation, whereas research conducted in 1998 showed that up to 80 per

cent of BPR efforts fail (Developing change and leadership capabilities, 2004). Such failure is

then as with the other large-scale organisational changes regularly attributed to people

issues, or more specifically, the failure of managers to anticipate and address the human aspects

or soft side of BPR, as human aspects are more central than technological aspects

(Marjanovic, 2000, p. 44). This contention is clearly supported by a comment made by Michael

Hammer himself:

I wasnt smart enough about that I was reflecting on my engineering background and was

insufficiently appreciative of the human dimension. Ive learned thats critical(in Hellriegel

et al., 1998, p. 602).

The arguments in the preceding paragraph again point out the decisive importance of adequately

addressing issues surrounding the human element in the organisation, if change is to be

implemented successfully. This, in turn, provides support for the development of a uniquely

human-focused intervention to assist in addressing these people issues, and thus contributes to

the successful facilitation of organisational change. This argument is further addressed in the

subsequent paragraphs, as well as in Chapters 3, 5 and 6.

2.4.4. Mergers and acquisitions

Mergers and acquisitions (M&As), or organisational marriages, involve the integration of two

or more organisations into one unified whole (Cartwright & Cooper, 1995). In particular,

mergers refer to the peaceful integration of two equal organisations, like in the analogy of a

marriage. Acquisitions, in turn, involve a takeover of one organisation by anothera situation

often referred to as a hostile takeover (Newton, 1993a; 1993b; Werhane, 1993).

M&As have been steadily increasing since the 1970s (Cartwright & Cooper, 1993), with

international M&As being worth 2,4 trillion US dollars in 1998 (Tetenbaum, 1999). In 2002

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alone, there were 4 363 M&As in the US (Kilfoil & Groenewald, 2005). Marks (1997) cited a

number of modern trends in M&A activities: firstly, technological developments and

globalisation are the driving force behind many M&A decisions. Secondly, strategic concerns are

playing an increasingly significant role. Thirdly, M&A activities are involving larger

organisations and even entire industries. Finally, human assets are even more crucial to merger

and acquisition success than before (p. 271). The latter trend not only again illustrates the

centrality of people in organisational change, but also alludes to the primary reason why M&A

efforts often fail: people issues (see Section 2.5) particularly as these change efforts are often

characterized by heightened emotions, fears of losing ones job14, having to move sites, changes

to conditions of service that might be unfavourable and so on (Kilfoil & Groenewald, 2005, p.

12).

The predominant aim of M&As is improved organisational performance (Appelbaum, Gandell,

Shapiro, Belisle & Hoeven, 2000). The primary causes of M&As, then, are environmental

factors such as technological developments and regulatory changes forcing organisations to

create operating and strategic synergies (Tetenbaum, 1999, p. 35). Such synergies are known

as the 2 + 2 = 5 effect (Cartwright & Cooper, 1993, p. 329). M&As have a high failure rate

(Marks, 1997), and invariably result in job losses (Cartwright & Cooper, 1995, p. 35). Thus,

like restructuring (Section 2.4.2) and re-engineering (Section 2.4.3), M&As are also associated

with downsizing (Section 2.4.1) and subsequent redundancies.

When two organisations amalgamate into one, it stands to reason that either one of the cultures

will be replaced by the other, more dominant culture, or both will be substituted by a new

culture. According to Robbins (1990), then, the primary reason for the failure of M&As is a

mismatch between the cultures of the merging organisations. In particular, he stated that a

cultural mismatch is more likely to result in a disaster than a financial, technical, geographic,

product, or market mismatch (p. 451). Although many definitions of organisational culture

exist (see, for example, Schein, 1992), two definitions most apt for the purposes of this study

depict culture as a set of assumptions, beliefs, values and norms that are shared by an

organizations members (Newstrom & Davis, 1997, p. 102),or as a shared system of meaning

14See Section 2.5.7.

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(Kurashina, 2005; Robbins, 1990; Strandgaard Pedersen & Dobbin, 2006)(see also Section

9.4.1.1). As is illustrated in the subsequent sections, meaning (which is often found in elements

such as shared beliefs, values and norms, both inside and outside of the organisation see

Chapters 4 and 5) is a central motivation in ones life. M&As, then, pose a threat to this shared

system of meaning; the individuals sense of purpose is endangered, which may result in

resistance to change (see Section 2.6 and Chapters 1, 5 and 6).

The preceding discussion served to indicate that organisational changes not only often fail to

produce the intended outcomes, but they also frequently result in (often dramatic) job losses.

From this, it can be derived that organisational change may result in a multitude of unintended

negative consequences for those employees who survive such change initiatives; consequences

that need to be addressed if the implementation of change is to be successful (see Chapters 5 and

6). Subsequently, Section 2.5 presents a discussion on some of the most prominent human

consequences of organisational change.

2.5. The human consequences of organisational change

While change is inevitable in organisations, does it usually have to be so injurious and so

badly managed? (Worrall & Cooper, 2004, p. 65).

As has been emphasised in the preceding sections, people-related issues constitute the primary

reason for the failure of organisational change efforts (Atkinson, 2005; Cartwright & Cooper,

1993; Chawla & Kelloway, 2004; Karp, 2004; Roxburgh, 2003; Schiemann, 1992; Smith, 2005a;

2005b; Rashid et al., 2004; Vakola et al., 2004; Worrall & Cooper, 2004). Such issues should

not be viewed as occurring only amidst lower-level employees following changes implemented

by management. It has been shown that gaps in the understanding of organization change

and thus responses thereto also occur among different levels of management (Bartunek,

Rousseau, Rudolph & DePalma, 2006, p. 183). The people-related issues involved in

organisational change may result from the negative impact that changes often have on

employees. Because people are considered the critical factor in the success of change efforts

(Herzog, 1991, p. 6), and managing change is in very large part, about managing the people

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aspects of that process (Smith, 2005a, p. 408), an investigation is warranted into some of the

most prominent human consequences of change. In particular, the psychological and physical

impact of organisational change, the career plateau, obsolescence, the survivor syndrome, the

new psychological contract and job insecurity are discussed.

2.5.1. The psychological impact of organisational change

Most people are not detached from their work but experience a range of emotional

involvements through their membership of the organisation(Mullins, 1999, p. 734).

[Change] engenders ambiguity, stress, resistance and some loss, regardless of the gain

(Abel & Sementelli, 2005, p. 443).

Unlike the business side of change, the human side is not entirely rational. Rather, it involves

emotions like fear, uncertainty and doubt. However, despite this, management is still grounded

in the theory of the rational man (Karp, 2004), and, as a result, over for past 50 years,

management theory and practice have adopted a technical, analytical approach in which the role

of the so-called soft factors like emotions and feelings has largely been denied (Bruch &

Ghoshal, 2003, p. 45). Subsequently, the implementation of the vast majority of change

initiatives has been managed from a technical viewpoint with little recognition or

understanding of how the human element influences the success or failure of change (Bovey &

Hede, 2001, p. 535). According to Demers, Forrer, Leibowitz and Cahill (1996),

[o]rganisations tend to be very good at planning and orchestrating the technical and structural

aspects of change, but poor at guiding and supporting the human side the personal

reorientation15associated with change (p. 22). According to Bartunek et al. (2006), this neglect

of the emotional side of change is also apparent in the change literature, as a call to study the

role of recipient emotions during organizational change only surfaced in recent years (p. 183).

Organisations failure to address the human side of change often has a detrimental psychological

impact on employees. According to Iacovini (1993), when an organization embarks on a major

change effort, employees at all levels find themselves in a sea of stress and confusion (p. 66).

15 Schein (1992; 1994; 1996) emphasised personal reorientation as critical in ensuring successful organisational change (seeSection 3.4).

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Stuart (1996, p. 11) similarly argued that the stress, worry, angst and grief of organisational

change is similar to the trauma usually associated with disasters or catastrophes and even

abuse to such an extent that the terms victims or survivors are used to label employees (see

Section 2.5.5). Accordingly, research indicates the emotional responses that some employees

experience as a result of organisational change to be akin to trauma such as death and grief. For

example, Perlman and Takacs (in Vakola & Nikolaou, 2005; Vakola et al., 2004) pointed out a

definite resemblance between the phases of emotional experiences that individuals go through

when subjected to change, and those described by Elizabeth Kubler-Ross (1969) as the

progressive stages of dealing with death.

From the above propositions, it is apparent that stress is one of the primary psychological

consequences of organisational change that employees are subjected to. According to the

psychological literature, stress involves a challenge to a persons capacity to adapt to inner and

outer demands, which may be physiologically arousing, emotionally taxing, and cognitively and

behaviourally activating (Westen, 1996, p. 426). In the organisational context, the construct

occupational stressis defined as the impact of job demands on employees due to the existence

of a stressor, or organisational condition [such as organisational change] that may require an

adaptive response from an employee (Jex, in Devine et al., 2003, p. 110). What follows is a

discussion of some of the primary causes and consequences of stress. Although stress in the

work context is discussed in general, an effort is also made to illustrate the impact of

organisational change in particular.

2.5.1.1. Causes of stress

A 1997 study indicated that for most Americans, their jobs are the biggest stressor in their lives

(Caudron, 1998). Research further indicated that the most prominent contributors to job stress

are time pressures (60 percent); work overload (54 percent); threat of job loss (52 percent); lack

of consultation and communication (51 percent) and understaffing (46 percent) (Woodall &

Winstanley, 2001). Greenhaus et al. (2000) proposed a model of job stress that not only

illustrates a number of causes, but also indicates the strain that stress causes the individual. What

is more, this model points out which factors may serve as moderating variables in the

relationship between stressors, stress and the strain exhibited by employees. Finally, it indicates

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some of the consequences that such job stress may have for the organisation. This model is

presented in Figure 2.3 below.

Stressors Strains Job outcomes

Personal

characteristicsJob

dissatisfaction

As is apparent from this model, stress is brought on by a substantial number of factors in the

organisational context. These factors are summarised in Table 2.5 below. Furthermore, from

both the preceding and the following discussions, it may be deduced that many of these stressors,

as well as those cited above, may be associated with organisational change. For example, as will

be seen in Section 2.5.2, downsizing often results in an increased workload for remaining

employees, which may aggravate time pressures and work overload (Bergh, 1999).

Organisational changes such as job redesign bring about a change in role characteristics, a

potential consequence of which is role ambiguity (see Table 2.5 below). At the same time, the

survivors of organisational change efforts often fear that they will be next to lose their jobs (see

Section 2.5.5), whereas career concerns and transitions such as obsolescence (Section 2.5.3) and

the career plateau (Section 2.5.4) are common consequences of organisational change. Finally,

the stress of organisational change may further aggravate non-work pressures. For example, role

Organisationalcharacteristics

Job demands Role characteristics Interpersonal

relationships

Working conditions

Career concerns/

transitions Nonwork pressures

Perceived

stress

Physical

Emotional

Behavioural

Reduced job

involvement

Increasedabsenteeism

Increased

turnover

Work

ineffectiveness

Appraisal of

situation

Coping and

support

ure 2.3. The Job stress processFig (adapted from Greenhaus et al., 2000, p. 264)

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overload may result in longer working hours, which, in turn, may put pressure on individuals

relationship with their significant other and their children.

Table 2.5.

Examples of stressors (Adapted from Greenhaus et al., 2000, p. 265)

Organisational characteristics

Centralisation, low participation in decision-

making

Poor communication

Pay inequities

Working conditions

Crowding

Noise

Excessive heat or cold

Career Concerns/transitions

Change of job/employer/location

Obsolescence

Career plateau

Bias in the workplace

Loss of employment

Retirement

Job demands

Time pressures and deadlines

Responsibility for people

Repetitive work

Nonwork pressures

Family conflicts

Life changes (e.g. Divorce, illness, death of a

loved one, birth of a child)

Role Characteristics

Role conflict (caught between conflicting

expectations)

Role ambiguity (lack of clarity aboutperformance expectations)

Role overload/underload (having too much or

too little work)

Interpersonal relations

Conflict within/between groups

Competition

Inconsistent/inequitable supervision

2.5.1.2. Moderating factors

As is depicted in the model above, ones perception of stress, as moderated by ones personal

characteristics (for example, Type A behaviour, inflexibility, intolerance of ambiguity,

neuroticism, and a strong internal locus of control) may increase ones propensity to experience

stress, as may ones appraisal of the situation (Greenhaus et al., 2000; Muchinsky, 2000).

Regarding the latter, it is generally accepted that the way in which one approaches a situation,

that is, ones attitude towards a stressful situation, often impacts upon the extent to which one

experiences stress. This resembles the logotherapeutic principle of attitudinal values and was

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largely affirmed by Fredericksons (2006) assertion that finding positive meaning results in

positive emotions16(see Chapter 4).

The above model further shows that coping and support influences the extent to which this

perception of stress puts strain on the individual. Psychological research has shown that social

support is positively correlated with ones ability to cope with stressors in the environment (see

Barlow & Durand, 1999; Baron & Byrne, 1997; Westen, 1996). What is more, the presence of

social support has been found to be predictive of employee attitudes toward organisational

change and, in particular, of readiness for change (Vakola & Nikolaou, 2005). However, as is

shown in this chapter, organisational changes often involves the downsizing of ones colleagues,

which may result in the collapse of a large part of ones social support network. In this way,

then, organisational change makes an additional, more indirect contribution to the stress one

experiences during such times of transition.

2.5.1.3. The consequences of stress

In the literature, a distinction is usually made between emotional/psychological, behavioural and

physical consequences of stress (see Bergh, 1999; Robbins et al, 2003). Whereas the physical

effects of stress are addressed in Section 2.5.2, this section addresses not only the psychological

and behavioural ramifications of stress, but also some of the social and organisational

consequences. From these effects, the motivation behind comments such as those by Grey and

Mitev (1995, p. 11), who stated that organisational change (and singling out BPR) can

legitimately claim to be distinctive in the scale of human misery it promises to produce (p. 11),

becomes more apparent.

i) The psychological impact of organisational change and stress

As was shown above, organisational change often results in conditions such as disorientation,

anxiety, uncertainty, sadness and fear (Roberto & Levesque, 2005; Stuart, 1996). Research has

shown that the psychological and emotional impact of stress range from irritability and general

negativity to clinical conditions such as anxiety and depression. In addition, prolonged stress

may have adverse effects on ones memory and concentration, moods, ability to relate to others,

16This author proposed a reciprocal relationship between positive meaning and positive emotions.

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and motivation, and increase ones propensity to substance abuse (Barlow & Durand, 1999;

Byars & Rue, 2000; Greenhaus et al, 2000; Oltmanns & Emery, 1998; Weiten, 1992; Westen,

1996). Stress also often results in apathy and boredom two conditions that are associated with

a lack of meaning or purpose in life (see Chapter 4)(Greenhaus et al., 2000).

In addition to the above effects, it has also been shown that long-term stress may result in a

condition known as burnout (Greenhaus et al, 2000). The common causes, psychological

reactions, and consequences of burnout are summarised in Figure 2.4 below. Briefly, burnout

occurs when work becomes meaningless to the individual (Byars & Rue, 2000) and he or she

disengages him/herself from clients and the job, therefore changing his/her attitude from caring

to indifference (Maslach & Pines, in Bosman et al., 2005, p. 33). In the context of this study,

this condition may have devastating effects for both the employee and the organisation, as work

serves as a central source of meaning for the individual. Strmpfer (2002) provided much

support for this contention by postulating that a number of variables relating to positive

psychology (see Chapter 1), humanistic psychology (see Chapter 3), as well as existentialism and

logotherapy (see Chapter 4) may have a direct or mediating positive effect on the prevalence of

and individuals experience of burnout. In addition, job satisfaction a construct shown to be

related to the individuals experience of meaning in organisations (Section 5.2.3.2) has been

shown to be negatively related to burnout (r = -0,75) (Tsigilis, Koustelios & Togia, 2004).

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Organisational conditions

Lack of rewards

Lack of control

Lack of clarity

Lack of support

Personal conditions

Idealistic expectations

Personal responsibility

Predisposition to stress

Emotional exhaustion

Depersonalisation

Low personal achievement

Feelings of anger, boredom,

frustration, suspicion, apathy,

guilt, depression, anxiety,

helplessness, pessimism,

resentment, irritability and

hopelessness.

Attitudes of cynicism, self-doubt,

and indifference

Low self-esteem

Chronic negativ

up to the point

fatigue

Interpersona

Social withdraw

Poor general h

Declining job p

Substance abus

Feelings of me

Causes Psychological

reactions

Consequences

e emotions

of emotional

l friction

al

ealth

erformance

e

aninglessness

Figure 2.4. The burnout process(Adapted from Bergh, 1999, p. 491; Jackson & Schuler, 1983,

p. 60)

Over the past few years, the prevalence of burnout in organisations has risen significantly,

resulting in a substantial increase in research and knowledge relating to this construct (Tsigilis et

al., 2004). This phenomenon is also prevalent in SA, as is evident from the 2003 special editionof the SA Journal of Industrial Psychologydedicated entirely to the subject of burnout, stress and

coping. Here, Schaufeli (2003) indicated that burnout research has flourished over the past 20

years, with studies having been undertaken in 34 countries outside of the US. In addition to

summarising aspects similar to those reflected in the model above, this author indicated that

burnout occurs in between four and seven per cent of individuals in the working population. In

some occupations, it is believed that the prevalence of burnout is as high as ten per cent.

Although Schaufeli (2003) stated that results from research regarding the relationships between

burnout and organisational elements are disappointing (p. 7), this author emphasised that in

economic terms, the cost of burnout to organisations may be substantial.

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ii) The behavioural impact of organisational change and stress

According to Greenhaus et al. (2000), the behavioural consequences of stress include a sudden

change in the use of alcohol and/or smoking habits, sudden changes in weight loss or gain, and

difficulty breathing. Furthermore, stress has also been shown to negatively influence sleeping

patterns (Robbins et al., 2003), which, in itself, may produce a multitude of negative

ramifications (see, for example, Carlson, 1995). In addition, the table above shows that the

behavioural consequences of burnout include interpersonal friction and social withdrawal.

Greenhaus et al. (2000) explained these phenomena by stating that when individuals are

emotionally drained, they often have less empathy for those with whom they work and live

(p. 273). This results in strained communications, which often causes burnout victims to

withdraw from social interactions in an attempt to cope. This will thus result in one alienating

oneself from ones social support network, which may further exacerbate stress.

Bergh (1999) further added that burnout may also be associated with behavioural indicators such

as an increase in how rigidly rules are followed, higher defensiveness and levels of criticism,

continuous procrastination, and an increase in the number of mistakes made. In addition, stress

also has a number of behavioural consequences specific to the workplace. A number of these are

addressed under Section iv) below.

iii) The social impact of organisational change and stress

Not only the individual employee is affected by organisational changes. Scott and Jaffe (1988)

pointed out that the adverse outcomes of organisational change might have negative

consequences for jobs, health, marriages and resulting costs for productivity and profitability

(Scott & Jaffe, 1988, p. 25). Thus, changes such as layoffs are traumatic for everybody

involved (Doherty et al., 1993, p. 45; emphasis in original), including the families of those

individuals affected by change. This may then impact upon non-work pressures (see Table 2.5

above) and thus place strain on the individuals social support network.

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Van Tonder (2004a) pointed out that although the financial costs associated with organisational

change17 are staggering, more attention should be paid to the human and social costs that

accompany the millions of lost employment opportunities (p. 91). Butts (1997) further traced

the consequences of organisational changes by examining the impact they have on society at

large. This author stated that the large numbers of lost jobs have led to increased unemployment,

job insecurities (Section 2.7) and poverty. These are believed to contribute to disease and

death, as well as a multitude of family and social problems including increased crime, violence

and even urban riots (p. 115). These problems are further addressed in Sections 2.3.1, 4.2 and

5.2.

iv) The effect of stress on organisations

According to Stuart (1996) and Vakola and Nikolaou (2005), the consequences of change in

organisations include eroded commitment (see Section 5.2.3), morale, trust, loyalty and self-

esteem. Scott and Jaffe (1988) similarly contended that the personal distress employees

experience include illness, low energy, lack of motivation, difficulty concentrating, accidents,

and interpersonal conflict (p. 25). What is more, research indicates that the emotional

consequences of change are likely to influence employee performance negatively for up to even

four years after the initial transition (Cartwright & Cooper, 1995, p. 36).

Byars and Rue (2000) made the impact of stress on organisations more explicit by listing the

following work-related effects: increased absenteeism; lower morale, lower productivity;

increased accidents; increased workers compensation; increased legal costs; higher labour

turnover, and higher direct medical costs. Directly relevant to the current study, Vakola and

Nikolaou (2005) found that negative correlations exist between occupational stressors and

attitudes to change, which, according to their research, indicates that highly stressed

individuals demonstrate decreased commitment and increased reluctance to accept organizational

change interventions (p. 160). Similarly, Tsang (2003) noted that stress becomes a significant

hindrance to effective organisational change.

17This author specifically discussed the concept of organisational decline, or what he terms organisational death and near-deathexperiences (Van Tonder, 2004, p. 91).

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From this, it is apparent that the human impact of organisational change may also have a

detrimental impact on the effectiveness of organisations including posing a threat to the change

initiative itself. This then again underscores the importance of addressing the human side of

organisational change if such transitions are to be effective a criterion for success that may be

fulfilled by the proposed logotherapy-based intervention.

2.5.2. The physical impact of organisational change

In addition to the potentially negative implications for employees mental health, organisational

change may also have adverse physical outcomes for the individual. In particular, because

downsizing results in there being fewer employees [to] handle what must be done (Rice &

Dreilinger, 1991, p. 41), many employees may experience increasing work overload not only to

work harder, but also to constantly improve their performance (Higgs, 2005; Ugboro, 2006)

often with fewer resources (Bosman et al., 2005). This includes employees in both lower and

managerial levels (Gratton & Hope Hailey, 1999; McGovern, 1999).

In addition, it is commonplace for surviving managers to have to assume greater responsibility

and increased decision making, and take on wider spans of control (in terms of both number of

people managed and variety of tasks performed), which results in high levels of task

fragmentation and reduces role clarity (Worrall & Cooper, 2004; see also Ugboro, 2006). This

additional workload, resulting from organisational change, is likely to produce negative attitudes

towards and a reluctance to contribute to change initiatives (Vakola & Nikolaou, 2005),

particularly as their heavy workloads will preclude the availability of time to support such efforts

(Sirkin, Keenan & Jackson, 2005). Given the importance of positive attitudes (Sections 2.6 and

2.7) and organisational citizenship behaviours (Section 5.2.3.2) in achieving successful change,

these consequences may be detrimental to the effectiveness of the organisation.

Furthermore, this increase in employee inputs is often not rewarded, thereby resulting in

perceptions of unfairness and inequity (Folger & Skarlicki, 1999; see also Sections 2.6 and

5.2.3.2 for discussions on the impact of perceived inequity in the organisation). In this regard,

Brown (1996) went as far as to call contemporary organisations modern sweatshops,

characterised by psychic rather than physical brutality. Such employee overload may also

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influence the organisation negatively, as it is has been shown to result in less productive

employees (Rice & Dreilinger, 1991).

According to Higgs (2005) and Tang and Fuller (1995), the physical consequences of

organisational change may also extend to the physical health of employees. As was illustrated in

the previous section, the stress that accompanies change can result in a multitude of

psychological and behavioural conditions that may have a detrimental impact on not only the

individual, but also on the organisation. In addition, stress may also have a number of physical

consequences for the individual. According to Barlow and Durand (1999), Byars and Rue

(2000), and Westen (1996), these include conditions such as headaches; coronary heart disease;

diabetes; gout; hypertension; decreased immunity functioning; gastro-intestinal problems;

bronchial asthma; rheumatoid arthritis; muscle tension; menstrual dysfunction, and sexual

dysfunction. In addition to decreasing the quality of life of the individual, these effects may then

also impact negatively upon the organisation (see Section 2.5.1.3).

2.5.3. The career plateau

A career plateau refers to a point in a career where the likelihood of additional hierarchical

promotion is very low (Ference, Stoner & Warren, 1977, p. 602). This phenomenon is caused

by factors such as slow organisational growth, technological changes closing career paths (see

obsolescence), and the pyramidal structure of organisations, which provides fewer and fewer

positions at higher organisational levels (Greenhaus et al., 2000). Other organisational factors

that may impact on the promotional opportunities of employees include organisational norms and

procedures, as well as work experiences and work attitudes such as work value congruence,

supportive work relationships, autonomy, job involvement, and work-role overload (Cohen,

Granot-Shilovsky & Yishai, 2007, p. 10); the impact of which may be aggravated by

organisational change18.

The career plateau is often accompanied by thoughts of one being a failure and feelings of guilt

and betrayal (Greenhaus, et al., 2000). This may result in plateaud individuals lowering their

18For example, changes in organisational culture (see Section 9.4.1.1) may result in new organisational norms and procedures,whereas the loss of relationships may result from downsizing (Section 2.4.1).

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aspirations, their commitment to the organisation, and their willingness to accept responsibility

03 Ch 2 - Organisational Change

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