Why does employee resistance to change ocurr and what are the outcomes of it?!

The model developed by Oreg (2006) shows the sources of employee resistance, the types of resistance and the consequences of it. (See Fig. 1). It deserves an attention since the whole process of resistance is studied and discussed. Moreover, the model is the result of empirical study made in an organization with 800 employees when the organization initiated a change. According to Oreg (2006) resistance is a complex, subjective and “tridimensional attitude towards change” consisting of affective, cognitive and behavioural components. Whenever employees are introduced a change in the organization, they put evaluations on it which is reflected in those three components. For example, affective component reflects how employees feel about the change, whereas cognitive component regards what employees think about the change. Therefore, actions taken by employees as a reaction to change are considered under the behavioural component. Three of the components are key to understanding the aspects of the resistance phenomenon.

Referring back to the figure 1, it is obvious that “potential sources of resistance lie both within the individual as well as in the individual’s environment” (Oreg, 2006). The sources that might affect the employee resistance can be as personality of an employee or the context variables, such as power and prestige, job security and intrinsic rewards. Most probably, “one of the first determinants of whether employees will accept or resist change is the extent to which the change is perceived as beneficial versus detrimental to them.” (Oreg, 2006) In line with Oreg (2006), every employee has his/her distinctive internal tendency to resist or adopt change, which in turn can predict employees’ feelings towards change. Referring to the study by Oreg (2006), when the office move was introduced to the employees, results showed that it caused as strong emotional and as well behavioural resistance like avoiding coming to the office and taking action against the move.

Frequently, organizational change effects how the power is distributed after the change. Some employees may benefit from change by assigning more prominent roles, whereas others may lose the power they employed before change. Hence, employees have reasons to go against change if they fear losing it. Despite, organizational change often leads to transforming tasks and position, thus threatening employees’ intrinsic rewards they gain from their work. Consequently, employees’ beliefs on moving to less interesting position might affect the evaluations they form on change or cognitive resistance. In addition, Oreg (2006) argues that employees’ attitude towards change is influenced by the process through which change is implemented. We agree with him while proposing that employees’ trust in their managers, how information is distributed and with what extent of quality, and social environment shape employees’ resistance to change. If employees trust their managers, receive timely and useful information about a change, they are more likely to evaluate the change positively and express desire to cooperate with it. Moreover, “when an employee’s social environment (i.e., colleagues, supervisors, and subordinates) tends to resist a change, the employee is more likely to resist as well.” (Oreg, 2006)

In accordance with ‘tridimensional conceptualization of resistance’ (Oreg, 2006), employee resistance leads to work-related outcomes, such as jobs satisfaction, employee’s intention to quit and continuance commitment. To illustrate clearly, “employees who reported being stressed, anxious, and angry because of the change, also reported being less satisfied with their jobs; those who reported having acted against the change also reported greater intention to leave the organization, and, similarly, those who reported having negative cognitive evaluations of the change when it was first introduced were also less likely to believe it is worth their while to remain in the organization.”(Oreg, 2006) As a result, ‘antecedents’ of change discussed might impact employees’ attitudes towards the particular change, while final impact might be reflected in their overall attitude toward the organization. For that reason, “resistance should be something the organization uses to improve itself and its decisions” (Oreg, 2006).

From my point of view, change is inavitable and is the part of our everyday life. Companies should focus on constant change, while incorporating employees in the change process. Due to above mentioned factors, employee resistance do and will always exist against change. The challenging part for leaders or entrepreneurs is to associate change with "something positive to organization and employees as well". Unless, employees feel the part of the change process and cooperate with management, no change can be implemented successfully.


Figure 1. The theoretical model of resistance to change by Oreg (2006).



Reference:
Oreg, S. (2006). Personality, context, and resistance to organizational change. European Journal of Work and Organizational Psychology, 15 (1), 73 – 101.

What People Really Need from a Change Leader by Mark J. Tager

Due to nowadays turbulent environment, changes in the companies are to become the necessary for sustaining competitive advantage or simply, for survival. Therefore, change initiatives should be organized and lead properly in order to get positive outcomes. Thus, the role of change leaders is crucial as for implementing the change successfully as well avoiding employee resistance. According to Tager (2004), the good leaders should

• Have a vision

• Provide motivation

• Instill confidence

• Create a direction

• Provide resources

Moreover, nowadays changing environment leads most of the leaders to move to actions directly without considering the change process, which followers should go through. In doing saw, leaders face new problems of lack of clarity, increased stress and ambiguity, a sharp need for trust and emotional support as people have to work in the different context. (Tager, 2004)

Another interesting issue is how the author describes what a good change leader should provide. He mainly states that the communication, support, openness, empathy and flexibility are the main factors that should be reflected in the leader’s actions. Moreover, to discuss the issue from the view of follower, the following gives a clear picture what followers demand from change leaders (Tager, 2004):

• Lets me know what’s going on and isn’t afraid to say “I don’t know”

• Is easy to “read” so I know where he or she is coming from

• Remains calm under fire

• Sets clear expectations, ones that are sure to change and will then be replaced
with new clear expectations

• “Hears” me—is willing to Listen

• Is willing to change the plan when things aren’t working out

• Involves me and isn’t afraid to ask for help

• Is visible and available

• Seems “together” in thought and action

Finally, Tager (2008) suggests that three major attributes should be taken into consideration by change leaders to enhance the performance of firms in “today’s turbulent work climate”. These are: flexibility, empathy and trustworthiness. Without flexible actions taken by change leaders, without empathy gained from followers and without trust between the leader and the follower, change initiatives are planned to fail.

From my point of view, change leaders are facing the challenges they have never faced before. They are key to the success of the change initiative and overcoming probable follower stress and low morale. Drawing on the guest lecture delivered by Mica, change agents should be visible any time during the change process, should motivate followers and feel confident of their competencies. Hence, building trust and empathy among followers are the vital components of successful change.


REFERENCES:
Kamm, M.W. (2008). Guest Lecture 24th of November, Middle Management - Real Life, Retrieved 2008-11-25 from Jönköping International Business School’s website:
http://jibsnet.hj.se/documents/files/download/832478114/3385827292690149047/Microsoft%20PowerPoint%20-%20Middle%20Management%20JIBS%2020081

Tager, J.M. (2004). What People Really Need from a Change Leader. Leader to Leader. vol:2004 iss:31 pg:6 -9

Visiting ITAB

After Tatiana(http://jibsabir.blogspot.com/2008/12/itab-company-visit.html) and Irine(http://entrepreneurship2008.blogspot.com/2008/11/iatb-visit.html) have talked about our visit to ITAB company, I am encouraged to add several points which were very interesting to me:

1. How carefully ITAB chooses its customers and targets its products.

2. Management is aware of fierce competition and focus on relationships with customers.

3. Exact delivery performace.

4. How they anticipate entrance in foreign markets combining cometitive times with conditions.

5. Developing trustworthy parnetships with foreign partners

6. Dealing and targeting various preferences of diverse customers

7. Offering good design with less cost.

8. high emphasis on people! Team-work and personell development is major factor within ITAB.

9. Communication between senior manager and middle manager, flat organizational structure seems to be effective given the ITAB experience

10. Automatization, not many workers in the production factory. The fact of today's reality in the world.

Finally, I would like to thank course manager to give us possibility to meet with the general manager of one of the leading companies in Sweden. I wish we have more such visits before the program ends, since learning by examples is considered to be the most effective.

Franchising in Georgia

While discussing whether franchising is a suitable growth concept for Georgian economy, I think it is better to talk about two parts: (1) franchising foreign brands and concepts in Georgia and (2) franchising within Georgian market meaning franchise is granted from the Georgian company.

As for the first one, franchising foreign brands in Georgia is utilized for a long time and is found to be efficient. We have franchises of famous brands in the world such as McDonalds, Mavi jeans, Mango, Sisley, Kodak, Apple and others. Georgia is developing country and it is limited with its abilities to grow internally as firms are constrained with their managerial capacity to grow internally according to Penrose (1995). At the same time, Georgia lacks an environment favorable for innovations and it is constrained with its financial resources. For that reason, it might be said that franchising is useful concept for expansion of Georgian economy. In addition, Georgian people are open to new brands and favor foreign brands due to their perception of high quality of popular foreign brands. This in turn, puts high demand on franchising famous world brands, mainly apparel and technologies. But, franchising fees are mostly significantly high, that’s why prices at franchises are very high in Georgia. For example, McDonalds in Georgia has triple prices compare to McDonalds in USA. On a macro level, we might question whether franchising contributes to the growth of Georgian economy since high prices paid by customers should be compared with taxes paid to the government by franchises.

Furthermore, I will emphasize more on the franchising concept within Georgian market since I have more theoretical knowledge and practical experience how franchising leads to growth of the firm, thus impacting on the country’s overall economy. Before I came to pursue my degree at JIBS, I worked for the company “Elit Electronics” founded in Batumi, Georgia. The company was started 12 years ago and now has nearly 40 shops in all big cities and almost all regions of Georgia. It is the leader supplier of household appliances and electronics throughout Georgia. After reading the article by Shane (1996), I found out that using franchising concept by Elit Electronics was the right strategy for growth of the company. Most importantly, due to lack of market transparency in Georgia many still do not know that some of Elit Electronics shops are franchised and not owned by the company. Moreover, I did not know that before I started to work in their management team. The process went so:

First, the company developed the concept of shop design, service offered, salespeople outfit, training and development, after-sale service and then put all those in “handbook”, which was then protected by copyright. The company was successful in determining the intellectual property they own and protecting them from copying. Then, when the owner, who was one person, saw that his company was constrained with managerial capacity as the company started to grow at a high rate. According to Penrose (1955), a firm’s growth is constrained by the speed at which it can expand its managerial capacity. This was the case in Elit Electronics; entrepreneur with only 3 or 4 young BBA graduates was managing the firm. Then, as firm sales increased and demand was placed from regions; it was time to expand. But, here comes the problem of adverse selection and moral hazard in addition to increased monitoring costs. Adverse selection happens when an employee misrepresents his/her true abilities and moral hazard is when an entrepreneur can not assess whether his/her employees is performing good or not. It would have happened in case Elit Electronics decided to grow internally, while increasing monitoring costs and taking entrepreneurs time in traveling to the regions to check how shops are designed, salespeople dressed, products displayed, etc. Since the owner of Elit Electronics did not have so much time to monitor employees, he had to hire new managers, thus introducing the probability of adverse selection and moral hazard. To avoid misrepresentation from the employee and underperformance, constant monitoring should be done by entrepreneur. But, the faster the company grows, more selecting and monitoring costs will be incurred.

Most importantly, I am convinced that owner of Elit Electronics did not know about Agency theory but did behave what agency theory suggests, replacement of wage contracts with HOAs (Hybrid Organizational arrangements) like franchising that provide residual claimancy to employees, in turn avoiding the problem of adverse selection and moral hazard. Despite, my practical experience in Elit Electronics supports Shane (1996) stating that qualified individuals tend to see buying a franchise as more valuable. That happened in the case of Elit Electronics: due to many requirements from Elit Electronics in developing the shop and many steps involved in operating under the name of “Elit Electronics”, only experienced and qualified individuals came to ask for franchise and enter into negotiation. At last, franchising concept used by Elit Electronics reduced increasing rate of monitoring cost associated with growth of the firm and allowed the company to grow faster. Now, it has 40 shops all over Georgia, most of them is franchise and the company enjoys the economies of scale by buying household appliances and electronics in bulk from suppliers. Elit Electronics is one of the examples of firms whose probability of survival was increased by focusing on and employing franchising concept in Georgia.

Finally, high survival rate of Elit Electronics in its 12 years of existence contributed to expansion of Georgian economy. As firm grew, more franchises were granted and created thus leading to monetary contribution to Georgian economy. It is worth mentioning, there are other Georgian companies employing franchising growth strategy, leading to more companies formed in Georgia and activities and markets getting wider. In sum, franchising concept might be considered as a suitable growth concept for Georgian economy.


REFERENCES:

Penrose, E. (1955). Limits to the growth and size of firms. The American Economic Review 45(2), 531-543

Shane, S.A. (1996). Hybrid organizational arrangements and their implications for firm growth and survival: A study of new franchisors. Academy of management Journal, 39(1), 216-234

http://www.elitelectronics.ge/index.php?m=275