Susan McNulty is the Vice President of Human Resources at ASP Software. She is in the midst of reorganizing the company’s human resources (HR) function, so it will be structured most effectively to provide HR support to its managers. She meets with Nathan Miller, an organizational development consultant, to seek his assistance in managing the change. Susan has reduced the number of positions in the downsized department and reassigned employees to teams based on the functions they will support. Instead of being on functional or subject-matter teams (e.g., compensation or organizational development), the new teams will now be organized to support internal organizations: sales and marketing, software engineering, distribution, and other corporate functions.

This case study illustrates the problems and challenges that leaders face in making and communicating organizational changes, such as dealing with employee morale and motivation, keeping employees informed during the change process, communicating the purpose and rationale for the change, soliciting input, and being aware of employee attitudes towards change.

This case study illustrates the problems that leaders face and examines the leader’s role in managing organizational change.

Downsizing—a reduction in the number of employees in the organization, also called a layoff or reduction in force (RIF).

Internal customer—a person or group that is supported by one or more groups inside the same organization.

Myers-Briggs—known as the Myers-Briggs Type Indicator (MBTI), a widely used inventory in many organizations that gives individuals information about their preferred working styles.

Organizational development—the application of behavioral-science principles to organizations, with the objective to improve organizational effectiveness (see French & Bell, 1999).

Reorganization—a change to an organizational structure or process.

Change Management Overview

Popular management books suggest that the greatest challenges for leaders and managers in implementing organizational change are to inspire others to believe in their vision and follow it (Kouzes & Posner 1987). But, large-scale organizational change is rarely simple and met without skepticism. As Peter Senge writes, "Most of us know firsthand that change programs fail. We’ve seen enough ‘flavor of the month’ programs ‘rolled out’ from top management to last a lifetime" (Senge 1999, p. 6). Because of its impact on the organizational culture and potential importance to an organization’s success, such change and the leader’s role in managing and guiding it has been a frequent topic of interest to both academic and popular management thinkers.

Leaders face several communication challenges as they define, explain, and conduct organizational change. Among several recommendations for change leaders, Kotter (1995, 1996) suggests that they should establish a sense of urgency, build a guiding coalition, communicate a clear vision, and empower employees to take action—all challenges of communication. These can be difficult tasks for leaders who must deal with multiple demands on their time, competing expectations from employees, and a frequently tenuous political environment that heightens attention to their every word. Leaders who do not want to prematurely upset employees may decide not to communicate much at all, while others may want to communicate each step of the change, causing anxiety among employees who will want to know what is coming next. The result is often that change can be a painful process that can hinder organizational effectiveness, as managers and employees alike disengage from their work, worry about the future, devote time to rumor and gossip, and wonder what is expected of them.

It is frequently the job of the organizational development (OD) consultant to work with managers and leaders to assist them during the change process. Organizational development is the application of behavioral-science principles and practices, during consultation with management to improve an organization’s effectiveness. Organizational development consultants can be internal or external; they are usually educated in the principles of organizational communication, industrial and organizational psychology, behavioral science, education, or other social-scientific fields. They consult with managers on such issues as increasing team effectiveness, developing and communicating a vision or strategic plan, managing conflict or interpersonal problems, designing organizational structures and processes, managing intergroup and interdepartmental relations, and more. Done well, organizational development can help managers and employees build organizational structures in which people feel valued for their contributions, participate and contribute fully to the organization’s success, and construct a healthy, collaborative, participative, and effective environment.

1. What is Susan looking for from Nathan?

2. What do you believe that Susan has done positively so far in communicating and managing the organizational changes at ASP?

3. What could Susan have done differently?

4. What do you think are likely problems in this organization at this point? What problems do you think might exist among members of the management team? The staff? Why?

5. What do you think needs to be done now? What would you propose if you were Nathan?

6. What should a leader do to effectively manage change?

———. (2002). The heart of change: Real-life stories of how people change their organizations. Boston: Harvard Business School Press.