Projects

Change Management

Change Management Effectiveness Within the Paper Industry:
A Multi-Level Investigation

Background

Frequent and often pervasive change is becoming a fact of life as organizations face increasing challenges in ever-more competitive environments. This is particularly true for organizations in the paper industry as they work to adjust to changing demands (Ault, Walton, & Childers, 1998). As noted in the 1999 Pulp & Paper Fact Book (North America), there were 212 major acquisitions involving U.S. pulp and paper mill assets in that year alone. This trend is not expected to abate anytime soon in that it has been forecasted that "The estimated 3000 pulp and paper companies around the world in 1997, …, are expected to shrink to 50 giant companies by the early 21st century" (Leffler, 1997). Such activities are going to result in a great deal of internal changes within the affected organizations. Unfortunately, it appears that paper industry organizations are still struggling with how best to implement necessary changes so that there is sufficient buy-in at the employee level. Without this acceptance, it can be extremely difficult to fully realize the potential gains inherent in any major change effort. Clearly, this industry is not unique in having difficulty managing the change process (more on this issue below).

The bulk of the research on organizational change takes a higher level (macro) perspective that either examines organizational adaptation to environmental changes (strategic management literature - Kotter & Schlesinger, 1979; Romanelli & Tushman, 1994), or processes and procedures for effecting single changes in organizations (organizational development literature - Quirke, 1996; Schweiger & DeNisi, 1991; Miller et al., 1994). Yet, ultimately, the key elements in determining the success of organizational changes are the attitudes and behaviors of the individuals in the organization charged with implementation (Herold, Fedor, & Caldwell, 2002). Thus, we have a reasonable understanding of how organizations deal with their environments, how specific contextual variables affect the success of specific change efforts, and how change management practices/processes can affect the consequences of specific changes such as layoffs (e.g., Brockner, Konovsky, Cooper-Schneider, Folger, Martin & Bies, 1994). In contrast, little is known about how individuals perceive organizational changes, how such perceptions are affected by other changes in the environment, and what determines their responses.

Armenakis and Bedeian (1999), in their review of organizational theory and research developments in the 1990's, divided these developments into four categories or themes: content issues focusing on the substance of the change (e.g., reorganizations), context issues focusing on forces internal and external to the organization, process issues focusing on how the change was implemented, and criterion issues focusing on outcomes commonly assessed. The fact that ten years of change-oriented research can fit these categories, without requiring a category addressing the individuals affected by the changes, is further evidence of a crucial missing piece in our understanding.

If change implementation ultimately depends on the attitudes and behaviors of organizational members, then we need to broaden our models for studying change. At a very general level, it seems reasonable to hypothesize that the nature of the change ("What"), the totality of other changes ("What else"), how the change is managed ("How"), and the predispositions of the individual experiencing the change ("Who") will all play roles in determining individual responses. Unfortunately, there is surprisingly little research or theory to guide us in developing such a framework (see Figure 1).

Figure 1: Factors expected to affect individuals' reactions to organizational change

Of the four categories of variables ("What," "What else," "How," and "Who"), the organizational development and organizational behavior literatures have probably provided the greatest insight into the "How" variables through research on change practices and the importance of such factors as procedural justice (Beer, 1980; Brockner et al., 1994; Lind & Tyler, 1988). At the "What" level, we don't have much to go on. When studies have focused on particular changes, e.g., layoffs (Brockner et al., 1994), reorganizations (Ashford, 1988), organizational transformation (Mossholder, Settoon, Armendakis, & Harris, 2000), or simply important policy changes (Lau & Woodman, 1995), they have typically used one particular change as a vehicle for studying some process or outcome variable of interest (procedural justice, coping, attitudes about the change). Unfortunately, this has limited our understanding of the broad array of possible organizational changes. Furthermore, we currently lack a typology of changes that would help in dimensionalizing the domain in terms of what it is about different changes that influences individuals' responses.

At the "Who" level, the state of research is reflective of the general neglect of individual differences or personality characteristics research in organizational studies (Caldwell, Fedor, & Herold, 2002a). Only recently, researchers such as Judge et. al. (1999) have begun to study person variables (personality, self-esteem, locus of control, etc.) as determinants of how people cope with change. Overall, when researchers have looked at the individual's role in change-related responses, either it is done in the context of a single change (Lau & Woodman, 1995; Wanberg & Banas, 2000) or to change in general (Judge et al, 1999). As a result, we have not been able to determine the impact of individual differences within the more realistic context of what has changed and how that change has been managed.

Similarly, at the "What else" level, we have little to go on because change research has always focused on a particular "change event," rather than on capturing the broader change environment - what we are calling organizational turbulence. As such, there is an entire context to any change that has, to date, been completely ignored by researchers in this area.

The purpose of the present study is to further build and test a framework that deals with all four levels of variables (the nature of the change, what other changes are occurring, how it is managed, and individual differences among those experiencing the change), in determining organizational members' reactions to a change, and thereby the effectiveness of various organizational changes. In addition, placing this effort in the context of one industry, paper, will allow for the development of insights and recommendations for practice that are both industry and company specific. The need for such an approach is highlighted by some preliminary data we have collected as part of a cross-organizational study of change and organizational turbulence. Fortuitously, there were four paper-related companies that were participants in this earlier, initial research. Below, we summarize comparisons between these paper companies (broken down into plant, sales and administrative employees) and the remainder of the organizations.

In Figure 2, we see that respondents working for paper companies are less likely to believe that the goals of a given change effort have been met, and are more likely to report increased levels of withdrawal and decreased satisfaction as a result of the changes being experienced. This suggests a possible industry pattern of reduced efficacy and increased negative consequences when changes are introduced. The results are particularly evident in the plant operations and sales areas of the paper companies studied.

Figure 2

In Figure 3, we see a possible explanation for the above results. When respondents rate the managerial and organizational support shown for a given change, and the quality of the planning that went into the change, the paper company employees again have more negative impressions of how the change was handled than employees of all other companies. Those involved in the sales functions at the paper companies show an interesting pattern of responses suggesting reasonable planning, but poor support from the organization for the changes. Are paper companies more apt to plan changes adequately, but less likely to provide the training and other resources needed for successful change?

Figure 3

These preliminary data suggest that the paper industry has much to gain from a deeper understanding of the factors associated with successful management of change. The purpose of this proposal is to assess the effectiveness of specific change efforts taking place within paper industry-related organizations while accounting for the change context (organizational turbulence), how the specific change has been managed, and the characteristics of the individuals who are impacted by the change. This represents multi-level research that cuts across the management disciplines of Strategy and Organizational Theory (organizational-level variables), Organizational Behavior (individual-level variables), and Organizational Development (organizational practice-level variables) in trying to better understand change and its consequences.

Goals:
The goals of this effort are three-fold:
1. to advance our general understanding of how organizations manage change;
2. improve our understanding of the nature of changes and change management practices in the paper industry; and,
3. improve change strategies and implementation practices in the paper industry.

References:
Armenakis, A. A., & Bedeian, A. G. 1999. Organizational change: A review of theory and research in the 1990s. Journal of Management, 25: 293-315.

Ashford, S. J. 1988. Individual strategies for coping with stress during organizational transitions. Journal of Applied Behavioral Science, 24: 19-36.

Ault, R., Walton, R., & Childers, M. 1998. What works: A decade of change at Champion International. Jossey-Bass: San Francisco.

Beer, M. 1980. Organizational change and development: A systems view. Santa Monica, Ca.: Goodyear Publishing Co.

Brockner, J., Konovsky, M., Cooper-Schneider, R., Folger, R., Martin, C., & Bies, R. J. 1994. Interactive effects of procedural justice and outcome negativity on victims and survivors of job loss. Acadamey of Management Journal, 37: 397-409.

Caldwell, Fedor, & Herold (2002a). The Role of Individual Differences in Shaping Interpretations and Reactions to Organizational Change. Paper presented at the annual meeting of the Academy of Management, August, Denver, Colorado.

Caldwell, Fedor, & Herold (2002b). Viewing employee-environmental fit through the lenses of organizational change: The interactive roles of change and change management. Paper presented at the annual meeting of the Academy of Management, August, Denver, Colorado.

Costa, P. T., & McCrae, R. R. 1992. Revised NEO Personality Inventory and NEO Five-Factor Inventory. Odessa, FL: Psychological Assessment Resources.

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Herold, Fedor, & Caldwell (2002). Toward a More Integrative Framework for Understanding Individuals' Reactions to Organizational Change. Working paper. Georgia Institute of Technology, Atlanta, GA.

Judge, T. A., Thoresen, C. J., Pucik, V., & Welbourne, T. M. 1999. Managerial coping with organizational change: A dispositional perspective. Journal of Applied Psychology, 84: 107 - 122.

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Lind, E. A., & Tyler, T. 1988. Procedural justice in organizations. The Social Psychology of Procedural Justice, 173 - 202. New York: Plenum Press.

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Quirke, B. (1996). Communicating Corporate Change. McGraw-Hill:England.

Romanelli, E. & Tushman, M. L. 1994. Organizational transformation as punctuated equilibrium: An empirical test. Academy of Management Journal, 37: 1141-1166.

Schweiger, D., & DeNisi, A. 1991. Communications with employees following a merger: A longitudinal field experiment. Academy of Management Journal, 34: 110 - 135.

Thorp. B.A. 2001. Technology, the environment, and corporate adaptation to change: The Paper industry in transition. Paper presented at Georgia Institute of Technology, Atlanta, Georgia, February 27, 2001.

Tushman, M. L. & Romanelli, E. 1985. Organizational evolution: A metamorphosis model of convergence and reorientation. In L.L. Cummings & B. M . Staw (Eds.), Research in Organizational Behavior, 7: 171-222. Greenwich, CT, JAI Press.

Wanberg, C. R., & Banas, J. T. 2000. Predictors and outcomes of openness to changes in a reorganizing workplace. Journal of Applied Psychology, 85: 132 - 142.