Facing Up to the Constancy of Organizational Change: Further Insights and Approaches to Solutions

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 113–119 AND ORGANIZATIONAL Current themes in organizational chang...

Author: Doris Fay

80 downloads 1185 Views 2MB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!

Report copyright / DMCA form

DOWNLOAD PDF

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 113–119

AND

ORGANIZATIONAL

Current themes in organizational change Doris Fay

Aston Business School, Aston University, Birmingham, UK Harald Lührmann Accenture, Germany

The game goes on. The pressure on organizations for continuous change, in order to adapt to shifts in market structure, to deregulation or legal initiatives, and to quickly grasp evolving opportunities has not reduced—on the contrary; it has increased with progressing globalization and competition. Specifically, current challenges range from managing mergers and acquisitions, downsizing, and “rightsizing”, to business reengineering, or developing and implementing new technologies. As sales markets are getting tougher, companies keep decreasing the product life cycles, which necessitates faster innovation. “Change” has become a buzzword in the daily press; it seems to be omnipresent in the minds of consultants and other practitioners. Unfortunately, the results from costly change efforts fall too often behind expectations. For social scientists, therefore, it remains a pertinent task to invest in research that helps to gain a better understanding of change processes and of factors that contribute to successful change and innovation. This special issue faces up to this challenge by providing empirical and theoretical contributions that address two subject areas of the multifaceted change arena: first, corporate restructurings such as merger and acquisition, downsizing, or redundancies; and second, changing and innovating the way business is done. Mergers and acquisitions (M&A) seem to appear in waves, with the earliest ones being witnessed in the late 1890 in the USA and the most recent one in the 1990 (Gaughan, 2002; Lubatkin & Lane, 1996). By now, M&A are common to nearly all industries, such as finance (e.g., Allianz and Dresdner in 2001), media (AOL and Time Warner in 2000), or production (HP and Compaq in 2001). The optimistic voices that celebrate the

Correspondence should be addressed to Doris Fay, Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK. Email: [email protected] would like particularly to acknowledge the help and support of our reviewers in the process of compiling this special issue.

114 FAY AND LÜHRMANN

© 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000029

announcements of each new merger, however, tend to turn into frustrated voices when speaking about their merger’s success. Estimations of mergers that failed their financial objectives in terms of share value, return on investment, postcombination profitability range from 50% (Cartwright & Cooper, 1996) up to 75% (Marks & Mirvis, 2001). Failure analyses undertaken from the perspective of strategic management examined the success of the planned business diversification and potential synergies, other disciplines such as organizational research focused on whether different corporate cultures could be aligned (Lubatkin & Lane, 1996; Marks & Mirvis, 2001). Recently, however, there has been an increasing interest in understanding how to manage “the soft side” of a merger process; which brought factors such as communication (Schweiger & DeNisi, 1991), and trust during the merging process in to the limelight (Kremershof, 2003; Stahl & Sitkin, 2001; cf. Larsson & Finkelstein, 1999). An understanding evolved that such variables would strongly influence staff commitment, motivation, and retention. The work of Rolf van Dick, Ulrich Wagner, and Gunnar Lemmer, in the first article of this special issue, widens this approach. Drawing on social identity theory the authors highlight the role of organizational identity and its effect on staff attitudes. In many mergers or acquisitions, one of the parties involved needs to give up the “object” that employees identify with; for example, AOL Time Warner will remove “AOL” from its name (AOL, 2003). This article highlights the relevance of both, the premerger and postmerger identity to understand a range of attitudinal outcomes that may affect the bottom lines. Concurrent with the merger wave, driven by the urge to cut costs or to increase productivity, other businesses engaged in reducing their workforce. Similar to mergers, the results of the downsizing and redundancy exercises were often disappointing. Unforeseen repercussions, such as low moral of the remaining staff, the realization that one might have lost the best people (Mirvis, 1997), and the feeling that organizational performance was still poor despite the painful cuts, prompted a landmark study on the development of profitability of downsized companies. Results clearly showed that companies that purely downsized did not improve their performance in terms of return on assets (Cascio, Young, & Morris, 1997) (ironically, though, stock price performance increased). This revealing result was attributed to the remaining workforce’s attitudes and behaviours counteracting the presumed benefits of downsizing; it was the survivor syndrome’s hour of birth (Brockner, 1988). It became a widely accepted assumption that survivors who have witnessed poor treatment of the leavers will develop negative emotions and attitudes towards their organization and perform poorly.

CURRENT THEMES 115

While the study by Cascio et al. (1997) raised serious doubts about the financial merits of downsizing, the associated unpleasant attitudinal and emotional outcomes have put an additional question to its usefulness. However, Les Worrall, Carole Parkes, and Cary Cooper, in the next article, suggest that the negative effects of downsizing have not been fully proven. Negative effects are typically explained in terms of the survivor syndrome and are also attributed the widely practised “Mafia model” of downsizing (Stebbins, 1989). The latter describes the desire to have done with the redundancy quickly and then forget about it, which generally leads to ignoring even the most basic human resources practices. The authors argue that the frequently reported unwanted outcomes could in fact be engendered by the experience of the organization undergoing change. Layoffs—even in small numbers—require changes to how the work is done, for example, in terms of division of labour; and most forms of change are in general associated with a whole raft of unpleasant experiences. To test whether negative outcomes have been rightly attributed to downsizing (instead of the disturbing process of change), they compare assessments on effectiveness, morale, employee motivation, and other variables from managers whose organizations underwent redundancy programmes with assessments of managers from organizations that underwent other types of changes. The results confirm that redundancy programmes are associated with worse assessments than other types of change—which was especially the case when redundancies were combined with delayering. The 1990s saw an enormous growth in publications that sought to unravel the factors leading to the survivor syndrome and ensuing symptoms such as voluntary turnover. The evolving knowledge highlighted that survivors’ perceptions of how fair the processes around the layoffs were is relevant (Brockner, Wiesenfeld, & Martin, 1995; Brockner, Wiesenfeld, Reed, Grover, & Martin, 1993). The implication of this was to focus on good treatment of leavers to avoid the survivor syndrome. Many practitioners incorporate this knowledge into their downsizing strategies. The qualitative study by Kusum Sahdev compares an organization in which the downsizing delivered the desired results with an organization that was not successful. Her analysis shows how the strong emphasis on pleasing the leavers also has negative outcomes. One organization followed the state-of-the-art knowledge and focused strongly on accommodating the leavers by pursuing a transparent redundancy process, applying fair decision rules, and providing substantial support for the leavers in terms of outplacement and redundancy packages. Contrary to expectations, this company was not successful; instead, the measures taken, combined with neglect of job design issues, made leaving the organization more attractive than staying. Is this the hour of birth of the reluctant survivor? On the other hand, the organization that ignored many of these factors, and that even made no secret of potential further downsizing, fared well. Key to their success was investing in survivors, making staying attractive by enhancing their skills, redesigning their work and putting into place mechanism of empowering.

116 FAY AND LÜHRMANN

The second group of articles in this special issue focuses on business innovation such as the adoption and implementation of new technologies and working practices. Again, the few studies that sought to test their effectiveness, such as the seminal study by Porras and Robertson (1992) on organizational development interventions, have shown that there are positive effects; but one cannot ignore the fact that a considerable number of interventions do not meet their targets. Unfortunately, a more recent analysis did not come to a more positive conclusion: Wolfsmith and colleagues estimated the success rate of large-scale change interventions to average around 50% (as cited in Farias & Johnson, 2000). These ambiguous results have fuelled an interest in identifying factors that are crucial to success; one of them is, according to Porras and Robertson, “the degree and quality of organizational member involvement in the change process” (p. 754). Accordingly, literature on organizational change typically elaborates on strategies that are designed to enable change recipients’ participation in the change process (e.g., Cummings & Worley, 1997). In practice, however, job incumbents may be reluctant to acknowledge the “blessings” offered by these participation opportunities. Conny Antoni’s empirical article seeks to identify employee attitudes and perceptions that encourage them to get involved in the change process. Using a generalized expectancy-valence model the author identifies the role that colleagues and supervisors have in influencing whether employees make use of the opportunity to be involved. This research is not only important because participation contributes to the success of the change initiatives; additionally, participation seems to be a factor that prevents the development of cynicism against organizational change (Reichers, Wanous, & Austin, 1997). In view of the prognosis that change will be the only constant feature of our future, it seems a timely task to understand what protects us from becoming too negative about it. Whereas Conny Antoni’s article subscribes to the view that “user participation” is beneficial to successful organizational change, the theoretical article authored by Chris Clegg and Susan Walsh develop a set of propositions about change management that challenge this perspective (in addition to some other commonly held positions). Most importantly, the authors take the stance that when implementing change, technology is typically taken as a given; therefore, change management efforts focus too much on issues of implementation and user participation. Drawing strongly on the principles of sociotechnical systems approach, they turn the logic of “user participation in system design” upside down and demand “ownership” of the future users over the process. Effective change management then does not ask how one can achieve user participation in the design and implementation of a new system; instead, the question is how the future users—who are in this framework the owners of the new system—can make designers and other experts to develop what they need. The penultimate article by Doris Fay, Harald Lührmann, and Carsten Kohl also emphasizes the notion of active change participants by exploring the role of proactive climate. Previous theorizing on climate and culture in organizational

CURRENT THEMES 117

change has discussed these variables from two perspectives: First, scholars of organizational development have pointed out that the success of change efforts depends on whether culture can be successfully changed (cf. Burke, 1994; Cummings & Worley, 1997). No matter whether an organization targets at changing its structure, processes, technology, or mission, culture and climate change is seen as a cardinal factor for successful, enduring organizational change. Second, organizations may differ from each other in their ability to successfully implement a change. This implies that climate could be a precondition for the success of a change effort. Building on previous work on climate in organizational change (Baer & Frese, 2003; Klein, Conn, & Sorra, 2001) the authors look at the role of proactive climate in organizations that are in the consolidation phase after a large-scale reorganization. Results show that climate is linked both directly to performance of an organizational unit and moderates the effect of line managers’ attitudes and behaviours. The final article looks at one specific avenue through which organizations change: innovation. Organizations change by innovating their processes, products, people management strategies, services, or other variables. Arguing, that work teams play a crucial role in initiating and pulling through innovations, Michael West, Giles Hirst, Andreas Richter, and Helen Shipton undertake the task of drawing up prescriptions for developing innovative work teams. Based on a comprehensive review on team innovation that employs an input—process— output framework, they develop practically oriented recommendations. The article does not shy away from pointing to some important dilemmas that one is confronted with when trying to put science into practice. For example, the finding that external demands support innovation is considered alongside its potentially impairing effect on creativity; the beneficial effects of diversity for generating ideas and decision-making quality is linked to diversity’s potentially disintegrating force; the necessity that innovation and even only attempted innovations require recognition and reward becomes a dilemma when recognizing that rewards can threat intrinsic motivation—while intrinsic motivation is one of the best established predictors in creativity research. The article helps us to understand how distal variables such as diversity translate into more proximal variables such as conflicts and dissent. Even though the demand for a better understanding of what facilitates innovation in organizations is stronger than ever, innovation research has become fairly routinized and a lack of integration across different levels has been noted (cf. Anderson, de Dreu, & Nijstad, 2004). This article might help to find ways out. REFERENCES Anderson, N., de Dreu, C.K.W., & Nijstad, B.A. (2004). The routinization of innovation research: A constructively critical review of the state-of-the-science. Journal of Organizational Behaviour, 25, 147–173.

118 FAY AND LÜHRMANN

AOL. (2003, September 19). AOL dropped from Time Warner name. Retrieved from http://www.pbs.org/newshour/bb/business/aol_time_index.html Baer, M., & Frese, M. (2003). Innovation is not enough: Climates for initiative and psychological safety, process innovations and firm performance. Journal of Organizational Behavior, 24, 45–68. Brockner, J. (1988). The effects of work layoffs on survivors: Research, theory, and practice. In B.M.Staw & L.L.Cummings (Eds.), Research in organizational behavior (Vol. 10, pp. 213– 255). Greenwich, CT: JAI Press. Brockner, J., Wiesenfeld, B.M., & Martin, C. (1995). Decision frame, procedural justice, and survivors’ reactions to job layoffs. Organizational Behavior and Human Decision Processes, 63, 59–68. Brockner, J., Wiesenfeld, B.M., Reed, T., Grover, S., & Martin, C. (1993). The interactive effects of job content and context on the reaction of layoff survivors. Journal of Personality and Social Psychology, 64(2), 187–197. Burke, W.W. (1994). Organization development: A process of learning and changing. Reading, MA: Addison-Wesley. Cartwright, S., & Cooper, C.L. (1996). Managing mergers, acquisitions, and strategic alliances: Integrating people and cultures (2nd ed.). Oxford, UK: ButterworthHeinemann. Cascio, W.F., Young, C.E., & Morris, J.R. (1997). Financial consequences of employment-change decisions in major U.S. corporations. Academy of Management Journal, 40, 1175– 1189. Cummings, T.G., & Worley, C.G. (1997). Organization development and change (6th ed.). Cincinnati, OH: South-Western College Publishing. Farias, G., & Johnson, H. (2000). Organizational development and change management: Setting the record straight. Journal of Applied Behavioral Science, 36, 376–379. Gaughan, P. (2002). Mergers, acquisitions, and corporate restructurings (3rd ed.). New York: HarperCollins. Klein, K.J., Conn, A.B., & Sorra, J.S. (2001). Implementing computerized technology: An organizational analysis. Journal of Applied Psychology, 86(5), 811–824. Kremershof, I. (2003). The role of trust in the post-merger/-acquisition integration process: A case survey. Unpublished diploma thesis, Giessen University, Germany. Larsson, R., & Finkelstein, S. (1999). Integrating strategic, organizational, and human resource perspectives on mergers and acquisitions: A case survey of synergy realization. Organization Science, 10, 1–26. Lubatkin, M.H., & Lane, P.J. (1996). Psst… The merger mavens still have it wrong. Academy of Management Executive, 10(1), 21–37. Marks, M.L., & Mirvis, P.H. (2001). Making mergers and acquisitions work: Strategic and psychological preparation. Academy of Management Executive, 15, 80–92. Mirvis, P.H. (1997). Human resource management: Leaders, laggards, and followers. Academy of Management Executive, 11(2), 43–56. Porras, J.I., & Robertson, P.J. (1992). Organizational development: Theory, practice, and research. In M.D.Dunnette & L.M.Hough (Eds.), Handbook of industrial and organizational psychology (2nd ed., Vol. 3, pp. 719–822). Palo Alto, CA: Consulting Psychologists Press. Reichers, A.E., Wanous, J.P., & Austin, J.T. (1997). Understanding and managing cynicism about organizational change. Academy of Management Executive, 11(1), 48–59.

CURRENT THEMES 119

Schweiger, D.M., & DeNisi, A.S. (1991). Communication with employees following a merger: A longitudinal field experiment. Academy of Management Journal, 34, 110–135. Stahl, G.K., & Sitkin, S.B. (2001, August). Trust in corporate acquisitions. Paper presented at the Academy of Management conference, Washington DC. Stebbins, M.W. (1989). Downsizing with “mafia model” consultants. Business Forum, 14, 45–47.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 121–138

AND

ORGANIZATIONAL

Research note: The winds of change— Multiple identifications in the case of organizational mergers Rolf van Dick, Ulrich Wagner, and Gunnar Lemmer Philipps-University of Marburg, Germany

Within the organizational domain, different foci of social identification can be differentiated. In the context of an organizational merger, identification with the former premerger organization, which often continues as a subunit of the larger whole after the merger, and identification with the larger organization post merger are important aspects of an employee’s belief system and thus are relevant for work-related attitudes and behaviours. We conducted a cross-sectional questionnaire study among 450 employees of two recently merged hospitals. We hypothesized that both identification with the premerger subunit that still exists as a separate entity after the fusion and identification with the postmerger larger organization will be positively associated with job satisfaction and self-reported citizenship behaviour and negatively correlated with turnover intentions and negative emotions. Furthermore, particularly those employees who are highly identified with both entities should hold more positive attitudes compared to those only weakly identified with both entities. Our hypotheses were largely confirmed. Practical implications for the management of organizational mergers are discussed. Mergers and acquisitions represent a major aspect of organizational change in today’s industries. The aim of this article is to give an overview of research on organizational mergers from a social identity perspective, and to provide empirical evidence for the relationships between social identification © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000038

IDENTIFICATION AND ORGANIZATIONAL CHANGE 121

and work-related attitudes and self-reported behaviours. We present evidence showing that it is fruitful to take different foci of identification into account in the domain of mergers and acquisitions. When taking the perspective of an employee, organizational mergers can be considered as a tremendous process of organizational change. According to Albert and Whetten (1985) organizational identity is defined by its essential features which are characterized by (1) what organizational members think is central to the organization; (2) what distinguishes this particular organization from other organizations from the viewpoint of its members; and (3) what the members perceive as enduring, i.e., connecting the organization’s past with its presence (cf. Gioia, 1998). By the act of acquiring another organization and incorporating this new organization into a larger whole and even more by being acquired, all these aspects of an organization’s identity are challenged. This can be demonstrated on the example of the fusion between Daimler Benz AG and Chrysler Corporation. The merger was publicly announced as a merger of equal partners with the signature of a merger agreement in London in May 1998. In 1999 and 2000 the merger looked like becoming an economic success with more than $11 billion operating profit. Since then, however, the profit has decreased dramatically, and economically the fusion is now widely considered a failure. The reason for the failure can be seen in a cultural mismatch between the working and leadership styles of both companies. Leshinsky (2000) argues that the fusion was not at all a merger of equals but a planned takeover of Chrysler by Daimler. Evidence for this comes from the fact that within 2 years after the merger most members of the senior management of Chrysler were replaced by German managers and that many of the German authoritative top-down processes in determining strategic and operative decisions were implemented at Chrysler, replacing the more “free-wheeling” sprit of the former company. For the employees of both premerger companies but particularly for those of Chrysler, centrality, enduring features, and distinctiveness of “their” organization have become more and more problematic and waning. For instance, Chrysler and Daimler had very different product lines before the merger happened, i.e., passenger cars and jeeps by Chrysler and luxury cars and heavy-duty trucks by

Correspondence should be addressed to Rolf van Dick, Work & Organizational Psychology, Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK. Email: [email protected] authors thank Miriam Koschate and Patrick Tissington for their helpful comments on previous versions of this article. Jeremy Dawson’s help with regression analysis is greatly appreciated. We are especially grateful to Doris Fay and two anonymous reviewers for their very constructive criticism. Portions of this paper have been presented at the 11th European Congress of Work and Organizational Psychology, May 14–17, 2003, Lisbon, Portugal.

122 VAN DICK, WAGNER, LEMMER

Daimler. After the merger this clear distinction disappeared because officially both product lines were produced under one roof. Some theorists argue that the nature of an organization’s identity is crucial for the individual’s identification with the organization (e.g., Dutton, Dukerich, & Harquail, 1994). According to Ashforth and Mael (1989), identification with one’s organization partially answers the question of “Who am I?” and being identified means a sense of oneness between employee and organization. Thus, the changes in the identity of the premerger companies Chrysler and Daimler are also challenging and threatening for the individual employee’s identity. Many authors consider loss in psychological attachment as one of the most problematic outcomes of organizational mergers (e.g., Cartwright & Cooper, 1992). From a social identity perspective, the fusion of two organizations can be seen as a merger between an ingroup and a former outgroup into a larger unit (see, for an overview, Van Dick, 2004). The more the members of the postmerger organization feel like being members of a new common ingroup, the more they can identify with the new organization (e.g., Gaertner, Bachman, Dovidio, & Banker, 2001). Social identity research on mergers and acquisitions has demonstrated that identification with the postmerger organization is related to higher job satisfaction, more extra-role behaviour, and lower turnover and absenteeism (e.g., Bachman, 1993; Terry, 2001, 2003). Rousseau (1998) asks the question of what motivates employees to identify with their organizations in times of change? She argues that contemporary workers are well aware of the fact that change in any form is necessary for today’s organizations to be successful in the global competition. If the change is considered to help reaching the organization’s goals or even to help the organization to survive, the change is incorporated in the organization’s identity and thus, eventually, into the person’s self-concept. Organizational change will also affect organizational identification. But whether this change is threatening or challenging and then leads to increases or decreases in identification is highly dependent on the context of the change, i.e., the necessity and continuity of the process in the eyes of the employees. Van Knippenberg and Van Leeuwen (2001) argue that the sense of continuity is key to identification with the postmerger company (see also Van Leeuwen, Van Knippenberg, & Ellemers, 2003). If employees feel that the merger does not affect their daily work, this sense of continuity helps translating the premerger identification (with the former organization) into a new identification with the postmerger organization. If, on the other hand, changes in organizational culture and climate lead employees to perceive large discontinuities between pre- and postmerger organization, it is unlikely that a high identification with the premerger organization continues to be a high identification with the postmerger company. However, one can also assume positive effects of discontinuity for some employees in line with the challenging aspect of change as proposed by Rousseau (1998, see above). The fusion itself might provide opportunities to a change for the better, particularly for those who did not feel attached with the organization prior to the merger. To summarize, we can assume that perceived

IDENTIFICATION AND ORGANIZATIONAL CHANGE 123

continuity and discontinuity lead to the following combinations of identification among the merger partner’s employees: (1) individuals who perceive high continuity and were highly identified prior and post merger (high/high); (2) individuals who perceive continuity but were neither identified prior nor post merger (low/low); and (3) individuals who perceive discontinuity as a threat and who were originally strongly identified but only weakly post merger (high/low). This group of employees in particular can be expected to have the most negative attitudes. Finally, (4) individuals who perceive discontinuity as positive since it is challenging and who were not identified originally but who are identified post merger (low/high). Empirical studies show that it is useful to differentiate between different foci of identification. Van Knippenberg and Van Schie (2000), for instance, distinguish between work group identification and identification with the organization as a whole and found that work group identification was more closely associated with a range of work-related attitudes than identification with the organization as a whole. Van Knippenberg and Van Schie argued that this result was plausible because the more narrow focus should always be more salient in everyday working life and should therefore have more impact on attitudes and behaviours. Van Dick, Wagner, Stellmacher, and Christ (2004) studied four different foci of identification among school teachers (identification with career, team, school, and occupational group, respectively). Their results revealed that it was not always team identification that was related closer to work-related variables, but that the association between identification and criteria like, for example, extra-role behaviour on behalf of the own qualification, on behalf of colleagues or on behalf of the organization as a whole was dependent on the level of specificity or correspondence (cf. Christ, Van Dick, Wagner, & Stellmacher, 2003). Finally, Scott (1997) considered different levels of identification in a geographically dispersed organization (e.g., regional identities) and found empirical support for the usefulness of this distinction. According to this theoretical and empirical work we consider it as also relevant to distinguish between foci of identification in the case of organizational mergers. In this context it is fruitful to distinguish between at least two foci of identification, that is (1) identification with the premerger subunit of the postmerger organization which is often implicitly or explicitly still existent, at least in the subjective feeling of the employee, and (2) identification with the new, larger organization post merger. Identification with both categories will be relevant for the explanation of work-related attitudes and behaviours. When the premerger subunits still exist as separate entities—as it is the case in the merger we present in the empirical part of the present article— they continue to contribute to the employees’ self-definition and thus their self-esteem. In addition to this, the fusion provides a new and larger group the employee can identify with. In line with the arguments of Gaertner and colleagues (2001) it can be expected that both premerger organizations form a new common identity. If there is at least a minimum amount of perceived continuity in working

124 VAN DICK, WAGNER, LEMMER

conditions, tasks to perform, and so on, prior and following the merger, employees will be able to use both categories—the larger merger as well as the subunits—as categories to identify with. The management and activation of the pre- and postmerger entities can be considered to be very similar to the situation of employees of global players for instance, who can identify both with the company as an internationally operating large category as well as with the national branch they are actually working for (see Ashforth & Johnson, 2001, for a discussion of multiple identities in organizations). To summarize, the social identity approach assumes positive relations between social identification with organizational groups and attitudes related to and behaviours on behalf of these groups. The theoretical rationale for this assumption is that via social identification the norms and values of the organization (or parts of it) become incorporated into the individual’s selfconcept and thus contribute to that part of his or her self-esteem that is dependent on the individual’s social identity. As a result, the individual thinks and acts in a congruent way with this identity and will be more motivated, satisfied and ready for engagement on behalf of the group. These assumptions have been supported in empirical studies (e.g., Van Dick & Wagner, 2002; Van Knippenberg & Van Schie, 2000) and a recent meta-analysis (Fontenot & Scott, 2003). Following these theoretical arguments and its empirical evidence we expect positive relations between both forms of identification and work-related criteria, i.e., employees who are more identified with either the premerger subunit or the postmerger larger organization will be more satisfied with their jobs, will experience less negative emotions with respect to the merger, will have lower turnover intentions, and will be willing to show extra-role behaviour to a greater extent. Of particular interest however, is the combination of both identities. Any organization provides multiple potential nested identities (work team, department, company, etc.). In the case of an organizational merger the two relevant categories are the former organization and the larger organization post merger. Which of these identities becomes the most relevant for the employee’s behaviour depends on the relative salience in a given situation (cf. Ashforth & Johnson, 2001). For those being highly identified with both the premerger subunit and the postmerger organization, the sense of continuity can be assumed to be high and thus the premerger identification has been transferred into a high identification with the new entity (cf. Van Knippenberg & Van Leeuwen, 2001). This should be particularly the case in our example where the two premerger organizations continue to exist as separate entities (cf. Van Leeuwen & Van Knippenberg, 2003). It can therefore be expected that these employees will hold the most positive attitudes. On the other hand those with only little identification with both foci can be expected to have the most negative attitudes because they have been negatively preoccupied towards their organization previous to the merger and the ongoing change would have no impact on this negative belief pattern.

IDENTIFICATION AND ORGANIZATIONAL CHANGE 125

To summarize, after an organizational merger has taken place, we would expect (1) to find positive correlations between both foci of identification and work-related attitudes. Moreover, we would expect (2) interaction effects of identification with the two entities, i.e., the premerger subunit and the postmerger larger organization. For those being highly identified with both entities (high/high), the premerger subunit is continuing to provide a basis for self-esteem and, on the same time, the transformation of the premerger identity into the new larger identity of the postmerger organization has worked particularly well and these employees should be best off with respect to satisfaction etc. For those who were identified only to a weak extent to the premerger subunit and continue to be weakly attached to the organization post merger (low/low), comparably lower levels of job satisfaction and extra-role behaviour and higher levels of turnover intentions and negative emotions can be expected. More interestingly, however, are outcomes for the other two plausible combinations. For those who were not identified with the premerger subunit but who do identify with the organization post merger (low/high), the merger obviously has changed the situation to the better and one can expect positive reactions towards the merger, i.e., less negative emotions and more job satisfaction. The worst situation can be expected for those who were highly identified prior to the merger but cannot identify with the organization post merger (high/low). Here, the perceived threat of discontinuity has lead to a drop in identification and this in turn is associated with more negative emotions, less job satisfaction, and a higher inclination towards turnover intentions. METHOD Background and procedures In the spring of 2001, a local council responsible for medical healthcare developed a concept for merging two hospitals for psychotherapy and psychiatry. Both hospitals were of nearly equal size (about 600 employees each); both are mainly dealing with adult patients (with an additional department for child therapy in one of the hospitals); both are situated at the surroundings of two middle-sized cities in Germany, about 30 kilometres apart. The plans for the merger were launched in summer 2001, and were formally completed by merger agreements between representatives of council, senior management, and unions. It was made explicit that no jobs should be cut because of the merger, but, instead, that jobs should be retained, facing the more and more competitive market in this sector. The plan was to keep both hospitals as separate entities with respect to the therapeutic sector but to merge facilities such as kitchen, laundry, and most parts of the administration in one of the locations. In May 2002, the researchers were formally commissioned with conducting an employee survey. After discussions with all relevant parties involved in the merger,

126 VAN DICK, WAGNER, LEMMER

standardized questionnaires were developed and pretested. In September 2002, questionnaires were distributed to all 1244 employees of both hospitals. Participation was voluntary and confidential. At the time of the study, only very few employees (N=6 in our sample) had switched positions from one to the other hospital. The only major change was that the CEO of one hospital became CEO of the new merger working half of the week in one and the other half in the other hospital. Both subunits kept their names (Centre for Psychiatry in [name of one of the two cities]) and together they got a joint name for being part of the merger (Center for Psychiatry in [name of the region]). However, despite the few changes planned to happen in the long run and that actually happened after the merger agreement, the merger was perceived as a big change for the employees— this became apparent in employee meetings documented in the form of letters and articles in the local newspapers. Participants and questionnaires The overall response rate was 37%. The sample consisted of 459 employees; 38% are female, 63% of the total sample were working in the therapeutic sector (e.g., as medical doctors, nurses, educators), and 37% in other domains—mainly in administration. The questionnaire contained scales measuring team climate, evaluation of different quality management measures, etc. but for the purposes of the present article, only the following parts are of interest. Organizational identification. This was obtained with respect to the two relevant domains. Four items were intended to measure identification with the subunit that exists prior to the merger and is continuing to exist after the merger. These and the items measuring the other concepts are provided in the appendix. Four items were intended to assess identification with the postmerger organization as a whole. These were identical to those measuring premerger subunit identification and differed only in the organization’s name. The identification measures were used in our previous research in a number of different occupations and have been demonstrated to be of sufficient internal reliability as well as of sufficient discriminant and convergent validity (see, for example, Van Dick et al., 2004). Job satisfaction. This was measured with three items adapted from the Job Diagnostic Survey (JDS; Hackman & Oldham, 1980; see Appendix). Organizational citizenship behaviour. OCB was assessed with five items tapping extra-role behaviours as defined by Organ (1997; see Appendix). Originally these items were formulated to tap two aspects of extra-role behaviour, which is behaviour directed towards the organization as a whole and altruistic behaviour towards colleagues. Factor analyses revealed, however, that both factors could not be separated in the present data (Eigenvalue of the first factor extracted in a principal components factor analysis was 2.5 (second factor: 0.8) with very high factor loadings of above 0.6 for all items).

IDENTIFICATION AND ORGANIZATIONAL CHANGE 127

Negative emotions. These were assessed with two items (“With respect to the merger I experience anger”, and “With respect to the merger I experience fear”, respectively). Both items were sufficiently correlated, r=.48, p<.001, so that we computed a scale “negative emotions” for further analyses. Finally, turnover intentions were measured with two items (“I frequently think of quitting this job”, and “I have already looked for other jobs”). Correlation between the two items was r=.61, p<.001. For all items participants had to indicate agreement or disagreement on six-point answering scales (endpoints: “do not at all agree”, and “do fully agree”, respectively). RESULTS We expected in Hypothesis 1 that both identification with the premerger subunit and the postmerger larger organization are positively associated with workrelated attitudes, that is with higher job satisfaction and self-reported OCB, and lower turnover intentions and negative emotions, respectively. Table 1 provides means, standard deviations, and intercorrelations for the variables. Table 1 also presents the internal reliability coefficients, which can be interpreted as sufficient or good with respect to the respective number of items (cf. Cortina, 1993). As can be seen in Table 1, results were in line with our hypotheses for job satisfaction, turnover intentions, and self-reported OCB. All correlations between these variables on the one hand and identification with the premerger subunit and the postmerger organization on the other were significant and in the expected direction. No significant relation existed between negative emotions and premerger subunit or postmerger identification. Identification with the premerger subunit was significantly related to identification with the postmerger larger organization. The correlation was low enough to confirm distinctiveness of the two foci of identification. However, the moderate positive correlation was in line with the assumption that premerger subunit identification determines in part the “new” identification with the larger postmerger organization. In Hypothesis 2, interaction effects for the two foci of identification have been formulated. To test for interaction effects, hierarchical regression analyses were conducted with a range of available sociodemographic variables entered in the first step. To control for confounding effects we entered sex, age, organizational tenure, membership in subunit X or Y, respectively, and job type (administrative vs therapeutic sector). In the second step, both identification with the premerger subunit and the postmerger organization were included. All predictors were standardized before entering. In the last step, the interaction term of these two variables was entered. We calculated four regressions with negative emotions, job satisfaction, turnover intentions, and OCB, respectively, as criteria. Results are presented in Table 2. As can be seen in Table 2, some of the demographic characteristics had a significant impact on negative emotions, and there was no significant influence of

Notes: *p<.05, **p<.01, Cronbach’s alphas are on the diagonal. Not applicable because

Means, standard deviations, reliability coefficients, and zero-order correlations

TABLE 1

128 VAN DICK, WAGNER, LEMMER

a

nominal data or, for age, obtained in categories.

the two foci of identification, what is replicating the nonsignificant zero-order correlations (see Table 1). However, as expected, the interaction between premerger subunit identification and postmerger identification was significant even when controlling for the demographic effects. Figure 1 provides the graphical depiction of this interaction effect.

IDENTIFICATION AND ORGANIZATIONAL CHANGE 129

Figure 1. Negative emotions following a merger as a function of identification with premerger subunit and postmerger organization.

In Figure 1, higher values indicate more negative emotions. The graph shows that, for those employees with a high identification with their premerger subunit, who are only weakly identified with the postmerger organization (high/low), the most negative feelings of anger and fear result when asked about the merger. This finding is fully in line with our second hypothesis. Table 2 and Figure 2 provide the results for the regression analysis with job satisfaction as the criterion. As can be seen in Table 2, none of the sociodemographic characteristics had a significant relation to job satisfaction in step 1. Both premerger subunit and postmerger identification were positively associated with job satisfaction, confirming Hypothesis 1; again, there was a significant interaction effect for the two foci of identification. Figure 2 shows that those participants with low levels of identification with both the premerger subunit and the postmerger organization reported the lowest job satisfaction. Unexpectedly, however, those who were highly identified with the subunit but not identified with the post merger organization (high/low) do report relatively high levels of job satisfaction. Finally, Table 2 provides the results for the regression analyses with turnover intentions and OCB as criteria. As can be seen, there was no demographic effect on turnover intentions and no significant interaction effect between the foci of identification as predicted in Hypothesis 2. However, as predicted in Hypothesis 1 and already shown in the simple correlation analysis, both identification foci were significantly associated with turnover intentions: The higher the identification with either of the foci, the less employees thought of quitting. In addition to the results of simple correlation analysis, the effect remained after controlling for a range of demographic characteristics. Finally, the analysis for

*p<.05, **p<.01.

TABLE 2 Summary of hierarchical regression analyses

130 VAN DICK, WAGNER, LEMMER

OCB showed demographic effects indicating more OCB among female participants and more for those working in the therapeutic sector. No interaction effect was obtained and, in this analysis, only identification with the postmerger organization was significantly associated with self-reported OCB.

IDENTIFICATION AND ORGANIZATIONAL CHANGE 131

Figure 2. Job satisfaction as a function of identification with premerger subunit and postmerger organization.

DISCUSSION Organizational identification has been shown to be positively associated with employees’ work-related attitudes in times of change. We studied organizational identification of employees who were undergoing a merger process and found support for our first hypothesis. Both identification with the premerger subunit and with the postmerger organization were positively correlated with job satisfaction and extra-role behaviour and negatively correlated with turnover intentions. Hypothesis 2 was partly supported by our data. The two obtained interaction effects show that in particular those who were only weekly identified with both foci report the lowest levels of job satisfaction. We could not find a direct relation between identification and experiences of negative emotions but the interaction between both foci of identification revealed particularly high negative emotions for those who were identifying highly with the premerger subunit and only weakly with the postmerger organization. For those employees it can be assumed that discontinuity caused by the merger is perceived as threatening and not as a positive challenge as for those employees with a low prior/high post pattern of identification. All reported effects remain stable after controlling for a range of socio-demographic factors, as sex, age, tenure, job type, and membership in one of the subunits. These variables themselves have only little impact on work-related attitudes and the effects in the four regression analyses are unsystematic and hard to interpret. The associations between identification and work-related attitudes demonstrate that those individuals who keep parts of their social identification

132 VAN DICK, WAGNER, LEMMER

with the former, premerger subunit, and who also develop bonds to the new, postmerger organization “survive” the change process best and have the lowest negative emotions and the most positive job satisfaction levels. Being identified with both the premerger subunit and the postmerger organization can be coined as perceiving the postmerger organization as a common ingroup, i.e., a new group incorporating the former premerger organization. This allows individuals to keep parts of their old identity as members of the premerger organization and to transfer this identity into the new larger social category of the postmerger organization. However, the premerger subunit identification is also positively associated with job satisfaction and for two of the analyses the hypothesized interaction effect could not be confirmed. In the context studied here, one could argue, that for job satisfaction it is not essential to develop a postmerger identity when the premerger organization remains visible as a separate entity after the merger. On the other hand, when considering the results concerning self-reported OCB, the postmerger identity seems crucial and more important than premerger subunit identification on this front. Taken together, results indicate that both foci of identification play a role in a context of an organizational merger, which has practical implications for the management of those identities. These implications will be discussed now briefly. According to Gaertner, Dovidio, and Bachman’s (1996) common ingroup identity model, a common identity can be fostered by increasing the postmerger organization’s members’ feelings of being part of a larger whole that consists of the two premerger organizations (“Us” and “We”), instead of stressing the existence of the premerger organizations as distinctive entities (“We” vs. ‘Them”; cf. also Gaertner et al., 2001). A common ingroup or one-group identity can be increased by measures fostering feelings of cooperation instead of competition. Following Rousseau (1998) and Van Knippenberg and Van Leeuwen (2001), the employee’s sense of continuity is crucial for an organizational merger’s success. Only when employees perceive that the merger does not destroy style and climate in the team they are working in, can identification with the premerger organization be translated into the newly developing larger whole. Thus, managers can promote identification with the postmerger organization by priming the common organizational membership and a sense of continuity for the two previously separated organizations. A very practical example to foster the sense of oneness between employee and organization is given by Rousseau (1998). She describes the cases of Southwest Airlines and other firms that reward employees with additional bonus cheques or stock options each time a common goal is achieved. This allows employees to participate in the organization’s success and fosters a sense of common fate. Another identity-based method can be the heightening of competition between the postmerger company and other companies, which also legitimates the fusion. Finally, to foster the sense of continuity, middle management should be retained, so that supervisors do not change for most of the employees, and as many as possible of the regulations and

IDENTIFICATION AND ORGANIZATIONAL CHANGE 133

benefits that have been part of the organization’s culture above and beyond usual standards in the respective industry should be kept. Limitations and outlook Our data are cross-sectional. Thus, the causal effect of identification on jobrelated attitudes, as assumed here, could also be the opposite—namely of jobrelated attitudes on identification. Longitudinal and experimental data will be necessary to get an answer to this question of causality. Nevertheless, our findings are in line with the assumptions that identification with the premerger subunit and the postmerger organization can exist parallel in the individual’s belief system and that both have positive effects on job-related attitudes. Our findings also suggest that a combination of both high pre- and postmerger identification lead to particular positive outcomes. The question remains, however, whether this pattern will change over time. In the research environment presented here, the merger happened only some months before the study and at the time large parts of the organization had not been affected by the merger at all. It will be interesting to follow up the further developments during the ongoing process. Finally, one could also argue that the reactions of the participants in the low/low and in the high/ high cells of identification prior and post merger are due to trait effects. One factor leading to artificially inflated variance might, for instance, be seen in positive and negative affectivity (e.g., Chan, 2001). However, this effect cannot account for the responses of those participants who changed from low to high identification and vice versa. Secondly, the weak intercorrelation between subunit and postmerger identification provides at least some evidence for the validity of the responses above and beyond trait or method artefacts. We hope that our findings will stimulate research and that longitudinal designs including objective data will help to further clarify the role of identity in the process of organizational change. In particular, negative emotions have not been studied extensively with relations to identity issues in organizational mergers. For employees who are involved in change processes like these, however, emotions are highly relevant. REFERENCES Albert, S., & Whetten, D.A. (1985). Organizational identity. In L.L.Cummings & B.M.Staw (Eds.), Research in organizational behavior (Vol. 7, pp. 263–295). Greenwich, CT: JAI Press. Ashforth, B.E., & Johnson, S.E. (2001). Which hat to wear? The relative salience of multiple identities in organizational contexts. In M.A.Hogg & D.J.Terry (Eds.), Social identity processes in organizational contexts (pp. 31–48). Philadelphia, PA: Psychology Press Inc. Ashforth, B.E., & Mael, F. (1989). Social identity theory and the organization. Academy of Management Journal, 14, 20–39.

134 VAN DICK, WAGNER, LEMMER

Bachman, B.A. (1993). An intergroup model of organizational mergers. Unpublished doctoral dissertation, University of Delaware, Newark, USA. Cartwright, D., & Cooper, C.L. (1992). Mergers and acquisitions: The human factor. Oxford, UK: Butterworth-Heinemann. Chan, D. (2001). Method effects of positive affectivity, negative affectivity, and impression management in self-reports of work attitudes. Human Performance, 14, 77–96. Christ, O., Van Dick, R., Wagner, U., & Stellmacher, J. (2003). When teachers go the extra-mile: Foci of organizational identification as determinants of different forms of organizational citizenship behaviour among schoolteachers. British Journal of Educational Psychology, 73, 329–341. Cortina, J.M. (1993). What is coefficient alpha: An examination of theory and applications. Journal of Applied Psychology, 78, 98–104. Dutton, J.E., Dukerich, J.M., & Harquail, C.V. (1994). Organizational images and member identification. Administrative Science Quarterly, 39, 239–263. Fontenot, J.C., & Scott, C.R. (2003). Correlates of organizational identification moderated by measurement scale, organizational type, and publication date: A meta-analysis. Manuscript submitted for publication. Gaertner, S.L., Bachman, B.A., Dovidio, J.F., & Banker, B.S. (2001). Corporate mergers and stepfamily marriages: Identity, harmony and commitment. In M.A.Hogg & D.J.Terry (Eds.), Social identity processes in organizational contexts (pp. 265–283). Philadelphia, PA: Psychology Press Inc. Gaertner, S.L., Dovidio, J.F., & Bachman, B.A. (1996). Revisiting the contact hypothesis: The induction of a common ingroup identity. Journal of Intercultural Relationships, 20, 271–290. Gioia, D.A. (1998). From individual to organizational identity. In D.A.Whetten & P.C. Godfrey (Eds.), Identity in organizations: Building theory through conversations (pp. 17–32). London: Sage. Hackman, J.R., & Oldham, G.R. (1980). Work redesign. Reading, MA: Addison-Wesley. Leshinsky, H. (2000, September). Daimler Chrysler: Merger or takeover? Retrieved from http:// www.stthomas.edu/mim/about/aboutMIM/1100/daimlerChrysler_MergerOrTakeover.htm Organ, D.W. (1997). Organizational citizenship behavior: It’s construct clean-up time. Human Performance, 10, 85–97. Rousseau, D.M. (1998). Why workers still identify with organizations. Journal of Organizational Behavior, 19, 217–233. Scott, C.R. (1997). Identification with multiple targets in a geographically dispersed organization. Management Communication Quarterly, 10, 491–522. Terry, D.J. (2001). Intergroup relations and organizational mergers. In M.A. Hogg & D.J. Terry (Eds.), Social identity processes in organizational contexts (pp. 229–248). Philadelphia, PA: Psychology Press. Terry, D.J. (2003). A social identity perspective on organizational mergers: The role of group status, permeability and similarity. In S.A.Haslam, D.Van Knippenberg, M.J.Platow, & N.Ellemers (Eds.), Social identity at work: Developing theory for organizational practice (pp. 293–316). Philadelphia, PA: Psychology Press Inc. Van Dick, R. (2004). My job is my castle: Identification in organizational contexts. In C.L. Cooper & I.T.Robertson (Eds.), International review of industrial and organizational psychology (Vol. 19, pp. 171–203). Chichester, UK: Wiley.

IDENTIFICATION AND ORGANIZATIONAL CHANGE 135

Van Dick, R., & Wagner, U. (2002). Social identification among school teachers: Dimensions, foci, and correlates. European Journal of Work and Organizational Psychology, 11, 129–149. Van Dick, R., Wagner, U., Stellmacher, J. & Christ, O. (2004). The utility of a broader conceptualization of organizational identification: Which aspects really matter? Journal of Occupational and Organizational Psychology, 77, 1–20. Van Knippenberg, D., & Van Leeuwen, E. (2001). Organizational identity after a merger: Sense of continuity as the key to postmerger identification. In M.A.Hogg & D.J.Terry (Eds.), Social identity processes in organizational contexts (pp. 249–264). Philadelphia, PA: Psychology Press Inc. Van Knippenberg, D., & Van Schie, E.C.M. (2000). Foci and correlates of organizational identification. Journal of Occupational and Organizational Psychology, 73, 137–147. Van Leeuwen, E., & Van Knippenberg, D. (2003). Organizational identification following a merger: The importance of agreeing to differ. In S.A.Haslam, D.Van Knippenberg, M.J. Platow, & N.Ellemers (Eds.), Social identity at work: Developing theory for organizational practice (pp. 205–222). Philadelphia, PA: Psychology Press, Inc. Van Leeuwen, E., Van Knippenberg, D., & Ellemers, N. (2003). Continuing and changing group identities: The effects of merging on social identification and intergroup bias. Personality and Social Psychology Bulletin, 29, 679–690.

APPENDIX: ITEMS REPRESENTING IDENTIFICATION, JOB SATISFACTION, AND ORGANIZATIONAL CITIZENSHIP BEHAVIOUR Identification with premerger subunit I identify with the premerger subunit in [name of the city the subunit is located]. I am glad to work for subunit in [name of the city the subunit is located]. Subunit in [name of the city the subunit is located] has a good reputation among people around me whose opinions are important to me. I am willing to engage for subunit in [name of the city the subunit is located] more than absolutely necessary. Identification with the postmerger organization I identify with the [name of the merger]. I am glad to work for [name of the merger]. [Name of the merger] has a good reputation among people around me whose opinions are important to me. I am willing to engage for [name of the merger] more than absolutely necessary.

136 VAN DICK, WAGNER, LEMMER

Job satisfaction Generally speaking, I am very satisfied with this job. I am generally satisfied with the kind of work I do in this job. I am satisfied with the feeling to do something meaningful with my job. Organizational citizenship behaviour I am always very punctual. I always follow rules very thoroughly. I gladly help orienting new colleagues. I help colleagues who have heavy workloads. I inform my colleagues and supervisors early when I’m unable to come to work.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 139–163

AND

ORGANIZATIONAL

The impact of organizational change on the perceptions of UK managers Les Worrall The Management Research Centre, Wolverhampton Business School, UK Carole Parkes Aston Business School, Aston University, Birmingham, UK Cary L.Cooper Manchester School of Management (UMIST), UK Redundancy, delayering, downsizing, and various other forms of organizational change have become increasingly prevalent. This article focuses on the impact of different forms of organizational change on managers’ perceptions of the organizations they work within and the comparison between changes that involve redundancy and/or delayering and those that do not involve such changes. The literature has many accounts of the negative effects associated with redundancy and delayering, but are these effects unique to these types of change or are they a consequence of negative experiences of a range of organizational changes? Hypotheses were tested to assess, first, whether there are differences between different levels of management, notably between directors and nondirectors in the way they perceive organizational change, second, to assess how change has affected managers’ perceptions of their organizations and their working lives, and third, to explore if different forms of change are associated with differences in managers’ perceptions of their organizations “as a place to work”. Hypotheses were tested with data from a cross-sectional survey with 830 managers from the UK. Organizational changes include cost reduction and culture change programmes, delayering, mergers/demergers, outsourcing, redundancy programmes, and contract/ temporary workers. The analyses reported here indicate clearly that specific © 2004 Psychology Press Ltd http:// www.tandf.co.uk/ journals/pp/ 1359432X.html

DOI: 10.1080/ 13594320444000047

138 WORRALL, PARKES, COOPER

forms of change are associated with managers’ reports of their experiences at work; some forms of change (notably redundancy and delayering) seem to have particularly damaging implications for managers’ experiences in the workplace. The analyses also show that there is a difference in the way directors and nondirectors perceive the changes. Finally, the article considers strategies for ameliorating the effects of change including the role of HR. Redundancy, delayering, downsizing, and various other forms of organizational change are claimed to have become more increasingly prevalent since the 1990s. Resistance and reluctance to adapt to change are common reactions of humans in an organizational environment (King & Anderson, 2002). It is not surprising then that there is a considerable literature, developed in the context of organizational change, to show that perceptions of uncertainty are detrimental to well-being (Ashford, 1988; Nelson, Cooper, & Jackson, 1995) and we believe that certain types of change are therefore more likely to be detrimental to individuals, and in turn to organizations, than other forms of change. Redundancy is probably the most evocative and fear-inducing form of organizational change and literature in this area focuses on; the impact of redundancies on organizations, on those directly affected by it and, particularly important to this study, on those who survive it (e.g., Gowing, Kraft, & Campbell-Quick, 1997; Kets de Vries & Balazs, 1997; Kozlowski, Chao, Smith, & Hedlund, 1993). It has been established elsewhere that redundancy and delayering—linked to cost reduction programmes and “downsizing”—have played a significant part in the overall process of restructuring that has affected many UK organizations (Worrall & Cooper, 1999). Although developed best in the US, many UK companies have used downsizing-driven redundancy and delayering programmes as a means of “strategic transformation” ostensibly to change organizations’ corporate cultures and to drive down costs. A distinctive feature of changes and in particularly change involving redundancy from this time has been its effects on white-collar workers. Cascio (2002) asserts that the “juggernaut” of employee downsizing affecting white-collar workers is continuing.

Correspondence should be addressed to Carole Parkes, Work & Organizational Psychology, Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK. Email: [email protected] authors wish to thank the Institute and membership of the Chartered Institute of Management (CMI) for their involvement in the research programme and Jeremy Dawson for his guidance on some aspects of the analysis. Special thanks are also due to Doris Fay and two anonymous reviewers who provided very welcome support and constructive comments. Cary L.Cooper is now at Lancaster University Management School.

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 139

In many cases downsizing appears to have been a corporate euphemism for mass redundancies and the overenthusiastic stripping out layers of management (Vollmann & Brazas, 1993). What is of more concern is that many organizational change programmes have relied heavily on redundancy and delayering and we have become used to the euphemisms for what Cascio (1993) defines as “the planned elimination of positions or jobs” (p. 95). These include “downsizing” or “rightsizing” or “business process reengineering” or some other management fad of the moment (Champy, 1995; Hammer & Champy, 1993). Organizations are constantly under pressure to perform well and in particular make returns to the shareholders (Hutton, 1995). The pressure to downsize— delivering more for less—is reported as the norm (Drucker, 1998; Handy, 1994; “On the Battlefields”, 1996; Sparrow, 1998). Hence, there has been an increasing use of change strategies such as downsizing or delayering that rely heavily on redundancies; this use is driven by the hope that it increases organizational performance. The evidence, however, on its beneficial effects are mixed (we report this in more detail below). There are widespread observations that downsizing initiatives did not deliver the hoped for results. This has ignited research to understand why such initiatives have not succeeded and has led to the uncovering of what is now referred to in the literature as survivor syndrome (Brockner, Greenberg, Brockner, Bortz, & Carter, 1986). Since then, we do know one of the factors that explain why downsizing exercises do not deliver what is expected of them. However, despite the widespread claims that downsizing is harmful— since it can give rise to phenomena associated with the survivor syndrome— we believe that this has not yet been fully empirically tested. Research employing the concept of a survivor syndrome explored the variables that can increase or mitigate the magnitude of the survivor syndrome (Brockner et al., 1986). Littler (2000) argues that the “survivor syndrome” is related to workplace morale, motivation, commitment, perceived promotion opportunities, job satisfaction, and job security. It has, to our knowledge, however, not been shown whether the negative effects associated with redundancies are actually a unique consequence of redundancy, or whether they are the result of the general organizational change aspect implied in redundancy programme. As already stated, there is a tendency for employees to experience organizational change efforts as threatening (Ashford, 1988; King & Anderson, 2002; Nelson et al., 1995); therefore, the negative reports on the effects of changes involving redundancy could also be related to this general experience. To obtain more evidence for the frequently claimed negative effect of changes involving redundancy, this study seeks to compare experiences and perceptions of managers that underwent different types of changes, i.e., cost reduction, culture change, redundancy, and outsourcing (Worrall & Cooper, 1998). It also compares their perceptions, experiences, and subsequent effects, and reports on their behaviour in the workplace. The effects of specific types of change, namely redundancy (the removal of posts and people from an organization) and

140 WORRALL, PARKES, COOPER

delayering (the removal of management layers/posts and often but not always people) are given particular attention. The second goal of this article is to compare the perceptions of individuals located at different levels of an organization’s hierarchy. Anecdotal reports on the effectiveness of organizational change involving redundancy and delayering have been somewhat inconsistent. We suggest that the reason for the inconsistency of these reports may lie in the source of this evidence: We believe that there are differences in how these changes are perceived according to level of management and that directors are more likely to view such changes as positive compared to nondirectors. Finally, we want to test the widespread claim that the incidence of organizational change has increased over recent years. We will look at this by testing whether the number of organizations that have been affected by changes over a period of 4 years has increased. DOES IT DELIVER THE HOPED-FOR EFFECTS ON PERFORMANCE? A large body of literature explores the effects redundancy and delayering have on managers’ attitudes to their organization and on aspects of business performance and operation. The conventional wisdom in many practitioneroriented management texts is that downsizing, delayering, and redundancy improve productivity, effectiveness, efficiency, and competitiveness and thus organizational performance (Cameron, 1994; Devanna & Tichy, 1990; Kets de Vries & Balazs, 1997; Shaw & Barrett-Power, 1997). There are a number of ways in which performance improvement through downsizing is alleged to be achieved: these include increased flexibility, smoother communication, and faster decision making (Fowler, 1993; Freeman & Cameron, 1993; Greenhalgh, Lawrence, & Sutton, 1988; Lewis, 1993; Turnbull & Wass, 1997). However, previous findings have called these assumptions into question. Worrall and Cooper (1998) suggest that the main consequence of redundancy on survivors is a sharpened sense of accountability, increased task overload and task fragmentation, and reduced role clarity, as redundancy and delayering seem to be far more effective in removing people from an organization than in removing the tasks that these discarded people used to do. The consequence of this has been described by Burchell, Lapido, and Wilkinson (2002) as work intensification (where role, task, information, and work volume overloading takes place) and work extensification (where the work-life balance is shifted as the barrier to the two becomes less well defined). Other negative effects of redundancy and delayering seem to be due to its destabilizing effect: skills shortages, low morale, anger, and lack of innovation have been reported (Cameron, Freeman, & Mishra, 1993) as employees become more fearful and risk averse. Organizations that are prepared to take risks, to innovate and to develop competences are often described as “learning

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 141

organizations” in the contemporary management literature. We contend that restructuring which involves significant reductions in employee numbers can be damaging to organizations aspiring to this in two main ways: First, competencies are lost as significant “chunks” of organizational memory are discarded; and, second, employees become less prepared to take risks and engage with innovation in case they are “next in line”. To summarize, even though managers hope for changes involving redundancy to deliver positive effects, accumulating evidence indicates that this is not usually the case and indeed that redundancy is more likely to have a negative effect on organizational performance. The literature provides evidence of the negative effects of redundancy and delayering. However, from our perspective, this effect has not yet been fully explored since it is not clear whether the described negative effects should be attributed to unique characteristics of redundancy and delayering, or whether they are a result of negative experiences of organizational change. To our knowledge, studies have not explored comparisons between changes that do not involve redundancy and delayering and those that do. This study sets out to compare the perceived effects of different types of change on assessments of organizational performance. IMPLICATIONS FOR DIFFERENT LEVELS OF MANAGEMENT We assume that the way in which employees are affected by redundancy and delayering depends on where they are located in the organization. The view that residual tasks, following delayering or redundancy, are often cascaded down the management hierarchy is supported by Tombaugh and White (1990), who found that senior management, following redundancy, expected more junior managers to absorb increased responsibility and decision making at both the individual and work-group levels. They found that surviving managers typically were unprepared for wider spans of control both in the number of workers and in the variety of tasks they had to manage and this may be symptomatic of a failure of more senior managers to manage the change process effectively. These findings indicate that it is inappropriate to treat managers as a homogeneous group. Indeed, earlier findings (Worrall & Cooper, 1999) have indicated significant differences between managers’ perceptions at different levels of the managerial hierarchy. Managers at chief executive and director level were found to have perceptions about the impact of change radically different from senior, middle, and junior managers; this study aims to extend knowledge in this area by testing the differences in perceptions of different levels of managers and specifically between directors and nondirectors. It is our contention that directors perceive changes including those involving redundancy and delayering more positively than nondirectors because they are often party to the decisions. Constant pressures to cut costs and increase profits

142 WORRALL, PARKES, COOPER

inevitably leads to job cutting because it is one way to make an impact on the “bottom line”, certainly in the short term. EFFECTS ON EMPLOYEE WELL-BEING Previous research has found that redundancy and delayering affects survivors’ emotions, attitudes and behaviours (Brockner, 1990; Greenhalgh & Rosenblatt, 1984; Noer, 1993; Thornhill & Gibbons, 1995). Emotions synonymous with grieving such as shock, anger, denial, guilt, and fear have been noted alongside decreased motivation, decreased trust in management, and decreased levels of organizational commitment in subsequent jobs (Brockner et al., 1986; Kozlowski et al., 1993). As organizations adopt downsizing as a way of life, there is evidence to suggest that survivors initially work harder for reasons such as guilt and insecurity (Brockner, Davy, & Carter, 1985). However, parallel to this are reports of increased workloads and increased stress, which question whether any short-term improvement in performance is sustainable in the longer term. It is difficult to find evidence of any completely successful redundancy programme where the effects have not been injurious to both survivors and victims (Cascio, 2002). A review of the literature reveals that redundancy, downsizing, and delayering are associated with several core constructs in organizational analysis. “Survivor syndrome” is identified with workplace morale, motivation, commitment, perceived promotion opportunities, job satisfaction, and job security (Littler, 2000) and Organ (1997) similarly asserts that morale is strongly associated with measures such as job satisfaction, job involvement, and organizational commitment. Organizational commitment (Mowday, Porter, & Steers, 1982) emerges as an important construct in the analysis of the effect of organizational change on workers. Significantly, Dunham, Grube, and Castaneda (1994) has identified that “positive experiences” can foster commitment and individual attachment to the organization. Robinson and Rousseau (1994) argued that employer violations of the psychological contract increase the probability of employee turnover while decreasing the satisfaction of those who remain: They also argued that a violation, such as redundancy, could reduce organizational commitment, morale, and motivation. Such violations have caused employees to reduce their sense of obligation to employers and, at the same time, to increase their feelings of what they felt they were owed by their employers (Ebadan & Winstanley, 1997). In other instances, fear of redundancy may go some way to explaining “presenteeism” (Handy, 1998) as managers attempt to demonstrate their indispensability by visibly working long hours (Worrall & Cooper, 2001a) and to explaining absenteeism induced by lower levels of employee commitment and loyalty (Worrall & Cooper, 2001b). A model proposed by Greenhalgh and Rosenblatt (1984) listed restructuring, mergers, and downsizing as examples of threats that act as antecedents of job

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 143

insecurity. The threat to the continuation of one’s job leads to adverse behaviours on the job (in terms of effort, propensity to leave, and resistance to change), which in turn leads to adverse impacts for the organization (in terms of productivity, turnover, and adaptability). Although it is accepted that the relationship between job insecurity and employees attitudes and behaviours may be moderated by some work- and nonwork-related factors, Davy, Kinicki, and Scheck (1991) found that job satisfaction and organizational commitment mediate job insecurity effects on withdrawal cognitions in a downsizing organization, while Hallier and Lyon (1996) found that threats to managers’ positions and careers resulted in decreased trust and diminished organizational commitment. This section highlights a wealth of employee well-being variables that can be affected by redundancy and delayering. As pointed out earlier, it is not clear whether the reported detrimental effects are the results of specific characteristics of redundancy or delayering. This study sets out to compare experiences of managers who work for organizations that underwent changes that did not involve redundancy and delayering with managers that did experience redundancy and delayering; it is assumed that that those involving redundancy will have more negative effects. CONSEQUENCES OF POOR HR PRACTICES We argue that satisfaction with HR practices including those which affect rewards, careers, recognition, workload, and other related variables including satisfaction with communication are likely to be lower in organizations that undergo changes involving redundancy. The reason for this is that good HR practices—even though widely preached—are not practiced in redundancy. This is reflected for example in the fact that HRM texts have not generally addressed the wider issues involved in restructuring and downsizing (Redman & Wilkinson, 2001) despite it being the “most pervasive phenomenon in the business world” (Cameron, 1994, pp. 183– 188). Our assumption is also based on the widely practised “Mafia model” of downsizing (Stebbins, 1989), which suggests that because it is a difficult and unpleasant process it is best hurriedly carried out and quickly forgotten. Effective communication plays a central role in any change initiative (Tizard, 2002). Cascio (2002) argues that failure to communicate “openly and honestly” contributes to the atmosphere of uncertainty. Studies have also shown that employees who understand the reasons behind changes see them in a more positive light and as a justified option (Gopinath & Becker, 2000). A study by Brockner, Grover, Reed, and DeWitt (1992) suggests a positive correlation between the clarity of manager’s explanations and the favourability of employee’s reactions. This is seen to be particularly true in conditions of high uncertainty for employees and high importance in terms of individuals’ needs and priorities.

144 WORRALL, PARKES, COOPER

The existence of a harassment culture can be determined by the extent to which individuals have perceptions of the organization as a source of threat and fear. This can be through observations of harassment at an individual or organizational level. In relation to this study, it should be noted that the term can be used to denote organizational practices, such as those which involve the threat of job loss. The organization presents the controls as in the interests of the employees, for example, performance management improvement plans are presented as in the interests of the employee but are perceived as forms of punishment (Liefooghe & Mackenzie Davey, 2001). This is because the outcomes of performance management processes can contribute directly to the decisions about who the victims of restructuring and downsizing will be. However, subjectivity in such systems and a lack of objective assessment can lead to a lack of trust and confidence in the system (Winstanley & Stuart-Smith, 1996). Another reason for the importance of effective management of redundancy and delayering is provided by Reilly, Brett, and Stroh (1993) who explain that, under threat of redundancy, individuals become more loyal to their own personal development than to their employing organization. This suggests that individuals tend to redefine and switch their loyalty (away from organizations and to themselves). In conclusion, the need for HR to be proactive in developing and effectively managing policies and practices to reduce the negative consequences of organizational changes and in particular those involving redundancy and delayering is paramount. However, scholars of the field have pointed out that HR is strongly neglected when organizations engage in redundancy or delayering. This implies that the variables described in the previous section should be less favourable in organizations that underwent redundancy or delayering in comparison to other organizational changes. RESEARCH QUESTION AND HYPOTHESES The assertions made by authors writing about organizational change being a persistent and increasing feature of organizational life is discussed in the introduction. We believe that these assertions are mainly based on anecdotal evidence, thus the following research question was set and addressed in our analyses: Did the number of organizations affected by organizational change increase over the period 1997 to 2000? The issue of different perceptions of the effects of organizational change by management level is discussed earlier in this article, and this study compares different levels of management in the way in which they experience changes. Furthermore, we compare managers who underwent different types of changes with each other (including a group of managers that did not experience change for some of the analyses) to test whether changes involving redundancy or delayering (or both) result in more negative reports than changes without either

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 145

of these initiatives. The types of change reported include cost reduction and culture change programmes, delayering, mergers/demergers, outsourcing, redundancy programmes, and (with the exception of 1997) contract/temporary workers. The following hypotheses were developed: Hypothesis 1. When organizations undergo changes involving redundancy or delayering, directors perceive the effect of organizational change on organizational outcome variables (such as organizational effectiveness, organizational performance, and competences loss) and on employee well-being variables (such as employee loyalty and job security) more positively than nondirectors. The literature review presented earlier indicates that organizational change that involves redundancy does often not deliver the desired for results. Here we seek to test whether the negative consequences are attributable to the specific experiences involved in redundancy or whether these are simply an effect of having undergone organizational change. Hypothesis 2. We hypothesize that there are differential effects of the types of organizational changes on organizational performance and employee well-being: Managers perceive the effects of change on performance and employee wellbeing most positively when the changes are without redundancy or delayering; and most negatively when changes involving redundancy. Hypothesis 3. Managers’ current personal well-being depends on whether or not their organization has undergone a change that involves redundancy or delayering, as well as whether there is no change at all. The way managers feel in their organizations (in terms of their satisfaction, morale) and perceive the culture in their organization (in terms of a harassment culture) is most negative for managers from organizations that underwent redundancy or delayering; they feel more positive when their organization underwent other types of change, and feel best in organizations that did not experience change. Hypothesis 4. Managers’ reports on how their organizational attachment (in terms of reciprocal commitment to the organization and intention to quit) and work intensification has developed over the last 3 years depends on whether their organization has undergone a change or not, and if, what kind of change. We assume that managers who experienced redundancy and delayering report a more negative develop ment of their organizational attachment and a more negative development of work intensification over the last 3 years, in comparison to managers of organizations where the change did not involve redundancy or delayering and in comparison with managers from organizations that did not undergo a change.

146 WORRALL, PARKES, COOPER

METHOD Study and sample This article is based on the data of a 4-year University of Manchester Institute of Science and Technology (UMIST)—Chartered Management Institute (CMI) research programme that was designed to explore the changing nature of managerial work in the UK and to assess the impact of different forms of organizational change on, for example, organizational effectiveness and managers’ well-being variables, such as job security, motivation, morale, and commitment to the organizations they work within. The “Quality of Working Life” survey was conducted annually from 1997 to 2000 using the CMI’s membership database as a sampling frame. There are no reliable, published estimates of the size, structure, and sectoral distribution of the population of UK managers. Therefore, it has not been possible to test whether the CMI is fully representative of UK management population, and to weight the survey data in case it is not representative. The panel of respondents were drawn from the CMI and the survey was sent to 5000 randomly selected individual members of the Institute. The exercise generated 1362 valid responses in 1997, 1313 responses in 1998, 1213 responses in 1999, and 1516 responses in 2000 (which represented response rates of 27%, 26%, 24%, and 30%, respectively). It is important to emphasize that the sample is representative of the structure of the membership of the Chartered Management Institute. For the purpose of this study, which is essentially an exploration of the differential impact of various types of organizational change, we decided to use a reduced data set. We excluded those managers who were not full-time employees and those who worked in organizations employing less than 100 employees. Our rationale is that such a comparison requires an analysis of organizations where defined managerial structures and hierarchies exist and where there is a defined internal labour market. This reduced the number of participants to 817 in 1997, 801 in 1998, 724 in 1999, and 830 in 2000. Data from all four years will be used to explore our research question on the magnitude of organizational change over time. Hypotheses 1 to 4 are tested using the data of the year 2000. Different categories of management level were assessed and for the purposes of this research, we distinguished between directors (chairmen, CEOs/MDs, and directors—labelled D) and compared their views against those of nondirectors (senior, middle, and junior managers— labelled ND). Measures Effectiveness of organizational change on organizational outcomes was measured with three scales—effectiveness, outcome, and competence loss:

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 147

1. Effectiveness was measured with a scale comprising four items asking managers to what degree had organizational changes improved decision making, accountability, participation, and flexibility in their organization. The answering format was a five-point scale (strongly disagree to strongly agree). 2. Outcome. Changes in organizational performance were captured with two items, assessing how far productivity and profitability were enhanced as a consequence of organizational changes, using the same question and answering format as effectiveness. 3. Competence loss was measured by a single item asking to what degree organizational changes had resulted in key skills and experience being lost. Answering format was the same as for effectiveness. Two measures of employee perspectives (job security and loyalty) were also included: 4. Employee loyalty. This scale consisted of three items and asked managers to assess in how far organizational changes had affected their employee’s loyalty, morale, and motivation. The answering format recorded if the managers perceived these attitudes to have increased, remained unchanged, or decreased. 5. Employee job security was measured by a single item asking about the effects of the changes on employee’s job security. The answering format recorded if employees’ job security increased, remained unchanged, or decreased. Manager’s current well-being was assessed with three scales—satisfaction (two scales), morale and motivation, and index for harassment culture: 6. Satisfaction with communication was measured by two items and asked about satisfaction in current job with team communication and feedback. Answering format was a five-point scale (strongly agree to strongly disagree). 7. Satisfaction with HR policies was measured by a scale consisting of four items and asked about satisfaction in current job with career opportunities, recognition for performance, reward/remuneration, and workload, using the same answering format as satisfaction with communication. 8. Morale and motivation was measured by a scale consisting of six items concerning organizational morale, department/team morale, having fun at work, whether the organization has become a better place to work in past 12 months, and whether employees are treated as the most important asset. Answering format was the same as for the satisfaction scale. 9. Harassment culture was measured by an index of two items asking how far managers agreed that there was a blame culture in the organization and

148 WORRALL, PARKES, COOPER

whether they had witnessed bullying in the organization. Answering format was the same as for the satisfaction scale. Three scales were used to assess manager’s perceptions of change in the last 3 years—reciprocal commitment, intention to quit, and work intensification: 10. Reciprocal commitment was measured by a scale consisting of three items, and asked how far the manager’s commitment to their work group, commitment to their organization, and the organization’s commitment to them had developed over the last 3 years. Answering format was the same as for effectiveness. 11. Intention to quit was measured by a single item and asked how far the manager’s inclination to change jobs to pursue their career had developed over the last 3 years. Answering format was the same as for effectiveness. 12. Work intensification was measured by an index of three items asking how far the nature of managerial work had changed over the past 3 years. The items were task fragmentation, volume of information, and increased organizational politics. Answering format was the same as for effectiveness. Type of organizational change was measured by asking managers to record the occurrence (or not) of seven categories of change. These categories were: cost reduction programmes, culture change programmes, delayering, mergers/ demergers, outsourcing, redundancy programmes, and the replacement of fulltime employees by contract and/or temporary managers (now often called interim managers).

All scale means, standard deviations, intercorrelations, and reliabilities can be found in Table 1. Internal consistencies can be considered as sufficient in most cases regarding the limited number of items.

RESULTS The research question was tested by comparing the numbers of managers who reported experiencing specific types of change over a 4 year period (1997–2000) to those who did not experience any of the assessed changes.

*p>.05, **p>.01; Row 1–5, n=745; Row 6–12, n=855; Satisf.=Satisfaction with; Recipr.=Reciprocal.

TABLE 1

Means, standard deviations and zero-order correlations of variables, Cronbach’s alpha on diagonal

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 149

TABLE 2 Number of managers reporting changes and those reporting no change

No change Reported changes Total number of managers

1997

1998

1999

2000

287 (35.1%) 530 (64.9%)

261 (32.6%) 540 (67.4%)

220 (30.4%) 504 (69.6%)

233 (28.1%) 597 (71.9%)

817

801

724

830

Note: Changes reported include, cost reduction and culture change programmes, delayering, mergers/demergers, outsourcing, redundancy programmes and (with the exception of 1997) contract/temporary workers.

150 WORRALL, PARKES, COOPER

Table 2 shows that over the 4 year period the proportion of managers experiencing change increased. This trend is significant with Chi-square (3, N=830)=10.34, p<.016. This result supports the commonly held perceptions that organizational changes are becoming increasingly wide-spread. All hypotheses were tested with multivariate analysis of variance (MANOVA), with management level (directors vs. nondirectors) as the first factor, and type of change as the second factor. Respondents were grouped according to the type of change their organization had undergone; four groups were distinguished: 1. There was organizational change but without the use of either redundancy or delayering, i.e., the change process involved cost reduction, culture change, mergers/demergers, the use of temporary and/or contract staff or outsourcing or a mixture of these; change without redundancy or delayering (CWRD), n=253. 2. Redundancy was used without delayering; redundancy no delayering (RND), n=219–244. 3. Delayering was used without redundancy; delayering no redundancy (DNR), n= 67–71. 4. Redundancy and delayering were used in parallel; redundancy and delayering (RAD), n=201. 5. No change (NC), n=112. The first four groups are used to test Hypothesis 2 on the different effects of types of organizational changes. Hypotheses 3–4, which relate to current experiences in organizations and developments over the last years, also include participants who reported that their organization had not undergone changes. Hypotheses 1 and 2 are tested with one MANOVA including all dependent variables implied in these hypotheses. Hypothesis 1 compares nondirectors and directors regarding how they perceive change. The groups were compared with respect to their perceptions of organizational outcome of change (effectiveness, outcome, competence loss) and employee well-being (loyalty and job security). Results depicted in Tables 3 and 4 imply that directors and nondirectors differ significantly in their perceptions of change: multivariate F-test, F(5,733)=17.41, p<.001. The directors perceive change in general more positively than nondirectors: Univariate tests imply that this applies to all variables. The nonsignificant interaction

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 151

TABLE 3 Significant results of MANOVAs and post hoc tests Measure

ML

Type of change

1. Effectiveness 2. Outcome 3. Competence loss

D>ND D>ND D
CWRD>RAD, RND

4. Employee loyalty

D>ND

5. Employee job insecurity

D
6. Satisfaction with communication 7. Satisfaction with HR policies 8. Morale & motivation

D>ND

D>ND

9. Harassment culture

D
RAD>RND, CWRD, DNR RND>CWRD RADDNR, RND+

D>ND

NC>CWRD, RND, DNR, RAD NC>CWRD, RND, DNR, RAD CWRD>RAD, RND RND>RAD NCRAD NC
10. Reciprocal commitment D>ND 11. Intention to quit DND

“<” and “>” indicate a difference between groups in the post hoc test, with p<.05 (p<.10 when indicated with +); ML=managerial level, D=director, ND=nondirector; NC=no change, CWRD=change without redundancy and delayering, RAD=redundancy and delayering, DNR=delayering no redundancy, RND=redundancy no delayering. TABLE 4 Means and standard deviations for management level of participants Director

Nondirector

M

SD

M

SD

1. Effectiveness 2. Outcome 3. Competence loss 4. Employee loyalty 5. Employee job insecurity 6. Satisfaction with communication

3.50 3.40 2.95 1.84 3.40

0.81 0.73 1.04 0.66 1.08

3.04 2.98 3.70 1.41 3.01

0.79 0.74 1.03 0.53 1.13

3.79

0.70

3.49

0.83

152 WORRALL, PARKES, COOPER

Director M

SD

Nondirector M

SD

7. Satisfaction with HR 3.41 0.84 2.99 0.84 policies 8. Morale & motivation 3.27 0.68 2.81 0.75 9. Harassment culture 2.64 0.91 3.02 0.93 10. Reciprocal 3.41 0.58 3.19 0.63 commitment 11. Intention to quit 3.18 0.92 3.45 0.98 12. Work intensity 3.92 0.61 3.82 0.59 Director=Chairs, CEOs and Directors; Nondirector=Senior Managers, Middle Managers and Junior Managers.

term of managerial level and change type, however, indicated that there was no support for our assumption that nondirectors had especially negative perceptions when affected by changes involving redundancy or delayering. Results only indicate that nondirectors give less favourable reports regardless of the type of change they were exposed to. Hypothesis 2 assumed differential effects of type of organizational change on organizational outcome variables (effectiveness, outcome, and competence loss) and employee well-being (employee loyalty and job security). Hypothesis 2 is confirmed, F(15, 2205)=6.54, p<.001. Post hoc tests were run to identify between what types of changes the differences occurred (cf. Table 3). Inspections of the means (cf. Table 5) and the post hoc test support the assumption that changes that involve only redundancy (RND) or redundancy and delayering (RAD) are associated with significantly more negative reports of all tested variables in comparison to those changes which do not include redundancy or delayering. In most of the post hoc tests the group that underwent change without redundancy or delayering (CWRD) gave significantly more favourable reports that than all other groups. An exception to this is the scale outcome, where the univariate test was not significant. The last two hypotheses predict a differential impact of the type of change and whether there was no change on managers’ well-being (in terms of their satisfaction, and morale and motivation, cf. Hypothesis 3) and on the development of the organizational attachment (reciprocal commitment, intention to quit) and work intensity (Hypothesis 4). The two hypotheses were again tested with one MANOVA, testing all dependent variables implied in the two hypotheses. The multivariate F-value for type of change indicated a significant effect of the type of change, F(28, 3384)=4.66, p<.001. Post hoc tests showed for all variables implied in Hypothesis 3 that the nochange group made significantly more positive statements than any or most of the other groups (Table 3). For managers’ morale and motivation and the

Note: CWRD=change without redundancy and delayering, RND=redundancy no delayering, DNR=delayering no redundancy, RAD=redundancy and delayering, NC=no change.

Means and standard deviations for type of change experienced

TABLE 5 MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 153

observation of a harassment culture, the particular negative effect of redundancy combined with delayering (RAD) appeared again: This group reported

154 WORRALL, PARKES, COOPER

significantly lower morale and motivation and higher observation of harassment culture than the group that underwent change without redundancy or delayering. With respect to the variables implied in Hypothesis 4, the post hoc tests show that no change is perceived more positively than some of the change groups; it was, however not the case that the redundancy and delayering group stuck out. We also tested for all variables, whether there was an interaction between management level and type of change. The multivariate test of the interactions between the factor management level and type of change was not significant, F (28, 3368)=0.96, p>.1. DISCUSSION Our findings have revealed that our panel of respondents experienced significant organizational change between 1997 and 2000. The figures show that an increasing number of managers reported changes each year over this period. Changes in the global economy and increased competition provide more uncertain business conditions, which in turn lead to a more insecure work environment as organizations respond with restructurings and measures such as redundancy and delayering. According to Hutton (1997) such decisions are often brought about because of the intense pressure on private and public sector alike to improve their profitability and efficiency, the lack of labour market protection, and the weakness of the unions. The prime driver for redundancy and delayering is often cost cutting. Looking at the number of people affected by change involving redundancy and delayering in the year 2000 (individuals in groups 2–4=492) compared to those where changes did not involve redundancy and delayering (n=253) shows that overwhelmingly, change seemed to have focused on reducing costs with a view to enhancing profitability and productivity in a business climate where improving competitiveness was increasingly seen as the key to survival. This pattern also occurred in the previous years (data not shown here). In the comparison of perceptions of change between directors and nondirectors, the views of managers within the board room differed from other managers. The perspectives of board-level managers and other managers were found to be quite different on a host of measures. Directors appeared to view organizational changes in a more positive light than their more junior counterparts, i.e., nondirectors. This was only a general trend but it was not confined to changes involving redundancy and delayering but was also found in all types of changes. We believe our results are symptomatic of increased power distance in UK business organizations and contend that the experience of working life in the board room has become more distanced from the experience of working life outside the board room (Worrall & Cooper, 2001b). This has been taken up in the media and epitomized by the reporting of “fat-cat” pay, which is now

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 155

included in assessments of FTSE 100 company profiles (Ashworth, Butler, & Buckley, 2004). We also compared different types of changes in order to test whether redundancy and delayering is more harmful than other types of change. In terms of organizational effectiveness, change that did not involve redundancy and delayering is received more positively than change that did involve such changes. While organizational change is often predicated in terms of improving organizational effectiveness and efficiency, managers showed a considerable degree of ambivalence about the effect of change on organizational performance. This supports Thornhill, Saunders, and Stead (1997) who suggested that, following a redundancy programme, individuals become indecisive and risk averse as spans of control and task overload both increase and role clarity declines. More colloquially, managers are less willing to “stick their neck out” following redundancies, which might explain why managers perceive decision making to have slowed down. There is evidence that the perceived impact of change is to cause the attrition of organizations’ skills and knowledge bases: This is paradoxical given the emphasis on knowledge management and “the learning organization” in the current management discourse. In those organizations where redundancy with delayering occurred, the loss of knowledge and skill was perceived to have been most pronounced. We suggest an explanation for this may be that the selection criteria used by organizations to pick individuals for redundancy may be more geared to taking out high cost employees than to preserving organizational knowledge. This may be accentuated by the increasing use of temporary and contract staff who do not hold company knowledge and often leave after short periods taking the knowledge they have acquired with them. The analysis showed that managers who had experienced redundancy and delayering as part of organizational change and restructuring programmes were far more likely to report negative impact on employee variables such as the employees’ loyalty, morale, motivation, and sense of job security. Furthermore, redundancy, particularly when it is used in conjunction with delayering, is often a short-term action that erodes trust within an organization creating a culture of blame and harassment that is damaging to the employee—employer relationship. Our analysis revealed that it was not only employee loyalty that was affected negatively by organizational change involving redundancy. In particular, redundancy appears to have reduced managers’ perceptions of employee morale and (not surprisingly) their sense of their employee’s job security. Different types of change increase job insecurity but this was particularly pronounced in organizations where redundancy and delayering had been used in parallel. Managers showed a substantially reduced sense of job security even though they had survived. For a number of variables we found that managers only report more positive perceptions when they experience change which does not involve redundancy and/or delayering compared to those that do. Differential impacts were found of

156 WORRALL, PARKES, COOPER

change/no change and type of change on managers perceptions of well-being variables including loyalty, morale and motivation, commitment, intention to quit, work intensification, and perceived organizational climate (satisfaction with communication, HR policies, and the extent to which a harassment culture was perceived). Significantly, no change is perceived more positively than any other group. Our study adds to the literature as we show that the people who stay suffer under redundancy and delayering; and this result is not attributable to the general negative effect of organizational changes but to the specific nature of redundancy and delayering. We have revealed that the impact of redundancy on organizations is considerable and the organizational context and culture in which the individuals work. It should be borne in mind when interpreting the results that, due to the nature of CMI membership and self-selection issues, the panel of respondents tends to overrepresent managers at more senior levels. However, the survey elicited an average of 800 responses and we believe this depicts a balanced view of change processes in organizations. It is also accepted that for a few of the measures used, the alpha coefficient for the scales is not particularly high but these are the exception and they have been included to add to the picture provided by the main scales (see Table 1). Our research has important implications for the management of change: In particular, we suggest that organizations should seek alternative methods of reducing their costs rather than immediately reducing the headcount and, to paraphrase Cascio (2002), organizations should use redundancy and downsizing as a last resort and not as the first option. Change managers also need to be aware of the structural problems that exist in many organizations where the views of the board and the views of other, more junior managers are radically different indicating the existence of different value systems and separate agendas for organizational development. It is our contention that this polarization of views indicates the existence of a fundamental structural problem that militates against the more effective and sympathetic management of strategic change in many organizations. We contend that redundancy makes managers more risk averse. It can erode the skill and knowledge bases of organizations, it may reduce trust, it can be associated with the existence of a harassment culture within organizations, and it contributes to reducing individuals’ quality of working life. Each of these negative consequences has the ability to inhibit the future development of the postredundancy organization and make the management of postredundancy survivors problematic, in terms of having to rebuild their commitment, reestablish their perception that the organization has some commitment to them, redevelop their sense of job security, and rekindle their sense of identification with the perceptions and feelings, which will ultimately find form in changed managerial behaviours in the workplace.

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 157

We argue that the high and persistent rate of organizational change and the use of redundancy as a mechanism for change (either singly or in conjunction with delayering) has brought about changed pressures, changed attitudes, and changed managerial behaviours in the workplace. An increase in the tensions that arise from managers having to balance work and nonwork commitments (Worrall & Cooper, 2001b) and changes in behavioural patterns indicate that managers may be becoming more mercenary as their loyalty switches from the organization to their own self-interest. HR can play a crucial role in effective management of workforce reduction particularly in ameliorating the serious negative affects of its mismanagement (Redman & Wilkinson, 2001). Cascio (2002) emphasizes the importance of the processes used in relation to those affected by changes and we propose that satisfaction with HR practices and the impact this has on organizational climate is important in the perceptions of managers when they experience organizational change. This is particularly important when changes involve redundancy and delayering compared to those that do not involve such changes. What might been seen as almost indifference towards HR policies switches to real concerns when individuals are personally affected by such decisions in terms of their career and/ or livelihood. Although once decisions to instigate redundancies and/or delayering are made, they are rarely reversed, the manner in which the processes are undertaken can vitally affect the views of the “survivors” as well as the climate and reputation of the organization. It is a case of “it ain’t what you do, it’s the way that you do it” and certainly avoiding the Stebbins (1989) “Mafia model” of downsizing. It is in this respect that good HR practices can make a difference. Campbell, Thornhill, and Saunders (1997) suggested that mismanaging change programmes and relying on redundancy has led organizations into a spiral of decline where more emphasis becomes focused on internal politics and on managerial positioning in new structures than on products, markets, and customers. Our concern is that much change in the UK is being driven—in the private sector—by a singular focus on maximizing shareholder value and an unwillingness to take into consideration the interests of a wider set of stakeholders. In the public sector, central government seems to be driving modernzation at a pace that many organizations cannot cope with, causing many public sector organizations to restructure, reduce costs, and to outsource services. While change is inevitable in organizations, does it usually have to be so injurious and so badly managed? If only one message is taken from this article by practitioners, it should be that those managers who had not experienced change had more positive perceptions than all other groups. Perhaps change initiatives should be awarded “a very high price tag, to be used sparingly and only with great care”. Cascio (2002) provides a checklist of “mistakes to avoid” when restructuring, which includes failures in goal setting, communication, employee involvement, managing departing employees, survivors, and other stakeholders, and using downsizing as a last resort. Our findings support these assertions. Changes

158 WORRALL, PARKES, COOPER

involving redundancy and delayering are particularly damaging but, where such changes are unavoidable, the way the processes are managed is of critical importance. In this case, it may be that it “ain’t what you do, it’s the way that you do it”. Brockner and Greenberg’s (1990) framework of organizational justice in relation to layoffs is of particular importance in understanding the dilemmas and reactions to the processes and decisions involved in these changes. Cascio (2002) also asserts that, unless firms are brutally honest about the processes and outcomes of their restructuring efforts, they are doomed to repeat the same mistakes over and over again. Similarly, organizations need to have a clarity of the implications when managing downsizing (Herriot & Pemberton, 1997) and accept that the best way to manage process of downsizing is to learn from experience gained by other organizations (Cameron, 1994). This research has implications for managing change and the HR strategy of organizations. The pressures to increase performance and develop human potential are paramount but cannot be done using blunt instruments such as redundancy without thinking through the consequences for the future and working effectively with fewer resources should put the value of utilizing human potential at the top of the agenda. The integration of HRM with business strategy is crucial to ensure that the people factor is included in the equations of such decisions but a more proactive approach by HR to create new cultures and structures within which strategy is formulated, would provide a more preferable reciprocal relationship between HR policy making and business strategy (Legge, 1995). REFERENCES Ashford, S.J. (1988). Individual strategies for coping with stress during organizational transitions. Journal of Applied Behavioural Science, 24, 19–36. Ashworth, J., Butler, S., & Buckley, C. (2004, April 5). Powerhouses of business. The Times, p. 23. Brockner, J. (1990). Scope of justice in the workplace: How survivors react to co-worker layoffs. Journal of Social Issues, 46, 95–106. Brockner, J., Davy, J., & Carter, C. (1985). Layoffs, self esteem, and survivor guilt: Motivational, affective and attitudinal consequences. Organizational Behavior and Human Decision Processes, 36, 229–244. Brockner, J., & Greenberg, J. (1990). The impact of layoffs on survivors: An organizational justice perspective. In J.S.Carroll (Ed.), Applied social psychology and organizational settings (pp. 45–75). Hillsdale, NJ: Lawrence Erlbaum Associates, Inc. Brockner, J., Greenberg, J., Brockner, A., Bortz, J., & Carter, C. (1986). Layoffs, equity theory and work performance: Further evidence of survivor guilt. Academy of Management Journal, 29, 374–384. Brockner, J., Grover, S., Reed, T., & DeWitt, R. (1992). Layoffs, job insecurity and survivors work effort: Evidence of an invented relationship. Academy of Management Journal, 35, 413–425.

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 159

Burchell, B., Lapido, D., & Wilkinson, F. (2002). Job insecurity and work intensification. London: Routledge. Cameron, K.S. (1994). Investigating organizational downsizing: Fundamental issues. Human Resource Management, 33, 183–188. Cameron, K.S., Freeman, S.J., & Mishra, A.K. (1993). Downsizing and redesigning organizations. In G.P.Huber & W.H.Glick (Eds.), Organization change and redesign (pp. 19–65). Oxford, UK: Oxford University Press. Campbell, F.K., Thornhill, A., & Saunders, M.N.K. (1997). The development of a framework for survivors of downsizing. Paper presented at the annual conference of the British Academy of Management, London Business School. Cascio, W.F. (1993). Downsizing: What do we know? What have we learned? Academy of Management Executive, 7, 95–104. Cascio, W.F. (2002). Strategies for responsible restructuring. Academy of Management Executive, 16, 80–91. Champy, J. (1995). Reengineering management. London: HarperCollins. Davy, J.A., Kinicki, A.J., & Scheck, C.W. (1991). Developing and testing a model of survivor responses to layoffs. Journal of Vocational Behavior, 38, 302–317. Devanna, M., & Tichy, N. (1990). Creating the competitive organization of the 21st century: The boundary less corporation. Human Resource Management, 29, 455–471. Drucker, P. (1998). Managing in a time of great change. New York: Truman Talley Books. Dunham, R.B., Grube, J.A., & Castaneda, M.B. (1994). Organizational commitment: The utility of an integrative definition. Journal of Applied Psychology, 79, 370–380. Ebadan, G., & Winstanley, D. (1997). Downsizing, delayering and careers: The survivors’ perspective. Human Relations Journal, 7, 79–91. Fowler, A. (1993). Redundancy. London: Institute of Personnel Management. Freeman, S.J., & Cameron, K.S. (1993). Organizational downsizing: A convergence and reorientation framework. Organizational Science, 4, 10–28. Gopinath, C., & Becker, T.E. (2000). Communication, procedural justice, and employee attitudes: Relationships under conditions of divestiture. Journal of Management, 26, 63–83. Gowing, M.K., Kraft, J.D., & Campbell-Quick, J. (1997). The new organizational reality: Downsizing, restructuring and revitalization. Washington, DC: American Psychological Association. Greenhalgh, L., Lawrence, A., & Sutton, R. (1988). Determining workforce reduction strategies in declining organizations. Academy of Management Review, 13, 241–254. Greenhalgh, L., & Rosenblatt, Z. (1984). Job insecurity: Toward conceptual clarity. Academy of Management Review, 9, 438–448. Hallier, J., & Lyon, P. (1996). Job insecurity and employee commitment: Managers’ reactions to threats and outcomes of redundancy selection. British Journal of Management, 7, 107–123. Hammer, M., & Champy, J. (1993). Reengineering the corporation: A manifesto for business revolution. London: Nicholas Brealey. Handy, C. (1994). The age of paradox. Boston: Harvard Business School Press. Handy, L. (1998). The Ashridge management index. Berkhamsted, UK: Ashridge Management College.

160 WORRALL, PARKES, COOPER

Herriot, P., & Pemberton, C. (1997). Facilitating new deals. Human Resource Management Journal, 7, 45–55. Hutton, W. (1995). The state we’re in. London: Random House. Hutton, W. (1997). The state to come. London: Vintage. Kets de Vries, M.F. R., & Balazs, K. (1997). The downside of downsizing. Human Resources, 50, 11–50. King, N., & Anderson, N. (2002). Managing innovation and change (2nd ed.). London: Thomson. Kozlowski, S., Chao, G., Smith, E., & Hedlund, J. (1993). Organizational downsizing: Strategies, interventions, and research implications. In C.L.Cooper & I.T.Robertson (Eds.), International review of industrial and organizational psychology (pp. 263–332). New York: John Wiley & Sons. Legge, K. (1995). Human resource management: Rhetoric and realities. Basingstoke, UK: Palgrave. Lewis, P. (1993). The successful management of redundancy. Oxford, UK: Blackwell. Liefooghe, A.P. D., & Mackenzie Davey, K. (2001). Accounts of bullying: The role of the organization. European Journal of Work and Organizational Psychology, 10, 375–392. Littler, C.R. (2000). Comparing downsizing experiences of three countries: A restructuring cycle? In R.J.Burke & C.L.Cooper (Eds.), The organization in crisis: Downsizing, restructuring and privatisation. Oxford, UK: Blackwell. Mowday, R.T., Porter, L.W., & Steers, R. (1982). Organizational linkages: The psychology of commitment, absenteeism and turnover. San Diego, CA: Academic Press. Nelson, A., Cooper, C.L., & Jackson, P.R. (1995). Uncertainty amidst change: The impact of privatisation on employee job satisfaction and well-being. Journal of Occupational and Organizational Psychology, 68, 57–71. Noer, D. (1993). Healing the wounds: Overcoming the trauma of layoffs and revitalizing downsized organizations. San Francisco: Jossey Bass Publishers. On the battlefields of business, millions of casualties. (1996, March 3). New York Times, pp. 14–16. Organ, D.W. (1997). Towards an explication of “moral”: In search of the “m” factor. In C.L. Cooper & S.E.Jackson (Eds.), Creating tomorrow’s organizations: A handbook for future research in organizational behavior. New York: John Wiley & Sons. Redman, T., & Wilkinson, A. (2001). Contemporary human resource management. Harlow, UK: Pearson Education. Reilly, A.H., Brett, J.M., & Stroh, L.K. (1993). The impact of corporate turbulence on employee attitudes. Strategic Management Journal, 14, 167–179. Robinson, S., & Rousseau, D.M. (1994). The psychological contract: Not the exception but the norm. Journal of Organizational Behavior, 15, 245–259. Shaw, J.B., & Barrett-Power, E. (1997). A conceptual framework for assessing organization, work group and individual effectiveness during and after downsizing. Human Relations, 50, 109–127. Sparrow, P.R. (1998). Can the psychological contract be managed? In S.J.Perkins & S.J. Sandringham (Eds.), Trust, motivation and commitment: A reader. Faringdon, UK: Oxon SRRC. Stebbins, M.W. (1989). Downsizing with “Mafia model” consultants. Business Forum, 45–47.

MANAGERS• PERCEPTIONS OF ORGANIZATIONAL CHANGE 161

Thornhill, A., & Gibbons, A. (1995). “Could do better” is verdict of research. People Management, 1, 31–35. Thornhill, A., Saunders, M., & Stead, J. (1997). Downsizing, delayering—but where’s the commitment? Development of a diagnostic tool to help manage survivors. Personnel Review, 26, 81–98. Tizard, J. (2002). Managing change. New Zealand Management, 49, 64. Tombaugh, J.R., & White, P.L. (1990). Downsizing: An empirical assessment of survivors’ perceptions in a post layoff environment. Organization Development Journal, 8, 32–43. Turnbull, P., & Wass, V. (1997). Job insecurity and labour market lemons: The (mis) management of redundancy in steel making, coal mining and port transport. Journal of Management Studies, 34, 27–51. Vollmann, T., & Brazas, M. (1993). Downsizing. European Management Journal, 11, 18–29. Winstanley, D., & Stuart-Smith, K. (1996). Policing performance: The ethics of performance management, Personnel Review, 25, 66–84. Worrall, L., & Cooper, C.L. (1998). The quality of working life: The 1998 survey of managers’ experiences [Research Rep.]. London: Institute of Management. Worrall, L., & Cooper, C.L. (1999). The quality of working life: The 1999 survey of managers’ experiences [Research Rep.]. London: Institute of Management. Worrall, L., & Cooper, C.L. (2001a). The long working hours culture. European Business Forum, 6, 48–53. Worrall, L., & Cooper, C.L. (2001b). The quality of working life: The 2000 survey of managers’ experiences [Research Rep.]. London: Institute of Management.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 165–196

AND

ORGANIZATIONAL

Revisiting the survivor syndrome: The role of leadership in implementing downsizing Kusum Sahdev Aston Business School, Aston University, Birmingham, UK

This article examines the key strategic and operational aspects of managing downsizing in Barclaycard, a credit card company, and SKF (UK), a bearings manufacturing company. The article begins by briefly reviewing the literature on downsizing; it then presents the data collection methods used in this study. The main areas explored were the strategic reasons for downsizing, the implementation strategies used, and the reactions of middle managers and nonmanagerial staff. In both organizations, downsizing was accompanied by significant redesign and transformation. The underlying theme in Barclaycard was that downsizing was a proactive measure in order to protect future jobs; despite this, the survivors’ reactions were negative. SKF (UK) had experienced many rounds of downsizing over the years, yet the reactions of survivors were positive. This article provides possible explanations for these contrasting findings and concludes by suggesting actions that organizations need to take in order to avoid the survivor syndrome. DOWNSIZING: AN OVERVIEW Downsizing is now a harsh fact of life in most organizations. The early 1980s saw the start of new forms of organizations evolving as a consequence of global competitive pressures, enhancements in technology and a demanding customerdriven market (Freeman, 1999; Ulrich, 1998). This has caused organizations to examine critically their structures, processes, and number © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000056

REVISITING THE SURVIVOR SYNDROME 163

of employees. Reduction in size, or downsizing, with a focus on core products or services has become the norm. Some positive outcomes of downsizing have been reported and include lower overheads, less bureaucracy, faster and smoother decision making, and an increase in entrepreneurship (McKinley, Mone, & Barker, 1998). However, in reality, many downsizing efforts fail to achieve the intended economic goals (Edwards, 2000; McKinley et al., 1998). Financial measures, such as return on assets, return on equity, sales to total assets, and ratio of market to book value equity, are negatively affected by the announcement of layoffs (Cascio, Young, & Morris, 1998). Other disadvantages for the business include the high cost of paying employees severance packages (Appelbaum, Close, & Klasa, 1999). Downsizing has a negative effect on learning and innovation as it breaks the informal networks developed over a number of years (Amabile & Conti, 1999; Reynolds-Fisher & White, 2000). At the individual level, the survivor syndrome is the most written about outcome of downsizing to date. It is described as “a mixed bag of emotions often exhibited by remaining employees following an organizational downsizing” (Doherty & Horsted, 1995, p. 26). The reactions shown by survivors include emotions such as anger, insecurity, a perception of unfairness, depression, reduced risk taking and motivation, as well as low levels of morale (Kets de Vries & Balazs, 1997; Kettley, 1995). Research to date suggests various reasons for the survivor syndrome such as the violation of the psychological contract, perceptions of unfairness on the part of the organization or management and the lack of future vision of the organization. These are examined in the following sections. The aim of this article is to widen our understanding of the survivor syndrome by highlighting the role of supportive leadership when implementing downsizing. Violation of the psychological contract The psychological contract refers to the unwritten reciprocity of the relationship between the employer and the employee (Herriot, Manning, & Kidd, 1997;

Correspondence should be addressed to Kusum Sahdev, ODRL 4th Floor, Exchange House, 494 Midsummer Boulevard, Milton Keynes, UK. Email: [email protected] article is based on a four-and-a-half-year study carried out at Cranfield School of Management. The author would like to acknowledge Stephen Perkins for his support throughout the process and also more specifically for providing her with an opportunity to present the key findings to a group of senior-level HR practitioners. The author would like to thank Professor David Whetten for his extremely helpful feedback in shaping the overall research. She is grateful to Doris Fay and two anonymous reviewers for their very helpful comments on previous versions of the article. Portions of this article were presented at the 18th EGOS Colloquium held in Barcelona, July 4–6, 2002.

164 SAHDEV

Robinson, Kraatz, & Rousseau, 1994). The uniqueness of the psychological contract is that it is voluntary, subjective, informal, and evolves with time (Hilltrop, 1995). It can be open to exploitation as well as undue generosity (Herriot et al., 1997). The current debate on the psychological contract evolved as a result of significant downsizing in organizations, which has transformed all aspects of work (Herriot et al., 1997; Robinson & Morrison, 1995). The old contract espoused values such as stability, paternalism, security, jobs for life, high trust, and loyalty. The violation of the psychological contract that downsizing represents has affected employees more than the employer, as employees are not in a position to influence the fundamental changes at the macro level, e.g., global competition. The other significant dimension of the violation of the contract is that it has been changed unilaterally by the organization, which has generated feelings of anger and mistrust amongst (Herriot et a1, 1997; Robinson & Morrison, 1995; Sahdev & Vinnicombe, 1998). Strategies to rebuild the psychological contract remain a challenge (Hilltrop, 1995). Various prescriptive techniques have been recommended by experts. For example, it is suggested that HRM approaches need to be much more tailored to suit the needs of the individual in place of adopting a unitarist perspective (Sparrow, 1996). The introduction of performance management systems as a way of driving new behaviours and renegotiating the psychological contract is also recommended in the literature (Storey & Sisson, 1993) providing it is not seen as a top down strategy (Stiles, Gratton, Truss, Hope Hailey, & McGovern, 1997). The relationship between employer and employee needs to shift from mutual dependence and relative permanence to one that focuses on self-reliance and acceptance of a transient state of play (De Muse, Tornow, & Walter, 1990). Whilst these recommendations have been useful in considering the issue of rebuilding the psychological contract and are important contributions in enabling organizations to reengage the survivors, examples of good practice in the form of case study organizations that have applied these strategies are scarce. Survivors’ reactions in relation to organization justice In terms of studying the reactions of survivors, a significant body of knowledge has evolved using the organizational justice perspectives (Brockner & Siegel, 1996). This has helped to develop an understanding of the range of strategies that organizations can use to minimize the negative effects of the survivor syndrome. The organization justice perspective is particularly relevant “because the lay-off process consists of a series of events in which survivors are likely to evaluate the fairness of the organization’s actions” (Brockner & Greenberg, 1990, p. 46). Three elements of the organization justice theory are relevant to organization downsizing: distributive justice, procedural justice, and interactional justice. Distributive justice is concerned with how people make decisions about the

REVISITING THE SURVIVOR SYNDROME 165

distribution of resources, particularly in the context of scarcity (Homans, 1961). During downsizing these principles come to the fore, from the organization’s perspective; the decisions are biased towards efficiency, whereas from the individual’s perspective the need for a job is the guiding principle. Hence, the two aspects of distributive justice could be a source of conflict in redundancy selection (e.g., Brockner & Greenberg, 1990). Procedural justice concerns itself with the processes used to arrive at decisions to allocate scarce resources. In the context of downsizing, procedures used to make decisions about redundancy selection affect survivors’ perceptions of the fairness of downsizing (e.g., Brockner & Greenberg, 1990). This primarily relates to the redundancy agreements derived from consultation with employee representative bodies. Interactional justice relates to how information is presented to the employees. In the context of downsizing, information such as why certain selection decisions were made, or why certain performance ratings were given, influence survivors’ perceptions of the fairness of the downsizing (Bies & Shapiro, 1987). By offering explanations, negative reactions are greatly reduced. The findings of these studies recommend a range of variables, which if taken into account can help reduce the negative reactions of the survivors. These include: giving clear explanations of the reasons for downsizing (Brockner, DeWitt, Grover, & Reed, 1990; Brockner, Greenberg, Brockner, Bortz, Davey, & Carter, 1986); the level of compensation awarded to the leavers (Brockner, Grover, Reed, DeWitt, & O’Malley, 1987); the relationships that survivors had with the leavers (Brockner et al., 1987); the fairness of the organization’s actions (Bies, Martin, & Brockner, 1993); how management broke the news (Brockner et al., 1990); and the redundancy selection procedures used (Brockner, 1992). Other factors such as job context and content (Brockner, Wiesenfeld, Stephan, Reed, Grover, & Martin, 1993), the level of job insecurity (Brockner, Grover, Reed, & DeWitt, 1992a), prior commitment (Brockner, Tyler, & CooperSchneider, 1992b), and the reactions of fellow survivors (Brockner, Wiesenfeld, Stephan, Hurley, Grover, Reed, DeWitt, & Martin, 1997) also influence survivors’ reactions to downsizing. The above studies have helped to develop a clear understanding of the range of moderator variables that can influence survivors’ perceptions of the fairness of the downsizing process. However, they are narrowly focused and do not take into account the complexities of organizational life. These studies emphasize the need to treat leavers fairly in order to avoid the survivor syndrome. The data from these studies do not give elaborate explanations or meanings as to how the world of the survivors may have changed as a consequence of downsizing. Furthermore, they do not take into account the importance of creating a future vision, which survivors can identify with or the strategic aspects of downsizing such as the reasons for downsizing and the implementation strategies used.

166 SAHDEV

Macro-level explanations to survivors’ reactions and suggestions for managing downsizing effectively Literature to date suggests that if downsizing is implemented without clearly articulating the vision for the future, or if the new vision is distant and diverse from the existing beliefs that prevail in the organization and no effort is made to clarify the future of the organization, then downsizing actions often reflect a cash-flow driven exercise (Demarie & Keats, 1996; Hitt, Keats, Harback, & Nixon, 1994). Based on the research carried out by Cameron, Freeman, and Mishra (1991, 1993) factors that led to a deterioration in performance and the survivor syndrome included: downsizing via attrition leading to skills shortages; no overall work reduction in the organization; reward and appraisal system changed to introduce inappropriate elements; and pursuing downsizing without quality improvement programmes or redesign. Based on this research Freeman and Cameron (1993) suggest a framework of downsizing that incorporates the expected relationships between downsizing, redesign, and organization performance. It is drawn from two generic types of change models: reorientation and convergence; Freeman and Cameron propose that downsizing can be studied within these two contexts. During reorientation, top leadership would not only initiate change, but also mediate between the internal and external institutional forces of inertia and the competitive and technological forces of fundamental change. During convergence, the focus is on incremental changes and continuous improvement. However, this framework is dependent upon an accurate interpretation of the external environment. Also, this approach does not take into account the fact that organizations may start by taking the convergence strategies of change but could then move into reorientation. The above points have been further developed by Freeman (1999) and referred to as the “gestalt” approach. The key contribution of this approach is that it takes into account the whole range of activities and patterns of change that take place during downsizing. The two strategies described are downsizing followed by redesign, and redesign followed by downsizing. When downsizing drives redesign the focus is on making the organization smaller by doing the same things more effectively and efficiently. There is minimal restructuring in instances where downsizing drives redesign with very few changes in human resource practices and processes. When redesign drives downsizing, the converse is true. However, the main shortcoming of this approach is that it makes no linkages with the reactions of survivors; nor does it make any suggestions as to how survivors may respond in each of these situations. The approach is too structured, placing organizations in one or the other category. It does not clarify, for instance, how reasons for downsizing might have an effect on the course of action taken by the organization.

REVISITING THE SURVIVOR SYNDROME 167

Key gaps and research questions Thus the literature to date has focused on three areas: violation of the psychological contract; organization justice aspects of managing survivors; and macro-level changes that organizations introduce during downsizing. However, these strands have evolved separately with little integration. Furthermore, there is a tendency to generalize survivors’ reactions as being made up of a medley of negative emotional responses caused by the extent to which leavers are treated fairly in the downsizing process. Using a qualitative approach, this study sets out to examine the linkages between the strategic aspects of downsizing, how the strategy is implemented in the heart of the organization, and its impact on the survivors’ reactions. It will do this through the following research questions: (1) What were the reasons for downsizing? (2) What implementation strategies were used to carry out the downsizing? (3) What were the reactions of the survivors? METHOD In order to answer the above questions, case study methodology was considered to be the most appropriate strategy, as it would enable the research to take into account the real life context (Yin, 1994). Furthermore, the research questions are not based on a priori hypotheses; instead the focus is very much on examining the key attributes of the survivors’ reactions in the context within which downsizing was carried out. Furthermore, large-scale surveys generate hard data that are statistically significant but often fall short of relating the findings to the actual context. Case study research takes into account the wholeness of the situation and is a way of organizing data so as to preserve the unitary character of the social object being studied (Gummesson, 1991; Mitchell, 1983; Yin, 1994). Alloway (1977), who strongly recommends the case study approach, is of the view that it has particular benefits of applying the findings in real life. Hence its impact on enhancing organization effectiveness cannot be underestimated. In short, it allows for more in-depth analysis of various issues, which are not readily accessible through survey methods (Bell, 1984; Gummesson, 1991; Yin, 1994). The criteria for selecting cases for this research included the following: first, organizations had to have had recent experience of downsizing (over the last 3 years). Second, as the research questions were about examining the context of downsizing, it became clear that a diverse range of organizations in terms of products and services delivered would be needed in order to make comparisons of the effectiveness of downsizing. In order to arrive at a long list of organizations, a small-scale survey was conducted to examine the views of HR directors/managers of 90 organizations in the UK on issues such as reasons for downsizing, impact on the survivors, and positive/ negative outcomes on the

168 SAHDEV

organization. Responses were received from a diverse mix of organizations representing the manufacturing sector (23.2%), local government (16.1%), finance and banking (12.5%), and health services (12.5%). Other companies (35. 7%) covered a combination of IT, services, transportation, heavy engineering, telecommunications, and utilities. The size of the organizations participating in the research ranged from 1000 to 10,000 employees. The questionnaire gave the respondents an opportunity to participate in further research, and a long list of 13 organizations was drawn up, taking into account aspects of diversity and the scale of changes that had taken place. Each organization was then contacted to outline the purpose of the research and the nature of data collection. All 13 responded positively but not all of them were ready to allow access for research at the time. The overall study included four organizations: Bedfordshire County Council, a local authority with a workforce size of 12,000; The Utility Company, a gas transportation company, employing 13,500; SKF (UK), a bearings manufacturing company employing 437 people; and Barclaycard, a credit card company employing 4500 people. Bedfordshire County Council and The Utility Company had completed the downsizing when this study was carried out. In SKF (UK), the situation was less clear as from 1996 onwards there has been a gradual reduction in size. In Barclaycard this was ongoing during the research. This article focuses on the findings from two of the organizations studied, Barclaycard and SKF (UK). The reasons for choosing these two organizations were that they covered two different sectors of industry and had different experiences of downsizing. SKF (UK) had been downsizing since 1974, whereas within Barclaycard this was the first round of downsizing. In both organizations downsizing was accompanied by a transformation change programme. This study spanned a period of years and was published in the summer of 2001 (Sahdev, Vinnicombe, & Bank, 2001). Background of the companies SKF was founded in Gothenburg, Sweden and is one of the world’s oldest ballbearing manufacturing companies with sites in many countries and a world market share of 20%. The Luton factory, SKF (UK), commenced operation in 1910 manufacturing bearings and bearings-related products. On a day-to-day basis, SKF (UK), as with all other SKF plants, works autonomously, although major decisions are made at the Swedish headquarters. Since 1974 SKF (UK), along with other sites across the world, has been facing difficult market conditions. It has gone through several rounds of downsizing. Data for the case study was gathered between early 1999 and early 2000. At present SKF (UK) has 437 employees based at the Luton plant, as confirmed towards the end of the study. Barclaycard is 100% owned by Barclays Bank; however, it is independent of the group in its day-to-day running and has its own board of directors.

REVISITING THE SURVIVOR SYNDROME 169

Barclaycard commenced its operation in the UK in 1966 at a time when the concept of plastic money was new and radical in Europe. The concept of the credit card was not only new, but was introduced against a backdrop of a conservative culture that prevailed in most British banks at the time. It took Barclaycard over a decade to become profitable and prestigious in the group. A sense of pride perceptible among the people who work for Barclaycard is due to the start-up struggle, its uniqueness among the bank’s financial products, and its distinguished position within the group. Data collection methods Three sources of evidence were used to answer the research questions: one-to one interviews, analysis of documents, and focus groups. The rationale for using this combination of methods was to enable the researcher to gather evidence from multiple sources in order to develop an overall picture of the phenomenon of downsizing in its real-life context. The following sections outline how these methods were used to address the three research questions. One-to-one interviews and selection of key informants The advantages of using one-to-one interviews are that they are targeted, focusing directly on the case study topic, and insightful in that they provide perceived causal inferences immediately and the researcher has the opportunity to probe further on issues of interest (Breakwell, 1995; Coolican, 1992). One-to-one interviews were carried out to address the first two research questions: “What were the reasons for downsizing?” and “What implementation strategies were used to carry out downsizing?” In each organization, four or five key informants who were actively involved in managing downsizing and held senior level positions were selected for the interviews. At least one informant was a senior HR professional who had a pivotal role in managing HR policies and practices in redundancy situations. The interviews were recorded with the consent of the interviewees and backed up by handwritten notes made during the interview. Table 1 shows the interviewees’ positions in the two organizations. Examples of questions used in the interviews are as follows: • What factors were influential in the decision to downsize? • What implementation strategies were used in carrying out the downsizing? • What about redundancy procedures and HR policies for selection for redundancies? • Were other redesign/restructuring strategies considered? • What communications’ strategies were used?

170 SAHDEV

Analysis of documents In order to gain a comprehensive understanding of the issues related to downsizing, it was felt that the company’s internal documents would be useful. This would help to enhance the rigour, reliability, and validity of the results obtained. Bryman (1989) and Pettigrew (1990) discuss several advantages of using documentary evidence in case study research. It is stable, unobtrusive, nonreactive, and can provide the viewpoints of senior-level people who may be inaccessible. Documentary evidence helps to reconfirm and corroborate evidence from other sources (Yin, 1994). Analysis of documents helped in answering the first two research questions: reasons for downsizing and implementation strategies used. In SKF (UK) Factory95, redundancy policy documents and agreement with the trades unions regarding reward strategy were the main documents analysed. In Barclaycard, contents of the Business Transformation Programme, procedures for implementing role changes, eight editions of internal communication’s document referred to as Inform were analysed. This helped to support data gathered through one-to-one interviews and focus groups. TABLE 1 Interviewee details Company

Interviewee 1 Interviewee 2

Interviewee 3 Interviewee 4 Interviewee 5

SKF (UK)

Managing Director

Channel Manager (Production) Director of Business Transformat ion

Barclaycard Director of Merchant Services

HR Director

Director of Card Services

Channel Manager (Production) Employee Relations Manager

Channel Manager (Quality) Employee Developme nt Manager

Focus groups Focus groups were used to answer the third research question: “What were the reactions of the survivors?” Focus groups enable the researcher to get closer to the participants’ understanding and perspectives of certain issues (Coolican, 1992; Millward, 1995). Four focus groups were conducted with 8–10 middle managers and nonmanagerial staff separately (8 focus groups in all, 4 in each company). Production operatives in SKF (UK) and customer services advisers in Barclaycard made up the nonmanagerial staff in the focus groups. Discussions in the focus groups lasted for about an hour and were recorded with prior consent. The rationale for conducting focus groups was to study the survivor issues in the heart of the organization as felt by the two groups with no prejudged expectations of reactions. The questions asked during the focus groups were open in nature and designed to help participants engage in a discussion to

REVISITING THE SURVIVOR SYNDROME 171

identify their perceptions of the impact of downsizing on their day-to-day work. Examples of questions included were: What is their working day like? How have things changed since downsizing? What is going well? What particular areas concern them? Data analysis Data analysis incorporated a “within case analysis”, i.e., categorizing and making sense of the results of each case study. The analyses of the research followed a progressive ladder from describing to explaining to formalizing the results (Miles & Huberman, 1994). The continuous progression is described as the ladder of abstraction (Miles & Huberman, 1994). In practical terms this is a fourstage approach and includes data collection, data reduction, data display, and conclusions drawing/ verification. In one-to-one interviews with senior managers, the first step was to pick up comments and descriptions from the interview notes and place them into categories under the broad headings such as “reasons for downsizing” and “implementation strategies used”. Step two involved formulating the codes by examining the strands under each category. For example, in Barclaycard under the broad heading “reasons for downsizing”, the codes were, “external threats”, “enhancing efficiency and effectiveness”, and “high cost-base”. The third step used was to condense the data (or the evidence) so that it could be displayed in the form of matrices. A similar process was adopted for analysing the documents. Analyses of focus groups resulted in a range of categories. Data collected through the interviews, documents, and focus groups were displayed as “informant-by-variable” matrices based on Miles and Huberman’s (1994) approach. A selection of transcripts and matrices were reviewed by a panel made up of three people who were experts in the subject area and qualitative techniques, thus enhancing the reliability and validity of the data. The displays also help to make judgements about the convergence of viewpoints from responses within the same company. SUMMARY OF FINDINGS The findings of the study are presented below and include reasons for downsizing, implementation strategies used, and the reactions of the survivors. Reasons for downsizing and the implementation strategies used were explored through one-to-one interviews and analysis of documents. Reactions of survivors were explored through focus group discussions. The results will be illustrated with quotations from the various data sources.

172 SAHDEV

Barclaycard A summary of key reasons and implementation strategies used is presented in Tables 2 and 3. TABLE 2 Reasons for downsizing: Barclaycard External threats

Enhancing efficiency and effectiveness

High cost-base

Competition from financial and nonfinancial sectors, e.g., banks, Sainsbury, Tesco, Marks & Spencer Competitors offering low annual percentage rates

Culture of complacency due to long history of success

Benchmarking exercise with “best in world”

Long-serving employees: 70% with over 10 years service

Revenue management has been a preferred option and not cost-base, mainly due to an aversion towards downsizing

Agile start-up companies from the US with low costbase and sophisticated technology Customers have over 1000 credit card companies to choose from

Advances in technology offering faster services to customers

TABLE 3 Implementation strategies to manage downsizing: Barclaycard Business Programme (BTP) Transformation

Restructuring

HR strategies

Proactive approach

Attempted to take a balanced view in terms of cost reduction versus continued investment to achieve strategic agenda Aim was to build a stronger business with a focus on the customer

From a hierarchical to a matrix style of organization

Skills analysis to retain the best

Proactive, Barclaycard was profitable and had the leading market share

Customer services advisers’ roles changed from functional to multiskilled Closure of call centres to form a single “virtual call

Redundancy selection based on performance and skills

Downsizing was a well-planned process, spanning over three years

Voluntary job matching scheme used to balance between

Extensive communication at the launch of the Business

Bring the cost-base in line with other competitors

REVISITING THE SURVIVOR SYNDROME 173

Business Programme (BTP) Transformation

Was a reengineering programme involving significant redesign of the organization

Restructuring

HR strategies

Proactive approach

centre” with new technology

compulsory and voluntary redundancies Extensive involvement of trade unions

Transformation Programme with all employees Redundancy procedures updated through internal communication documents

Reasons for downsizing Reasons for downsizing included the following: External threats. Barclaycard is facing competition from retail outlets, such as Marks & Spencer, Sainsbury, and Tesco, whose financial service business posed a threat. Voluntary sector organizations and banks have also added to the competition. Furthermore, players from the US have set up businesses with leading edge technology and low entry costs. An increasing number of our competitors are not allied to a UK clearing bank as a parent, e.g. Tesco, Sainsbury’s. Enhancing efficiency and effectiveness. Barclaycard had a culture of complacency with an established mindset due to its leading position in the market place. Also, as the card industry is wholly reliant on technology, introducing new and faster technology is essential, which inevitably has an impact on the number and types of jobs. What we are trying to get is the optimum size of our infrastructure and our resourcing consistent with the service delivery that we want to provide and to the size of our account base. Probably technology has a greater impact in this industry than most—that is because the card industry is so technically dependent. The technology behind the card industry is global and it is not surprising that in an industry that is completely dependent on technology, it has to change with the times. High cost base of operations. Barclaycard used benchmarking as a tool to see how out of step it was compared to its competitors and world-class companies.

174 SAHDEV

This exercise revealed that its operating costs were £100 million higher than they should be. We tend to have a cost base that is common to financial services in the UK rather than the cost structure which would be common in retailing or in the US players. We do recognize that unless we get our cost base sorted over the next two years or so, we won’t be in a position where we can compete profitably with the best of our competitors. Implementation strategies used to manage downsizing Business Transformation Programme. As a consequence of benchmarking, Barclaycard launched the Business Transformation Programme (BTP), a 3 year programme aimed at redesigning the organization, to be completed by the end of 2001. It was accompanied by the announcement of 1100 job losses out of a total of 4500 employees (approximately 27%). Prior to this, Barclaycard had never embarked on a change programme of this magnitude. The BTP attempted to take a balanced view in terms of cost reduction versus continued investment to achieve its strategic agenda. This would contribute to the overall goal of longterm competitiveness, new investment in the business, and promotion of the brand. BTP was a reengineering/redesign programme, which affected all aspects of the business. We took the view that we will need a programme of change that will run right across the business, rather than something that is just done piecemeal in individual areas. This is a bit counter-cultural to how we manage most things in the business where we try to do them locally owned by individual account executives. We were much less interested in significant cost savings say in 1999, than in helping the business to achieve sustainable changes over a period of 5 years. Restructuring. The roles and responsibilities of the people were redesigned to take into account a multiskilled approach requiring a matrix structure. The restructuring was a phased process starting with Card Services. The call centre in Northampton was closed and its functions shifted to a high-tech call centre in Manchester and Teesside. The role of the customer services advisers was enlarged to handle all enquiries. The virtual call centre utilized resources more efficiently whilst giving a better service to the customer. We need to provide customers with a single point of contact so we are moving to an arrangement whereby we take the geography, the product and

REVISITING THE SURVIVOR SYNDROME 175

the function out of the way we handle customers servicing and we will move from six to seven call centres to one virtual call centre. There will be opportunities for people to be much more satisfied with what they are doing at work and the reasons for their roles. In terms of call centre work there will be a lot of upskilling, so that people know that they know much more about the organization, much more about the products, they can actually see and value their contributions, which is a wholly new concept. HR strategies. A significant effort was devoted at the strategic level to developing a clear communication strategy and a procedure for redundancy selection that demonstrated Barclaycard’s concern for those who were made redundant. The senior team communicated the job losses through road shows presenting the results of the benchmarking exercise and the need to urgently transform the business. The redundancy selection procedure was designed to preserve skills (merit based) and at the same time minimize compulsory redundancies through a voluntary job-matching scheme. The trade unions were involved in this process: leaders at Barclaycard saw this as an opportunity to foster a good working relationship with them. People were informed about the various stages of the redundancy process and the relevant HR issues through regular bulletins. Furthermore, leavers would be allocated generous severance packages and outplacement support. If we have got someone who is not displaced, but wants to go and we can’t find someone who is able to that job, then we have to look very carefully at whether we can allow that person to take voluntary redundancy. We will look at job matching. Traditionally the Bank hasn’t had good relations with the unions. As part of this programme it was used as an opportunity—a pilot almost—for developing a new relationship with the unions so the Bank involved the union much earlier than it would normally have done and took the unions into confidence. Proactive approach. The compelling difference between Barclaycard’s downsizing and that of many other financial sector institutions is that the downsizing was a direct consequence of strategic measures to enhance efficiency and effectiveness. Downsizing within Barclaycard was not a straightforward headcount reduction—it was the result of applying a considered set of measures that aimed at sustaining Barclaycard’s market leadership for the future. On the whole, Barclaycard is a well-run business with a growing number of cardholders. Over the last 10 years the business climate has been changing gradually which has made the company question the way it provides services to its customers as

176 SAHDEV

well as the existing working practices, systems and structures. This is the first most significant change that the business has undergone and the first across-theboard downsizing in the recent history of Barclaycard. Our goal therefore is to make a sustainable, quantum shift and a cost base that will see us good for at least 5 years. I don’t see this as a programme that is going to result in 1100 jobs going; equally I think I could position it as a programme which will safeguard the future of the 2000 or so staff that will be remaining. Reactions of middle managers The following sections present the reactions of middle managers and nonmanagerial staff based in the call centres in Manchester and Teesside, as they were the first to go through the redesign process. These are based on the focus group discussions. (See Table 4 for examples.) Trust. Middle managers lost their trust in the directors for a number of reasons. Firstly, they were informed through a letter about the future structure and their roles, which left them questioning the credibility of the directors and the worth of the BTP. Secondly, the road shows conducted to communicate the reasons for changes and the associated job losses had adverse effects on staff as it took more than 6 months for downsizing to be implemented. Thirdly, middle managers were left to deal with the discontent at the ground level, as the benefits of new technology did not deliver enhanced results. Fourthly, senior management’s inability to acknowledge their mistakes and empower the middle managers to make decisions had adverse effects on perceptions of trust. Commitment. Middle managers did not feel committed towards Barclaycard but realized that they have a responsibility towards their people. They paid lip service to commitment; their hearts were not necessarily engaged. In some cases, uncertainty about future employment bred lack of commitment and loyalty. This resulted in competent people TABLE 4 Voices of survivors Trust

Commitment

Voices of middle managers, Barclaycard We were told about our new Commitment is believing roles through an envelope what you are saying and coming to our desk, saying quite a lot of the times we this is the new structure, say things that we have this means that your jobs absolutely no faith in, but will technically fall away we will say things in a positive way and do it but

Motivation The role changed and it is about the people management side of the equation with responsibilities for quality and customer care and making sure that our people

REVISITING THE SURVIVOR SYNDROME 177

Trust as on …all the jobs will go on the board to apply.

People awareness has been low in the agenda. It was all geared to systems and processes; there were no connections made between people and systems.

Commitment we don’t necessarily believe it.

Loyalty is a two-way thing. We don’t think the bank has the loyalty. We would like to stay here and progress but we genuinely believe that this is not the end of it. Voices of customer services advisers, Barclaycard They don’t understand You can hear commitment on the phone, in people’s enough of what we are sitting through; they could voices; they are trying to give good customer visit and understand on a service. They are not monthly basis. Also, if we knew what their goals saying, “ah, well, this is were, we could do an awful what it is, take it or leave lot to achieve them. it”. It is not for their money, it is more for intangible aspects of commitment. We tend to be cocooned. The roadshows portrayed the Directors as harbingers We don’t realize the value of our jobs here, when you of doom and gloom and look elsewhere. We have people were really quite good terms and frightened. conditions…We are catching up with the harsh realities of the outside world. We have a good deal.

Motivation are well motivated and have correct performance and development plans. In the new structure the middle managers lost some of their roles, e.g., budgeting, scheduling, forecasting. The restructuring was a particularly unpleasant experience and did knock a lot of your self-esteem or the ability to do the role. The business performance was going down. We feel that while we had communication from BTP about the fact that technology would help to improve things, the reality is that we haven’t got what we were told. It has been demoralizing.

People were often tearful, because they were not able to give the level of service that they used to give. Customers used to be very impressed with us, all of a sudden there were complaints and they extended the call length and there was a queue of calls.

leaving Barclaycard. Middle managers could understand the rationale for the transformation programme but could not internalize the change itself. Motivation (role changes). Middle managers in the call centres felt that their role was diminished from having total responsibility for delivering business results to being responsible only for people management issues. This has resulted in a degree of resentment about their lack of control over the outcomes. Their roles have become much more regimented, as there is constant pressure to improve productivity and achieve business results through effective performance management of people.

178 SAHDEV

Reluctant survivors. In view of the way the changes were communicated and the negative impact on the employees, middle managers retrospectively questioned their own decisions about staying with Barclaycard. They were left to deal with the outcomes of HR policies that were focused on protecting employment. The reality was that a significant proportion of people who wanted to go were not released. Instead of feeling positive, about not having to make people redundant, middle managers were left with the rather difficult situation of managing reluctant survivors. Reactions of customer services advisers See Table 4 for examples. Trust. New technology, which is part of the BTP, did not deliver the high service levels that were promised. This resulted in advisers questioning the capability of senior management to handle large-scale change and the very rationale of the change programme. There was a lack of visibility of senior managers from the centre; advisers felt that it would have been helpful for senior managers to maintain links with the regions both from the point of view of clarifying the goals of the business as well as understanding the day-to-day operational problems. There were occasions when the customers knew more about the new products than the staff and this did not generate feelings of trust in the organization itself. Furthermore, the lack of trust in senior management has its roots in the communication phase of the BTP. The directors made formal announcements of the job losses during the road shows. Not only was the announcement made in a dramatic form, it took almost 6 months to implement the changes. Hence, people at the ground level had to continue working in a prolonged period of uncertainty. Commitment. Commitment, according to survivors is difficult to measure. Advisers did their utmost to keep the customers engaged by reassuring them that the changes will make life easier. Advisers showed a genuine desire to provide a high level of customer service. At the same time, advisers felt that they still value being part of Barclaycard, as the terms and conditions of employment are hard to match outside. Motivation (role changes—concern for customer service). Advisers felt let down by technology; the speed of response has been slow resulting in a higher backlog than in the past. The pilot tests of the system were carried out with small workloads, thus giving a false picture of the system’s true capability. Advisers felt that they had an emotional involvement with their customers, and felt that they had let them down. Furthermore, advisers failed to achieve their targets, which in turn generated feelings of insecurity. Reluctant survivors. The way the announcements about the impending downsizing were made created false expectations. People took it for granted that they could have the severance package and started making plans for “life after Barclaycard”. However, this did not materialize as not all applications for

REVISITING THE SURVIVOR SYNDROME 179

voluntary redundancy could be accepted. Some advisers did not want to be part of the new world, yet they were forced to stay on. The net outcome of this was that many advisers left of their own accord. Emotions are still running high and people are not fully engaged in the process. SKF (UK) There are two distinct periods of downsizing in SKF (UK): The first period could be categorized as between 1974 and 1995 and the second from 1996 onwards. The focus of this case study is to examine the recent downsizing, which has been more or less continuous. However, it is essential to have an overview of the issues that prevailed prior to 1996. The key reasons for downsizing and implementation strategies are outlined in Tables 5 and 6. Reasons for downsizing Reasons for downsizing included the following: Global competition. The key reason for downsizing from 1974 onwards was the growing global competition from the Pacific Rim, Japan, and the USA. It started in the 1970s and this was to meet initially the Japanese threat, the competition, when the group decided to rationalize bearing production around TABLE 5 Reasons for downsizing: SKF (UK) Global competition

Working practices

Competitors from across the world, e.g., Japan, USA, Pacific Rim Losing market leadership/ market share

Hierarchical ways of working, functionally organized Significant overheads and non-value-added activities

Could not survive on history alone—oldest and established organizations

TABLE 6

Adverse industrial relations climate/quality issues

Dysfunctional IR climate “them and us”, strikes/ stoppages Pay scales tampered with to average earnings, no incentive for enhancing quality. Bonus schemes were mismanaged Duplication of work across Overall output was poor— other SKF locations quality and quantity resulting in a high costbase

180 SAHDEV

Implementation strategies: SKF (UK) Restructuring mid 1980s–1996

Lean manufacturing Underlying ethos 1996 onwards 1996 onwards

HR strategies 1996 onwards

Streamlining product ranges in each country

Focus on total production in place of functional role

Recognize the contributions of the shop-floor workers

SKF (UK) allocated one product line, old product lines transferred out to other countries Command and control from Sweden

Enhance efficiency and effectiveness: increasing productivity and reducing number of people Focus on reducing support/managerial functions—indirect labour

Acknowledged that the profitability depended on the commitment of the survivors

Salary rates of the survivors increased by 7% to take into account the new roles (skill-based pay) Modular training programme developed—five modules in all for the production operatives Roles of managers widened to take into account the strategic and operational aspects

Job losses, primarily bluecollar

Training on Total Quality Management across the company; analysis of every activity and process

SKF had representation in all monetary zones

Management offices relocated in the operations, including the MD; managers worked closely with the workers to implement changes Relation between managers and production operatives became a democratic one Leadership values were about recognizing the worth of people

Management style: coaching, facilitating

Voluntary redundancy for those who felt that the changes were too dramatic

Enhanced worldwide presence

factories in the SKF world and that really was when we first saw, I suppose, the first big downsizing in Luton. SKF (UK) had a strong history and presence, but could not survive on this basis alone. Working practices. SKF (UK) had a hierarchical way of functioning with significant overheads. This led to entrenched working practices and managerial complacency. Furthermore, there was an amount of duplication of work within all SKF manufacturing sites as they all produced the whole range of products, thus making the operation extremely expensive. The high cost base in SKF (UK)

REVISITING THE SURVIVOR SYNDROME 181

along with all other sites had to be reduced significantly in order for the company to survive growing global competition. Part of the cost base was overstaffing among the 5258 employees in the UK. Too high costs, too much indirect labour, by which I mean staff, whitecollar workers, too few producers and the atmosphere in the company was very much of disdain for manufacturing. I did a calculation once. Each blue-collar person had four people on his back he is paying for; he had to make enough profit to pay four people, in addition to himself. Adverse industrial relations climate/quality issues. Within SKF (UK) during this period there existed a “them and us” situation between managers and the unions. This attitude prompted the union to continually push the rates of pay up. In addition, the quality of the bearings was poor. All of this attracted the attention of the group headquarters in Sweden and the UK was becoming an unattractive place to invest money in. Twenty years ago we had a management—union relationship that was prewar. It was confrontational, or at least using the system to their advantage (pay scales were manipulated to average earnings). Implementation strategies used to manage downsizing Restructuring. This involved allocating a specialized range of products to each factory across the world. This resulted in massive job losses over a 10 year period; SKF (UK) reduced from 5258 employees in 1974 to 1125 in 1984, a steady, nearly linear downsizing. Subsequent to this, there were further job losses due to difficult market conditions and the period between 1984 and 1995 saw another 455 job losses. The style of job losses was a command and control one from Gothenburg and affected primarily the blue-collar workers. The massive redundancies were a mix of voluntary and compulsory as they tolled approximately 4700 over the next 20 year period. The idea was that they would rationalize their manufacturing plants. They would have representation within the Dollar Zone…, within the Yen Zone… and within the Deutsche Zone. Against this backdrop, in 1995, there was threat of closure of the SKF (UK) plant. However, 2 days before the official announcement was to be made, the decision to close was overturned and SKF (UK) was given a lifeline. There were several reasons for this reversal. Firstly, the key decision-makers from Gothenburg who had planned to close SKF (UK) left the company and a new

182 SAHDEV

CEO was appointed who was against the closure of SKF (UK). Secondly, the market for bearings began to pick up and continued to do so from 1995 to 1998. Thirdly, a champion who had worked for SKF (UK) for 25 years was appointed to head up the plant. The new team began to implement a systematic transformation programme referred to as Factory95. Lean manufacturing: Factory95/underlying ethos. From 1996 onwards SKF (UK) implemented Factory95, a transformation change strategy developed by the headquarters in Sweden, which involved changes in working practices and overall organizational culture. Factory95 is a manufacturing process that aims to get people more focused on total production instead of focusing on specific functions. The new leadership team seized upon Factory95 as a business philosophy that would spell out the transformation process, incorporating high levels of employee involvement and empowerment. John McCormack, the Managing Director, brought with him the knowledge, understanding, and experience of the products and the markets having worked for SKF in various capacities for 25 years. What followed was a series of actions that sent strong messages about the new world. The transformation programme was not just an initiative; it was about changing the mindsets of people at the ground level. It focused on lifting the presence and self-esteem of the survivors—the people who were involved in manufacturing the bearings. Actions were not taken on a piecemeal basis: jobs were redesigned, layers of management were reduced, pay structures were transformed to take into account the greater contributions of the people; a relentless effort was put into bringing about a learning culture and power was devolved to those who manufacture the goods. The company does not have a spectacular HR department, nor does it have glossy policies and procedures. HR is now everybody’s responsibility. The culture of the company was succinctly described below: We have completely changed the culture from one that was gently fading to one that prides itself and is the best performing in the Group. It was a shift of balance from a massive plant, massive number of whitecollar workers, inefficient working practices and inefficient manning of processes—it was a complete restructuring. We peered over the abyss and looked at closure and decided that the only way to succeed was to implement Factory95 ruthlessly, openly, and honestly, observing the total spirit and letter of Factory95. HR strategies. The HR strategies used focused on shifting the power base from the managers to the blue-collar workers who were ultimately responsible for manufacturing bearings. They were empowered to manage their teams and outputs to address the needs of the customer. To begin with they were given a 7% pay increase and along with this a skill-based pay structure was put into place. A

REVISITING THE SURVIVOR SYNDROME 183

modular programme was developed and each time an employee completed a module he/she was given a pay rise. This was a gradual process of upskilling and multiskilling the workforce. It was felt that a number of people who had been with the company for a long time and who genuinely wanted to take early retirement in place of going through significant changes in working practices should be allowed to go. As part of the deal a voluntary severance scheme was put into place to allow people to leave with dignity. The trend to downsize will continue. As one interviewee outlined it: The future is more and more with fewer and fewer. We will never lose an opportunity to save a job whenever we can and where it is going to end I don’t know. As people get more and more skilled, we will be able to make more and more savings. Reactions of middle managers See Table 7 for examples. Trust. Delayering has resulted in people communicating more with each other on a day-to-day basis. Along with this, the values embedded in SKF (UK) cover empowerment, openness, and devolved decision making, which have resulted in middle managers working closely with the production operatives. Information is readily available and managers encourage sharing of information. The change in management style, from being status oriented to focusing on delivering the best to the customer, has helped in developing a high level of trust in the organization. Middle managers recognize that the production operatives are fundamental to the process of manufacturing bearings and thereby sustaining competitiveness. The role of the middle manager is to provide support to the production operatives; the common focus is on meeting the needs of the external customer. Downsizing and all the accompanying changes have resulted in increased levels of trust within SKF (UK) both among middle managers themselves as well as with the employees. The changes have resulted in SKF (UK) being number 1 in the SKF group, which has helped to enhance trust in managers from the perspective of the employees. Commitment. In SKF (UK) managers feel proud of working in a successful organization. They are committed to achieving results and there is an innate drive to take full responsibility of the outcomes. Loyalty, according to middle managers, is about doing a job well. There is clarity of direction and middle managers feel that the only focus is to deliver bearings to the customer. They also feel grateful that SKF (UK) has provided them with a good lifestyle and hence feel loyal to the company. At times, reward practices are seen as being unfair but managers enjoy what they do, which compensates for the lack of monetary reward. On the whole, middle managers feel that they could not achieve high performance levels without loyalty to SKF (UK).

Voices of survivors: SKF (UK)

TABLE 7

184 SAHDEV

Working in teams is the way forward. They are getting people to become more independent, so you don’t have to rely on managers. You have the freedom to make decisions. In the long run it is good as we are moving with the times, but it does mean that we will require fewer and fewer people. The good thing is that you get educated and more skilled. We have a modular programme for people to gain skills. Sometimes, people see it for financial gains and not for the right reasons. It must be seen for the good of the Company and not just for the individuals.

REVISITING THE SURVIVOR SYNDROME 185

Motivation. Middle managers’ role in SKF (UK) has become much wider, thus enriching jobs. This has meant learning new skills and sharing knowledge and information with each other. There is a learning culture within SKF (UK) and managers have acquired new skills, not necessarily work related. However, the challenges of the situation are that managers do not have time to complete tasks from start to finish and specialist skills are becoming depleted. There is an increased reliance on other plants for supply of components and often the system does not work in harmony, which is frustrating for the managers. There are also limited opportunities for career development. Continual change. Continual change is viewed positively as it stops people stagnating or indeed building empires. It fits well with the ethos of continual waves of downsizing that SKF (UK) has undergone and will continue to undergo in the future. By questioning working practices, managers feel that they will constantly improve the outputs. There is some concern about the strategic side of the business as the Managing Director is not around much. Reactions of production operatives See Table 7 for examples. Trust. In SKF (UK) the reactions of the production operatives suggest that they are trusted to work on their own initiative. People on the whole get on with each other and also provide mutual support when necessary. In terms of management style, there is more openness and managers are willing to share information more readily. The Managing Director is also visible; people feel that he is personable and knows everyone by first name. The significance of trust is in the context of the immediate working environment; they are not concerned about the events that take place at group level; it is too remote for them. Commitment. Production operatives feel proud to belong to SKF (UK), which holds a number 1 position in the group. There is a common sense of direction. In terms of loyalty, the overall feeling is that whilst the employment contract continues, they will be loyal to SKF (UK). There is very little dependence or expectation that SKF (UK) should protect the employees. However, some employees feel that loyalty is dependent on how the managers treat them. Unfairness in the way people are treated has a negative impact on loyalty. In the past SKF (UK) used to encourage family events; now it has become a more serious place to work. Motivation. In SKF (UK) production operatives have a high level of autonomy. There are increased learning and development opportunities thus raising the general skill level in the organization. Individuals are more accountable now than they were in the past, but with a flat structure there are no career progression opportunities. People feel that they are contributing more to the end product than they ever did in the past. On the whole work has become more enjoyable but SKF (UK) has become a more serious place to work in, with little by way of the

186 SAHDEV

“personal touch”. Some production operatives resent taking extra responsibilities and see it as additional work for little extra money. Insecurity. There is recognition that “jobs for life” are a thing of the past. There is a drive to produce high quality bearings as this is the only way to maintain security. The workforce is resilient, as they have managed to survive many rounds of redundancies. There is little concern about finding another job in the area, as there are alternative opportunities in manufacturing. The only source of anxiety is that SKF Group could transfer the manufacturing site to Sweden without much difficulty as none of the components are manufactured in Luton. DISCUSSION Findings from this study suggest that trust, commitment, and motivation are common themes emerging from the reactions of survivors in Barclaycard and SKF (UK). These themes were also prevalent in the wider study that included two additional organizations—The Utility Company and Bedfordshire County Council—which makes the results more generalizable. However, SKF (UK) was the only organization where the reactions of the survivors were overwhelmingly positive. As the focus of this article is to compare Barclaycard and SKF (UK), it would be useful to evaluate the reasons for the differences in survivors’ reactions and to explore the specific contributions of this study to existing knowledge. The role of leadership in implementing downsizing Research by Cameron et al. (1991, 1993) and Freeman (1999) suggests that the introduction of quality improvement programmes, redesign, and a considered approach to managing downsizing help to avoid the negative effects of the survivor syndrome. Furthermore, the literature also suggests that leadership should actively engage in articulating the future vision of the organization (Demarie & Keats, 1996; Hitt et al., 1994). Neither Barclaycard nor SKF (UK) engaged in a “short and sharp” workforce reduction strategy. In Barclaycard, the Business Transformation Programme was a 3 year intervention to bring about systematic changes in structure, processes, and technology to enhance the level of customer service. Downsizing was not merely a cost-cutting exercise. In SKF (UK), Factory95 was about fundamentally changing the design of the organization and reducing headcount on a continual basis through enhanced efficiency and effectiveness. In both Barclaycard and SKF (UK) the leaders invested a significant amount of time upfront explaining the reasons for downsizing and transformation change. The difference between the outcomes can be attributed to the fact that in addition to introducing transformational change, redesign, and articulating a clear vision of the organization, the Managing Director at SKF (UK) set about changing the ideology of work—the focus of attention of Factory95 was the workforce. Power and influence to determine the quality of outputs was

REVISITING THE SURVIVOR SYNDROME 187

transferred to the production operatives. Furthermore, the Managing Director and all managers concerned developed close working relationships with the production operatives. They engaged on a personal basis with the everyday challenges faced by the survivors. Alongside this, significant investment was made in educating the entire workforce to acquire new skills for which they received an increase in salary. In SKF (UK), there is an acceptance that downsizing may continue or that the future could become uncertain, but people feel confident about gaining alternative employment due to the skills and knowledge that they have acquired. The survivors’ reactions within Barclaycard suggest that they had disengaged from the new reality of the organization. Overall, middle managers and advisers were not questioning the legitimacy of downsizing— they were keen to provide a better service to their customers—but they felt let down by the leaders who did not listen to their concerns about the likely difficulties in implementation of new technology. Furthermore, the leaders were not visible during the implementation of the changes; middle managers were left to battle with the everyday challenges of new technology. This resulted in widespread prevalence of the survivor syndrome. The process was implemented mechanistically with little regard to people management aspects at the ground level. Thus the above findings contribute to the existing literature by suggesting that it is not enough to develop a macro-level strategy to implement downsizing. The detail of micromanaging and leveraging the capability of those who work at the operational levels is fundamental to the relative success or failure of downsizing exercises. Ongoing communication and support need to be at a deeper level, taking into account the practical concerns of the survivors who are involved in the redesign of systems and processes. The findings of the study also suggest that the leaders’ competence in handling both the strategic and operational aspects of the transformation is instrumental in how downsizing can affect the survivors’ reactions. The framework presented by Freeman (1999) suggests that the actions taken to manage downsizing depend upon whether downsizing precedes or follows redesign. However, there is no clear indication as to the reactions of the survivors in these two contexts. The findings of this study suggest that downsizing and redesign were implemented simultaneously. It could be interpreted that in the real life context it may not be feasible to have neat categories as suggested by Freeman. Furthermore, the findings of this study contribute to the literature by specifying the reactions of the survivors and providing explanations as to the reasons for positive/negative outcomes when downsizing accompanies redesign.

188 SAHDEV

Reluctant survivors The redundancy selection procedure in Barclaycard focused on retaining skills through the job-matching scheme. However, the leaders in Barclaycard misjudged the fact that some people were keener to take the severance package than engage in learning new ways of working. The consequence of this was that some of those who wanted to take the severance package were forced to stay, thus creating the “reluctant survivor” situation. Also, Barclaycard had perhaps paid far too much attention to the leavers at the expense of gaining the commitment of the survivors. In SKF (UK) people had the choice of leaving with a generous severance package if they felt that they could not be part of the future vision of the organization. Findings from Barclaycard and SKF (UK) question the relevance of distributive justice and procedural justice frameworks as a way of reducing the survivor syndrome as suggested by Brockner and his colleagues (e.g., Bies et al., 1993; Brockner & Siegel, 1996; Brockner et al., 1987, 1997). The findings from this study challenge the existing literature (Bies et al., 1993; Brockner et al., 1987), which suggests that if redundancy selection is merit based, survivors are less likely to feel guilty about their colleagues losing their jobs, which then enables the survivors to contribute whole-heartedly to the organizational goals. The findings also question the HR policies and procedures adopted for managing downsizing that focus on managing leavers as opposed to managing survivors. The findings of this study contribute to the existing literature by suggesting that survivor management programmes needs to be in place alongside the conventional outplacement programmes offered to leavers. Violation of the psychological contract The findings of this study also challenge the literature which suggests that the survivor syndrome is caused by lack of long-term job security (Herriot et al., 1997; Robinson & Morrison, 1995). In SKF (UK), survivors recognize the issue of job insecurity but do not blame the organizational practices for causing it. In Barclaycard, survivors did not question the legitimacy of the downsizing; they felt let down because they were prevented from providing high levels of customer service by ineffective leadership. Hence, these findings contribute to the literature by suggesting that the quality of support provided to survivors is instrumental in sustaining trust and commitment to the organization. The literature also recommends the value of introducing performance management systems to bring about behavioural change in relation to the new employment expectations (Stiles et al., 1997; Storey & Sisson, 1993). The findings of this study confirm this; leadership in SKF (UK) renegotiated the new contract by systematically implementing appropriate reward strategies and providing learning and development opportunities. This was not the case within Barclaycard.

REVISITING THE SURVIVOR SYNDROME 189

Alternative explanations The findings of this study provide alternative explanations as to why SKF (UK) was successful in mitigating the negative effects of the survivor syndrome. Prior experience of downsizing may have an effect on how subsequent exercises are managed and also the degree to which survivors become more capable of meeting the challenges of downsizing. SKF (UK) had experienced several rounds of downsizing over an extended period, whereas for Barclaycard this was the first round. The numbers of people leaving as a consequence of downsizing were much higher in Barclaycard, (almost 27% or 1100 out of a total workforce size of 4500) than in SKF (UK) where there was a gradual reduction on a continuous basis and where an extensive redundancy programme had already been carried out. Also, SKF (UK) is a medium-sized organization and the Managing Director could make a direct impact much more effectively than in Barclaycard. Lastly, Barclaycard was not losing market share as such; this was a proactive measure to save the future of the organization. SKF (UK) on the other hand was at the brink of closure due to a whole set of reasons described already. Factory95 was almost a last chance for survival; hence, the drive to transform the organization may have been greater than in Barclaycard. LIMITATIONS OF THE STUDY AND AREAS OF FUTURE RESEARCH This study reports the findings from two organizations, which is a limitation of the case study methodology. Survivors’ reactions need to be tested via a larger sample using a survey questionnaire. In particular, the reactions of survivors need to be tested across organizations and also at various levels to confirm the conditions in which survivors’ display high levels of trust, commitment, and motivation. Also, the findings reported in this study are a snapshot at a given time. This study is limited by the fact that organizations change and new factors come into play, which may influence survivors differently. Hence, a longitudinal study in these two organizations may yield interesting results. Implications for practitioners If downsizing is accompanied by increase in workload with no additional remuneration for the survivors, then organizations should be prepared to face up to the medley of negative emotions that make up the survivor syndrome. Furthermore, if leaders are not willing or able to articulate the new realities and the crucial role of the survivors in achieving the goals of the organization, they will be creating “reluctant survivors” or “survivor envy”. Also, leadership styles that engender close working relationships and provide day-to-day support to the survivors are vital in sustaining a positive workforce. Lastly, organization redesign must result in process simplification and not process complication in

190 SAHDEV

order to avoid survivors feeling overwhelmed by the aftermath of downsizing. Survivors’ reactions suggest the importance of maintaining and sustaining trust, commitment, and motivation in order to achieve the organizational goals. REFERENCES Alloway, R.M. (1977). Research and thesis writing using comparative cases. Stockholm: Stockholm Institute of International Business. Amabile, T.M., & Conti, R. (1999). Changes in the work environment for creativity during downsizing. Academy of Management Journal, 42(6), 630–640. Applebaum, S.H., Close, T.G., & Klasa, S. (1999). Downsizing: An examination of some successes and more failures. Management Decisions, 37(5), 424–436. Bell, J. (1984). Conducting small-scale investigation in educational management. New York: Harper & Row. Bies, R., Martin, C., & Brockner, J. (1993). Just laid off but still a good citizen: Only if the process is fair. Employee Responsibilities and Rights Journal, 6(3), 227–238. Bies, R.J., & Shapiro, D.L. (1987). Interactional fairness judgements: The influence of causal accounts. Social Justice Research, 1, 199–218. Breakwell, G.M. (1995). Interviewing. In G.M.Breakwell, S.Hammond, & S.Fife-Schaw (Eds.), Research methods in psychology. London: Sage. Brockner, J. (1992). Managing the effects of lay offs on others. California Management Review, 34(4), 9–27. Brockner, J., DeWitt, R.L., Grover, S., & Reed, T. (1990). When it is especially important to explain why. Journal of Experimental and Social Psychology, 26, 389–407. Brockner, J., & Greenberg, J. (1990). The impact of layoffs on survivors: An organizational justice perspective. In J.S.Carroll (Ed.), Applied social psychology and organizational settings (pp. 45–75). Hillsdale, NJ: Lawrence Erlbaum Associates, Inc. Brockner, J., Greenberg, J., Brockner, A., Bortz, J., Davey, J., & Carter, C. (1986). Layoffs, equity theory, and work performance: Further evidence of the impact of survivor guilt. Academy of Management Journal, 29(2), 373–384. Brockner, J., Grover, S.C., Reed, T., DeWitt, R., & O’Malley, M. (1987). Survivors’ reactions to layoffs: We get by with a little help for our friends. Administrative Science Quarterly, 32, 526–541. Brockner, J., Grover, S.C., Reed, T., & DeWitt, R.L. (1992a). Layoffs, job insecurity and survivors’ work effort: Evidence of an inverted u-relationship. Academy of Management Journal, 35, 413–425. Brockner, J., & Siegel, P. (1996). Understanding the interaction between procedural and distributive justice. In R.M.Kramer & T.R.Tyler (Eds.), Trust in organizations (pp. 390– 413). Thousand Oaks, CA: Sage. Brockner, J., Tyler, T.R., & Cooper-Schneider, R. (1992b). The influence of prior commitment to an institution on reactions to perceived unfairness: The higher they are, the harder they fall. Administrative Science Quarterly, 37, 241–261. Brockner, J., Wiesenfeld, B., Stephan, J., Hurley, R., Grover, S., Reed, T., DeWitt, R.L., & Martin, C. (1997). The effects on layoff survivors of their fellow survivors’ reactions. Journal of Applied Social Psychology, 10, 835–863.

REVISITING THE SURVIVOR SYNDROME 191

Brockner, J., Wiesenfeld, B.M., Reed, T., Grover, S., & Martin, C. (1993). The interactive effects of job content and context on the reaction of layoff survivors. Journal of Personality and Social Psychology, 64(2), 187–197. Bryman, A. (1989). Research methods in organization studies. London: Unwin Hyman. Cameron, K., Freeman, S., & Mishra, A. (1991). Best practices in white-collar downsizing: Managing contradictions. Academy of Management Executive, 5(3), 57–73. Cameron, K., Freeman, S., & Mishra, A. (1993). Downsizing and redesigning organizations. In G.P.Huber & W.H.Glick (Eds.), Organizational change and redesign (pp. 19–65). New York: Oxford University Press. Cascio, W.F., Young, C.E., & Morris, J.R. (1998). Some ideological foundations of organizational downsizing. Journal of Management Inquiry, 7, 198–212. Coolican, H. (1992). Research methods and statistics in psychology. London: Hodder & Stoughton. Demarie, S.M., & Keats, B.W. (1996). Organizational downsizing: A research framework. Paper presented at the annual conference of the Academy of Management. De Meuse, K.P., Tornow, E.C., & Walter, W.W. (1990). The tie that binds has become very frayed? Human Resource Planning, 13(3), 202–213. Doherty, N., & Horsted, J. (1995). Helping survivors stay on board. People Management, 1(1), 26–31. Edwards, J.C. (2000). Technological discontinuity and workforce size: An argument for selective downsizing. International Journal of Organizational Analysis, 8(3), 290–308. Freeman, S.J. (1999). The gestalt of organizational downsizing: Downsizing strategies as packages of change. Human Relations, 52(12), 1505–1541. Freeman, S.J., & Cameron, K. (1993). Organizational downsizing: A convergence and reorientation framework. Organization Science, 4, 10–29. Gummesson, E. (1991). Qualitative methods in management research. Newbury Park, CA: Sage Publications. Herriot, P., Manning, W.E.G., & Kidd, J.M. (1997). The content of the psychological contract. British Journal of Management, 8(2), 151–162. Hilltrop, J.M. (1995). The changing psychological contract: The human resource challenge of the 1990s. European Management Journal, 13(3), 14–19. Hitt, M.A., Keats, B.W., Harback, H.F., & Nixon, R.D. (1994). Rightsizing: Building and maintaining strategies, leadership and long-term competitiveness. Organizational Dynamics, 23(2), 18–32. Homans, G.C. (1961). Social behaviour: Its elementary forms. New York: Harcourt, Brace, & World. Kets de Vries, M., & Balazs, K. (1997). The downside of downsizing. Human Relations, 50(1), 11–50. Kettley, P. (1995). Employee morale during downsizing [Rep. No. 291]. Brighton, UK: Institute of Employment Studies. McKinley, W., Mone M.A., & Barker, V.L. (1998). Some ideological foundations of organizational downsizing. Journal of Management Inquiry, 7, 198–212. Miles, M.B., & Huberman, A.M. (1994). Qualitative data analysis. London: Sage. Millward, L. (1995). Focus groups. In G.M.Breakwell, S.Hammond, & C.Fife-Schaw (Eds.), Research methods in psychology. London: Sage. Mitchell, J.C. (1983). Case and situation analysis. Sociological Review, 31, 187–211.

192 SAHDEV

Pettigrew, A. (1990). Longitudinal field research on change: Theory and practice. Organizational Science, 1(3), 267–292. Reynolds-Fisher, S., & White, M. (2000). Downsizing in a learning organization: Are there hidden costs? Academy of Management Review, 25, 244–251. Robinson, S.L., Kraatz, S.M., & Rousseau, M.D. (1994). Changing obligations and the psychological contract: A longitudinal study. Academy of Management Journal, 37 (1), 137– 152. Robinson, S.L., & Morrison, E.W. (1995). Psychological contracts and organization citizenship behaviour: The effect of unfulfilled obligations. Journal of Organizational Behaviour, 16, 289–298. Sahdev, K.L., & Vinnicombe, S. (1998). Downsizing and the survivor syndrome: A study of HR’s perceptions of survivors’ responses [Working Paper No. SWP 6/98]. Cranfield, UK: Cranfield School of Management. Sahdev, K.L., Vinnicombe, S., & Bank, J. (2001). Creating a resilient workforce: Managing the upside of downsizing. London: FT/Prentice Hall. Sparrow, P.R. (1996). Transitions in the psychological contract in UK banking. Human Resource Management Journal, 6(4), 75–92. Stiles, P., Gratton, L., Truss, C., Hope Hailey, V., & McGovern, P. (1997). Performance management and the psychological contract. Human Resource Management Journal, 7(1), 57–66. Storey, J., & Sisson, K. (1993). Managing human resources and industrial relations. Milton Keynes, UK: Open University Press. Ulrich, D. (1998). A mandate for human resources. Harvard Business Review, February/ March, 124–134. Yin, R.K. (1994). Case study research, design and methods. Thousand Oaks, CA: Sage.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 197–216

AND

ORGANIZATIONAL

Research note: A motivational perspective on change processes and outcomes Conny H.Antoni Work and Organizational Psychology, University of Trier, Germany

A reengineering process in a chemical plant with technostructural and human-process-oriented interventions was analysed in order to develop and test a generalized expectancy—valence-theory model for participation in the change process and effective change. It was assumed that both supervisory support and favourable colleagues’ change attitudes enhance one’s change motivation, and participation in the change process, by increasing participation opportunities, and positive attitudes toward change. In turn, employee participation should have a positive impact on outcomes of the change process. After 2 years of restructuring, 104 employees participated in the evaluation of the change process. Path analyses revealed results that supported our model by and large. Employee participation in the change process predicts positive organizational effects. Favourable change attitudes as well as perceived participation opportunities, and supervisory support, which were integrated into one scale, predict the degree of employee participation. The latter also showed a direct path to organizational effects. Due to the increasing speed of technological development and international competition, similarly the demands for organizational change increase (Womack, Jones, & Roos, 1990). As the most commonly mentioned factor for successful change is organizational member involvement (Porras & Robertson, 1992), this article tries to develop and test a model to explain what supports participation of organizational members in the change process and thus positive change outcomes, applying a generalized expectancy—valence-theory approach.

© 2004 Psychology Press Ltd

194 ANTONI

http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000065

The term change management is used synonymously to the concept of organizational development. Change management and organizational development are defined as the use, or application of planned, behavioural science-based interventions in organizations in order to improve organizational effectiveness (Porras & Robertson, 1992). Unfortunately, the increasing demands for change management contrasts with devastating reviews on their effectiveness, reporting less than 40% of all interventions resulted in positive change (Porras & Robertson, 1992) or at least inconsistent effects (Beekun, 1989; Neumann, Edwards, & Raju, 1989; Nicholas, 1982). It might not surprise that interventions, like teambuilding, are more effective in changing attitudes than behaviour or even performance (Tannenbaum, Beard, & Salas, 1992), as productivity, or quality indicators are influenced by many other factors (Tannenbaum, Salas, & Cannon-Bowers, 1996). Nevertheless it is disappointing that studies on teambuilding do not find any significant effects on performance (Salas, Rozell, Driskell, & Mullen, 1999). However, it is not only psychological interventions that do not meet expectations of effectiveness, but also structural and strategic changes, such as mergers, and acquisitions on company level. For example, an analysis of 300 mergers in the period of 1986– 1996 by The Economist reports 57% failures (van Oudenhoven & van der Zee, 2002). This poses the question, what can be done to increase the effectiveness of change management? A MODEL EXPLAINING CHANGE PROCESSES AND OUTCOMES Porras and Robertson (1992) suggest that individual behaviour change is at the core of organizational change. The authors suppose that sustainable change requires that organizational members alter their behaviour, and that, in order to achieve this behavioural change, one must first alter individual cognitions as they regulate the organizational members’ behaviour. This means that beliefs of organizational members regarding which behaviour is appropriate and will be Correspondence should be addressed to Conny H.Antoni, Work and Organizational Psychology, FB 1, University of Trier, D-54286 Trier, Germany. Email: [email protected] thank Vivien Schmitt for her work in the research project and Tina Heinrich for her helpful comments on previous versions of this article. I am especially grateful to Doris Fay and two anonymous reviewers for their very constructive criticism. Parts of this paper have been presented at the 11th European Congress of Work and Organizational Psychology, May 14–17, 2003, Lisbon, Portugal.

PARTICIPATION AND ORGANIZATIONAL CHANGE 195

rewarded influence their behavioural choices. Therefore, one has to change the beliefs of the organizational members, which shape their behaviour, in order to support sustainable organizational change. Other theorists also stress this central role of individual (Argyris, 1990, 1999; Argyris & Schön, 1978; Schein, 1985, 1987), and shared cognitions (Baitsch, 1993, 1996) for explaining organizational change and learning. This corresponds to the most common finding in organizational change literature that the members of an organization must be the key source of energy for organizational change processes, and that for this reason their commitment and involvement is the crucial factor for successful organiza tional change (Beer, 1976; Porras & Robertson, 1992). Similar results are reported regarding productivity management (Pritchard, 1995; Pritchard, Jones, Roth, Stuebing, & Ekeberg, 1988; Pritchard, Kleinbeck, & Schmidt, 1993). Based on these findings, we take a motivational approach for explaining what supports participation in organizational change processes, building on expectancy-valence theory (Vroom, 1964). As organizational change processes imply situations that are experienced as novel, and complex for the ones concerned, the usefulness of situation-specific assessment of variables typical for expectancy—valence theory might be questionable. Krampen (2000) has shown that generalized expectancies and valences, rather than specific expectancies and valences, should be referred to for predicting behaviour in novel situations. For this reason, we propose that instead of action- and situation-specific expectancies and valences, generalized attitudes should be the best predictors for individual behaviour in change processes. Expectancy—valence theories have been criticized both conceptually and methodically. For example, from a conceptual viewpoint the criticisms are that only rational and hedonistic behaviour is explained, that the causes of expectancy and valence assessments are not explained or that the systematic, situation- and time-specific assessments of individual expectancies and valences are too costly for intervention purposes. Methodically or empirically they have been criticized for example, because Expectancy× Valence calculations require rational scales, expectancy and valence assessments are not independent from each other, or because interactive models of expectancy and valence variables are no better than additive ones (Locke, 1975). Recent meta-analytic studies have shown, however, that expectancies, and attractiveness of goal attainment influence goal commitment (Klein, Wesson, Hollenbeck, & Alge, 1999). As commitment is also necessary for participation in change, we take these results as an indicator for the presumed usefulness of the expectancy-valence approach. Furthermore, we follow Krampen’s (2000) suggestion to conceptualize a linear, additive model of generalized expectancies and valences for predicting behaviour in novel situations, avoiding some of the conceptual (situation and time specific assessments) and methodical problems (rational scale requirement) mentioned above.

196 ANTONI

Figure 1. Proposed factors influencing participation in change processes and the effects of change.

To give a brief overview of this model (see Figure 1), we assume that supervisory support and favourable change attitudes of one’s colleagues increase both participation opportunities and positive attitudes towards change. Participation opportunities and positive attitudes towards change are supposed to be the crucial motivational variables for further participation in the change process, which should have a positive impact on its outcomes. However, the effects of change management might also be directly influenced by supervisory support and favourable change attitudes. Positive outcomes, in terms of achieving project goals, should decrease at least the perceived immediate need for further change, as need for change is usually conceptualized as the perceived goal-status quo discrepancy. Supervisory support, and the change attitudes of one’s colleagues refer to one’s social environment. We assume that the social environment of employees influences, whether they generally believe to be able to participate in change processes and whether they generally value change. In particular, leadership behaviour influences both objective and subjective participation opportunities by the way they encourage participation, or delegate tasks and decision power (Dachler & Wilpert, 1978; Tannenbaum & Schmidt, 1958). Several studies have shown that participative supervisory behaviour influence employee perceptions of control (Parker & Price, 1994; Sagie, 1994). Furthermore, it can be conceived a central leadership task of management to influence change attitudes of their employees, and their awareness for change requirements. Supervisors can achieve this aim by acting as opinion leaders, role

PARTICIPATION AND ORGANIZATIONAL CHANGE 197

models, or by reinforcing and rewarding the respective behaviour (e.g., Manz & Sims, 1987). Similar to supervisory behaviour, attitudes and support of one’s colleagues might also influence the perceived participation opportunity, as well as change attitudes. Studies on teamwork report such influences of colleagues on one’s attitudes regarding sociotechnical interventions (Antoni, 1990, 1996). Furthermore, we assume that perceived participation opportunities, reflecting primarily a generalized expectancy (i.e., that one is able to participate in the change process), and change attitudes, capturing generalized valences of change, can predict participation in change processes. We suppose that the less people perceive opportunities to participate in the change process, the less likely is their participation. In other words, if individuals expect to be able to contribute to the change process with their ideas and suggestions, then they will consequently get involved in the change process. But perceiving opportunities might be not enough, as the opportunities also have to be valued positively. Whether change is valued positively depends on peoples attitudes towards change, whereas some people might be more open, and others more reluctant towards change. In line with most of the literature on organizational development (Becker & Langosch, 2002; Beer, 1976; Doppler & Lauterburg, 2002; Porras & Robertson, 1992), we propose that effective organizational change depends on the active participation of organizational members in the change process. The more they support and contribute in this process, the more likely will be positive effects. Whether these effects of participation are motivational and/ or cognitive, is not in the focus of this article, but has already been discussed in other publications (see Antoni, 1999; Wagner, Leana, Locke, & Schweiger, 1997). Since we assume that change outcomes depend on the behaviour and attitudes of organizational members, both perceived supervisory support and colleagues’ attitudes might also influence change outcomes directly, as they may be indicative of the behaviour of these social groups in the change process. For example, supervisors and colleagues might influence change effects by their suggestions. Consequently, productivity increases might be achieved faster. This reasoning is supported by the findings of several studies that show direct effects of supervisory support on individual (Antoni, 1996; Griffin, Patterson, & West, 2001) and organizational outcomes (Antoni, 1990; Hyatt & Ruddy, 1997). Furthermore, particularly recent studies on innovative group climate show effects of employee attitudes on innovation and performance outcomes (Bain, Mann, & Pirola-Merlo, 2001; Brodbeck & Maier, 2001; Burningham & West, 1995; West & Anderson, 1996). Finally, we propose that positive outcomes, in terms of achieving project goals, should decrease at least the perceived goal-status quo discrepancy and thus the perceived immediate need for further change. In sum, we take a generalized expectancy-valence-theory-based approach to predict participation in the change process and its outcomes. Firstly, the

198 ANTONI

employees’ expectancies that one is enabled to participate, and to successfully contribute with own ideas, and, secondly, the perceived valence or attractiveness of change, are both influenced by the social environment of the employees, i.e., their supervisors and colleagues, which might influence change outcomes also directly by their behaviour. Based on these assumptions and findings the following hypotheses will be tested (cf. Figure 1): (1) Perceived supervisory support leads to the perception of participation opportunities (H1a), positive attitudes towards change (H1b), and positive organizational outcomes (H1c). (2) Positive attitudes of one’s colleagues towards change enhance the perception of participation opportunities (H2a), positive attitudes towards change (H2b), and organizational outcomes (H2c). (3) Employee participation can be predicted by the motivation to change, which is an effect of perceived opportunities to participate in the change process (H3a), and positive attitudes towards change in general (H3b). (4) Employee participation in the change process should predict positive change outcomes (H4). (5) Positive change outcomes decrease the immediate perceived need for further change (H5). METHOD The study was realized as a part of a summative evaluation of a change management project of a chemical plant with 377 employees. Two years before this study was conducted, management had started a reengineering project in order to save costs and to increase productivity, by changing from a functionally divided to a more process flow-oriented organization with self-regulating teams. For this purpose, on plant level, a project structure was implemented with a project team, which was linked to several subteams for different topics. The aim was to realize this change process in a participative manner, i.e., to offer employees participation opportunities. The management team of the plant formed the project team together with two employee representatives. The plant leader served as the project leader and was a member of a steering team on company level. Subteams consisted of employees and were led by the respective functional manager. An external and an internal change agent consulted management, project team, and subteams during the whole change process. As part of the change process different structural and behavioural interventions were implemented. For example, structural interventions were: two separate production departments integrated into one process unit; service functions integrated; teams and team leaders were implemented; the elimination of the hierarchy level of first-line supervisors; first-line supervisors moved to logistics or process support. Behavioural interventions covered workshops with the

PARTICIPATION AND ORGANIZATIONAL CHANGE 199

various project teams aiming at clarifying, and setting goals, and working out respective strategies. Furthermore, teambuilding was realized with the newly formed teams, and training for people in new functions, such as the team leaders, as well as technical skill training was conducted. This short description of the applied interventions demonstrates the complexity of this change management project combining and linking both technostructural and human-process-oriented interventions (French & Bell, 1984). At the end of the 2 year change project, every second employee was asked to participate in the final evaluation of the change management project. In order to ensure anonymity and increase response rates, no questions regarding age, tenure, or gender were included. Questionnaires were posted to 188 persons; 104 of them answered, reflecting a response rate of 55%: 14 participants were management members (defined as having people reporting to them), 81 were employees, and 9 persons did not reveal their function. Since no data about demographic characteristics were assessed, no inferences about the representativity of the sample can be made. Even with respect to management functions it is difficult to assess the number of participants, as 9% of the participants did not reveal their function. Measures Scales to measure the constructs were specifically developed for this study (see Table 1). We used six-step Likert items, ranging from 1=“disagree” or “never” to 6=“agree” or “always”. Openness for change of one’s colleagues was measured with three items, e.g., “My colleagues are open for change” ( =.77). Supervisory support was measured with three items, e.g., “Supervisors support employees in change processes” ( =. 78). Participation opportunities were measured with four items, e.g., “I can contribute with my ideas to improve work processes adequately” ( =.89). Change attitudes were measured with five items, e.g., “I am open to change” ( =. 82). Participation in change process was measured with three items, e.g., “I contributed with my suggestions and ideas to the project” ( =.70). Organizational effects were measured with four items, e.g., “Processes and structures are now more efficient” ( =.89). Need for further change was operationalized by four TABLE 1 Scales and items Need for further change 1. In my department there is a lot to be improved 2. In my department everything is the way it should be* 3. Changes would be urgent 4. Nothing has to be changed* Openness for change of one’s colleagues

200 ANTONI

1. My colleagues share their knowledge with me 2. My colleagues are open for change 3. My colleagues adapt fast to changes Supervisory support 1. Supervisors give a good example regarding change 2. Supervisors support employees in change processes 3. My supervisor opposes changes in his/her department* Participation opportunities 1. My suggestions to improve the work organization are being noticed 2. My suggestions are taken seriously 3. I can contribute with my ideas to improve work processes adequately 4. I can realize my ideas in my work Change attitudes 1. It’s fun for me to get familiar with new areas of work 2. It’s easy for me to adapt to new work situations 3. I am open to change 4. It’s difficult for me to adapt to new work requirements* 5. I am afraid of not being able to handle the changes* Participation in change process 1. I have supported the project’s goals 2. I communicated problems of the project that I noticed 3. I contributed with my suggestions and ideas to the project Organizational effects 1. Processes and structures are now more efficient 2. The project had positive effects for our plant 3. Project goals were met 4. The plant got more competitive Six-step Likert-items, ranging from 1 “disagree” or “never” to 6 “agree” or “always” *reverse scored item.

questions, e.g., “In my department is a lot to be improved” ( =.86). Thus, all scales showed satisfactory or good internal consistencies (.70< <.89; see Table 2). To test the factorial validity of the scales an exploratory factor analysis with varimax rotation was done with all items. The factor analysis yielded six factors with Eigenvalues over one, explaining 70.53% of the variance. Participation opportunity and supervisory support items loaded on a common factor. Although we supposed them to be two theoretically different concepts, we cannot separate them empirically, and according to item loadings, the two scales are to be combined. One item of the supervisory support scale, which was reverse scored, had no clear loading structure, and therefore was omitted from further analysis. The new integrated seven-item scale “participation opportunity and support” had good internal consistency ( =.90). All other items loaded high on those factors consistent with the a priori scales (only one participation item had cross-loadings), for this reason we continued analyses with those a priori scales.

significant; all other correlations are significant p<.05; n=90–103. Scales 1 to 7 sixstep Likert-items (from 1=“never” to 6=“always”); 2Leader function 1=no; 2=yes.

ns=not

Scale means, standard deviations, scale intercorrelations and Cronbach’s alphas in parentheses

TABLE 2

PARTICIPATION AND ORGANIZATIONAL CHANGE 201

202 ANTONI

RESULTS To test the assumptions path analyses were calculated with AMOS 4.0. Due to the small sample size we could do no latent analysis, but instead analysed the relationships between the manifest variables. We started with allowing relationships between all model variables, and thus resulting in a model with a significant 2 value, and a RSMEA value well above the critical level (RSMEA >. 10) indicating a poor model fit (n=98; 2=6.19; df= 1; p=.01; NFI=.997; RFI=. 931; TLI=.941; CFI=.997; RSMEA=.231). We then eliminated all of the nonsignificant paths (p >.05) between the model variables. After eliminating three nonsignificant paths, the resulting path model showed good fit, and supports our hypotheses by and large (see Figure 2). Good model fit is indicated by the low and nonsignificant 2 statistic (n=98; 2= 10.31; df=6; p=.152). The size of the other fit indicators show also good model fit: The Tucker-Lewis Index (TLI=.992) is well above the recommended level of .95. The same holds for the Normed Fit Index (NFI—.995), the Relative Fit Index (RFI=.981), and the Comparative Fit Index (CFI=.998). Only the Root Mean Square Error of Approximation (RSMEA=.086) is slightly above the recommended value (.05), but still within reasonable limits (Arbuckle, 1999). Hypotheses 1 (a, b, and c) had to be dropped, since the a priori scale supervisory support was not supported by factor analysis. As two of its items loaded on participation opportunities and were integrated in this scale, hypothesis 3a had to be modified with respect to this new scale “participation and support”, as participation and support is now assumed to influence change motivation and, thus, participation in the change processes. As supposed, significant positive path coefficients were found from “one’s colleagues openness for change” to perceived participation opportunities and support (H2a) and to change attitudes (H2b). However, no significant path was found from “one’s colleagues openness for change” to organizational outcomes (H2c). In line with our hypotheses, both participation opportunity and support (H3a), and favourable change attitudes (H3b) showed a significant positive path to participation in the change process. Furthermore, consistent with our hypothesis, we found significant positive paths from reported participation in the change process to organizational outcomes (H4). Finally, we found the expected negative path from organizational outcomes to perceived need for further change (H5). Additionally there was a negative path from participation opportunity and support, and a positive one from change attitudes to perceived need for further change. As management members tended to rate participation in change processes and organizational effects significantly higher (Table 2), we analysed whether these differences would influence the path model. Therefore, we ran a separate analysis only for employees yielding almost identical results with respect to path

PARTICIPATION AND ORGANIZATIONAL CHANGE 203

Figure 2. A path model for participation in change processes and the effects of change. n=98; 2=10.31; df=8; p=.112; NFI=.995; RFI=.981; TLI=.992; CFI=.998; RSMEA=.086; significant path coefficients and explained variance in parentheses; p<.01; NFI=Normed Fit Index; RFI=Relative Fit Index; TLI=Tucker-Lewis coefficient; CFI=Comparative Fit Index; RSMEA=Root Mean Square Error of Approximation.

coefficients and explained variance. However, probably due to the smaller sample size, two path coefficients did not become significant, and model fit was worse, but with all indicators being still acceptable (n=75; 2=12.92; df=6; p=. 04; NFI=.991; RFI=.968; TLI=.983; CFI=.995), with the exemption of the RSMEA indicator (.125). DISCUSSION The aims of this article are to develop and test a generalized expectancy— valence-theory model for participation in the change process and its outcomes. Based on the literature review by Porras and Robertson (1992), who identified employee involvement, need for change, and favourable change attitudes as critical conditions for effective implementation of change, we developed a process model integrating these variables, which is largely supported by the data. In this model, we suppose that outcomes of the change process are positively influenced by employee participation, depending on both their participation opportunities, and their attitudes towards change, which in turn are influenced by their social environment, particularly by their supervisors and colleagues. Furthermore, we expect that supervisors and colleagues also influence the outcomes of the change process directly and, finally, we propose that project achievements should reduce the immediate need for further change.

204 ANTONI

As we integrated the scales of participation opportunities and supervisory support, due to the results of the factor analysis, where they loaded on a common factor, we could not test the hypotheses referring to supervisory support directly. The results do support the hypothesis that perceived openness of one’s colleagues towards change enhances participation opportunities (H2a) and supports change attitudes (H2b). However, there appears to be no direct effect of perceived openness of one’s colleagues towards change on organizational outcomes of the change process (H2c). Thus it seems that individuals take their colleagues’ attitudes towards change into account when they assess their chances to participate in a change process. The more they feel safe and supported by the attitudes of their colleagues, the more they are convinced that they can effectively contribute their ideas. Furthermore, one’s colleagues’ openness towards change also seems to influence one’s attitudes towards change. This is in line with findings that a positive innovation climate in groups promotes innovation and group effectiveness (Bain et al., 2001; Brodbeck & Maier, 2001; Burningham & West, 1995; West & Anderson, 1996). Confidence in partner cooperation appears also to be important for cooperation between companies in strategic alliances (Das & Teng, 1998). It might be interesting to explore interpersonal differences influencing this relationship in future research, for example, people with high fear of social rejection might depend more on a positive, supporting, and participative environment as they show improved performance in conditions of participative goal setting (Wegge, 2000). What has to be done in future research is to analyse the role of management in building group climate. Particularly interesting would be to distinguish different types of groups, e.g., comparing traditional and self-leading groups. Multilevel analyses are needed to separate group from individual effects. Also in line with our reasoning, participation in the change process seems to be influenced by participation opportunities and support (H3a), as well as by positive attitudes towards change in general (H3b). These findings regarding the third hypothesis support a generalized expectancy—valence-theory approach to predict participation behaviour in change processes. Participation opportunities, focusing on generalized expectancies, and change attitudes, focusing on generalized valences of change, explained the variance in participation behaviour significantly. Thus, it seems that people’s decision, whether they participate in the change process or not, is based on their perception of participation opportunities and supervisory support and on their general attitude towards change. This generalized expectancy—valence-theory approach to predict participation behaviour in change processes appears promising for further elaboration, because it is not bound to a specific intervention strategy. Employee participation in the change process is in the focus of this approach, but this does not restrict the type of interventions, as, for example, in this study both technostructural and humanprocess-oriented interventions were combined. Further elaborations of this model could measure the different generalized expectancies and valences

PARTICIPATION AND ORGANIZATIONAL CHANGE 205

suggested by Krampen (2000) more specifically, e.g., goal clarity of the change process, to increase explained variance of participation in the change process. Participation in the change process predicted significantly reported positive change effects on organizational outcomes, as was expected in the fourth hypothesis. These findings support the notion, that it is important to have employees participate in the change process in order to achieve an effective change. This corresponds to findings that perceiving control is a basic human motive contributing to acceptance and satisfaction as well as to performance (Locke & Schweiger, 1979; Osnabrügge, Stahlberg, & Frey, 1985; Rothbaum, Weisz, & Snyder, 1982). Furthermore, these findings do not indicate increasing interindividual conflicts due to participation in decision making, as reported by other literature (Wegge, 2000). Other studies have shown that perceived fairness of participation in decision making is an important mediating variable between participation and satisfaction, stressing the importance of procedural justice in change processes (Roberson, Moye, & Locke, 1999). A recent meta-analytic study by CohenCharash and Spector (2001) also supported the important role of procedural justice for organizational outcomes, such as performance, counterproductive work, and organizational citizenship behaviour, as well as commitment. Hence, it seems promising to integrate these variables in our model in future research. However, change outcomes seem not only be influenced by employee participation, but also by participation opportunities and support. These results might be in line with hypothesis 1c, as supervisory support and participation opportunities were integrated in one scale. This might indicate that supervisors play an important role not only with respect to providing participation opportunities, and influencing change attitudes of their employees, but also in promoting change effects directly, e.g., realizing employees’ suggestions or their own ideas. This reasoning might also explain why there is no direct effect of openness of one’s colleagues on change outcomes as expected by hypothesis 2c, but a mediated one by participation opportunities and support. It suggests that supervisors are crucial for change to occur, as they implement their own and their employees’ suggestions. Finally, as it was expected (H5), need for further change seems to be reduced by achieving the desired change outcomes. However, we also found a significant negative path from participations opportunities and support, and a positive one from change attitudes to need for further change. One explanation for this might be that those perceiving less need for further change might have perceived enough participation opportunities and supervisory support to meet their goals. Furthermore, those employees with positive attitudes towards change might notice more need for further change, than those with less favourable attitudes. When interpreting these results, several constraints of this study have to be taken into account. First of all, the study is a post hoc questionnaire study, thus allowing no causal inferences. Consequently, reported effects and influences

206 ANTONI

refer to statistical and not to causal effects. Furthermore, the proposed direction of effects can be questioned. It could of course be the case, that depending upon how people evaluate and experience the results of the change process, they would assess other variables differently. For example, if they experience success, they might attribute it to their own participation and influence, resulting in higher ratings of participation, or this might influence their perceptions of secondary control, which could be reflected in their higher assessment of their colleagues’ and their supervisory support (Rothbaum et al., 1982). A better alternative to the cross-sectional approach of this study would be a pre-post test design within one plant, allowing comparisons before and after interventions are implemented, and also allowing analyses of different types of change (Golembiewski & Billingsley, 1980; Golembiewski, Billingsley, & Yeager, 1976; Golembiewski, Proehl, & Sink, 1982; Zmud & Armenakins, 1978). Even better, but even more difficult to realize, would be a quasi-experimental design, with a nonequivalent control plant. Secondly, the direction of causality might also be questioned with respect to the different time frames of the model variables. The variables measuring employee change attitudes as well as participation opportunity and support are conceptualized as generalized and with respect to situation and time quite stable attitudes. For this reason, present and not past tense was used in item formulations, whereas participation in the change process and change effects were measured retrospectively, as respondents were asked to evaluate the past change project. This approach to predict past participation behaviour and change effects by generalized attitudes and perceptions might be questioned, because employee change attitudes and perceived participation opportunity and support might have been influenced by the change process and its outcomes. In other words, employee change attitudes and perceived participation opportunity and support may not be the same at the time of measurement as they have been 2 years ago, before the change process started, because of the change. As mentioned above, a pre–post test design, allowing comparisons before and after interventions are implemented, would be needed to analyse such effects. Thirdly, all variables were measured with a common method and assessed by the same persons. For this reason, there might be single source and common method bias inflating relationships. Furthermore, reported relationships might only reflect subjective theories of change and not “true” relationships between variables. However, it does not seem plausible to explain the reported relationships only by common method variance, because principal component factor analyses with varimax rotation yielded six factors with a clear loading structure. Particularly, these factors cannot be explained by a common second level factor, as factor analysis on scale level revealed two second-level factors explaining 40% and 28% of the variance (Podsakoff & Organ, 1986). The question, to what degree these results reflect “true” relationships, or rather subjective theories of change—similar to subjective theories of work group effectiveness (Gladstein, 1984), cannot be answered. From a theoretical point of

PARTICIPATION AND ORGANIZATIONAL CHANGE 207

view, subjective theories of change are highly relevant, as the core assumption of our model, building on the reasoning of Porras and Robertson (1992) and the findings of existing research, is that these individual cognitions influence behaviour and, thus, change effectiveness. From a methodical viewpoint, objective or independently assessed data to validate these findings are not available. On the other hand, independently assessed data would just solve the problem of single source variance, but would not allow estimating the influence of subjective theories. Objective data are needed for that purpose. However, objective data about plant effectiveness cannot be used to test relationships as they are on plant level. Fourthly, questionnaire items were specifically formulated for this study, hence scales were not validated independently. However, the observed differences between management and employee data support the validity of the questions. For example, it seems plausible that management is more involved in the change process. Hence, managers would give higher ratings than employees with respect to these questions. Contrarily, no differences between managers and employees were observed with respect to openness of one’s colleagues to change or change attitudes, which also seems plausible. However, these differences between management and employees do not affect the main structure of the path model. Summing up these arguments, no causal inferences can be drawn from the results of this study as it is cross-sectional, and potential third variable influences cannot be ruled out. Nevertheless the results are largely consistent with the hypotheses and support the generalized expectancy—valence-theory approach for explaining participation in change processes. It integrates variables found to be crucial for effective change by various implementation theories into a process theory of change. This might be helpful for bridging the gap between process and implementation theories, as it shows how results of implementation theories can be used for developing process models. Further research, which elaborates this approach in the way described above, might thus be promising. Furthermore, these results give hints for the development of implementation strategies, even if these findings are interpreted as reflecting subjective theories of change, as these cognitions are supposed to shape the behaviour of organizational members influencing the effectiveness of change. The findings show that, in order to ensure an effective change process, it is to be considered important that management and supervisors actively support the change processes; but they have to be cautious, in not taking an overly active role in change, i.e., taking too many actions and decisions just by themselves, as employees might feel their participation is not necessary to change matters. Hence, management should support employees in order to get active “players”, and to take the change process in their department into their own hands rather than pulling the change by themselves. More recent scholarly writing about the role of the employees in the change process supports such an approach and even

208 ANTONI

suggests giving the employees the responsibility to pull the change process through (Clegg & Walsh, 2004 this issue). In order to get people involved in the change process, management has to provide participation opportunities, and ought to appreciate and reinforce change efforts. The observed relationships in our data show, that people would expect such management’s behaviours. Supervisors can do this in a participative manner by asking their employees for suggestions and considering those, or by delegating, i.e., by allowing people to realize their ideas by themselves within defined projects in which they have autonomy. Supervisors can positively influence people’s change attitudes by how they support and value change, since people take them as role models. In promoting change, supervisors have to keep in mind that employee behaviour, organizational processes, and structures, as well as technology and physical aspects, all influence one another, and require an integrated approach to organizational change as described in this case. The combined technostructural and human-process-oriented interventions, applied in this case, seem a promising approach. Changing production processes and organizational structures from a functional to a process-oriented and team-based organization, and further supporting these changes by teambuilding interventions, technical skill training, and by various workshops to clarify and set goals and to work out action strategies, was successful. This supports sociotechnical or system-theoretical reasoning that changes in one system variable requires complementary changes in other interdependent system variables. Complementary interventions ensure that consistent and congruent messages are sent to people regarding desired behaviour and provide the abilities and skills as well as the technostructural and physical conditions required (Porras & Robertson, 1992). REFERENCES Antoni, C.H. (1990). Qualitätszirkel als Modell partizipativer Gruppenarbeit. Analyse der Möglichkeiten und Grenzen aus der Sicht betroffener Mitarbeiter [Quality circles as a model of participative group work: Analysis of the chances and limits from of the employee perspective]. Bern, Switzerland: Huber. Antoni, C.H. (1996). Teilautonome Arbeitsgruppen. Ein Königsweg zu mehr Produktivität und einer menschengerechten Arbeit? [Semi-autonomous work groups: A way to more productivity and quality of working life?]. Weinheim, Germany: Psychologie Verlags Union. Antoni, C.H. (1999). Konzepte der Mitarbeiterbeteiligung: Delegation und Partizipation [Concepts of giving voice to employees: Delegation and participation]. In C.Hoyos & D. Frey (Eds.), Arbeits- und Organisationspsychologie. Ein Lehrbuch [Work and organizational psychology: A textbook] (pp. 569–583). Weinheim, Germany: Psychologie Verlags Union. Arbuckle, J.L. (1999). AMOS Users’ Guide: Version 4.01. Chicago: Small Waters.

PARTICIPATION AND ORGANIZATIONAL CHANGE 209

Argyris, C. (1990). Overcoming organizational defenses: Facilitating organizational learning. Englewood Cliffs, NJ: Prentice Hall. Argyris, C. (1999). On organizational learning. Cambridge, MA: Blackwell. Argyris, C., & Schön, D. (1978). Organizational learning: A theory of action perspective. Reading, MA: Addison Wesley. Bain, P.G., Mann, L., & Pirola-Merlo, A. (2001). The innovation imperative: The relationships between team climate, innovation and performance in research and development teams. Small Group Research, 32, 55–73. Baitsch, C. (1993). Was bewegt Organisationen? Selbstorganisation aus psychologischer Perspektive [What moves organizations? Self organization from a psychological perspective]. Frankfurt/Main, Germany: Campus. Baitsch, C. (1996). Wer lernt denn da? Bemerkungen zum Subjekt des Lernens [Who learns there? Remarks on the subject of learning]. In H.Geissler (Ed.), Arbeit, Lernen und Organisation [Work, learning, and organization] (pp. 215–231). Weinheim, Germany: Deutscher Studien Verlag. Becker, H., & Langosch, J. (2002). Produktivität und Menschlichkeit [Productivity and organization] (5th ed.). Stuttgart, Germany: Lucius & Lucius. Beekun, R.A. (1989). Assessing the effectiveness of sociotechnical interventions: Antidote or fad? Human Relations, 42, 877–897. Beer, M. (1976). The technology of organizational development. In M.D.Dunnette (Ed.), Handbook of industrial and organizational psychology (pp. 937–993). Chicago: Rand McNally. Brodbeck, F., & Maier, G.W. (2001). Das Teamklima-Inventar (TKI) für Innovation in Gruppen: Psychometrische Uberprüfung an einer deutschen Stichprobe [The team climate inventory for innovation in groups: Psychometric validation in a German sample]. Zeitschrift für Arbeits- und Organisationspsychologie, 45, 59–73. Burningham, C., & West, M.A. (1995). Individual, climate, and group interaction processes as predictors of work team innovation. Small Group Research, 26, 106–117. Clegg, C., & Walsh, S. (2004). Change management: Time for a change? European Journal of Work and Organizational Psychology, 13(2), 217–239. Cohen-Charash, Y., & Spector, P.E. (2001). The role of justice in organizations: A metaanalysis. Organizational Behavior and Human Decision Processes, 86, 278–321. Dachler, P., & Wilpert, B. (1978). Conceptual dimensions and boundaries of participation in organizations: A critical evaluation. Administrative Science Quarterly, 23, 1–39. Das, T.K., & Teng, B. (1998). Between trust and control: Developing confidence in partner cooperation in alliances. Academy of Management Review, 23, 491–512. Doppler, K., & Lauterburg, L. (2002). Change Management. Den Unternehmenswandel gestalten [Change management: Shaping organizational change] (10th ed.). Frankfurt, Germany: Campus. French, W.L., & Bell, T.H. (1984). Organizational development: Behavioral science interventions for organizational improvements (3rd ed.). Englewood Cliffs, NJ: Prentice Hall. Gladstein, D.L. (1984). Groups in context: A model of task group effectiveness. Administrative Science Quarterly, 29, 499–517. Golembiewski, R.T., & Billingsley, K.R. (1980). Measuring change in OD panel designs: A response to my critics. Academy of Management Review, 5, 97–103.

210 ANTONI

Golembiewski, R.T., Billingsley, K., & Yeager, S. (1976). Measuring change and persistence in human affairs: Types of change generated by OD designs. Journal of Applied Behavioral Science, 12, 133–157. Golembiewski, R.T., Proehl, C.W., & Sink, D. (1982). Estimating the success of OD applications. Training and Development Journal, 36, 86–95. Griffin, M.A., Patterson, M.G., & West, M.A. (2001). Job satisfaction and teamwork: The role of supervisor support. Journal of Organizational Behavior, 22, 537–550. Hyatt, D.E., & Ruddy, T.M. (1997). An examination of the relationship between work group characteristics and performance: One more into the breech. Personnel Psychology, 50, 553– 585. Klein, H.J., Wesson, M.J., Hollenbeck, J.R., & Alge, B.J. (1999). Goal commitment and the goal setting process: Conceptual clarification and empirical synthesis. Journal of Applied Psychology, 64, 885–896. Krampen, G. (2000). Handlungstheoretische Persönlichkeitspsychologie—Konzeptuelle und empirische Beiträge zur Konstrukterhellung [Action theoretical personality psychology: Conceptual and empirical contributions for concept clarification] (2nd ed.). Göttingen, Germany: Hogrefe. Locke, E.A. (1975). Personnel attitudes and motivation. Annual Review of Psychology, 26, 457–480. Locke, E.A., & Schweiger, D.M. (1979). Participation in decision-making: One more look. In B.M. Staw (Ed.), Research in organizational behavior (Vol. 1, pp. 265–339). Greenwich, CT: JAI Press. Manz, C.C., & Sims, H.P. (1987). Leading workers to lead themselves: The external leadership of self-managing work teams. Administrative Science Quarterly, 32, 106– 128. Neumann, G.A., Edwards, J.E., & Raju, N.S. (1989). Organizational development interventions: A meta-analysis of their effects on satisfaction and other attitudes. Personnel Psychology, 42, 461–489. Nicholas, J.M. (1982). The comparative impact of organization development interventions on hard criteria measures. Academy of Management Review, 7, 531–542. Osnabrügge, G., Stahlberg, D., & Frey, D. (1985). Die Theorie der kognizierten Kontrolle [Theory of cognitive control]. In D.Frey & M.Irle (Eds.), Theorien der Sozialpsychologie. Bd. III. Motivations- und Informationsverarbeitungstheorien [Theories of social psychology: Vol. III. Motivation and information processing theories] (pp. 127–174). Bern, Switzerland: Huber. Parker, L.E., & Price, R.H. (1994). Empowered managers and empowered workers: The effects of managerial support and managerial perceived control on workers’ sense of control over decision making. Human Relations, 47, 911–927. Podsakoff, P.M., & Organ, D.W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12, 531–544. Porras, J.I., & Robertson, P.J. (1992). Organizational development: Theory, practice, and research. In M.D.Dunnette & L.M.Hough (Eds.), Handbook of industrial and organizational psychology (2nd ed., Vol. 3, pp. 719–822). Palo Alto, CA: Consulting Psychologists Press. Pritchard, R.D. (1995). Productivity measurement and improvement: Organizational case studies. New York: Praeger.

PARTICIPATION AND ORGANIZATIONAL CHANGE 211

Pritchard, R.D., Jones, S.D., Roth, P.L., Stuebing, K.K., & Ekeberg, S.E. (1988). The effects of feedback, goal setting and incentives on organizational productivity. Journal of Applied Psychology, Monograph Series, 73, 337–358. Pritchard, R.D., Kleinbeck, U.E., & Schmidt, K.H. (1993). Das Managementsystem PPM: Durch Mitarbeiterbeteiligung zu höherer Produktivität [The management system PPM: By employee participation to increased productivity]. München, Germany: Beck. Roberson, Q.M., Moye, N.A., & Locke, E.A. (1999). Identifying a missing link between participation and satisfaction: The mediating role of procedural justice perceptions. Journal of Applied Psychology, 84, 585–593. Rothbaum, F., Weisz, J.R., & Snyder, S.S. (1982). Changing the world and changing the self: A two-process model of perceived control. Journal of Personality and Social Psychology, 42, 5–37. Sagie, A. (1994). Participative decision making and performance: A moderator analysis. Journal of Applied Behavioral Science, 30, 227–246. Salas, E., Rozell, D., Driskell, J.E., & Mullen, B. (1999). The effect of teambuilding on performance. Small Group Research, 30, 309–329. Schein, E. (1987). Process consultation. Reading, MA: Addison Wesley. Schein, E.H. (1985). Organizational culture and leadership: A dynamic view. San Francisco: Jossey Bass. Tannenbaum, S.I., Beard, R.L., & Salas, E. (1992). Team building and its influence on team effectiveness: An examination of conceptual and empirical developments. In K.Kelley (Ed.), Issues, theory and research in industrial/organizational psychology (pp. 117–153). Amsterdam: North-Holland/Elsevier. Tannenbaum, S.I., Salas, E., & Cannon-Bowers, J.A. (1996). Promoting team effectiveness. In M.A. West (Ed.), Work group psychology (pp. 503–529). Chichester, UK: Wiley. Tannenbaum, R., & Schmidt, W.H. (1958). How to choose a leadership pattern. Harvard Business Review, 36, 95–101. Van Oudenhoven, J.P., & van der Zee, K.I. (2002). Successful international cooperation: The influence of cultural similarity, strategic differences and international experience. Applied Psychology: An International Review, 51, 633–653. Vroom, V.H. (1964). Work and motivation. New York: Wiley. Wagner, J.A., Leana, C.R., Locke, E.A., & Schweiger, D.M. (1997). Cognitive and motivational frameworks in U.S. research on participation: A meta-analysis of primary effects. Journal of Organizational Behavior, 18, 49–65. Wegge, J. (2000). Participation in group goal setting: Some novel findings and a comprehensive model as a new ending to an old story. Applied Psychology: An International Review, 49, 498–516. West, M.A., & Anderson, N.R. (1996). Innovation in top-management teams. Journal of Applied Psychology, 81, 680–693. Womack, J.P., Jones, D.T., & Roos, D. (1990). The machine that changed the world. New York: Macmillan. Zmud, R.W., & Armenakins, A.A. (1978). Understanding the measurement of change. Academy of Management Review, 3, 661–669.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 217–239

AND

ORGANIZATIONAL

Change management: Time for a change! Chris Clegg Institute of Work Psychology, University of Sheffield, UK Susan Walsh Department of Psychology, University of Sheffield, UK

We discuss some core issues in the field of change management. We use these topics to identify some mindsets that dominate the practice of change management, and argue that these should be replaced by some alternatives. The alternatives are drawn largely from operations management and socio-technical thinking. We characterize existing approaches as partial, and speculate that this may be one of the reasons why so many change initiatives are ineffective at meeting their goals. We identify some of the reasons why existing mindsets are sustained. We also point to some ways forward, focusing on changes in the mindsets and language we use. We speculate that these would improve the effectiveness of change initiatives. It is something of a cliché to state that many organizations are at the same time facing, engaging in, and promoting increasing rates of change. Increasing uncertainty and competitiveness in market places, changes in technology enabling and supporting new ways of working, trends towards globalization, the reduction of barriers to entry in some markets as a result of the internet and ebusiness, the perceived need to reduce costs, improve quality, and be more responsive to customer needs, are all held to promote change. Whilst there may be a self-fulfilling element to this organizational and cultural dynamic, it is clear that organizations are engaging in a wide variety of changes. For practical instances we need look no further than the catalogue of change initiatives commonly on organizational and managerial agendas. Consider, for example, initiatives concerned with quality management, supply chain partnering, information and communications technologies, © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000074

CHANGE MANAGEMENT 213

just-in-time working, business process reengineering, teamworking, tele-working, e-business, empowerment, and the like (see, for example, Cairncross, 1998; Hackman & Wageman, 1995; Hammer & Champy, 1993; Holman, Wall, Clegg, Sparrow, & Howard, 2003; Leadbetter, 1999; Storey, 1994; TUC, 2000; Waterson, Clegg, Bolden, Pepper, Warr, & Wall, 1999; Womack, Jones, & Roos, 1990; Wood, Stride, Wall, & Clegg, 2003). There will be few, if any, organizations without experience of many of these changes over the last, and indeed over the next, five or so years. At the same time, the evidence from case studies, expert panels, surveys, and economic analyses suggests that the effectiveness of such changes, when considered against their organizational objectives and/or their economic performance, is often disappointing (Buchanan & Badham, 1999; Clegg et al., 1997a; Gibbs, 1997; Holman et al., 2000; Landauer, 1995; Willcocks & Grint, 1997). Rates of failure appear to be high, and rates of success low. For example, a survey of 898 manufacturing companies examined the rates of use and effectiveness of 12 different management practices and techniques across four countries, namely the UK, Australia, Japan, and Switzerland (see Clegg et al., 2002b). The practices included total quality management, just-intime working, integrated computer-based technologies, concurrent engineering, team-based working, supply chain partnering, empowerment, and business process reengineering. The conclusions from this study are that “there has been considerable uptake of these manufacturing practices, especially during the early and middle parts of the 1990s” (p. 185), but that “overall rates of success of the practices are moderate, with some successes but also high rates of failure” (p. 186). The reports of high failure rates are common in what may be termed the operations management and sociotechnical literatures, where much of the focus has been on the introduction of new technologies, management practices, and ways of working. What then of the literature on organization development? Here we draw on a review by Porras and Robertson (1992), who analysed findings from 72 empirical studies of the impact of a range of organization development (OD) initiatives. These included changes in organizational arrangements (e.g., changes in structures and rewards), social factors (e.g., management style and teamworking), physical setting (e.g., layout and design), and technologies and techniques (e.g., new technology, work flows, and job design). A requirement for inclusion in this review was that each study must: describe the research design, participants, and methods of evaluation; collect and report on quantitative data and statistical analyses; be conducted in the field (rather than be laboratory

Correspondence should be addressed to Prof. Chris W.Clegg, Institute of Work Psychology, University of Sheffield, Sheffield, S10 2TN, UK. Email: [email protected] authors would like to thank the editor and anonymous referees for their insightful and challenging comments.

214 CLEGG AND WALSH

or simulation based); and involve an intervention, minimally for an intact work group. To the best of our knowledge this represents the most comprehensive and rigorous evaluation of the impact of OD. The main findings were that across the studies overall, 53% of the dependent variables showed no change as a result of the OD effort, 9% revealed negative change, and 38% demonstrated positive change. Furthermore, in all the overall categories examined, the instances of no change and negative change in the dependent variables exceeded positive change. As such the evidence from the operations management, sociotechnical, and organization development literatures points to two main conclusions. First, change initiatives are common. And second, their performance appears to be disappointing. This seems to imply that a third conclusion may also be warranted —that, despite having a great deal of practice, many organizations are not very good at change management. In that context, the objectives of this article are to: • examine some key issues in the practice of change management • use these to reveal and summarize what we believe are some problematic mindsets in this area • offer some different perspectives • reflect on underlying partialities in this area, identify some of the reasons why these are sustained, and speculate on their impact • point to some ways forward. To these ends, the article is organized in four further parts. First we offer some background contextual remarks on the domain. Second, we examine a number of key issues in the practice of change management, and use these to reveal what we believe are some dominant and problematic underlying mindsets, in each case offering an alternative. In the third section we argue that each of the existing underlying mindsets reflects partial views of the domain. We identify some of the reasons why these dominant views are sustained, and we speculate that these mindsets help explain why so many change initiatives are disappointing. Finally, we offer views of some potential ways forward. Throughout the article we draw heavily on our experiences of working in organizations, and try to relate these to theoretical issues and concerns as appropriate. We draw primarily on ideas from the operations management and sociotechnical literatures, adopting a polemical tone, which we think appropriate given our criticisms of the area, and our advocacy of the need for change. CONTEXTUAL BACKGROUND To set this article in context we wish to make four interrelated points. First, there have been vast amounts of work conducted in the fields of organizational change. Some of this is practice based and draws attention to some of the lessons learned in this area. What represents good practice, and, perhaps just as

CHANGE MANAGEMENT 215

importantly, what represents bad practice, form the focus of some of this work. It is evident that there is a vast amount of craft-based expertise, and this is as one would expect given the rates and scope of change mentioned earlier. At the same time, there have been numerous more theoretically oriented approaches to change management, and many texts summarize some of the leading approaches. This area is not short of material. (See, for example, Argyris & Schon, 1978; Buchanan & Badham, 1999; Buchanan & Storey, 1997; Burnes, 2000; Cummings & Worley, 2001; Hartley, 2001; Porras & Robertson, 1992; Steers & Black, 1994.) Second, this is an area of interest populated by many different interest groups, some of whom make strong claims of the effectiveness of their particular chosen change initiative. Inevitably perhaps, there are elements of fad, fashion, and hype associated with various changes (Abrahamson, 1996), and the long-serving spectator of this field can discern phases of interest. We recognize that many of these fashions can be interpreted as temporary devices through which various interest groups pursue and reinvigorate their various agendas. It is hardly surprising to observe that the different groups take the opportunity to use such initiatives to promote and further their goals and interests, whether they be consultants, managers, academics, or whatever. At the same time, we acknowledge that some organizations and employees are suffering from initiative fatigue (Holman et al., 2000), captured we thought rather neatly in the plaintive cry “BOHECA” (“Bend Over HEre Comes Another”), used openly in one organization in which one of the authors has worked. Third, it is also apparent that many of the initiatives in this area comprise both technical and/or technique-based innovations, at the same time as human and organizational changes. For example, new forms of working such as e-business involve new ways of working, new working practices and changed relationships between members of the supply chain, and this is enabled by innovations in technology, in this case based on the internet and world wide web. The general point is that all changes comprise a systemic rearrangement, which crosses the perceived divide between the technical and the social (see, for example, Cherns, 1987; Clark, McLoughlin, Rose, & King, 1988; McLoughlin & Harris, 1997; Mumford, 1994; van Eijnatten, 1993). And fourth, it is clear that this literature does identify some generic points of relevance. For example, the literature on technical innovation reveals the political and systemic nature of change. Different parties may view initiatives in quite different ways, often as a function of their roles. A further issue to emerge here is that there is an evolutionary element to such changes, and that this continues after implementation and into use (see McLoughlin & Harris, 1997; Williams, 1997). One implication is that we should consider such changes over their life cycle (i.e., from strategy through to use and adaptation).

216 CLEGG AND WALSH

KEY ISSUES In this section, we examine six key interconnected issues in the practice of change management, and apply to them ideas from the areas of operations management and sociotechnical thinking. The six issues are concerned with: • • • • • •

a business process perspective on change change as “push” or “pull” systems the roles of users a systems perspective the functions of change management the language of change management. A business process perspective on change

One of the major innovations in organizational thinking and operations management since the early 1990s has been the emergence of a business process perspective (Hammer & Champy, 1993). Thus, most organizations now recognize the need to simplify and integrate their core business processes as a way of providing effective services. In part this is an attempt to counter the longstanding domination of functional vertical hierarchies and “silos” in organizations, and to try to think and organize laterally across the organization. It is now commonplace, for example, to argue that we should not separate out and fragment the ordering process from the billing process, assembly from test, or design from manufacture. The reason for such a change in emphasis lies in the longstanding dissatisfaction with separate, fragmented processes (see Womack et al., 1990). For example, the separation of design from manufacturing can lead to designs that are difficult and/or expensive to manufacture. Costs, delays, conflicts, and customer dissatisfaction in such circumstances are common. Whilst the coordination and integration of these activities may be difficult to achieve in practice, in part because it usually involves some organizational restructuring, the logic is commonly accepted (for example, see Bevan, 1996). We think it salutary to ask the question: How well has this way of thinking been adopted in the practice of change management? Unfortunately our experiences are not encouraging. In the area of software development, for example, the use of “waterfall methods” is common. Using such methods, a software development project works through various sequentially organized stages, typically including strategy, feasibility, conceptual design, detailed design, programming, implementation, use, and maintenance. Whilst the precise labelling and organizing of the stages varies depending on the methods adopted, the broad thrust is consistent. There are several problems with such approaches. First, different people tend to be involved at different stages—for example, the people undertaking the strategic thinking tend not to be the ones undertaking the design, and these again

CHANGE MANAGEMENT 217

are different from those who end up using the system. Second, fragmentation is almost always accompanied by differences in goals and objectives, and this can often lead to conflict and turf wars. Third, the opportunity for feedback loops in the process is limited (and hence the label “waterfall” methods). And fourth, this lack of continuity and feedback means it is difficult to influence, and learn from, one another. Bearing in mind that software development processes of this kind may involve many people with different forms of expertise, moving in and out of this system over a period of months and years, we can see how problems might arise. Viewed from a business process perspective, such an approach is unduly fragmented—it is a poor organization design for the provision of learning, collaboration, and effective solutions. (For a fuller development of these arguments, see Clegg, Waterson, & Axtell, 1997b.) It is our argument that this fragmented approach to change is not limited to the field of software development. The lack of continuity between the people who set the strategy, design the new way of working, implement it, use it, then maintain or adapt it, is common. The difficulties of building in feedback loops in the process are also common, and these are often manifest in a lack of “user participation” (see later), and the widespread lack of evaluation of such changes (two potential mechanisms for providing feedback) (Holman et al, 2000). The generic point we are making is that change processes in organizations are commonly fragmented, and appear not to have been designed bearing in mind the powerful logic underlying business process thinking. This fragmentation can be revealed in a number of ways, one of which is brought home to us in the assumptions that people undertaking change management appear to hold concerning the potential role of social scientists in this process. Indeed, as social scientists we have, on occasion, been consulted on change initiatives, often relatively late in the day. A common perception is that the “people problem” is one that arises during implementation, and furthermore, that social scientists can help get people “on board”. For example, we can help devise communications strategies to assist readiness for change and commitment to it. Putting to one side the potentially manipulative aspects of such requests, they are also fundamentally mistaken in other ways. In particular, such perspectives separate the design of an initiative from its implementation, and this has implications for the role of users to which we return later. To summarize, the critical point is that many change programmes are unnecessarily fragmented, having failed to adopt a business process logic that lays stress on continuity. One major problem with fragmented systems of this kind is that they provide poor opportunities for learning and collaboration. On the other hand, fragmented systems are excellent for generating conflict! It is very easy in such systems for one interest group to blame another for any failure or shortfall that may occur. We need to replace fragmented approaches to change management with a more continuous and process-based view. This will have a number of positive consequences and some of these are described in the following sections.

218 CLEGG AND WALSH

Change as “push” or “pull” systems Here we wish to make a distinction common in manufacturing operations and often associated with just-in-time thinking. The distinction is between manufacturing systems that “push” products through the process, as opposed to those that “pull” through products at such time as they are required by customers. The former approach is supply driven, whilst the latter is customer focused (see, for example, Goldratt & Cox, 1984; Ledford, 1995; Womack et al., 1990). The principal benefits of the latter approach are that inventory levels (and thereby costs) are lower, that lead times are reduced, and that customers have their needs met more effectively. Many manufacturing companies have made efforts since the early 1990s to move towards “pull” systems. We now wish to apply this logic to the field of change management. In the section above we argued that change management should be seen as a continuous process, but the point here is that such a process could be dominated by a push logic or a pull logic. Our experience is that most change management initiatives are push systems in which senior managers and various types of expert push change initiatives into parts of their organizations. In the example used in the previous section, waterfall methods are push methods. Whilst we accept that user requirements may be “captured” in the early stages of a change programme, many change initiatives are pushed through until such time as they are handed over to their users during implementation and use. Our argument is that those undertaking change programmes may have much to learn by adopting a pull perspective. In this logic, the users of the new way of working are responsible for pulling through the changes that they need to undertake their work effectively. This has massive implications for the role of users, and also for the adoption of a more systemic approach to change, two issues to which we return later. We note that such pull approaches would be greatly facilitated by the proactive climate described by Fay, Lührmann, and Kohl (2004 this issue). It is important to note that the term “user” is applied here (and throughout this article) in a nonhierarchical sense. The users include the recipients of change (i.e., the end users of some new practice or initiative) and those managing the areas in which the changes have been introduced. To use an example, one of the authors worked with Lyons Confectionery. The company make confectionery products for sale through retail outlets, and this involves the distribution of a range of products nationally using a fleet of several hundred delivery vans. The Sales Director (i.e., the end user responsible for this function) was keen to improve various aspects of the performance of the van sales and delivery operation, and was planning to introduce hand-held computers for use by the delivery staff. The potential benefits were quicker and more accurate sales and stock information, improved manufacturing and delivery schedules, and increased sales. The Director decided to run trials of various hand-

CHANGE MANAGEMENT 219

held computers available on the market, but first he and his team spent time working out how they wanted the new way of working to operate. To do this, he involved his regional sales managers, some delivery drivers and depot workers, and people from sales administration, customer services, and manufacturing (i.e., all the groups linked in the process). The company’s information technology specialist was involved in the project, but as one of the experts advising the project team. In the language used above, the Sales Director and the people in his division were the prospective users of the new system who pulled through the new working arrangements (and technology) that they needed to meet their operational needs. This proved to be one of the most successful change projects we have ever witnessed. We now consider in more detail the role of end users. The roles of users We have argued above that most change initiatives can be characterized as fragmented push systems. This has various implications for the roles of users and, in our view, helps explain some of the issues that dominate the change management literature. There are two issues that we wish to address here. The first is concerned with the whole notion of “user participation”. The second is focused on the topic of “resistance to change”. One of the features commonplace in the literature on change management concerns the plea for user participation. The argument is that users need to have information, interaction and influence concerning the changes they will be experiencing (see, for example, Heller, Pusic, Strauss, & Wilpert, 1998; Wall & Lischeron, 1977). This is one of the enduring foci of change programmes in practice, and the change management literature (for recent examples, see Antoni, 2004 this issue Kujala, 2003). The main benefits of user involvement are held to lie in improved design and improved commitment to change, with, usually, more emphasis on the latter. The common lament is that user participation is “a good thing”, but that it happens too infrequently in practice. Here we wish to take issue with the ways in which this debate is often constructed in organizations. Unfortunately, if we examine these pleas for participation carefully they are usually couched and phrased in a particular way. Thus, they usually can be paraphrased to read something like: “We, the experts in some new technology or technique, are having difficulty getting you (the users and recipients of some kind), to participate in this change programme—please join in.” Note here that the legitimate owners of this change initiative are assumed to be the experts who, in the language used earlier, are pushing some change initiative at the user, who is being asked to join in. We note that this debate is rarely, if ever, constructed the other way round. How often have you heard the issue of participation presented in terms such as these: “We, the users and managers of this new way of working, are having trouble, getting you (the experts in new technology or technique or way of

220 CLEGG AND WALSH

working), to join with us in developing our new way of working—please come and join us.” Note here the reversal in mindset, one that flows directly from the notion of a “pull” system for change. In this view, the people who end up using and managing the new systems are the owners of it, and they are asking various sorts of experts to participate with them in its development. The widespread approach to user participation reflects an important underlying mindset about change programmes. In this perspective, the experts appear to own the change programme, and they (may) spend time seeking to find ways to get the end users to participate, usually in its implementation. The legitimate owners of the new technology, technique, or way of working are the experts, usually until such time as they hand it over for operation and use. At that stage, the users and their managers take over, and the experts move on to other projects. As we argued above, this runs counter to all the received wisdoms regarding the need for process thinking and for continuity. It also fails to acknowledge the potential power of pull systems in which the customer is king. Our argument is that we need a new mindset, one that moves the debate on from the current concerns and arguments regarding user participation. The new ways of working (involving new technologies, techniques, social systems, or whatever) should be pulled through and owned by the people who will manage and use them. At various stages in the life cycle of these new ways of working, other expertise is required. The new mindset replaces push systems with pull systems, and the issue of user participation with user ownership. The problem now becomes one of finding ways of getting various forms of expertise to contribute to the effective design, implementa tion, and use of the new way of working. The legitimate ownership of the new systems rests throughout with the user community. We do recognize the irony here of social scientists arguing against the notion of user participation. Esteemed colleagues have invested considerable energy and expertise in trying to persuade organizations and their managers to take users seriously. They have fought long and hard in this territory (us too!). We do not do this lightly, but we do believe the mindset underlying the notion of user participation includes the seeds of its own downfall. As such we now prefer the notion of user ownership in a pull system. Related to much of the above, one often hears and reads of the problem of “resistance to change” (for example, see King & Anderson, 1995). This appears especially the case when organizations are introducing radical new ways of working, typically involving new technologies. Usually when one hears this lament, it is by “innovative” managers whose subtext appears to be something like: “We have all these wonderful new technologies—but people don’t like change—worse, some of them actively resist it—what can we do about them?” This ongoing managerial lament deserves some challenge. It may be the case, for example, that the employees have experienced a range of managerial initiatives over the previous few years, and that, as a result, they are not sanguine

CHANGE MANAGEMENT 221

(BOHECA!). They may believe they will lose out as a result of the change, for example through job losses or work intensification. They may believe that management are incompetent and have a history of ineffective and wasteful change programmes that do not meet the needs of the company. They may be somewhat cynical and believe that some managers are promoting particular changes for personal career reasons (see later). There may be many reasons why the employees resist change. Indeed, if we put users in the position where changes are pushed at them at the end of a fragmented process, and where they have little influence over design, as we have argued above is often the case, then one might argue that “resistance to change” is one of the few ways in which they can exert some control. Indeed it seems somewhat ironic to allow users relatively little say over, and control of, change, and then blame them when they display adverse reactions. Interestingly too, this labelling is usually projected “down” the organizational hierarchy, and rarely “upwards”. Very rarely is the accusation of “resistance” laid at the door of senior managers. We find it helpful to think of this topic using conjugating verbs. Consider the following as a demonstration: “I am an honest sceptic.” “You are a tad cautious.” “They are resistant to change.” Thus, it is OK for me to be sceptical when faced with change, in fact the adoption of the position of “honest sceptic” is laudable. But when “they” display such attitudes and behaviours, then I interpret these as “resistance”. Of course, it has to be said that the use of this language can be purposeful in that it serves to put pressure on employees to accept the “legitimate” drives for change on the part of their managers. Resisting change thereby is cast as negative, backward looking, selfserving, and based on emotional, and thereby inappropriate, reactions. It will be clear by now that we do not like this term, and that we believe it serves little useful purpose (except for those trying to push changes through). Again a new mindset is required. Part of this will be achieved by the suggestion above that the end user community and their managers become the legitimate owners of the work system in which they are engaged, and that change should be construed as a pull, rather than push, process. Another irony exists here—the people who develop and implement new systems and ways of working sometimes talk about the users (who in effect are their internal customers) in ways in which they would never dream of talking about their external (paying) customers. For someone in a sales or marketing function to describe their external customers as “moaning minnies”, as “resistant to change”, as “failing to understand what is on offer”, and argue that “they will get used to it in time”, would be regarded as professional suicide. And yet, we have heard all these descriptions of internal customers of change, i.e., the users. A genuine leap in mindset would be achieved if we started treating our internal customers like we do our external ones. A counter view should be addressed here. We have been asked whether or not this change in logic simply moves the problem into another area. This could happen in two ways. First, it could be that the problem of “resistance to change”

222 CLEGG AND WALSH

becomes “resistance to ownership”—thus, what if the user community does not choose to act as owners of a work system who actively pull changes towards themselves? Of course, this is entirely possible. However, we have seen successful instances of this approach (see above), and furthermore, there are strong theoretical grounds for hypothesizing that users are more likely to engage in changes over which they have some determination (Deci, Connell, & Ryan, 1992), control (Cherns, 1976), or autonomy (Hackman & Oldham, 1976), than they are with changes in which they are cast in a largely passive role. The second problem concerns those people who previously were the “pushers” of change. They are now cast in the role of supporters to the user owners, and they may regard this as a diminution of their status (as was potentially the case for the IT expert in Lyons Confectionery above). This is equivalent to the inclusion in manufacturing cells of people, such as quality inspectors, who previously did not necessarily see themselves as part of the shopfloor. This can certainly be a problem, but it may be relatively short-lived, and it should be counterbalanced by an improvement in system performance. To summarize here, we wish to argue that we need to replace our existing mindsets about the role of users, currently dominated by concerns over user participation and resistance. In our view, the “problems” of user participation and resistance to change are the inevitable outcomes of the widespread adoption of fragmented and push-based approaches to change. The logical corollary of adopting a process and pull approach to change, is that the end users of change initiatives become the owners of the new way of working. They are the owners of the change who pull through the changes they need to undertake their work. Other experts, whether they work in IT, or with whatever form of expertise, are there to support the users in getting the new ways of working that they need. This is not without its problems, but it has the further benefit that it helps engender a systemic approach to change, and we develop this argument below. A systems perspective At the beginning of this article, we alluded to the view, prevalent in the academic literature, that change initiatives are systemic in nature, typically involving changes both to the technical and the social system. In practice however, the majority of organizational change programmes pay most attention to new technologies, techniques, and tools, as opposed to the social (human and organizational) aspects of change. (We accept this is more likely to be true in the general management and operations management field, than it is in the area of organization development.) To take the example of companies introducing new information and communications technologies, they usually focus most of their attention and resources on the technology, rather than on getting the human and organizational issues right. For example, Clegg et al. (1997a) reported that “IT

CHANGE MANAGEMENT 223

remains technology-led…IT is not seen in an integrated way as raising sets of related business and organizational issues” (p. 859). A related study by Holman et al. (2000) examined a wider range of change programmes, including total quality initiatives, supply chain partnering, teamworking, empowerment, new technology, business process reengineering, and others. Their conclusions (p. 128) are similar: change tends to be technology or technique led…other aspects of the organization, such as human resource practices, job and work design, accounting systems, and supply chains, are often considered late in the change process, or only when it is clear that a problem has arisen. One result of this is that changes to these systems are rushed through with little consultation and participation. Another outcome is that the resource implications of such changes are not costed in the project plan. A consequence being that such changes are under resourced and inadequately implemented. And finally here, a study of e-business by Clegg et al. (2002a) found that the overwhelming majority of a group of leading experts from a variety of backgrounds agreed that it was either imperative or very important that companies adopt a total systems approach to e-business. However, most of these experts reported that, in practice, companies focus mainly on the technology when developing their e-businesses. The evidence over time and across instances points to a general finding. In most companies, and for most of the time, the technical commands more attention than the social. The focus of much change management is unduly partial. Earlier we argued in favour of an approach to change involving pulling rather than pushing, and this will have a further benefit. We have on several occasions been involved in change programmes where there has not been enough attention paid to the human and organizational aspects of the change. We have then tried to persuade project managers of the need to take on board issues concerned with new working practices, new job designs, new business processes, and the like. This has often proved futile. Trying to persuade busy and overwhelmed people, usually heavily focused on technologies and techniques, that their projects and problems are more difficult and complex than they realized, is not well received. This is easier to understand when we recognize that project managers usually are not expected to address these issues, are not rewarded for doing so, and have no particular expertise in these areas. This is not a recipe for success. But if we adopt the position argued above, that it is the end-user community and their managers who are pulling changes towards themselves, then the logic is different. These same issues are interesting to this community, because they are critical to future success and they are issues with which they will be dealing every day.

224 CLEGG AND WALSH

An example helps illustrate the argument. One of the authors undertook some projects in a large company manufacturing computers. Managers in this particular factory were used to introducing new technologies and new ways of working into their production processes, but they were also used to disappointing results from such investments. As a result they changed how they managed their change projects. For each major change project, the line manager who was to become the customer/recipient of some new technology and/or way of working (and thereby responsible for its use), was made the project manager responsible for its design and implementation. If, for some reason, this were not possible, the project manager of the change would remain with the change after implementation, and would be responsible for its line management once in use. In one way or another, the same person became responsible for the design, implementation, and use of the new way of working. As such, continuity and a process-based view were promoted, and the users experienced some ownership. One direct result was that change projects were no longer geared to, and managed against, the problem of getting some technology or technique implemented. Because responsibility now extended to actual use, the focus became much more systemic. Project teams were now much more interested in the detail of how the system would work once it was operational. Working practices, work organization, and user issues now became critical. The company believed this alteration in project management was the single most important innovation it undertook to improve the performance of its change initiatives. To recap here, we have argued that many companies focus too much on the technical aspects of change, and do not adopt a sufficiently systemic view of the changes they are undertaking. This more systemic orientation is entirely consistent with a mindset in which change is a continuous process pulled and owned by the users. The functions of change management Implicit in much of the work on change management is the assumption that changes are pursued to meet various valued organizational goals. Thus, for example, a company may introduce a new way of working to reduce costs, to improve quality, and thereby to increase the company’s competitiveness. These may be seen as the manifest goals of the change initiative. Of course, in practice, other goals may also be important, and further, these may vary depending on the particular stakeholder group involved. Let us illustrate this argument using the technique of Soft Systems Analysis, developed by Peter Checkland at Lancaster University (Checkland, 1981). Part of this technique involves the analyst in deliberately searching for different ways of looking on a complex system. Take the simple example of a British pub. A pub can be seen in a variety of ways, for example as a system for: enabling friends to meet and socialize; providing entertainment; initiating adolescents into adulthood; attracting tourists; making profits; scheduling the work of the police;

CHANGE MANAGEMENT 225

providing work for taxi drivers; dispensing drugs; relieving stress; providing employment; and so on. All of these, and more, are possible ways of construing the simple pub. Let us use that same idea and apply it to a change programme in a company, using the example of a company trying to introduce e-commerce. The change towards ecommerce could be seen as an initiative for: improving organizational effectiveness; keeping ahead of the competition; impressing the City and the shareholders; creating an image of modernity and customer focus; learning new ways of thinking and working; providing development opportunities for key individuals; enhancing the careers of managers in key roles; reinvigorating existing managerial agendas; attracting resources and power to the project team; and so on. The point we wish to make here is that change management usually has the manifest agenda of improving organizational performance in some way. But any change initiative may well have many other latent functions. Thus, careerconscious managers may see the opportunity to be centrally engaged in a major change programme as a good way of developing their expertise and their careers. Large change programmes are excellent ways of attracting significant organizational resources, of generating power, and building up useful networks and alliances. Senior managers may also engage in successive change programmes to keep getting home to employees enduring messages regarding the need to raise quality, reduce costs, etc. The precise nature of any particular change programme is less important here than is the continuing rhetoric and education on organizational competitiveness. Certain change programmes may also be important ways of demonstrating to the City that the company is taking an issue seriously, that it is engaging in appropriate behaviours. One can elaborate this argument further but the general points are clear. Change management initiatives are multifunctional endeavours that involve the different interest groups and stakeholders in different ways. Pluralism is the norm (Fox, 1974). It is oversimplistic just to focus on the apparent manifest goals, especially as stated in some change programme and investment case. Other goals will also be present and these need recognition and attention. We have been challenged as to whether or not such pluralism becomes any easier to manage in a continuous pull system (of the kind we are advocating), than under the normal ways of managing change (that we have been criticising). We acknowledge that pluralism is inevitable, but argue that the problems of different objectives are reduced in two ways. First, the organization of work using continuous (as opposed to fragmented) processes reduces the scope for conflicting objectives. For example, look no further than the conflicts that used to be common between design and manufacture, or between assembly and test. And second, the move to a pull (as opposed to a push) system is likely to give primacy to the objectives of the group of people who will operate and be responsible for the new work system. This is equivalent to the sociotechnical notion of handling variances at source (see Cherns, 1976).

226 CLEGG AND WALSH

The language of change management Several references have been made in earlier sections to the language that we use in this field. Here we have chosen to draw them together because they help reveal the mindsets which we believe underpin this area. We also believe the language that is used helps create and sustain some inappropriate mindsets (Argyris & Schon, 1978). As such we argue that several of these terms should be dropped from common usage, or, at the very least, should be treated with considerable scepticism when they are adopted. More positively, we advocate that these terms are replaced with other phrases that reflect different underlying mindsets, of the kinds we have proposed earlier in this article. In particular, the very phrase “change management” seems to us inappropriate and potentially misleading. It conjures up a focus on the implementation phase (i.e., the change) and rarely appears to embrace a concern for the design of the new working system. Too rarely do change management debates involve discussion of the full life cycle incorporating strategy, design, implementation, use, and evolution, and yet these are part of a continuous process. Change management also places the focus on managerial issues. Whilst managerial concerns and issues do arise in this area, and are both interesting and legitimate, surely there are other issues and perspectives of equal validity and concern. Why stress the managerial issues? As we have argued, other stakeholders are implicated directly or indirectly in change processes, especially if we adopt a longer life cycle, process-based and multifunctional perspective as we are advocating. One clear implication here is that we drop the label of “change management” because it betrays too limiting a mindset, one too focused on one part of the life cycle of an initiative, and on one particular (albeit important) interest group. Two alternative phrases seem improvements to us. One alternative would be to use the term “system design and use”. This helps capture the (inevitable) systemic nature of changes, along with the continuous processual (or life cycle) aspects. It avoids undue concentration on managerial issues. A second alternative would be to use the term “organization development” (we are grateful to one of the referees for this suggestion). This stresses the open-ended and evolutionary aspect of change. Either alternative seems to us an improvement. The underlying point is that the very term “change management” both reveals and helps sustain several partialities (concerning timing, focus, and interest group) that do not seem useful in what should be seen as a systemic issue. We also advocate that we should challenge the use of terms such as user participation and user resistance to change when they are used in this area. In line with the arguments above, we prefer a concern for user ownership. Resistance to change seems to us a term of limited usefulness.

CHANGE MANAGEMENT 227

PARTIALITY AND ITS IMPLICATIONS At the core of the each of the above issues lies the notion of partiality. We are claiming that the practice of change management in many organizations reveals and reflects too limited a view. More specifically, organizations are often too partial in their practice and thinking of change management, in particular regarding the way they fragment the process and manage it as a push system, the roles of users and experts, the lack of a systems perspective, and the functions of change. The language that is used reflects, reveals, and helps sustain these partialities. We believe that a recognition of the existence of these partialities and their underlying mindsets helps reveal why many change initiatives are so often ineffective in meeting their organizational goals. Indeed, we would argue it would be very surprising indeed if the use of fragmented, push-based systems of change that do not address systemic issues, nor treat their users appropriately, were actually able to deliver effective new ways of working. We have been challenged on whether or not the ideas presented in this article are any less partial than those we are criticising. In answer, we believe that the emphasis we have placed on a continuous process through the life cycle of change, on a whole systems view, and on multiple goals and the recognition of pluralism, are all less partial than the existing practices we have described. In these ways we believe our approach is less partial. We do accept that the replacement of push-based with pull-based systems replaces one owner with another, but we believe this will be more effective and we return to this argument later in the article. We also predict that change will get harder and more complex to manage. Thus, we do not believe these issues will go away or resolve themselves of their own accord. To illustrate this argument, we use a product analogy. One of the authors is working with a large aerospace engineering company that designs, manufactures, and supports very complex products. The company is persistently having to improve the performance capabilities of its product lines to maintain and enhance its market share in a highly competitive environment. As it does this, it finds that it has to learn of new interdependencies within its products. Thus, as it extends the performance of its products, the company has to learn of new ways in which the product behaves under more challenging circumstances. In systems language, new interdependencies have to be learned as slack is taken out of the system. We predict that the same things will happen in processes as is happening with products. Thus, as the changes we make in our new ways of working get more complex, perhaps involving increasingly global activities, as they increasingly incorporate more complex interactions between people and advanced technologies, and as we continue to try to reduce lead times, then we will need to understand more of the systemic complexities with process. Our speculation then is that processes will get more complex, more tightly coupled, and involve less slack (see Clegg, Icasati-Johanson, & Bennett, 2001). Because

228 CLEGG AND WALSH

these are the very circumstances where partial perspectives on change will be especially ineffective, these problems will become more, rather than less, important. The implication is that change management activities will get harder to manage and rates of failure, of the kind discussed at the beginning of this article, will get higher. At this stage, the interested reader might reasonably ask two questions: • How are such partialities sustained? • What can we do about them? We try to address the second question in the next section. As for the first, we have found useful parallels with the analysis presented by Karl Weick (1996). He was exercised by the need for experts in a domain to take stock of the tools that they carry and use. He considered why it was that two sets of fire-fighters in the USA failed to drop their heavy tools when running away from forest fires out of control, when, with the benefit of hindsight, this would have saved several of their lives. He uses this as a vehicle for analysing the situation facing scholars of organizations, arguing we should periodically take stock of our tools to ensure we are not too heavily laden to cope with dangerous and fast-changing circumstances. He argues: “There is no shortage of candidates for tools that weigh us down and preclude lightness” (Weick, 1996, p. 312). Weick (1996) was not focused specifically on the area of change management, but his points do apply. Furthermore, we have added some of our own views to his original list. Thus, people are likely to persist with their tools and mindsets when: • • • • • • • • •

there are no clear, unambiguous reasons to change they don’t trust the people telling them to change they are under pressure and they choose to trust in the familiar replacement tools are not proven (or worse, do not exist) dropping existing tools seems and feels like failure everyone else is using the same tools the tools are part of the group’s professional identity (“our tools are us”) use of the tools conveys power and legitimacy to their users the tools serve and further the interests of their users.

If we use the argument that our mindsets about change are part of our professional “tools” in this area, we can begin to see how difficult it may be to enact changes of the kind we are advocating. Weick argues that “people have multiple interdependent, socially coherent reasons for doing what they do“(p. 308). Overall, we are advocating that the people who undertake change in organizations need to change their mindsets. In keeping with the arguments in this article, we believe this will be easier to achieve if such changes are pulled

CHANGE MANAGEMENT 229

into this domain by their users (i.e., by people like ourselves engaged in system design and use). WAYS FORWARD We have argued above that our thinking and understanding about change management is too partial on a number of issues, and speculated that this helps explain why such change initiatives so often disappoint. Before discussing the ways forward, we wish to address the issue of whether or not the views we have offered are any more likely to be successful if adopted. Here we offer three defences of our views. First, the ideas hold good currency in the fields of operations management and sociotechnical thinking. For example, to the best of our knowledge, no-one in the field of operations management is advocating the abandonment of continuous pull-based systems. We are simply arguing that these principles can usefully be applied to the field of change management. Second, we have described some case-based instances of where we have seen these ideas successfully put into practice. And third, these ideas do have some theoretical rationale. For example, the advocacy of pull-based userowned change is entirely consistent with a long tradition of theoretical and empirical work stressing the importance of self-determination (Deci et al., 1992), autonomy at work (Hackman & Oldham, 1976), handling variances at source (Cherns, 1976, 1987), and empowerment (Wall, Cordery, & Clegg, 2002). We believe there is a logical coherence to these arguments, though, obviously, we do accept that they should be subject to serious empirical investigation. We now return to a discussion of the ways forward. Rather than try to spell out a full manifesto for change, we identify four key issues that we believe lie at the heart of this debate. In each case the target audience comprises all those of us actively engaged in change issues, including practitioners, consultants, and researchers. First, we need to reject some of the old mindsets and language that dominate the field of change management and replace them with new ones. We have summarized these in Table 1. We need to replace a fragmented and push-based approach to change with more process-based, “pull systems”. We need to change our view of users, and the dominant concerns we have concerning their participation and their resistance to change. We should regard users as the legitimate owners who pull towards themselves the changes they need to help them undertake their work more effectively. This will help them adopt a more systemic approach in which they deal both with the technical and the social. We also need to take regard of the multifunctional nature of change initiatives. These are major alterations in how we think about change in organizations. Second, a logical corollary of adopting a systemic view of change, is that we work with other groups and communities to design better ways of working. This requires that we embrace opportunities for multidisciplinary working (for example, with engineers, computer scientists, strategists, and

230 CLEGG AND WALSH

TABLE 1 Mindsets Existing dominant mindsets

Proposed new mindsets

Fragmented process Continuous process Focused on implementation Focused on strategy, design, implementation and use Push-based system Pull-based system Supply-dominated Customer-dominated User participation User ownership User resistance to change Participation of experts Focus on technology Systemic view Focus on organizational goals Focus on multiple goals Managerial emphasis Emphasis on pluralism “Change management” “System design and use” or “Organization development”

others), and develop expertise in such collaborations. This will require increasing support for multidisciplinary research and development (see also Norman, 1998). One implication that flows directly from this is that some social science work becomes more prospective. Thus social scientists need to get engaged in the design of new systems and ways of working at the outset. Social science, in this view, has a legitimate role as a design partner and one engaged in predicting the future and helping make it happen (Norman, 1998). Third, we need to continue to develop and use methods and tools, which foster the inclusion of social science ideas in the design process, and thereby encourage and facilitate the new mindsets we are advocating. Existing methods and tools that provide role models include search conferences (Emery & Purser, 1996), ETHICS (Mumford, 1987, 1994), soft systems analysis (Checkland, 1981), scenarios planning (Axtell, Pepper, Clegg, Wall, & Gardner, 2001), and allocation of function (Waterson, Older Gray, & Clegg, 2003). Such methods and tools provide vehicles for taking such an agenda forward. (Unfortunately there is not space here to describe such tools in any detail.) And finally, as mentioned above, we propose that these ideas are subjected to empirical test. Our view is that these are significant changes in the mindsets held by people involved in organizational change programmes. They will require that many people think quite differently about change and how they organize it. We speculate that it requires changes this radical to enable organizations and people to manage and deal with change more effectively. We predict that changes underpinned by the mindsets advocated here would be more effective, but that they will be hard to promote.

CHANGE MANAGEMENT 231

REFERENCES Abrahamson, E. (1996). Management fashion. Academy of Management Review, 21, 254–285. Antoni, C. (2004). Research note: A motivational perspective on change processes and outcomes. European Journal of Work and Organizational Psychology, 13(2), 197–216. Argyris, C., & Schon, D. (1978). Organisational learning: A theory of action perspective. Reading, MA: Addison-Wesley. Axtell, C.M., Pepper, K., Clegg, C.W., Wall, T.D., & Gardner, P. (2001). Designing and evaluating new ways of working: The application of some sociotechnical tools. Human Factors and Ergonomics in Manufacturing, 11, 1–18. Bevan, H. (1996). Managing today while creating tomorrow: The paradox of a reengineering journey [Working Article No, HWP 9630]. Henley, UK: Henley Management Group. Buchanan, D., & Badham, R. (1999). Power, politics and organizational change. London: Sage. Buchanan, D., & Storey, J. (1997). Role-taking and role-switching in organisational change: The four pluralities. In I.McLoughlin & M.Harris (Eds.), Innovation, organisational change and technology. London: Thompson Business Press. Burnes, B. (2000). Managing change: A strategic approach to organisational dynamics. London: Pitman. Cairncross, F. (1998). Communications and distance. Royal Society of Arts Journal, 2(4), 53– 59. Checkland, P. (1981). Systems thinking, systems practice. Chichester, UK: Wiley. Cherns, A. (1976). Principles of socio-technical design. Human Relations, 29, 783–792. Cherns, A. (1987). Principles of socio-technical design revisited. Human Relations, 40, 153–162. Clark, J., McLoughlin, I., Rose, H., & King, J. (1988). The process of technological change: New technology and social change in the workplace. Cambridge, UK: Cambridge University Press. Clegg, C.W., Axtell, C.M., Damodaran, L., Farbey, B., Hull, R., Lloyd-Jones, R., Nicholls, J., Sell, R., & Tomlinson, C. (1997a). Information technology: A study of performance and the role of human and organizational factors. Ergonomics, 40, 851–871. Clegg, C.W., Chu, C., Smithson, S., Henney, A., Willis, D., Jagodzinski, P., Hopkins, B., Icasati-Johanson, B., Fleck, S.J., Nichols, J., Bennett, S., Land, F., Peltu, M., & Patterson, M. (2002a). E-business prospects: Findings from an expert panel. London: Department of Trade and Industry. Clegg, C.W., Icasati-Johanson, B.M., & Bennett, S. (2001). E-business: Boom or gloom? Behaviour and Information Technology, 20, 293–298. Clegg, C.W., Wall, T.D., Pepper, K., Stride, C., Woods, D., Morrison, D., Cordery, J., Couchman, P., Badham, R., Kuenzler, C., Grote, G., Ide, W., Takahashi, M., & Kogi, K. (2002b). An international study of the use and effectiveness of modern manufacturing practices. Human Factors and Ergonomics in Manufacturing, 12, 171–191.

232 CLEGG AND WALSH

Clegg, C.W., Waterson, P.E., & Axtell, C.M. (1997b). Software development: Some critical views. Behaviour and Information Technology, 16, 359–362. Cummings, T., & Worley, C. (2001). Organisation development and change. St. Paul, MN: West Publishing. Deci, E.L., Connell, J.P., & Ryan, R.M. (1992). Self-determination in a work environment. In V.H. Vroom & E.L. Deci (Eds.), Management and motivation. London: Penguin. Emery, M., & Purser, R.E. (1996). The search conference: Theory and practice. San Francisco: Jossey Bass. Fay, D., Lührmann, H., & Kohl, C. (2004). Proactive climate in a post-re-organization setting: When staff compensates managers’ weaknesses. European Journal of Work and Organizational Psychology, 13(2), 241–267. Fox, A. (1974). Beyond contract: Work, power and trust relations. London: Faber & Faber. Gibbs, W.W. (1997). Taking computers to task. Scientific American, 277 (July), 64–71. Goldratt, E.M., & Cox, J. (1984). The goal. New York: North River Press. Hackman, J.R., & Oldham, G.R. (1976). Motivation through the design of work: Test of a theory. Organizational Behavior and Human Performance, 15, 250–279. Hackman, J.R., & Wageman, R. (1995). Total quality management: Empirical, conceptual and practical issues. Administrative Science Quarterly, 40, 309–341. Hammer, M., & Champy, J. (1993). Re-engineering the corporation: A manifesto for business revolution. London: Nicholas Brealey Publishing. Hartley, J. (2001). Organizational change and development. In P.B.Warr (Ed.), Psychology at work. Harmondsworth, UK: Penguin. Heller, F., Pusic, E., Strauss, G., & Wilpert, B. (1998). Organisational participation: Myth and reality. Oxford, UK: Oxford University Press. Holman, D., Axtell, C., Clegg, C., Pepper, K., Waterson, P., Cantista, I., & Older-Gray, M. (2000). Change and innovation in modern manufacturing practices: An expert panel survey of UK companies. Human Factors and Ergonomics in Manufacturing, 10, 121–137. Holman, D., Wall, T.D., Clegg, C.W., Sparrow, P., & Howard, A. (2003). The new workplace: A guide to the human impact of writing practices. Chichester, UK: Wiley. King, N., & Anderson, N. (1995). Innovation and change in organisations. New York: Routledge. Kujala, S. (2003). User involvement: A review of the benefits and challenges. Behaviour and Information Technology, 22, 1–16. Landauer, T.K. (1995). The trouble with computers. Cambridge, MA: MIT Press. Leadbetter, C. (1999). Living on thin air. London: Penguin. Ledford, G.E. (1995). Just-in-time. In N.Nicholson (Ed.), Encyclopedic dictionary of organizational behaviour, Oxford, UK: Blackwell. McLoughlin, I., & Harris, M. (1997). Innovation, organizational change and technology. London: International Thomson Business Press. Mumford, E. (1987). Sociotechnical systems design. In G.Bjerknes, P.Ehn, & M.Kyng (Eds.), Computers and democracy: A Scandinavian challenge. Aldershot, UK: Avebury. Mumford, E. (1994). Tools for change and progress. Leiden, Netherlands: CSG Publications. Norman, D. (1998). The post disciplinary revolution. Retrieved June 30, 2002, from http:// www.jnd.org/dn.mss/hfes-id-talk.htm

CHANGE MANAGEMENT 233

Porras, J.I., & Robertson, P.J. (1992). Organizational development: Theory, practice and research. In M.D.Dunnette & L.M.Hough (Eds.), Handbook of industrial and organizational psychology. Palo Alto, CA: Consulting Psychologists Press. Steers, R.M., & Black, J.S. (1994). Organisational behaviour. New York: HarperCollins. Storey, J. (1994). New wave manufacturing practices: Organizational and human resource management dimensions. London: Paul Chapman Publishing. Trades Union Congress. (2000). The future of work. Retrieved June 30, 2002, from http:// www.tuc.org.uk/em_research Van Eijnatten, F.M. (1993). The paradigm that changed the workplace. Assen, The Netherlands: Van Grocum. Wall, T.D., Cordery, J.L., & Clegg, C.W. (2002). Empowerment, performance and operational uncertainty: A theoretical integration. Applied Psychology: An International Review, 51(1), 146–169. Wall, T.D., & Lischeron, J. (1977). Worker participation. London: McGraw-Hill. Waterson, P., Older Gray, M.T., & Clegg, C.W. (2003). A sociotechnical method for designing work systems. Human Factors, 44(3), 376–391. Waterson, P.E., Clegg, C.W., Bolden, R., Pepper, K., Warr, P.B., & Wall, T.D. (1999). The use and effectiveness of modern manufacturing practices: A survey of UK industry. International Journal of Production Research, 37, 2271–2292. Weick, K.E. (1996). Drop your tools: An allegory for organizational studies. Administrative Science Quarterly, 41, 301–313. Willcocks, L., & Grint, K. (1997). Re-inventing the organisation? Towards a critique of business process re-engineering. In I.McLoughlin & M.Harris (Eds.), Innovation, organisational change and technology. London: Thompson Business Press. Williams, R. (1997). Universal solutions or local contingencies? Tensions and contradictions in the mutual shaping of technology and work organisation. In I.McLoughlin & M.Harris (Eds.), Innovation, organisational change and technology. London: Thompson Business Press. Womack, J.P., Jones, D.T., & Roos, D. (1990). The machine that changed the world. New York: Maxwell Macmillan International. Wood, S.J., Stride, C.B., Wall, T.D., & Clegg, C.W. (2003). Revisiting the use and effectiveness of modern management practices [Working Article]. Institute of Work Psychology, University of Sheffield, Sheffield S10 2TN, UK.

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 241–267

AND

ORGANIZATIONAL

Proactive climate in a post-reorganization setting: When staff compensate managers’ weakness Doris Fay Justus-Liebig-Universität Giessen, Germany Harald Lührmann and Carsten Kohl Accenture, Germany This study explored the effects of proactive climate on performance in a post-reorganization setting. We hypothesized that proactive climate should have both a direct effect on unit performance and should—in the sense of the “substitutes for leadership” approach— enhance the effect of managers’ entrepreneurial attributes (e.g., personal initiative) on unit performance. Hypotheses were tested using data from organizational units, called “centres” (n=35), of four recently reorganized public transport organizations. Managers provided ratings of centre performance, and centre members assessed their centre’s climate. Proactive climate was positively related with performance. Moderated regression analyses revealed significant interaction effects between proactive climate and some centre manager variables; however, the interaction pattern indicated that proactive climate compensated for a low degree of entrepreneurial attributes.

Organizational climate has long been recognized as a critical factor for a broad range of organizational outcomes such as customer service quality (Schneider, White, & Paul, 1998), staff satisfaction (Ostroff, 1993), learning motivation and transfer from training-to-work (Colquitt, LePine, & Noe, 2000), and most importantly, for organizational performance (Baer & Frese, 2003; Denison & Mishra, 1995). In face of the increasing demand of © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000083

PROACTIVE CLIMATE 235

organizations to continuously adapt to shifts in market structure, to new technology, deregulation, or legal initiatives, and other fundamental environmental and internal changes, scholars of organizational science have also turned to investigating the relevance of climate for organizational change. Studies on climate for innovation (Scott & Bruce, 1994; West, Smith, Feng, & Lawthom, 1998), for initiative (Baer & Frese, 2003), or implementation climate (Klein, Conn, & Sorra, 2001) revealed that climates have the potency to influence various processes through which organizations change. We build on this work by studying the role of proactive climate in organizations that were in the consolidation phase after large-scale changes. The main purpose of this study is to test the interplay of managers’ attributes and climate on performance. Many organizations seek to counter the increasing competition and the challenge of responding more flexibly and innovatively to market changes by encouraging entrepreneurial behaviours of their managers (Antoncic & Hisrich, 2001; Hisrich, 1990). Drawing on literature from leadership substitutes theory, we develop a model on the multiplicative effect of proactive climate and manager attributes on performance: We argue that the effectiveness of entrepreneurial behaviours depends on the climate in which managers operate. This departs from the typical approach in climate studies that tends to focus on linear effects of either climate on outcome variables or of leader variables on climate (e.g., Maierhofer, Griffin, & Sheehan, 2000; Zohar, 2000, 2002). With the exception of a recent study that looked at the interplay of leader-member exchange and safety climate (Hofmann, Morgeson, & Gerras, 2003), the potential interplay of climate and manager variables seems to have gone so far unnoticed. This article is organized as follows: First, we define the concept of climate and we introduce the specific climate investigated here, proactive climate. Second, we explore a variable that may limit the assumed positive effect of proactive climate. Third, we outline the significance of managers’ entrepreneurial attributes for performance. On this basis, we develop the interactive model, before finally putting the hypotheses to a test.

Correspondence should be addressed to Doris Fay, Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK. Email: [email protected] paper is based on the project “Economics of Culture Change”, a collaborative effort of Accenture, Germany, and Doris Fay and Michael Frese (Giessen University). We are much indebted to Accenture supporting this study. We thank Miriam Hobbelmann, Bettina Fackelmann, and Ralf Russ from Accenture for their support in delivering this project. We would like particularly to acknowledge the helpful comments of Sabine Sonnentag, our reviewers, and Michael Grojean on earlier versions of this manuscript.

236 FAY, LÜHRMANN, KOHL

PROACTIVE CLIMATE The most commonly used definition of climate conceptualizes it as employees’ “perceptions of the events, practices, and procedures and the kinds of behaviours that get rewarded, supported, and expected in a setting” (Schneider, 1990, p. 384). Two characteristics of the climate concept are noteworthy. First, climate is a quality of a social unit (e.g., of an entire organization or a business unit). The larger and more diversified an organization, the more likely it is that subunits develop their own distinct climates warranting investigation of the organizational units’ climates in addition to organizational climate. Second, climate is not a unidimensional phenomenon, but has many facets. Typically, the research question drives the choice for the aspect of climate being studied. For example, studies in manufacturing looked at the relevance of safety climate for employees’ unsafe behaviour (Hofmann & Stetzer, 1996) and microaccidents (Zohar, 2000); research on success of organizational change initiatives looked at climate for initiative and implementation climate (Baer & Frese, 2003; Klein et al., 2001). In this study, we focus on proactive climate. We define proactive climate as the shared perceptions that working practices are characterized by three orientations: (1) orientation towards self-starting actions, (2) orientation towards work innovation, and (3) orientation towards error management. The first aspect, the orientation towards self-starting actions, refers to the tendency of members of a social unit to search for action opportunities and to identify emerging tasks in contrast to reacting to action demands. It implies that members of a unit have a tendency to leave routine tracks of behaviours without having received direct orders or requests. This is similar to the climate for initiative (Baer & Frese, 2003) and goes back to the notion of individuals’ self-starting actions implied in the construct of personal initiative (Fay & Frese, 2001). The second component of proactive climate is a social unit’s orientation towards work innovation. This orientation implies to be open to new approaches and practices, as well as to be ready to try new things out and to even initiate new working methods. Previous research found that a person’s propensity to innovate is a potent predictor of innovation in individual level analyses (Bunce & West, 1995). Orientation towards error management represents the final aspect of proactive climate. An individual level study on error approaches identified various dimensions of error orientations such as error avoidance, error risk taking, or learning from errors (Rybowiak, Garst, Frese, & Batinic, 1999). Error management climate is the collective tendency to discuss errors openly and regard them as learning opportunities. It was studied under the assumption that this orientation should lead to organizational learning and benefit the company. It appeared that organizations’ error management climate was positively related to organizational performance (van Dyck, Frese, Baer, & Sonnentag, 2003).

PROACTIVE CLIMATE 237

Both theory and empirical evidence suggest that the three orientations— towards self-starting actions, work innovation, and error management— interact and support each other and are therefore highly interrelated (Baer & Frese, 2003; Frese & Fay, 2001). We will therefore conceptualize them here as components of one climate. First, the orientations to self-starting actions and to innovation are likely to develop concurrently. Self-starting actions entail leaving routine tracks of behaviours; this often implies doing something new or in an innovative way. Likewise, testing an innovative way of doing one’s work presupposes for many jobs some degree of self-starting actions. Hence, we believe that the development of a social units’ self-starting and innovative orientation are strongly related. Secondly, the emergence of these two orientations is tied to the materialization of an error management orientation. Doing something out of the ordinary—as implied in self-starting and innovative behaviours—increases the likelihood of making errors and of producing unexpected and undesired outcomes (Frese & Fay, 2001). An error management orientation signals that it is safe to run the risk of making errors (van Dyck et al., 2003); it indicates that disruptions caused by errors will be dealt with constructively. This should encourage a social unit’s self-starting and innovative orientation to work. Recent research supports the notion that the self-starting and error management orientation are highly interrelated. The climate for psychological safety (Edmondson, 1999)—which is similar to the error management climate—has a high overlap with the self-starting orientation (r=.70, p<.01, cf. Baer & Frese, 2003). Therefore, we conceptualize proactive climate here to comprise an orientation towards self-starting actions and novel approaches, combined with a constructive approach to errors. PROACTIVE CLIMATE AND PERFORMANCE A high degree of proactive climate should be beneficial to the performance of the entire organization or the organizational unit under investigation. Organizational units in which members actively approach tasks and problems and develop new ways of dealing with them should have a higher level of performance (Fay & Frese, 2001). This should be especially the case after organizational changes, when new routines have not yet been fully established. Here, we explore the effect of proactive climate in organizations that had completed large-scale organizational change initiatives. In such a consolidation phase, implementation of the new strategy, new organizational structure, and technology has been finished; nevertheless, there are still adaptations to be made and unexpected problems appear that may hinder optimal performance. A key factor for getting the maximum benefit out of the new structure and technology is that organizational units show high levels of proactivity by actively approaching the problems, taking measures to overcome the disruptions, by customizing and tailoring the implemented changes to the specific needs and characteristics of their

238 FAY, LÜHRMANN, KOHL

organization (Baer & Frese, 2003; cf. Fay & Frese, 2001; Frese, Fay, Hilburger, Leng, & Tag, 1997). Previous research lends some support to this. Under the assumption that proactive climate is especially important when firms have to cope with the disruptions involved in the implementation of changes (Klein & Sorra, 1996), Baer and Frese (2003) studied the development of organizational performance in relation to the climate in organizations that had adopted process innovations. The climate for initiative—a climate similar to proactive climate— predicted improvements in organizational performance. The authors argued that proactive change participants support organizational changes “being realized to their full potential” (p. 49). Here, we seek to replicate this effect in a somewhat different context: We assume that proactive climate is positively related to performance in slowly changing situations. As said, this study was carried out with organizations that had recently undergone large-scale reorganizations by which they assumed a centre structure with cost and profit centres. This has two implications: First, the organizations were in the consolidation phase after a major change. Second, as the organizations were structured in centres, with the centres representing organizational units that have own performance measures, the centres are the unit of analysis (instead of the whole organizations). Hypothesis 1: Proactive climate is positively related to performance. Are there conditions that limit the proactive climate’s positive effect? The previous hypothesis (and also the hypotheses developed at a later stage of this article) generally imply a positive effect of proactive climate on performance. This notion of proactive climate’s beneficial outcomes shall be given here some specification. A high degree of proactive climate may under certain conditions be detrimental to centre performance. As self-starting behaviours imply leaving routine tracks of behaviour, it is important that actions taken are aligned with the overall goals of a centre and of the organization. Hence, individuals in centres with a high level of proactive climate need to be well aware about the organization’s and especially their unit’s goals and objectives. A lack of goal knowledge could lead to engaging in the “wrong” activities (Campbell, 2000). The relevance of goals for individual and group behaviour has long been established in work and organizational psychology. For example, there is abundant evidence on goals contributing to performance by directing and energizing behaviour (Locke & Latham, 1990). Whereas goal-setting theory emphasizes the importance of goals being high and specific, other approaches highlight the relevance of goal clarity (e.g., Team Climate for Innovation; Anderson & West, 1998). With jobs and roles becoming increasingly ambiguous and with more job discretion being entrusted to front-line employees, goals need

PROACTIVE CLIMATE 239

to be clear to become useful guiding principles. In this line, Tesluk, Hofmann, and Quigley (2002) suggested that “these positions, therefore, require the development of a common set of decision premises that employees can rely on in response to complex and uncertain events with which they must cope.” (p. 443). In centres with a high level of proactive climate, goals need to be clear to individuals in order to become useful guiding principles. If members of a centre do not have a clear goal understanding, a high level of proactive climate could either result in actions that do not contribute to centre performance or that are even detrimental. Hypothesis 2: Goal clarity moderates the effect of proactive climate on centre performance. In centres with high goal clarity, proactive climate is positively related to performance; in centres with low goal clarity however, it is negatively or not significantly related to performance. Managers’ entrepreneurial orientation and proactive climate In addition to the direct effect of proactive climate on performance, we assume that climate has also an effect by interacting with managers’ attributes. Proactive climate enhances the effectiveness of managers’ attitudes and behaviours. Here we focus on managers’ entrepreneurial attributes and their interplay with climate. As an answer to the increasing pressure to respond more flexibly and innovatively to market changes, many organizations seek to increase the entrepreneurial behaviours of their managers. This entrepreneurship inside organizations—also termed intrapreneuring (Pinchot, 1985), intrapreneurship (Hisrich, 1990), or corporate entrepreneurship (Guth & Ginsberg, 1990)—is called for as it is seen as a potent means to revitalize organizations and to increase their performance (cf. Antoncic & Hisrich, 2001). A corporate entrepreneur explores innovative approaches instead of holding on to the proven and tested; takes initiative instead of waiting for instructions; uncovers and develops opportunities to create value (Antoncic & Hisrich, 2001; Hisrich, 1990). The organizations studied here subscribed to the view that corporate entrepreneurship would benefit their performance; the centre structure was assumed to spark an entrepreneurial spirit. Theory on entrepreneurship—entrepreneurship is similar to corporate entrepreneurship but refers to new business creation—proposed the Entrepreneurial Orientation (EO) to be a crucial factor for the success of an enterprise (Lumpkin & Dess, 1996; Schumpeter, 1934; cf. Rauch & Frese, 2000). The EO is characterized by autonomy orientation, innovativeness, risk taking, proactiveness, and competitive aggressiveness (Lumpkin & Dess, 1996; cf. Schumpeter, 1934). Research on small business owners has shown that the entrepreneur’s EO benefits several aspects of organizational performance (Krauss, 2003). Other research focused on business owners’ personal initiative— which reflects the proactivity orientation included in the EO—and revealed

240 FAY, LÜHRMANN, KOHL

across various cultures that it contributed to organizational performance and predicted long-term survival of the organization (Frese, 2000; cf. for an overview, Fay & Frese, 2001). The motivational orientations that make entrepreneurs and their firms successful should also be beneficial to larger organizations and their business units (i.e., the centres). Here, we focus on two of the EO variables that have been identified as orientations clearly relevant for organizational performance: personal initiative and innovativeness (Krauss, 2003). We posit that personal initiative and innovativeness contribute to identifying new action opportunities and to be open to adopting new approaches and strategies, which in turn should benefit centre performance. Additionally, we propose that managers’ sense of psychological ownership for their centre is an important orientation. Psychological ownership has been defined as “feeling(s) of possessiveness and of being psychologically tied to an object” (here: the centre) (Pierce, Kostova, & Dirks, 2001, p. 299). Psychological ownership comprises commitment to and identification with the centre (Allen & Meyer, 1990). It is high when managers feel as fully responsible for and as committed to their centres as if they were the owner of the centre, even though this is legally not the case (Pierce et al., 2001). Commitment theory assumes that a high degree of affective commitment to the unit of interest fosters behaviours that are beneficial such as low fluctuation propensity and working harder. Even though the effects are not strong, individuals’ organizational commitment was found to be positively related to job performance (cf. the meta-analysis by Riketta, 2002). Psychological ownership should lead to being active and highly involved and to making full use of available degrees of freedom; it is seen as the opposite to feeling restricted like a “cog in the wheel” (cf. Pierce et al., 2001). We assume that centre managers’ entrepreneurial attributes (conceptualized here as his/her personal initiative, innovativeness, and psychological ownership) contribute to centre performance. The degree, however, to which these attributes translate into centre performance is contingent on the climate in which he or she operates. Models on leadership effectiveness such as the leadership substitutes approach or Fiedler’s contingency theory have acknowledged that characteristics of the environment, of the task, and of the subordinates need to be taken into account in order to fully understand the effect of leadership behaviours on performance (Fiedler, 1967; Kerr & Jermier, 1978). The notion of leadership substitutes holds that these characteristics can neutralize, substitute, or enhance the effect of leadership behaviour (Howell, Dorfman, & Kerr, 1986; Kerr & Jermier, 1978). For example, the degree of relationship-oriented leadership has consistently been found to be positively related to employee satisfaction; the effect, however, of leadership behaviour is less strong when employees work on intrinsically satisfying tasks (Kerr & Jermier, 1978); a similar interplay was shown for the relationship between contingent reward, performance, and intrinsically satisfying tasks. These are examples in which characteristics of a task supersede the effect of leadership behaviours; they have been called

PROACTIVE CLIMATE 241

“substitutes” (cf. Kerr & Jermier, 1978). Other variables, on the other hand, possibly augment the relationship between leadership behaviour and outcome. The negative effect of noncontingent punishment behaviours on satisfaction is stronger for employees with high ability and experience (Podsakoff, Niehoff, MacKenzie, & Williams, 1993). This research departs from the traditional substitutes approach by studying centre climate instead of individual employee characteristics. We test the proposed interplay between leadership variables and centre climate in this study, with proactive climate conceptualized as the moderator between managers’ entrepreneurial attributes and centre performance. We hypothesize that proactive climate enhances the strength with which the entrepreneurial attributes are linked to performance: Centre managers’ entrepreneurial attributes contribute the more towards centre performance, the higher the level of proactive climate in the centre. We assume this to be based on the following processes: When a centre manager identifies a new, more cost-efficient way of delivering services to the customer, he or she is more likely to successfully implement this amended strategy when supported by proactive climate. Centres with a high level of proactive climate should be more ready to leave a routine and to test out a new idea. Since managers cannot implement and execute everything by themselves, they depend on their subordinates. Likewise, some amendments are only useful if adopted by all members of a centre. Furthermore, managers operating in centres with a highly proactive climate may have more time at their disposal to take an entrepreneurial approach. In centres that tend to take a self-starting approach to work, managers need to spend less time on allocating tasks and detecting emerging problems. A high proactive climate frees centre managers’ resources or supports putting ideas into practice. Hence, centre managers’ entrepreneurial attributes are more strongly related to performance in centres with a high proactive climate. Hypothesis 3: Proactive climate moderates the effect of centre manager’s entrepreneurial attributes such as personal initiative, innovativeness and psychological ownership on centre performance: These attributes are more strongly related to centre performance in centres with a high level of proactive climate. Managers’ use of technology and proactive climate A second route through which proactive climate could play a role for centre performance is its interplay with centre managers’ use of new technology. In the organizations studied here, centre managers were provided with new IT-based tools and information systems when the centre structure was implemented. These technologies provide detailed and up-to-date data on centre performance; it therefore an important source of feedback. Performance feedback is significant for motivation, performance, and learning (Bandura, 1991; Frese & Zapf, 1994; Hackman & Oldham, 1976; Locke & Latham, 1990). For example, a study on

242 FAY, LÜHRMANN, KOHL

professional software designers revealed that one important difference between high and moderate performers was the extent to which they processed feedback during a design task (Sonnentag, 1998). In the organizations studied here, use of the new technologies should contribute to centre performance, as the technology was designed to provide information (i.e., feedback on current centre performance) that would enable prompt responses to action necessities or opportunities. The effectiveness of the technology use, however, is again assumed to depend on proactive climate. Similar to the reasoning developed previously, in order to respond adequately to the performance requirements that can be extracted from the new technologies, centre managers depend on their staff. This hypothesis extends previously taken approaches, which studied and confirmed the direct effect of climate on the use of newly introduced technology (Klein et al., 2001). Hypothesis 4: Proactive climate moderates the effect of centre managers’ technology use on centre performance: The use of the new technology is more positively related to centre performance in centres with a high proactive climate. METHOD Setting of the study This study was carried out in Germany, in local and regionally operating public transport organizations. Until recently, public transport organizations were public-sector enterprises operating by order of local authorities or the state. As common for public-sector enterprises, these organizations operated with less emphasis on cost efficiency than the private sector, because local authorities usually balanced the losses. Public transport had traditional, rather bureaucratic structures, focused on reacting to orders by local authorities. Used to operating in a market in which they held a monopoly, sensing and responding to customer and to the market's needs played a minor role in strategic decisions. In the 1990s, reforms of the laws for utility organizations in German and many other countries of the European Community took place with the long-term orientation of privatization and market liberalization. As a consequence of these legal changes public transportation organizations found themselves exposed to an environment that had become suddenly very hostile. For the first time, they were threatened by upcoming competition and were confronted with authorities' goal to abolish subsidies. In consequence of this, organizations launched large-scale reorganizations to adapt to the new circumstances. Goal of these change initiatives were to increase cost effectiveness, customer orientation, and flexibility to become competitive for the liberalized market. An entrepreneurial spirit needed to be inflamed. All organizations researched here embraced the same strategy: They assumed the structure of a centre organization with cost and profit centres. This study focuses on the cost centres, which represent the majority of

PROACTIVE CLIMATE 243

business units in the organizations. Structural changes were supported by implementation of new IT-based tools, which provided up-to-date performance data. The study was carried out when the reorganizations had been put into practice, an average of 2 years ago. This time frame has been used in previous studies that focused on the post-implementation phase (Klein et al., 2001); major organizational changes can take several years until they are fully implemented and new behaviours are fully routinized (Klein et al., 2001). The situation in the organizations studied here can be best described as the consolidation phase after major changes. Sample and procedure The data reported here is part of a larger study on organizational change practices in utility organizations. Four German public transport organizations participated in this study. Seventy-two1 cost centre managers participated in an interview on change practices (which is not part of this study). The centres had technical, planning, human resources, and other administrative roles in their organizations. From these centre managers 90.3 % were male, 80% had a tenure of more than 10 years, and 9% less than 5 years. The questionnaire relevant for this study was returned by 63 centre managers, which represents a response rate of 87.5%. Centre managers were asked to pass on questionnaires to five members of their centre; these questionnaires were sent back to the researchers by mail. Sixty centres returned at least one employee questionnaire (n=226; 84% male). This represents an individual response rate of 62.8%; the response rate on the centre level was 82.1%. Employees’ tenure had a similar length as the centre managers (90% tenure of more than 10 years). Measures All measures were obtained with questionnaires. If not otherwise stated, answers were given on a 5-point Likert format (1=“doesn’t apply at all”, 5=“applies fully”). Centre performance. Centre managers rated their centre’s performance on six specific performance aspects, using 5-point Likert type scales (5=“very good result”, 1=“very poor result”). Three aspects referred to performance regarding

1The

employer of the second and third author had worked with two of the participating organizations. When they invited the organizations to participate in the study, the researchers made specific suggestions as to what centres to invite for participation to ascertain a representative sample; for the third organization, all centres participated; in the fourth organization, representatives of the organization determined which centres we could invite for participation.

244 FAY, LÜHRMANN, KOHL

the effectiveness of business processes, that is, time wasted on process barriers; speed of core business processes; productivity; and three aspects that assessed the financial side of centre performance: profits, business volume, and deviations from planned budgets. Cronbach’s alpha was .87. Centre managers’ orientations and attitudes. We measured centre manager’s innovativeness with four items from Patchen’s (1965) well-validated interest in work innovation scale and one newly developed item (“I always search for new and better methods to achieve my goals, even if everything just runs okay”). Cronbach’s alpha of this 5-item scale was .72. Six items measured personal initiative with a scale developed by Frese et al. (1997). This scale assesses an individual’s tendency to act in a self-starting and proactive way. Previous studies have demonstrated the scale’s validity (Fay & Frese, 2001; Frese et al., 1997) (Cronbach’s alpha=.77). The psychological ownership scale was newly developed for this study. The scale assesses the degree to which the manager feels responsibility for the centre, and whether he or she feels as if he or she owned this business unit. This includes responsibility for functions new to the role (i.e., tasks previously performed by the financial controller). Sample items are: “Overall, in my cost centre I feel like a business owner in a larger business.” Items for the full scale are reported in the Appendix. Cronbach’s alpha of the 5-item scale was .71. The four items assessing technology use were developed for this study (Cronbach’s alpha=.75). They capture the extent to which centre managers make use of the new IT tools and find them functional (for example “I use the IT tools to develop future strategies for my cost centre”; the full scale is reported in the Appendix). Employees of the participating centres provided measures of proactive climate and goal clarity. Proactive climate was measured with three items, which tap the aspects of self-starting behaviours, innovation, and errors: “Employees of this centre actively intervene in what happens here; we do not simply wait for tasks that come up”, “All things considered, in this centre we have a very innovative climate”, “The approach to errors in our centre is best described as follows: We openly communicate our errors and try to learn from them”. Cronbach’s alpha of this scale was .73; when aggregating to the level of the centre, alpha was .81. Employee goal clarity was measured with the following two items: “I have a good understanding of the goals and principles of this unit”, “I know the objectives and plans of this organization” (Cronbach’s alpha=.72). In the sense of triangulation, we also obtained the two core measures of this study—centre performance and proactive climate—from a second source. Centre managers rated their centre’s proactive climate using the same items as the employees (Cronbach’s alpha=.75). Similarly, centre members provided a general assessment of their centre’s performance with the 2-item measure originally developed by van Dyck et al. (2003; the adapted version of Baer & Frese, 2003). The two items are: “How successful is your centre in comparison to other centres in your organization?” and “To what degree has your centre

PROACTIVE CLIMATE 245

achieved its most important goals?” (Cronbach’s alpha=.76; on the aggregated level, alpha=.84). Of the five measures that were obtained from the centre manager and that will be used to test the hypotheses—personal initiative, innovativeness, psychological ownership, use of technology, and centre performance—three measures were developed for the purpose of this study. To test their discriminant validity, we performed a series of confirmatory factor analyses: Systematically testing two (where possible, three) scales, we compared the goodness of fit indices of the two-factor model (three-factor model) with a one-factor model and the independence model. In general, the goodness of fit indices—Chi-square fit index, Root Mean Square Error of Approximation (RMSEA), and Adjusted Goodness of Fit Index (AGFI)—were best for the two-(three-)factor model. For example, the fit indices for a model for innovation, personal initiative and ownership were best for the three factor model, 2 (df=51)=39.80, p=.872, AGFI —.857, RMSEA=.001, in comparison to two-factor models, e.g., with PI and ownership on one factor: 2 (df=53)=67.72, p=.084, AGFI=.735, RMSEA=.071; with innovation and ownership on one factor: 2 (df=53)=79.69, p=.01, AGFI—. 676, RMSEA=.096; and the one-factor model, 2 (df=54)=99.64, p=.000, AGFI=. 627, RMSEA=.124; complete results can be obtained upon request. Aggregation of measures With centre performance as a criterion and centre proactive climate as a predictor, the unit of analysis is the centre. These analyses require the aggregation of the employee data to the centre level, prior to which the following steps were taken: First, to obtain a reliable assessment of the climate, we included only those centres in the analyses, for which at least three employee questionnaires were returned. Second, the aggregation of data needs to be justified by an adequate level of agreement among the raters within the group. In this case, there needs to be agreement among the members of each centre. Agreement was examined using the rWG(J) (James, Demaree, & Wolf, 1984). The mean rWG(J) for proactive climate was .81 (n=47), and for centre performance .87 (n=47). This exceeds the coefficient of .70 recommended for the rWG(J) (cf. Klein et al., 2000). We excluded one centre that had for both variables a value that was out of range (< 0) (cf. Klein et al., 2001). In addition to the agreement on the target constructs within one centre, we also tested whether the centres differed significantly from each other; that is whether the between centre variance exceeded the within centre variance (Klein et al., 2000). Analyses of variance of proactive climate and centre performance were significant: climate, F(45, 145)=2.23, p<.001; performance: F(45, 144)=1.93, p<. 01. In contrast to proactive climate, which was measured as a centre level concept (i.e., the target to be judged was the climate in the centre: “…in this centre, we have…”), goal clarity was measured as an individual level variable (i.e., the

246 FAY, LÜHRMANN, KOHL

target to be judged was each respondent’s personal goal clarity: “I have…”). Previous research has used different approaches to work with individual level variables such as knowledge, skills, abilities, or personality traits on the group level. Depending of the nature of the task that the group performs, the highest or lowest individual score is used as the team score, or the group’s mean score, or the variability within the group (Barrick, Stewart, Neubert, & Mount, 1998). When it is assumed that the more of the characteristic of interest, the better (or worse), regardless of the degree of agreement or variability in the group, then the group score is operationalized with the group’s mean (cf. Barrick et al., 1998; LePine, 2003; Neuman & Wright, 1999). This is different from the measurement of climate: A certain level of agreement among group members’ assessment of their climate is required in order to have truly captured a climate as a shared perception or experience (Klein & Kozlowski, 2000). We assume that a centre’s goal clarity is best represented through the centre’s mean. This operationalization is based on the notion that the clearer goals the better, and that individuals with high goal clarity can compensate for colleagues with low goal clarity (cf. Barrick et al., 1998). Therefore, we calculated the averaged individual goal clarity to measure a centre’s goal clarity. RESULTS Table 1 presents the correlations of all study variables. Columns 1–3 depict the centre member data that is aggregated to the centre level. There is good convergence of the measures of centre climate obtained from the centre employees and from the centre managers, r=.40, p<.01, n=42; similarly, regarding centre performance, there is significant agreement between the centre managers’ rating on specific performance aspects and the generic measure provided by the centre members, r=.45, p<.01, n=35. These values are somewhat higher than coefficients obtained typically in multi-source ratings in organizational science, which range frequently between .20 and .30 (cf. Warr & Bourne, 2000). Convergence of the ratings from the different sources lends some support to the validity of proactive climate and centre performance measures. Three dummy variables code the four participating organizations (last three rows in Table 1). The correlations indicate that organizational membership significantly related to some of the study variables; this also applies to centre managers’ gender. Therefore, these variables are used as control variables in all further analyses. Controlling for organization and gender does not change the agreement on centre climate or centre performance (partial correlations are .49, p<.01, n=42 and .37, p<.05, n=35, respectively). Tests of hypotheses Hypotheses were tested with hierarchical multiple regression analyses. Due to an unfavourable ratio of predictors to cases (n=35), we tested each effect with each

.10; *p≤.05; **p≤.01; n=35–46. a Aggregated centre member ratings. b Centre manager rating. c Gender 1=male, 2=female. d Dummy codes for four organizations.

+p≤

Means, standard deviations and zero-order correlations of all study variables, Cronbach’s alpha on diagonal

TABLE 1

PROACTIVE CLIMATE 247

248 FAY, LÜHRMANN, KOHL

variable separately. Furthermore, low statistical power led us to assume a liberal alpha level of p<.10 to compensate for this (Pedhauzer, 1997). Hypothesis 1 proposes that proactive climate is positively related to centre performance. Table 2 presents the results of the regression analyses regressing centre mangers’ assessment of performance on to employees’ ratings of proactive climate after having entered the control variables in step one. Proactive climate explained 9.4% of variance in centre performance beyond what was explained by the control variables, which supports TABLE 2 Multiple and moderated regression of centre performance Variables entered Step 1 Step 2 Step 1

Step 2 Step 1b

Step 2 Step 1

Step 2 Step 1

Step 2 Step 1

Step 2 Step 1

variablesa

Control Proactive climate Control variablesa Proactive climate Goal clarity Proactive climate×Goal clarity Control variablesa Proactive climate Goal clarity Proactive climate×Goal clarity Control variablesa Proactive climate Personal initiative Proactive climate×Personal initiative Control variablesa Proactive climate Innovativeness Proactive climate×Innovativeness Control variablesa Proactive climate Psychological ownership Proactive climate×Ownership Control variablesa Proactive climate Technology use

R2

adj R2

∆R2

β

.275* .383* .417*

.175 .277 .293

.094*

.344*

.018

.463 −.226 −.152

.088*

.530 −.062 −.355*

.072+

.268 .222 −.346+

.037

.201 .377+ −.270

.072+

.262 .222 −.307+

.436*

.289

.495*

.351

.585**

.439

.404*

.272

.476**

.335

.441**

.317

.477**

.337

.403*

.270

.474**

.333

.396*

.261 .256 .216

PROACTIVE CLIMATE 249

Variables entered

R2

adj R2

R2

Step 2

Proactive .484** .345 .088* • .322* climate×Technology use +p• .10; *p• .05; **p• .01; n=34. a Control variables were three dummy codes coding four organizations and centre managers’ gender. b Reduced sample n=28.

Hypothesis 1. This is an important result as the measures of climate and performance were obtained from different sources and hence are not inflated by common method variance. Hypothesis 2 implies that a high level of proactive climate can be detrimental to centre performance if goals are not clear. We tested Hypothesis 2 with moderated regression analyses (Table 2). To avoid problems associated with multicolinearity, predictors were centred before entered into the regression equation (Aiken & West, 1991). In each regression analysis, control variables and the linear predictors were entered in step one; in the second step, the product term of proactive climate and the respective second variable was entered to test the interaction hypothesis. Variance inflation factors were always below the suggested value of 10.0 (Stevens, 1996). Tests of Hypotheses 3 and 4 were done likewise. The moderated regression analysis did not confirm Hypothesis 2 with a nonsignificant increment in explained variance in the second step (Table 2). This means, regardless of the averaged individual goal clarity, proactive climate is positively related to centre performance. We revisited our operationalization of goal clarity. The centres’ mean score was used to represent a centre’s goal clarity; in contrast to the other centre variables, this was done regardless of the degree of agreement or variability within the centre. This was based on the assumption that—in the case of high variability in a centre—members that have a very good understanding of the goals can compensate others that have a poor understanding. We might have been wrong on this. If for reasons inherent in the tasks of the centre, individuals with a good understanding cannot compensate for the others, then the averaged value on the group level is only meaningful if there is a high agreement of clarity in the centre. Therefore, we decided to rerun the analysis including only centres with a sufficient level of agreement on the goal clarity variable. (In fact, this assumption indicates a three-way interaction of climate, goal clarity, and level of agreement; three-way interactions, however, cannot be tested in small data sets.) The withincentre agreement was somewhat low with a mean rWG(J) of .66, which is not exceptional for individual level variables. We then excluded seven centres with a rWG(J) lower than .50 and repeated the analysis. The test of Hypothesis 2 with the reduced data set (n=28) yielded a significant increase in explained variance for

250 FAY, LÜHRMANN, KOHL

Figure 1. Interaction between centres’ proactive climate and centre members’ goal clarity in predicting centre performance.

the interaction term (Table 2). The plotted interaction (Aiken & West, 1991), however, indicated a different type of relationship than hypothesized (cf. Figure 1). When the averaged goal clarity in a centre was low, centre performance was not negatively related to proactive climate as expected. Instead, with low goal clarity the proactive climate is positively related to performance, =.902, t=3.484, p<.05, whereas with high goal clarity, there was no significant relationship of climate with performance, =.236, t=1.006, p>.10. This implies that proactive climate compensates the effect of low clarity on centre performance in centres where members share the feeling that they are not clear about their centre’s goals. Hypothesis 3 assumed that proactive climate moderates the effect of centre managers’ personal initiative, innovativeness, and psychological ownership on centre performance. This is based on the assumption that these centre manager orientations contribute to centre performance, and that their positive relationship with centre performance is stronger in centres with a high level of proactive climate. The zero-order correlations (Table 1) indeed show significant positive relationships between centre performance and centre managers’ personal initiative, innovativeness, and psychological ownership. Significant interactions with climate emerged for personal initiative and psychological ownership (Table 2). Figure 2 displays the plotted regression lines for centre manager personal initiative; the result was similar for ownership (Figure 3). Personal initiative and psychological ownership were positively related to performance when proactive climate was low, =.639, t=2.387, p<.05; =.564, t=2.372, p<.05. On the other hand, initiative and ownership were not significantly related to performance in centres with a high level of proactive climate, =• .111, t=• .479, p>.10; =• .076, t=• 0.346, p>.10; then, centre performance was high regardless of the level of initiative or ownership. This

PROACTIVE CLIMATE 251

Figure 2. Interaction between centre managers’ personal initiative and centres’ proactive climate in predicting centre performance.

Figure 3. Interaction between centre managers’ psychological ownership of centre and centres’ proactive climate in predicting centre performance.

departs from our hypothesized augmenting effect of climate; instead, it suggests that proactive climate had a compensatory effect for a low level of manager variable. In contrast to our expectations, proactive climate did not significantly moderate the effect of innovativeness on performance. The pattern of coefficients for innovativeness is similar to personal initiative and psychological ownership; however, the increment in explained variance in the second step is not significant, F(1, 26)=1.826, p=.188. Hypothesis 4, which assumed that climate moderates the relationship between centre managers’ technology use and centre performance, was tested likewise. The zero-order correlation indicated that technology use was directly positively related to centre performance (Table 1); furthermore, a significant interaction

252 FAY, LÜHRMANN, KOHL

Figure 4. Interaction between centre managers’ use of technology and centres’ proactive climate in predicting centre performance.

emerged in the regression analysis (Table 2). Use of technology was positively related to centre performance with a low proactive climate, =.580, t=2.449, p<. 05; this was not the case when proactive climate was high, =• .177, t=• 0.716, p>.10 (cf. Figure 4). DISCUSSION This study examined proactive climate and specifically pursued three goals: First, to test whether the positive function of a proactive climate for performance extends to a situation of slow change and adaptation; second, to test whether proactive climate is negatively related to performance in a situation of low goal clarity, and third, to test if the proactive climate interacts with managers’ entrepreneurial attitudes and behaviours, and use of technology. The measure of proactive climate was newly developed for this study, integrating the climates for initiative and for psychological safety (Baer & Frese, 2003) and extending them to include the aspect of innovation. Proactive climate showed to have good psychometric properties in terms of internal consistency and within group agreement; triangulation indicated a substantial agreement on the climate perceptions by centre members and climate as perceived by their direct supervisor, which is seen as evidence for the validity of the measure. As hypothesized, proactive climate assessed by the members of a centre was positively related to centre managers’ ratings of centre performance. This result extends previous findings (Baer & Frese, 2003), in which climate for initiative predicted organizational performance in the context of organizational change. The present study was based on centres from organizations that were in a postchange state. In a consolidation phase, the new technologies, processes, structures can still cause some disruption. Routines are often not yet fully developed and hence practices are rather open to revision and optimization. We

PROACTIVE CLIMATE 253

believe that in a highly proactive climate individuals are more ready to approach these issues and to explore alternative ways of doing things, and actively test them out. We also explored a condition that could limit the positive effect of proactive climate. Given that centre members are well aware of centre goals and can make informed decisions on what kind of actions to take, proactive climate should contribute to performance. With low goal clarity, ineffective or harmful steps may be taken. Conceptualizing goal clarity as an individual level variable (that was aggregated to the team level regardless of within group agreement; cf. Barrick et al., 1998) did not yield a significant result. After rethinking the notion of goal clarity as an individual level variable we tested the hypothesis using centres with adequate within-group agreement on an exploratory basis. A significant interaction of proactive climate and goal clarity emerged; the specific pattern of effect was different than expected. Regardless of the degree of goal clarity, the slope of the climate-performance relationship was never negative. The relationship between proactive climate and performance was strongest for centres with low goal clarity, which runs counter the expectations. Why was the impact of proactive climate on performance lowest with comparatively high goal clarity? Clear goals could in this case actually have meant having very specific goals. Although there is an abundance of research that supports the benefits of specific goals—especially when combined with high goals (Locke & Latham, 1990)—there might be exceptions to the rule. Goal specificity can bring about a very strong focus on these goals, but other objectives not directly implied in the goal remain unattended. For example, production groups with high quantitative goals start to ignore product quality (Weldon, Jehn, & Pradhan, 1991); individuals who are committed to high and specific goals tend to show less extrarole behaviour (Wright, George, Farnshworth, & McMahan, 1993). Very specific goals can lead to becoming too focused on them; which reduces proactive actions that lie outside the specified goals. Furthermore, unclear goals can increase the degree of reflexivity within a group (West, 1996). When members of a group share the feeling that they don’t know exactly what their goals and objectives are, this can increase deliberation about it. Reflexivity may make a highly proactive climate more effective. We do want to emphasize, however, that this results should be considered with care, since it is based on a very small sample size. We would like to see future research confirming it, employing a better measure of goal clarity. Even though there was no support for a negative effect of proactive climate, we believe that it is important to further pursue this issue and to further test out conditions in which proactive climate may be harmful. For example, in organizations in which the goals of the units are not well integrated with the overall goals, the effects of proactive climate of one unit may go at the expense of the effectiveness of another organizational unit. We also sought to test whether proactive climate increases the effect of centre manager entrepreneurial attitudes and their use of new technology on centre

254 FAY, LÜHRMANN, KOHL

performance. Results confirmed the moderator function of climate; in contrast to the expectation, proactive climate did not strengthen the relationship of the centre manager variables with performance. Instead, proactive climate appeared to work as a substitute. This has two implications for managers: On the one hand, in centres with a high level of proactive climate, centre performance was high regardless of centre managers’ personal initiative. In those centres the manager seems to be without influence. On the other hand, if he or she has low personal initiative, a high degree of proactive climate compensates for it, since the level of performance is at its maximum. This pattern of results extends to psychological ownership and the use of technology (cf. Figures 2–4). Our assumption, hence, that centre managers depend on their centres’ proactivity to maximize the effect of their entrepreneurial attitudes and behaviours, is not supported. Two questions emerge from these patterns of results. First, why is there no additional beneficial effect of the combination of a high degree of manager personal initiative and high proactive climate? It is not yet a case of “Too many cooks spoil the broth”, but at least, the performance does not seem to benefit from all parties being highly proactive. Possibly in such a situation, actions need to be very well coordinated to make a concerted, focused effort. Communication between manager and staff needs to be of high quality to achieve this. Hence, there may be contingencies that determine whether the combined effect of high initiative and high proactive climate contributes to performance. Second, why is the combination of a low climate and high centre manager variable as effective? It could be that in this constellation, managers give very specific direction and orders to their staff that help to efficiently implement managers’ ideas and strategies; then, employees’ role would be focused on implementation rather than being proactive themselves. This tentative explanation may raise the question of whether mangers with a high level of personal initiative impair the development of a high level of proactive climate. The data however, do not give any support to this. The relationships between the manager variables and proactive climate are positive (with correlation coefficients of .20, but nonsignificant; cf. Table 1). Unfortunately, it was not possible to test whether the three significant interaction effects explained unique variance in centre performance. The number of cases was too small to test all interactions in one analysis. It could therefore be possible that the three interactions are based on the same underlying principles. Replications of these results with a higher number of organizational units could clarify this issue. This study differs from the traditional approach in leadership substitutes research in two respects. First, substitutes research typically focused on classic leadership behaviours such as rewarding, role clarification, or consideration (cf. Podsakoff et al., 1993; Podsakoff, MacKenzie, Ahearne, & Bommer, 1995). In contrast, rather distal variables such as centre managers’ orientations (e.g., personal initiative) and their behaviours that are not directed towards the

PROACTIVE CLIMATE 255

subordinates (technology use) were used. Second, instead of looking at individual subordinates’ characteristics (or their tasks) as the moderating variable, we departed from the individual level of analysis and explored with proactive climate a variable that is located at the group level. Research in the substitutes domain found relatively little support for the interactive effect of leader behaviours and subordinate and environmental characteristics on outcomes. For example, Podsakoff and colleagues (1993) concluded their seminal analysis of leadership interactions with the remark that “the number of statistically significant interactions observed…was not much greater than …chance” (p. 33); a comprehensive review of such studies closed with the same conclusion (Podsakoff et al., 1995). Despite this conclusion, the substitutes approach has not lost all of its attraction. Our results suggest that it may be worthwhile to widen the approach and to explore more extensively interactive effects on the level of social units with appropriate criteria such as unit performance, group affective tone, or turnover. This study adds to the previous research on proactive climate (Baer & Frese, 2003), which found that a proactive climate type predicted changes in organizational performance in organizations adopting process innovations. The findings extend the significance of proactive climate by showing that it is beneficial in organizations that are in the consolidation phase after large-scale reorganization. However, one limitation to this study is its cross-sectional nature, which leaves the direction of the causal relationship open. Therefore, a causal effect opposite to what we assume cannot be ruled out. High performing centres could have more resources (i.e., time) to take a proactive stance, whereas low performing centres may be involved in a lot of firefighting, which possibly reduces the opportunity for proactive actions. Furthermore, reciprocal effects may be going on. A second limitation relates to the nature of our performance measure. Even though the convergence of managers’ and centre member ratings give clear support to the validity of this measure, ratings are subject to some bias. Future research should seek to use objective performance measures. We propose that an active climate is the group level variable which represents the desired counterpart to individual resistance to change and passivity (Coch & French, 1948; cf. overview by King & Anderson, 2002). Alternative views on organizational change put the future users of change in the position where they pull the change through (Clegg & Walsh, 2004 this issue); we believe that proactive climate will support such approaches. REFERENCES Aiken, L.S., & West, S.G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.

256 FAY, LÜHRMANN, KOHL

Allen, N.J., & Meyer, J.P. (1990). The measurement and antecedents of affective, continuance and normative commitment to the organization. Journal of Occupational Psychology, 63, 1– 18. Anderson, N.R., & West, M.A. (1998). Measuring climate for work group innovation: Development and validation of the team climate inventory. Journal of Organizational Behavior, 19(3), 235–258. Antoncic, B., & Hisrich, R.D. (2001). Intrapreneurship: Construct refinement and crosscultural validation. Journal of Business Venturing, 16, 495–527. Baer, M., & Frese, M. (2003). Innovation is not enough: Climates for initiative and psychological safety, process innovations and firm performance. Journal of Organizational Behavior, 24, 45–68. Bandura, A. (1991). Social cognitive theory of self-regulation. Organizational Behavior and Human Decision Processes, 50, 248–287. Barrick, M.R., Stewart, G.L., Neubert, M.J., & Mount, M.K. (1998). Relating member ability and personality to work-team processes and team effectiveness. Journal of Applied Psychology, 83, 377–391. Bunce, D., & West, M.A. (1995). Self perceptions and perceptions of group climate as predictors of individual innovation at work. Applied Psychology: An International Review, 44, 199–215. Campbell, D.J. (2000). The proactive employee: Managing workplace initiative. Academy of Management Executive, 14, 52–66. Clegg, C., & Walsh, S. (2004). Change management: Time for a change! European Journal of Work and Organizational Psychology, 13(2), 217–239. Coch, L., & French, J.R. (1948). Overcoming resistance to change. Human Relations, 11, 512– 532. Colquitt, J.A., LePine, J.A., & Noe, R.A. (2000). Toward an integrative theory of training motivation: A meta-analytic path analysis of 20 years of research. Journal of Applied Psychology, 85(5), 678–707. Denison, D.R., & Mishra, A.K. (1995). Toward a theory of organizational culture and effectiveness. Organization Science, 6(2), 204–223. Edmondson, A. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44, 350–383. Fay, D., & Frese, M. (2001). The concept of personal initiative: An overview of validity studies. Human Performance, 14, 97–124. Fiedler, F.E. (1967). A theory of leadership effectiveness. New York: McGraw-Hill. Frese, M. (Ed.). (2000). Success and failure of microbusiness owners in Africa: A psychological approach. Westport, CT: Quorum Greenwood Publications. Frese, M., & Fay, D. (2001). Personal initiative: An active performance concept for work in the 21st century. In B.M.Staw & R.I.Sutton (Eds.), Research in organizational behavior (Vol. 23, pp. 133–187). Amsterdam: Elsevier. Frese, M., Fay, D., Hilburger, T., Leng, K., & Tag, A. (1997). The concept of personal initiative: Operationalization, reliability and validity in two German samples. Journal of Occupational and Organizational Psychology, 70, 139–161. Frese, M., & Zapf, D. (1994). Action as the core of work psychology: A German approach. In H.C.Triandis, M.D.Dunnette, & L.Hough (Eds.), Handbook of industrial and organizational psychology (Vol. 4, pp. 271–340). Palo Alto, CA: Consulting Psychologists Press.

PROACTIVE CLIMATE 257

Guth, W.D., & Ginsberg, A. (1990). Corporate entrepreneurship. Strategic Management Journal, 11, 5–15. Hackman, J.R., & Oldham, G.R. (1976). Motivation through the design of work: Test of a theory. Organizational Behavior and Human Performance, 16, 250–279. Hisrich, R.D. (1990). Entrepreneurship/intrapreneurship. American Psychologist, 45, 209–222. Hofmann, D.A., Morgeson, F.P., & Gerras, S.J. (2003). Climate as a moderator of the relationship between leader-member exchange and content specific citizenship: Safety climate as an exemplar. Journal of Applied Psychology, 88, 170–178. Hofmann, D.A., & Stetzer, A. (1996). A cross-level investigation of factors influencing unsafe behaviors and accidents. Personnel Psychology, 49, 307–339. Howell, J.P., Dorfman, P.W., & Kerr, S. (1986). Moderator variables in leadership research. Academy of Management Review, 11(1), 88–102. James, L.R., Demaree, R.G., & Wolf, G. (1984). Estimating within-group interrater reliability with and without response bias. Journal of Applied Psychology, 69(1), 85–98. Kerr, S., & Jermier, J.M. (1978). Substitutes for leadership: Their meaning and measurement. Organizational Behavior and Human Decision Processes, 22(3), 375–403. King, N., & Anderson, N. (2002). Managing innovation and change (2nd ed.). London: Thomson. Klein, K., Bliese, P.D., Kozlowski, S.W.J., Danserau, F., Gavin, M.B., Griffin, M.A., et al. (2000). Multilevel analytical techniques: Commonalities, differences, and continuing questions. In K.J.Klein & S.W.J.Kozlowski (Eds.), Multilevel theory, research and methods in organizations (pp. 512–553). San Francisco: Jossey-Bass. Klein, K.J., Conn, A.B., & Sorra, J.S. (2001). Implementing computerized technology: An organizational analysis. Journal of Applied Psychology, 86(5), 811–824. Klein, K.J., & Kozlowski, S.W.J. (Eds.). (2000). Multilevel theory, research and methods in organizations. San Francisco: Jossey-Bass. Klein, K.J., & Sorra, J.S. (1996). The challenge of innovation implementation. Academy of Management Review, 21(4), 1055–1080. Krauss, S.I. (2003). Psychological success factors of small and micro business owners in southern Africa: A longitudinal approach. Giessen, Germany: University of Giessen. LePine, J.A. (2003). Team adaptation and postchange performance: Effects of team composition in terms of members’ cognitive ability and personality. Journal of Applied Psychology, 88, 27–39. Locke, E.A., & Latham, G.P. (1990). A theory of goal setting and task performance. Englewood Cliffs, NJ: Prentice Hall. Lumpkin, G.T., & Dess, G.G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Journal, 21, 135–172. Maierhofer, N.I., Griffin, M.A., & Sheehan, M. (2000). Linking manager values and behavior with employee values and behavior: A study of values and safety in the hairdressing industry. Journal of Occupational Health Psychology, 5(4), 417–427. Neuman, G.A., & Wright, J. (1999). Team effectiveness: Beyond skills and cognitive ability. Journal of Applied Psychology, 84, 376–389. Ostroff, C. (1993). The effects of climate and personal influences on individual behavior and attitudes in organizations. Organizational Behavior and Human Decision Processes, 56(1), 56–90.

258 FAY, LÜHRMANN, KOHL

Patchen, M. (1965). Some questionnaire measures of employee motivation and morale. Ann Arbor, MI: Institute for Social Research, University of Michigan. Pedhauzer, E.J. (1997). Multiple regression in behavioural research. New York: Holt. Pierce, J.L., Kostova, T., & Dirks, K.T. (2001). Toward a theory of psychological ownership in organizations. Academy of Management Review, 26, 298–310. Pinchot, G. (1985). Intrapreneuring: Why you don’t have to leave the corporation to become an entrepreneur. New York: Harper & Row. Podsakoff, P.M., MacKenzie, S.B., Ahearne, M., & Bommer, W.H. (1995). Searching for a needle in a haystack: Trying to identify the illusive moderators of leadership behaviors. Journal of Management, 21, 422–470. Podsakoff, P.M., Niehoff, B.P., MacKenzie, S.B., & Williams, M.L. (1993). Do substitutes for leadership really substitute for leadership? An empirical examination of Kerr and Jermier’s situational leadership model. Organizational Behavior and Human Decision Processes, 54(1), 1–44. Rauch, A., & Frese, M. (2000). Psychological approaches to entrepreneurial success: A general model and an overview of findings. In C.L.Cooper & I.T.Robertson (Eds.), International review of industrial and organizational psychology (Vol. 15, pp. 101–141). Chichester, UK: Wiley. Riketta, M. (2002). Attitudinal organizational commitment and job performance: A metaanalysis. Journal of Organizational Behaviour, 23(3), 257–266. Rybowiak, V., Garst, H., Frese, M., & Batinic, B. (1999). Error Orientation Questionnaire (EOQ): Reliability, validity, and different language equivalence. Journal of Organizational Behavior, 20, 527–547. Schneider, B. (Ed.). (1990). Organizational climate and culture. San Francisco: JosseyBass. Schneider, B., White, S.S., & Paul, M.C. (1998). Linking service climate and customer perceptions of service quality: Tests of a causal model. Journal of Applied Psychology, 83(2), 150–163. Schumpeter, J.A. (1934). The history of economic development. Cambridge, MA: Harvard University Press. Scott, S.G., & Bruce, R.A. (1994). Determinants of innovative behavior: A path model of individual innovation in the workplace. Academy of Management Journal, 37(3), 580–607. Sonnentag, S. (1998). Expertise in professional software design: A process study. Journal of Applied Psychology, 83, 703–715. Stevens, J. (1996). Applied multivariate statistics for the social science (3rd ed.). Mahwah, NJ: Lawrence Erlbaum Associates, Inc. Tesluk, P., Hofmann, D., & Quigley, N. (2002). Integrating the linkages between organizational culture and individual outcomes at work. In S.Sonnentag (Ed.), Psychological management of individual performance (pp. 441–469). Chichester, UK: Wiley. Van Dyck, C., Frese, M., Baer, M., & Sonnentag, S. (2003). Organizational error management culture and its impact on performance: A two-study replication. Manuscript submitted for publication. Warr, P., & Bourne, A. (2000). Associations between rating content and self-other agreement in multi-source feedback. European Journal of Work and Organizational Psychology, 9, 321– 334.

PROACTIVE CLIMATE 259

Weldon, E., Jehn, K.A., & Pradhan, P. (1991). Processes that mediate the relationship between a group goal and improved group performance. Journal of Personality and Social Psychology, 61(4), 555–569. West, M.A. (1996). Reflexivity and work group effectiveness: A conceptual integration. In M. A. West (Ed.), Handbook of work group psychology. Chichester, UK: Wiley. West, M.A., Smith, H., Feng, W.L., & Lawthom, R. (1998). Research excellence and departmental climate in British universities. Journal of Occupational and Organizational Psychology, 71(3), 261–281. Wright, P.M., George, J.M., Farnsworth, S.R., & McMahan, G.C. (1993). Productivity and extra-role behavior: The effects of goals and incentives on spontaneous helping. Journal of Applied Psychology, 78, 374–381. Zohar, D. (2000). A group-level model of safety climate: Testing the effect of group climate on microaccidents in manufacturing jobs. Journal of Applied Psychology, 85 (4), 587–596. Zohar, D. (2002). The effects of leadership dimensions, safety climate, and assigned priorities on minor injuries in work groups. Journal of Organizational Behavior, 23 (1), 75–92.

APPENDIX Psychological ownership “In general, I feel responsible for everything that happens in this centre.” “Being the person in charge for my cost centre I feel like the owner of a small enterprise.” “If I want something changed in my cost centre, it depends entirely on me whether it is going to happen—nothing happens all by its own.” “Overall, in my cost centre I feel like a small business owner in a large corporation.” “All in all, I feel I am the person in charge of the entire budget planning.” Technology use “This IT-based business data is quite nice, but I know very well what to do without looking at them.” (reversed) “The business data I get from the IT tools is no good to develop strategies to reduce costs or to increase sales volume.” (reversed) “I use the IT tools to develop future strategies for my cost centre.” “I use the IT tools in order to make important commercial/business decisions.”

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 269–299

AND

ORGANIZATIONAL

Twelve steps to heaven: Successfully managing change through developing innovative teams

Michael A.West, Giles Hirst, Andreas Richter, and Helen Shipton Aston Business School, Birmingham, UK

In this article we propose that work teams implement many of the innovative changes required to enable organizations to respond appropriately to the external environment. We describe how, using an input-process-output model, we can identify the key elements necessary for developing team innovation. We propose that it is the implementation of ideas rather than their development that is crucial for enabling organizational change. Drawing on theory and relevant research, 12 steps to developing innovative teams are described covering key aspects of the team task, team composition, organizational context, and team processes. Some of the greatest innovations over the past century have sprung from the creative juices of individuals. Where would the world be today without, say, the invention of controllable, powered flight by the Wright brothers, or the discovery of penicillin by Sir Alexander Fleming? But these are exceptions to the rule. The overwhelming majority of successful innovations come not from individuals striving heroically in a shed, but from team efforts orchestrated systematically by enterprises. And more than anything, what these corporate entrepreneurs have tended to exploit is not so much invention or discovery, but change. (“Innovating”, 2003, p. 3) The exploitation of change through innovation is achieved largely through the work of teams embedded in organizations. In order to manage and implement change we therefore need to understand how to develop innovative teams. In this article, we review relevant research and offer 12 prescriptions for developing such teams.

DEVELOPING INNOVATIVE TEAMS 261

Organizations operate in complex and turbulent environments, and to survive, they have to anticipate and respond to the changing demands created by markets, consumers, shareholders, legal requirements, economy, suppliers, technology and social trends (Paton & McCalman, 2000). They will only survive if they are sufficiently flexible to respond to these constantly changing demands in their environments, and have the ability to redirect, focus and exploit their resources effectively, appropriately, and more quickly than competitors. The demands for change are complex and multifaceted and consequently the responsibility for initiating and implementing appropriate and timely responses can no-longer be seen as the responsibility of senior management, but has to be part of every manager’s role (Clarke, 1994). This requires that managers change the way they attend to and interpret the external environment, and that they achieve similar transformations among everyone else in the organization (Wilson, 1992). If the demands for change are to be mastered, and the changes implemented to be sustainable, all members of the organization need to be receptive to, and have the necessary skills and motivation, to take part in the change process, and organizations must empower their employees to make changes at local levels (Senior, 1997). Teamworking offers a powerful strategy for managing organizational change. We propose that developing team innovation will enhance an organization’s ability to redirect and focus resources effectively, appropriately and more quickly than its competitors, because it enables all members of the organization to respond to the demands for change, and to make appropriate changes at a local level. Whether the context is producing TV programmes, managing health and illness in hospitals, developing new products in manufacturing organizations, or providing financial services, the use of work groups as a form of work organization is both ubiquitous and increasing (Guzzo, 1996). Researchers in applied psychology have responded by puzzling over the factors that influence the effectiveness of work groups or teams, from the shop floor through to top management teams (see, for reviews, Cohen & Bailey, 1997; West, 1996; West, Borrill, & Unsworth, 1998). Less research energy has been devoted to answering the question “What factors influence the extent to which teams generate and implement ideas for new and improved products, services and ways of doing things at work?” In this article, we focus only on this question and offer prescriptions for developing innovative work teams. In doing so, we do not consider factors that primarily or exclusively influence team effectiveness, even Correspondence should be addressed to Michael A.West, Aston Business School, Birmingham B4 7ET, UK. Email: [email protected] © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000092

262 WEST ET AL.

though they may have some influence on team innovation. Rather, we focus on factors that primarily or exclusively influence team innovation. Our opening quotation asserts that work teams often develop and implement the changes required to enable organizations to respond appropriately to the external environment. Understanding change in organizations requires an understanding of the factors that encourage innovation in teams. We review theory and research in order to identify 12 principles that theorists and practitioners can use to understand and promote innovation in teams. First we clarify the concepts of change, innovation, and creativity. WHAT ARE CHANGE, CREATIVITY, AND INNOVATION? We can dissipate the confusion amongst researchers about creativity, innovation, and change if we distinguish between them more clearly, in the ways they are defined and operationalized. Creativity is the development of ideas, while innovation is the development and application of ideas in practice (e.g., for new and improved products, services or ways of working) (West, 1997, 2002). Creativity is simply a part of the innovation process. Aphoristically, creativity is thinking about new things; innovation (which usually encompasses creativity) is about doing new things (West & Rickards, 1999). Innovation refers to the introduction and application of new and improved ways of doing things. A fuller, more explicit definition of innovation is “…the intentional introduction and application within a job, work team or organization of ideas, processes, products or procedures which are new to that job, work team or organization and which are designed to benefit the job, the work team or the organization” (West & Farr, 1990, p. 9). Innovation therefore represents a particular category of change—it is intentional, designed to benefit, and new to the unit of adoption. If a change incorporates these three elements, according to the definition, it is innovation; if any is missing, it is not. Creativity usually includes idea generation processes that spawn innovation. Our focus in this article is therefore on the introduction of changes by teams, changes that are intentional, designed to benefit, and are new to the team. Creativity is likely to be most evident in the early stages of innovation processes or cycles, when those in teams are required to develop or offer ideas in response to a perceived need for innovation. Creative thinking is also likely when they initiate proposals for change and consider their initial implementation. Such considerations will alert team members to possible impracticalities associated with their ideas and to potential negative reactions from stakeholders. Thus, creativity is primarily required at the early stages of the innovation process. As the innovation is adapted to organizational circumstances and stabilized, there is less need for creativity. Of course, it can be argued that creativity is important

DEVELOPING INNOVATIVE TEAMS 263

throughout the innovation process, but in general, the requirements for creative ideas will be greater at the earlier stages of the innovation process than the later. Many researchers operationalize innovation and creativity by asking supervisors to rate those they manage in terms of how creative they are (e.g., Zhou, 2003) or how “innovative” they are in coming up with ideas. But there is little precise demarcation regarding the operationalization of both constructs in many empirical research, e.g., measures used in various publications consist of a mix of idea generation and idea implementation (e.g., Oldham & Cummings, 1996; Zhou, 2003), resulting in substantial confusion about the factors predicting creativity and innovation (e.g., divergent thinking versus persistence). Creativity, operationalized as the extent to which employees develop ideas, is very different from the extent to which they implement and sustain changes. The employee who discovered the practical value of Post-It™ notes in 3M came up with the idea as a result of wanting to find a way of marking his hymnal during repeated church services. His creativity resided first in coming up with the idea. He was constrained then, not by technology (the adhesive properties required for the product were already available), but by the resistance and incredulity of others in the organization. His innovation strategy was to provide Post-It™ notes to the secretaries of senior managers, and they in turn began to demand more of the product, so persuading the Marketing and Production departments of the value of the idea. This distinction between creativity and innovation might have limited theoretical import if the factors influencing both team creativity and innovation implementation were identical. But, as we shall see, the effects of some variables, such as external demands and threat, may have different consequences for creativity and innovation. We therefore propose that creativity should be operationalized as idea generation (and this would include measures of novelty traditionally used in research into brainstorming—see for example, Paulus, 2000) and innovation as the implementation of ideas. Our understanding is also obscured by our tendency to treat “innovation” as a homogenous mass. The team that changes the location of their filing cabinets to improve space usage in the office has innovated. The team that develops a new way of drilling horizontally through the seabed has innovated. One innovation may take 15 minutes, the other 5 years. We believe researchers should make some attempt to rate innovations in terms of three operational dimensions: magnitude, radicalness, and novelty (West & Anderson, 1996). Magnitude is the size or scale of the innovation as judged by an expert in the domain (cf. Amabile, 1983). Radicalness is how much of a change to the status quo the innovation represents—a team introducing team appraisals as opposed to manager to team member appraisals would be clearly changing the status quo. Filing cabinet changes would be unlikely to change the status quo. Novelty is how new the innovation is (horizontal drilling was highly novel when it was first developed). Operationalizing and analysing innovation in this more precise way will, we believe, help us to understand the phenomenon of team innovation more completely. We propose the use of a model of team innovation,

264 WEST ET AL.

incorporating these considerations of team innovation, to guide our analysis, building on the model of team innovation described by West and Anderson (1996). A FRAMEWORK FOR RESEARCH ON TEAM INNOVATION If innovation can be satisfactorily defined and operationalized then what overarching framework can guide research to determine the antecedents of team innovation? In an authoritative review of group performance and intergroup relations, Guzzo and Shea (1992) concluded that the dominant model for conceptualizing group performance is an input—process—output model. This is a static model, incorporating no feedback loops, and represents therefore a simplification of a complex reality (team innovation is likely to influence the team’s task, composition, and the organizational context). But it enables us to describe and consider the interactions between factors likely to influence team innovation. Inputs include knowledge, skills, and abilities of group members; the composition of the team; and aspects of organizational context such as the task and associated objectives, reward systems, information systems, and training resources. Process refers to the interactions among group members, information exchange, patterns of participation in decision making, leadership, social support, and sanctions for group related behaviour. Outputs include the products of the group’s performance, but may also include group viability and team member well-being, growth, and satisfaction. In this article we describe research that examines, within this overall framework, the relationships between inputs, including aspects of the team task (intrinsically and extrinsically motivating task characteristics); team composition (personality of team members, skill, and demographic diversity); organizational context (rewards, learning and development practices, climate); team processes, including norms for innovation, leadership, regulatory focus, reflexivity, intergroup relations, conflict, and dissent; and outputs, notably the radicalness, magnitude, novelty, and likely effectiveness of team innovations (see Figure 1). At the end of each of the twelve steps we summarize the practical implications of the research findings and provide prescriptions for managers and applied psychologists. Inputs 1. Ensure the team task is intrinsically motivating. Teams are formed to carry out a task and the task is therefore always the starting point for analysing team functioning. The task a group performs is a fundamental influence on the team, influencing its composition, structure, processes, and functioning. Oldham and Cummings (1996) found that the five core job characteristics (identified by job design theory; see Hackman & Oldham, 1980) predicted

DEVELOPING INNOVATIVE TEAMS 265

Figure 1. An input-process-output model of team innovation.

individual innovation at work. These characteristics were skill variety and challenge, task identity, task significance, task feedback, and autonomy. Skill variety refers to the degree to which a job requires different activities in order for the work to be carried out and the degree to which the range of skills and talents of the person working within the role is used. Thus, a nurse working with the elderly in their homes may need to use her professional skills of dressing wounds, listening, counselling, being empathic, and appraising the supports and dangers in the person’s home. Task identity is the degree to which the job represents a whole piece of work. It is not simply adding a rubber band to the packaging of a product, but being involved in the manufacture of the product throughout the process, or at least in a meaningful part of the process. Task significance is the impact of task completion upon other people within the organization or in the world at large. Monitoring the effectiveness of an organization’s debt collection is less significant than addressing the well-being of elderly people in rural settings, and may therefore evoke less innovation. When people receive feedback on their performance they are more likely to become aware of “performance gaps”. Consequently they are more attuned to the need to initiate new ways of working in order to fill the gaps. Of course this also

266 WEST ET AL.

implies they have clear job objectives. Autonomy refers to the freedom, independence and discretion of employees in how they perform the task— determining how to do their work and when to do it. Level of autonomy directly determines the extent to which people are innovative in their work (Bailyn, 1985; Munton & West, 1995; West, 1987). This analysis is at the level of individual jobs and teams are not simply aggregates of individual jobs, though the design of team members’ roles will affect overall team innovation. We also have to consider the team task design. Sociotechnical systems theory (STST) provides a powerful framework for examining the effects of task design upon work group innovation. Sociotechnical systems theorists (Cooper & Foster, 1971; Emery, 1959) argue that autonomous work groups provide a structure through which the demands of the social and technical subsystems of an organization can be jointly optimized. Thus, STST proposes that the technical subsystems of any work unit must be balanced and optimized concurrently with the social subsystem—technological and spatial working conditions must be designed to meet the human demands of the social system. The joint optimization of the two subsystems (and thereby innovation) is more likely when work groups have the following characteristics: • The team is a relatively independent organizational unit that is responsible for a whole task that requires a variety of skills from team members. • The tasks of members are related in content so that awareness of a common task is evoked and maintained and members are required to work interdependently. • There is a “unity of product and organization”, i.e., the group has a complete task to perform and group members can “identify with their own product”. • The team has a relatively high level of autonomy in how to carry out its work. • There are opportunities for learning amongst team members and development possibilities for the task (Ulich & Weber, 1996). These results suggest in order to encourage innovation in teams we should ensure teams work interdependently on a complete task, which requires a broad range of high level skills; is perceived by team members as significant and can be developed; team members have autonomy in deciding the means to achieve their task goals; and members should have accurate and timely feedback on team performance. 2. Ensure a high level of external demands. Generating creative ideas in a work group in organizational settings is relatively easy; implementing new products, processes, or procedures in work organizations is difficult and takes time because of resistance to change, and structural and cultural barriers (West, 2002; West & Richter, in press). The work team faces a huge task in moving from the stage of having an idea to implementing it effectively in an organization. They must overcome the suspicions and objections of a myriad of stakeholders who may be

DEVELOPING INNOVATIVE TEAMS 267

affected by the change. A health care team that wishes to introduce much greater nurse involvement in diagnostic and treatment processes for breast cancer patients may have to overcome organizational inertia including the objections of doctors, professional associations, patients, and managers. West (1989) conducted a study of 92 community nurses. He found that work demands explained more of the variance in individual innovation than any other work role factor. Similarly, in a study of 333 health care workers, Bunce and West (1995) found that 32% of those studied innovated as a response to overwork, procedural difficulties, and interpersonal difficulties at work. Necessity may well be the mother of invention. At the organizational level, research suggests that the lower the market share held by manufacturing organizations, the higher the level of product innovation (West, Patterson, Pillinger, & Nickell, 2000). Moreover, the extent of environmental uncertainty reported by senior managers in these organizations (in relation to suppliers, customers, market demands, and government legislation), is a strong predictor of the degree of innovation in organizational systems, e.g., in people management practices. Extending this model, we also suggest that other factors may influence whether high demands have a significant positive relationship with innovation. In a study of 100 health care teams, we tested this hypothesis by investigating the moderating role of group processes on the relationship between external demands and levels of team innovation. External demands were operationalized as the severity of health and social problems and levels of deprivation in the community served by each health care team. There was no direct relationship between external demands on teams and their level of innovation. However, group processes moderated the relationship between external demands and innovation, such that good group processes and high levels of external demands were associated with high levels of team innovation. Well-functioning teams in relatively benign areas did not have a high level of innovation in patient care (West, Utsch, & Dawson, 2003c). Thus, our results suggest that teamwork may have a strong positive influence on team innovation under relatively demanding conditions but a weaker influence when the conditions are less demanding. While external demands drive change creating the imperative to innovate, the relationship between external demands and creativity is less clear. One position stemming from work demands research asserts that there is an inverted U-shaped relationship between external demands and creativity as would be suggested by the Yerkes-Dodson law (cf. McGrath, 1976). Following this approach, moderate levels of external demands have a positive relationship with creativity, as they are optimally motivating, while extremes of both low and high demands have a negative relationship with creativity. Amabile and colleagues found that R&D projects rated high in creativity had more challenging work environments with less excessive work load pressure in comparison to those projects rated low in creativity (Amabile, Conti, Coon, Lazenby, & Herron, 1996). An alternative view is that external demands impede creativity (West, 2002). Evidence from

268 WEST ET AL.

cognitive psychology suggests that the generation of creative cognitions occurs when individuals feel safe, experience relatively positive affect, and feel free from pressure (Claxton, 1997, 1998). In summary, we conclude that high levels of external demands are important for innovation implementation, but may also suppress the generation of creative ideas. How can teams deal with this dilemma? West (2002) argues that effective team integration skills will enable the team to respond to external demands by both creating safe environments for idea generation and implementing these ideas as innovations. Such integration skills refer to appropriate team knowledge, skills, and abilities (KSAs; Stevens & Campion, 1994), which, among others, include conflict resolution skills, the utilization of decentralized communication networks to enhance communication, but also goal setting and performance management. Create conditions within which teams are exposed to high, but not extreme levels of external demands. Enhance team members’ integration skills. 3. Select a team of innovative people. To build an innovative team, we must ensure that members are inclined towards innovation. People who are confident of their abilities are more likely to innovate in the workplace. In a study of role innovation among more than 2000 UK managers, Nicholson and West (1988) found that confidence and motivation to develop knowledge and skills predicted innovation following job change. Tolerance of ambiguity, widely associated with creativity, enables individuals to avoid the problems of getting stuck in mental ruts, and to increase the chances of unusual responses and the discovery of novelty (Barron & Harrington, 1981). Innovative people also tend to be self-disciplined, with a high degree of drive and motivation, and a concern with achieving excellence (Mumford & Gustafson, 1988). This perseverance against social pressures presumably reduces the dangers of premature abandonment. Innovative people tend to be self-directed, enjoying and requiring freedom in their work (Mumford & Gustafson, 1988). They have a high need for freedom, control, and discretion in the work place and appear to find bureaucratic limitations or the exercise of control by managers frustrating (West, 1987; West & Rushton, 1989). Innovation also requires sufficient knowledge of the field to be able to move it forwards, while not being so conceptually trapped in it that we are unable to conceive of alternative courses (Mumford & Gustafson, 1988). In future research, we need to distinguish between personality characteristics that may differentially predict team member creativity and team member propensity to implement innovation. Although, Sternberg and Lubart (1996) suggest that the latter have characteristics that are related to both creativity and innovation, with precise operationalization of these concepts, clear distinctions among personality predictors may well emerge. Secondly, we assert there is a need for researchers to examine how individuals’ personality characteristics are

DEVELOPING INNOVATIVE TEAMS 269

integrated into team outputs. For example, is it desirable to have a mixture of personality types in order to foster innovation? Or is it preferable to have a small proportion of the team composed of individuals with strong preferences for unconventional approaches? Select team members therefore who are knowledgeable and confident, with a high tolerance for ambiguity, who are also self-disciplined and persistent. 4. Select people with diverse skills and demographic backgrounds. Of the different classification systems for diversity (e.g., Jackson 1992, 1996; Maznevski, 1994) most differentiate between task-oriented diversity in attributes that are relevant to the person’s role or task in the organization (e.g., organizational position and specialized knowledge), and those that are simply inherent in the person and “relations-oriented” (e.g., age, gender, ethnicity, social status, and personality) (Maznevski, 1994). The available evidence supports the conclusion that team task diversity is associated with better quality team decision making (Jackson, 1996). The most significant study of innovation in teams to date is a UNESCO-sponsored international effort to determine the factors influencing the scientific performance of 1222 research teams (Andrews, 1979; see also Payne, 1990). Diversity was assessed in six areas: projects, interdisciplinary orientations, specialities, funding resources, R&D activities, and professional functions. Overall, diversity accounted for 10% of the variance in scientific recognition, R&D effectiveness, and number of publications (all surrogate indicators of innovation), reinforcing the conclusion from existing research that diversity positively influences team innovation. Innovation requires diversity of knowledge bases, professional orientations, or disciplinary backgrounds because the integration of diverse perspectives creates the potential for combinations of ideas from different domains. This is likely to produce creative ideas. People with different professional training, skills, experiences, and orientations are likely to have divergent perspectives and this can create conflict. But if this knowledge can be harnessed these teams are also likely to have a greater wealth of knowledge to draw upon than other teams. Teams that draw upon diverse perspectives may find it relatively easy to implement new ideas, for three reasons. Firstly, such teams may be relatively better able to anticipate potential problems that may emerge as ideas move from initial conception to implementation. Secondly, it is probable that teams whose members have the skills to work with people from diverse background will be adept at networking and dealing with the political agendas that surround innovation implementation. Furthermore, if informational conflict is processed in the interests of effective decision making, the team will undertake a more comprehensive and detailed analysis of problems and more innovative actions will result (De Dreu, 1997; Hoffman & Maier, 1961; Pearce & Ravlin, 1987;

270 WEST ET AL.

Porac & Howard, 1990; Tjosvold, 1985, 1991, 1998). But diversity also demands extra efforts at integration since diversity creates the potential for conflict as much as for creativity (De Dreu, 1997; Pelled, Eisenhardt, & Xin, 1999). There is some evidence that heterogeneity in relations-oriented diversity is associated with group innovation, including heterogeneity in attitudes (Willems & Clark, 1971), gender, (Wood, 1987), and education (Smith Bannon, Olian, Sims, & Scully, 1994). Empirical research on the effects of demographic diversity on work team outcomes has produced mixed results (Milliken & Martins, 1996). “Sometimes the effect of diversity seems positive, at other times negative, and in other situations, there seems to be no effect at all” (Shaw & Barret-Power, 1998, p. 1307). Where diversity reduces group members’ clarity about and commitment to group objectives, levels of participation (interaction, information-sharing, and shared influence over decision making), task orientation (commitment to quality of task performance), and support for new ideas, then it is likely that innovation attempts will be resisted. The relationship between demographic diversity and innovation may therefore be curvilinear (see also West, 2002). The one study to test this possibility showed a curvilinear relationship between age, gender, and tenure diversity and team innovation, and this was mediated by the task focus of the team. If teams were tightly focused on the task then moderate levels of demographic diversity seemed to promote innovation. Very high or low levels of demographic diversity were associated with low levels of innovation (González-Romá & West, 2003). Time may be a factor too. Watson, Kumar, and Michaelson (1993) studied culturally homogenous and culturally diverse student teams analysing case studies. They found that the diverse teams performed less well early on. After 17 months of working together, the diverse teams had group processes as effective as the homogenous teams and outperformed them in relation to range of perspectives on the task and number of alternative solutions developed. Thus, when diverse perspectives are discussed, over time the cross-fertilization of different approaches may result in more innovative solutions. Select team members who have task relevant skills but a diverse range of skills and professional backgrounds; ensure the team has a range of demography (age, gender, tenure in the organization) but ensure the team has clarity about and commitment to group objectives to be tightly focused to get the work done. Give the team sufficient starting time to integrate the diverse perspectives and viewpoints. 5. Provide organizational rewards for innovation. The organizational context of teamwork has a significant effect on the team’s innovation (Guzzo, 1996; Hackman, 1990). Organizational cultures that resist innovation will of course reduce the likelihood that teams will innovate. One of the most tangible marks of organizational support for innovation is whether employees’ attempts to introduce new and improved ways of doing things are rewarded.

DEVELOPING INNOVATIVE TEAMS 271

Efforts to reward employees for innovative performance should be undertaken with care, since some research suggests that doing so may have a negative impact upon intrinsic motivation. Thus, pay may deflect attention away from the task in hand towards the achievement of an external goal, i.e., higher levels of reward (Amabile, 1983, 1988). This is potentially detrimental to creativity. On the other hand, emerging research evidence suggests that it is possible to design reward systems that do not displace attention from the task towards the reward (Eisenberger & Cameron, 1996), and that it external rewards can encourage both creativity and innovation implementation (Abbey & Dickson, 1983; Eisenberger & Cameron, 1996). In a series of studies, Amabile and colleagues showed that reward perceived as a bonus, a confirmation of one’s competence, or a means of enabling one to do better and more interesting work in the future can stimulate creativity (see Amabile et al., 1996). There is also a body of work examining “gainsharing” as a device for stimulating productivity and innovation that suggests the value of reward for innovation (Cotton, 1996; Heller, Pusic, Strauss, & Wilpert, 1998). Gainsharing is the term used to describe systems used in commercial organizations to involve staff in developing new and more effective means of production. If employees develop ways of increasing production or improving quality they are rewarded with a share of the financial gains of the innovation. Evaluations of “gainsharing” programmes suggest they are effective in increasing innovation, productivity and employee involvement in decision making (Cotton, 1996). It makes sense to argue that what should be rewarded is not the success of innovation but genuine attempts to innovate. Otherwise it is likely that employees will simply play safe with innovations that are neither radical nor novel (staying within existing paradigms). Furthermore, efforts should be made to reward the team, rather than the individual, for innovative efforts. The limited research that exists exploring the relationship between reward and organizational outcomes suggests that paying team members for performance is only likely to work where account is taken of the need to encourage individuals to work collaboratively rather than competitively (Bloom, 1999; Bloom & Milkovich, 1998). There has, however, been surprisingly little work examining the effects of reward systems on team innovation (or indeed individual innovation in organizations) and this is a gap in understanding which researchers should find relatively easy to fill. Find ways of rewarding teams that attempt to innovate, even if the innovations don’t work out. 6. Create a learning and development climate in the organization. For teams to innovate in organizations they must learn, be it from customers, suppliers, training experiences, or any other domain. Learning means changing our understanding and changing understanding is fundamental to innovation. What organizational mechanisms are likely to be effective in engendering the learning

272 WEST ET AL.

required to produce team innovation? Those who study organizational learning emphasize the importance of practices that encourage “outward focus” in order to bring new knowledge into the company (Burgoyne, Pedler, & Boydell, 1999). Exposure to different experiences and points of view makes team members willing to examine their own mental models and to make any necessary adjustments. In addition, the importance for learning and innovation of developing mechanisms to facilitate interaction with the external environment is well documented (Cohen & Levinthal, 1990). There is a strong theoretical case to suggest that organizations need to adopt appropriate HR practices if they are to develop such outward focus. Recruitment and selection determine whether or not people are employed with the necessary attributes to make a contribution to the knowledge creation process. Induction and training activities shape the psychological contract, potentially enhancing motivation and developing skills as well as the required questioning, sharing, and challenging behaviours. Appraisal and remuneration strategies play a role in clarifying expectations and rewarding effective performance, defined in terms of willingness to learn, take risks, and communicate well. Human resource management (HRM) activity therefore can shape the learning agenda, providing the impetus and incentive for individuals to experience exploratory learning and develop their communication and teamworking skills. What organizational learning mechanisms are likely to assist in generating this variety of perspectives in teams? Presenting team members with the opportunity to visit customers or suppliers, regardless of their job role, provides stimulation from the external environment and provokes questioning of the appropriateness of organizational practices and goals (McGrath, 1984). Similarly, intraorganizational secondments are likely to be beneficial in challenging thinking and generating the flow of new ideas. Opportunities for team members to learn outside the constraints of their immediate jobs will facilitate the transfer of knowledge internally and enrich individuals’ perceptions of the challenges faced by other organizational members (Tsai, 2001). In a longitudinal study of 22 UK manufacturing companies examining the relationship between people management practices and product and technological innovation, Shipton, West, Dawson, Patterson, and Birdi (2003b) found that practices designed to promote variety of knowledge within the organization, training, induction, and appraisal were all significant predictors of product innovation. The data suggest that people management practices designed to expose individuals to new and different experiences and to develop their skills are associated with high levels of product and technological innovation. Moreover, data presented in this study show that a combination of these people management practices explain variation between companies in product and technological innovation above and beyond the effects of single practices. By what mechanisms is this effect generated? It is possible that people management presents individuals and teams with the cues necessary to communicate what behaviours are deemed desirable. In other words, perhaps

DEVELOPING INNOVATIVE TEAMS 273

through appraisal, for example, team members are encouraged to exhibit “outward focus” or to disseminate knowledge to others. This is, however, an underresearched area. Further research would be valuable to test whether HR practices stimulate the creation of a learning climat, which in turn fosters team innovation. Encourage team innovation by developing sophisticated HRM practices (recruitment, selection, induction, training, and appraisal), and encourage organizational learning via secondments, visits to external organizations, a broad approach to training support, and knowledge management which involves recording and communicating teams’ solutions and best practices. 7. Develop a climate for innovation in the organization. Amabile’s componential model of creativity and innovation (Amabile, 1988, 1997) provides a framework to examine how the organizational environment affects creativity and innovation. She proposes that two general categories of environment—stimulants and obstacles to creativity—affect organizational innovation by influencing expertise, task motivation, and creativity skills. Stimulants refer to organizational and supervisory encouragement, work group support, sufficient resources, and challenging work. Obstacles refer to organizational impediments and workload pressures. In this section we will focus on the relationship between organizational encouragement, obstacles, and team innovation. Organizational encouragement includes three aspects of the work environment: (1) Encouragement of risk taking and idea generation, a valuing of innovation from the highest to the lowest levels of management. (2) Fair and supportive evaluation of new ideas. (3) Information flow across the organization, participative management, and decision making. Amabile et al. (1996) describe studies indicating that internal strife, conservatism, and rigid, formal management structures represent obstacles to creativity. The authors suggest that because these factors may be perceived as controlling, their likely negative influence on creativity may evolve from an increase in individual extrinsic motivation (a motivation through external factors but not the task itself) and a corresponding decrease in the intrinsic motivation necessary for creativity. In a study comparing the work environments of (externally rated) highly creative R&D projects against less creative projects, Amabile and colleagues found support for their model and found that high-creativity projects were overall higher on work environment stimulants and lower on obstacles than lowcreativity projects (Amabile et al., 1996).

274 WEST ET AL.

Some of Amabile’s stimulants (i.e., organizational and supervisory encouragement, work group support) incorporate facets of a climate of “positive affect”. Such positive affect was also suggested by other research at the individual level of analysis to be related to creativity and innovation (Isen & Baron, 1991; Isen, Daubman, & Nowicki, 1987). Similarly, Shipton, Parkes, West, and Patterson (2003a) found that the average level of job satisfaction in manufacturing organizations predicted product innovation a year later, controlling for prior levels of company product innovation and profitability. Thus, we suggest that a climate of positive affectivity within an organization may provide a secure base from which teams can generate both creative ideas and ensure their implementation. Senior managers should focus on managing the climate or culture of the organization in order to increase employees’ experience of positive challenge; organizational encouragement for innovation; support and openness; and to decrease their perceptions of chronic organizational hostility, conservatism, and rigid formal structures. Finally, increasing positive affect by determining and increasing the factors that promote employee satisfaction may well lead to higher levels of team innovation. Processes So far we have examined the “inputs” component of the input-process-output model guiding this review. These will affect the processes of the team. The dance of the team comprises the day-to-day finely textured processes determining the level of team innovation, which includes norms, conflict, and leadership. West’s (1990) four-factor model (shared objectives, participation, task focus, and support for innovation) has guided some research on team processes and innovation. Rather than review these four factors we focus on the one factor that is most exclusively likely to influence innovation as opposed to team effectiveness more generally—norms for innovation. We also consider five key elements of the team’s dance: norms for innovation, reflexivity, leadership, conflict and dissent, and intergroup relations. 8. Establish team norms for innovation. Team norms which encourage risk taking and the improvement of existing practices are likely to provide an environment conducive to innovation. Norms can powerfully shape individual and group behaviour (for reviews, see Brown, 2000; Hackman, 1992) and those supporting innovation will encourage team members to introduce innovations. In a longitudinal study of 27 hospital top management teams, norms supporting innovation were the most powerful predictor of team innovation of any of the group processes or group composition factors examined (Anderson & West, 1998; West & Anderson, 1996). A manufacturing organization on the Isle of Wight provides a good example of how innovative team norms may develop from relatively seemingly trivial

DEVELOPING INNOVATIVE TEAMS 275

events. The main production team on the shop floor had complained about the storage of dirty materials, and was given a budget and time off from production to design and build a suitable storage extension for the factory. They completed the task under time and budget, and thereafter began to suggest many more innovations in work processes and structures. The team, as a result of their good experience, developed clear norms for discovering and valuing innovation. In effect, the team was provided with the conditions to be innovative, and once empowered proactively fostered innovative team norms. Encourage teams to decide to be innovative and both verbally and practically to support team members’ ideas for new and improved products, services, or ways of working. 9. Encourage reflexivity in teams—coach them to stop working. Our research suggests that a key indicator of innovation in work teams is reflexivity. Team reflexivity is the extent to which team members collectively reflect upon the team’s objectives, strategies, and processes as well as their wider objectives, and adapt them accordingly (West, 1996, 2000). There are three central elements to the concept of reflexivity—reflection, planning, and action or adaptation. Reflection consists of attention, awareness, monitoring, and evaluation of the object of reflection (West, 2000). Planning is one of the potential consequences of the indeterminacy created by reflection, because, during this indeterminacy, courses of action can be contemplated, intentions formed, plans developed (in more or less detail), and the potential for carrying them out is built up. High reflexivity exists when team planning is characterized by greater detail, inclusiveness of potential problems, hierarchical ordering of plans, and long as well as short range planning (West, 2000). Detailed implementation intentions or plans are likely to lead to innovation implementation (Frese & Zapf, 1993; Gollwitzer, 1996). In a longitudinal research study involving 19 BBC television education programme production teams (whose work fundamentally requires creativity and innovation) (Carter & West, 1998) reflexivity was a significant predictor of senior managers’ ratings of the effectiveness and creativity of the programmes the teams produced. In audio- and videotaping team processes, we have found that innovation is most likely in teams that do reflect on their objectives (“What is it we are trying to achieve here?”), strategies (“I’m not sure we are going about solving the quality problem in production in the right way…can we discuss the approach some more?”), and processes (“I think the way we run these meetings is not useful any more …why don’t we try to hold them once a month off site, so that they are less frequent, longer, and more relaxed?”). Moreover, such teams appear to continually renegotiate the way they work to try to improve performance. Reflexivity requires a degree of safety however, since reflection is likely to reveal gaps between how the team is performing and how it would like to

276 WEST ET AL.

perform. Edmondson’s work helps us to understand the conditions within a team that encourage reflexivity or learning (Edmondson, 1996, 1999). She found major differences between newly formed intensive care nursing teams in their management of medication errors. In some teams, members openly acknowledged and discussed their medication errors and discussed ways to avoid their occurrence. In others, members kept information about errors to themselves. Learning about the causes of these errors, as a team, and devising innovations to prevent future errors were only possible in teams of the former type. Edmondson gives an example of how, in one learning-oriented team, discussion of a recent error led to innovation in equipment. An intravenous medication pump was identified as a source of consistent errors and so was replaced by a different type of pump. In many cases reflexivity leads to radical change in the status quo and sometimes the creative destruction of existing processes. For example a breast cancer care team we studied opened up its decision-making meetings to a wide range of staff who could watch the team, as in a goldfish bowl, and then provide commentary and feedback to them. These comments were then discussed and reflected upon within the team in order for them to improve working practices. Teams must take time out to reflect on their objectives, team processes, and outcomes, make plans for change, implement them, and reflect again. This requires they develop a sense of safety that enables them to self-reflectively explore in this way. 10. Ensure there is clarity of leadership in the team and that the leadership style is appropriate for encouraging innovation. The team leader has a potent and pervasive influence on team processes and team innovation (Tannenbaum, Salas, & Cannon-Bowers, 1996). The leader brings task expertise, abilities, and attitudes to the team that influence the group design and group norms (Hackman, 1990, 1992, 2002), and, through monitoring, feedback, and coaching, develops the processes, that enables the team to do its work successfully (McIntyre & Salas, 1995) and to innovate. Mumford, Scott, Gaddis, and Strange (2002) identified three leadership characteristics that stimulate team innovation: domain specific expertise, social and problem-solving skills, and transformational leadership behaviours. We adopt this framework and describe research that relates to these areas. Over and above these factors, we argue that clarity of team leadership is an important predictor of team innovation. Kim, Min, and Cha (1999) surveyed 87 R&D teams, in six Korean organizations. Of the six roles examined a leader’s technical problem-solving ability (in particular appraisal of problems and identification of new ideas) was significantly correlated with R&D innovation. A leader’s technical expertise contributes to the cognitive resources of the teams as well as to team problemsolving capacity (Mumford et al., 2002).

DEVELOPING INNOVATIVE TEAMS 277

A programme of social psychological research by Maier (1960–1970) examined the link between leadership problem solving and team innovation. Maier (1970) conducted a series of experiments with groups exploring the influence of different leadership behaviours on creativity. The results suggested that the leader should encourage “problem mindedness” in groups on the basis that exploring the problem fully is the best way of eventually generating a rich vein of solution options. The leader can delay a group’s criticism of an idea by asking for alternative contributions and can use his or her power to protect individuals with minority views, so that their opinions can be heard (Maier & Solem, 1962). Maier (1970) argued that leaders should delay offering their opinions as long as possible, since propositions from leaders are often given undue weight and tend either to be too hastily accepted, rather than properly evaluated, a finding since replicated in a variety of applied studies. Maier concludes that leaders should function as “the group’s central nervous system”: receive information, facilitate communication, relay messages, and integrate responses—in short, integrate the group. The leader must be receptive to information, but not impose solutions. The leader should be aware of group processes; listen in order to understand rather than to appraise or refute; assume responsibility for accurate communication; be sensitive to unexpressed feelings; protect minority views; keep the discussion moving; and develop skills in summarizing (Maier, 1970). Recent theories of leadership depict two dominant styles: transformational and transactional. We discuss transformational leadership, as research (e.g., Keller, 1992) suggests transformational leadership is a strong predictor of team innovation. These leaders influence group members by encouraging them to transform their views of themselves and their work. They rely on charisma and the ability to conjure inspiring visions of the future (e.g., Bass, 1990; Burns, 1978; House & Shamir, 1993). Such leaders use emotional or ideological appeals to change the behaviour of the group, moving them from self-interest in work values to consideration of the whole group and organization. Inspiration can encourage team members not to be disheartened by setbacks and to invest additional effort to take risks and develop innovative solutions to endemic work problems. Much of the research on team leadership has focused on the contribution made by a single leader. However, leadership can also be provided by two or more individuals who are either formally appointed to the role, or emerge from within the team. Leadership is important even in self-managed teams, affecting both organizational factors such as acquiring resources for the team, and team member behaviour such as encouraging the team to take control of its own activities (Nygren & Levine, 1996). We propose clarity of team leadership (team members are clear about where the leadership of the team resides) is critical to the role of leadership in fostering team innovation (regardless of whether leadership is shared). Lack of clarity about or conflict over the leadership role will be negatively associated with team innovation. In a test of these

278 WEST ET AL.

propositions, West, Borrill, Dawson, Brodbeck, Shapiro, and Haward (2003a) sampled 3447 respondents from 98 primary health care teams, 113 community mental health teams, and 72 breast cancer care teams. The results revealed that leadership clarity was associated with clear team objectives, high levels of participation, commitment to excellence, and support for innovation. Team processes consistently predicted team innovation across all three samples. Clarity of team leadership predicted innovation in the latter two samples and team processes partially mediated this relationship. Ensure that leadership in the team is clear to all team members and that there is no conflict over leadership. Listen in order to understand rather than to appraise or refute; assume responsibility for accurate team communication; be sensitive to unexpressed feelings; develop inspiring visions of the possibilities for innovation; keep the discussion moving; and develop problem-solving and technical skills. 11. Manage conflict constructively and encourage minorities to dissent within teams. Many scholars argue that the management of competing perspectives is fundamental to the generation of creativity and innovation (Mumford & Gustafson, 1988; Nemeth & Owens, 1996; Tjosvold, 1998). We made reference to this point in step 4 when discussing the need for individuals with diverse skills to be represented in innovative teams. Here, we argue that through dealing effectively with conflicting perspectives, teams are challenged to achieve high levels of performance and innovation. Evidence suggests that this is the case where conflict is task-related (rather than centred around relationships or process issues; see De Dreu, 1997; Jehn, 1997). Task conflict is an awareness of differences in viewpoints and opinions about a task. It includes constructive challenges to the group’s performance. Dean Tjosvold and colleagues (Tjosvold, 1982, 1998; Tjosvold & Field, 1983; Tjosvold & Johnson, 1977; Tjosvold, Wedley, & Field, 1986) have presented cogent arguments and strong supportive evidence that such constructive (task-related) controversy in a co-operative group context improves the quality of decision making and creativity (Tjosvold, 1991). Constructive controversy is characterized by full exploration of opposing opinions and frank analyses of task-related issues. It occurs when decisionmakers believe they are in a cooperative group context, where mutually beneficial goals are emphasized, rather than in a competitive context; where decision-makers feel their personal competence is confirmed rather than questioned; and where they perceive processes of mutual influence rather than attempted dominance. For example, the most effective self-managing teams in a manufacturing plant that Alper and Tjosvold (1993) studied, were those which had compatible goals and promoted constructive controversy. The 544 employees who made up the 59 teams completed a questionnaire, which probed for information about cooperation, competition, and conflict within the teams. Teams were responsible

DEVELOPING INNOVATIVE TEAMS 279

for activities such as work scheduling, house-keeping, safety, purchasing, accident investigation, and quality. Members of teams that promoted interdependent conflict management (people cooperated to work through their differences), compared to teams with win/lose conflict (where team members tended to engage in a power struggle when they had different views and interests), felt confident that they could deal with differences. Such teams were rated as more productive and innovative by their managers. Apparently, because of this success, members of these teams were committed to working as a team. Another perspective on conflict and innovation comes from minority influence theory. A number of researchers have shown that consistent arguments by a minority group are likely to lead to change in majority views in groups (Maass & Clark, 1984; Nemeth, 1986; Nemeth & Chiles, 1988; Nemeth & Kwan, 1987; Nemeth & Owens, 1996; Nemeth & Wachtler, 1983) (for an account of this research and an assessment of how it relates to group creativity, see the excellent chapter by Nemeth & Nemeth-Brown, 2003). De Dreu and de Vries (1997) suggest that a homogenous workforce in which minority dissent is suppressed will reduce creativity, innovation, individuality, and independence (see also Nemeth & Staw, 1989). Disagreement about ideas within a group can be beneficial and some researchers even argue that team task or information-related conflict is valuable, whether or not it occurs in a collaborative context, since it can improve decision making and strategic planning (Cosier & Rose, 1977; Mitroff, Barabba, & Kilmann, 1977; Schweiger, Sandberg, & Rechner, 1989). This is because task-related conflict may lead team members to reevaluate the status quo and adapt their objectives, strategies, or processes more appropriately to their situation (Coser, 1970; Nemeth & Staw, 1989; Roloff, 1987; Thomas, 1979). However, de Dreu and Weingart (2003) suggest that high levels of conflict in teams, regardless of whether the conflict is focused on relationships or task, will inhibit team effectiveness and innovation. In two studies of newly formed postal work teams and heterogeneous teams in The Netherlands, de Dreu and West (2001) found that minority dissent did indeed predict team innovation (as rated by the teams’ supervisors), but only in teams with high levels of participation. High levels of team member interaction, participative decision making, and information sharing provide the conditions for minorities to voice dissent and foster innovation. Encourage moderate task-related (as distinct from emotional or interpersonal) conflict and minority dissent, along with high levels of participation since this will lead to debate and to consideration of alternative interpretations of information available. This in turn will prompt integrated and creative solutions to work-related problems—to innovation. 12. Don’t just bond…bridge. Teamworking often provides the basis for collaboration and collective decision making. In turn these bonds enable

280 WEST ET AL.

innovation. The other side of this equation is that team members tend to identify with their group and develop competitive orientations toward other groups. As a consequence team-based organizations are often riven by intergroup competition, hostility, and rivalry, with likely consequent negative impacts on organizational performance overall; in short, inter-group bias. Early research in social psychology, such as the famous Robbers’ Cave study, showed how psychological group identification occurs almost immediately when groups find themselves under conditions of conflicting interest, with dramatic behavioural consequences of strong in-group favouritism and loyalty. However, people also develop group identification with the most minimal social cues, even when groups are totally independent regarding the interests they pursue (Tajfel, 1981; Tajfel & Billig, 1974). The pitfall is that group members tend to discriminate in favour of their own group and against members of out-groups especially when group membership is made salient (Turner, 1985). This isolates the group from diverse and critical input from out-groups. In these conditions, teams may fail to acquire the wealth of knowledge present within an organization and may develop inward looking orientations, stifling growth and innovation. In a study of 45 new product teams in five high technology companies, Ancona and Caldwell (1992) found that when a work group recruited a new member from another functional area in an organization, communication between the team and that area went up dramatically. This would favour innovation through the incorporation of diverse ideas and models gleaned from these different functional areas. These findings echo Damanpour’s (1996) meta-analytic conclusions that suggested external communication was more important for innovation than internal communication in organizations. How can teams encourage good intergroup working? A fruitful avenue may be to look at the two main causes of dysfunctional intergroup relations: conflicting interests or goals, and the disruptive dynamics of salient social categorization. One way for the team to improve relationships with other teams would be to make such improvement one of its four or five core work objectives. Teams can also use secondments and set up cross-team work projects. Another strategy is to improve and encourage contact and open communication between teams. Such contacts usually lead to a weakening of perceptions of conflicting goals (Tjosvold, 1998). Open and collaborative communication is a means by which trusting cross-team relationships can be created; such trusting relationships enable conflicts of interest to be managed constructively. There are many ways for the organization to encourage intergroup working (see West, Tjosvold, & Smith, 2003b), including encouraging teams to downplay the salience of group boundaries by developing a common superordinate identity within the organization; rewarding the maintenance and development of crossteam relationships; and making team boundaries more permeable, e.g., through rotating team members in different teams (see also Katz & Allen, 1988). Research reviewed in step 6 considers what specific aspects of organizational context are most likely to impact upon team innovation. There, however, is much

DEVELOPING INNOVATIVE TEAMS 281

work to be done in organizations by work and organizational psychologists to encourage the application of these strategies to ensure that innovation is maximized. Encourage different teams to work together, share best practice, develop joint projects, and strive to find a common superordinate identity within the organization in order to encourage the innovation that springs from bridging boundaries. Reward interteam working. CONCLUSION The input—process—output model we have described here offers an integrative framework for understanding how to encourage team innovation. Implicitly the structure of this model suggests team processes provide the core driving force for team innovation and that these processes may mediate the relationship between team inputs and innovation. While researchers (e.g., Pelled et al., 1999; Zenger & Lawrence, 1989) have proposed that diversity influences team communication and through these processes drives innovation, the relationship between other input variables may be considerably more complex. For example the organizational context will have a direct and indirect impact on innovation. A company that supports innovation may be more likely to develop innovative HRM practices, such as novel equal opportunity programmes and/or the selection of employees from a global as opposed to local pool of resources. In turn these practices will determine the demographic diversity of an organization, which will influence team processes and innovation. Further the organizational context may stifle or stimulate different team processes. For example, rewarding innovative teams may encourage norms for innovation and reflexivity but may also promote conflict and competition between teams. Thus, we suggest that there is a need for researchers to examine specific aspects of this model and identify the potential interrelationships between different variables. Within the model and its steps we propose that certain variables may have a differential impact on innovation and creativity. For example, while external demands promote innovation, the relationship with creativity is much less clear. Some researchers have suggested that external demands have a negative relationship with creativity, whereas others have argued that external demands have an inverted U-shaped relationship with creativity. We suggest this confusion stems from the limited research examining this topic and from differences in the way different studies have defined innovation and creativity. To address this concern, future researchers should provide a more precise demarcation of creativity and innovation. We draw researchers’ attention to the observation that we have relatively little understanding of the organizational context and the influence of rewards on innovation. Furthermore, while much effort has been devoted to understanding how team processes affect innovation, we need to understand more about how

282 WEST ET AL.

leadership behaviours interact with task type to produce high or low levels of innovation. Finally, we are only beginning to understand how interactions between teams may be fruitful sources of innovation or inhibitors of innovation. Team innovation is vital to the effectiveness of organizations in highly demanding and competitive environments. At the same time, opportunities to develop and implement skills in the workplace and to innovate are central to the satisfaction of team members at work. Work and organizational psychologists can contribute much to translating research into practice and developing teams that enable change, innovation, and the well-being of those who work within them —we hope that facilitating organizations to take the 12 steps we have described in this article will help to take them to a better place as they struggle with the earthly challenges of change. REFERENCES Abbey, A., & Dickson, J.W. (1983). R&D work climate and innovation in semiconductors. Academy of Management Journal, 26(2), 362–368. Alper, S., & Tjosvold, D. (1993). Cooperation theory and self-managing teams on the manufacturing floor. Paper presented at the meeting of the International Association for Conflict Management, Eugene, OR, USA. Amabile, T.M. (1983). The social psychology of creativity: A componential conceptualization. Journal of Personality and Social Psychology, 45, 357–376. Amabile, T.M. (1988). A model of creativity and innovation in organizations. In B.M. Staw & L.L. Cummings (Eds.), Research in organizational behavior (Vol. 10, pp. 123–167). Greenwich, CT: JAI Press. Amabile, T.M. (1997). Motivating creativity in organizations: On doing what you love and loving what you do. California Management Review, 40, 39–58. Amabile, T.M., Conti, R., Coon, H., Lazenby, J., & Herron, M. (1996). Assessing the work environment for creativity. Academy of Management Journal, 39, 1154–1184. Ancona, D.G., & Caldwell, D.F. (1992). Bridging the boundary: External process and performance in organizational teams. Administrative Science Quarterly, 37, 634–665. Anderson, N., & West, M.A. (1998). Measuring climate for work group innovation: Development and validation of the Team Climate Inventory. Journal of Organizational Behavior, 19, 235–258. Andrews, F.M. (1979). Scientific productivity. Cambridge, UK: Cambridge University Press. Bailyn, L. (1985). Autonomy in the industrial R&D laboratory. Human Resource Management, 24, 129–146. Barron, F.B., & Harrington, D.M. (1981). Creativity, intelligence and personality. In M.R. Rosenzweig & L.W.Porter (Eds.), Annual Review of Psychology, 32, 439–476. Palo Alto, CA: Annual Reviews. Bass, B.M. (1990). Handbook of leadership: A survey of theory and research. New York: Free Press. Bloom, M. (1999). The performance effects of pay dispersion on individuals and organizations. Academy of Management Journal, 42(1), 25–40.

DEVELOPING INNOVATIVE TEAMS 283

Bloom, M., & Milkovich, G. (1998). Relationships among risk, incentive pay, and organizational performance. Academy of Management Journal, 41(3), 283–297. Brown, R.J. (2000). Group processes: Dynamics within and between groups. London: Blackwell. Bunce, D., & West, M.A. (1995). Changing work environments: Innovative coping responses to occupational stress. Work and Stress, 8, 319–331. Burgoyne, J., Pedler, M., & Boydell, T. (1999). The learning company: A strategy for sustainable development. New York: Maidenhead. Burns, J.M. (1978). Leadership. New York: Harper & Row. Carter, S.M., & West, M.A. (1998). Reflexivity, effectiveness and mental health in BBCTV production teams. Small Group Research, 5, 583–601. Clarke, L. (1994). The essence of change. London: Prentice Hall. Claxton, G.L. (1997). Have brain, tortoise mind: Why intelligence increases when you think less. London: Fourth Estate. Claxton, G.L. (1998). Knowing without knowing why: Investigating human intuition. The Psychologist, 11, 217–220. Cohen, S.G., & Bailey, D.E. (1997). What makes teams work: Group effectiveness research from the shop floor to the executive suite. Journal of Management, 23, 239–290. Cohen, W.M., & Levinthal, D.A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152. Cooper, R., & Foster, M. (1971). Sociotechnical systems. American Psychologist, 26, 467–474. Coser, L.A. (1970). Continuities in the study of social conflict. New York: Free Press. Cosier, R., & Rose, G. (1977). Cognitive conflict and goal conflict effects on task performance. Organizational Behavior and Human Performance, 19, 378–391. Cotton, J.L. (1996). Employee involvement. In C.L.Cooper & I.T.Robertson (Eds.), International review of industrial and organizational psychology (Vol. 11, pp. 219–242). Chichester, UK: John Wiley & Sons Ltd. Damanpour, F. (1996). Organizational complexity and innovation: Developing and testing multiple contingency models. Management Science, 42, 693–716. De Dreu, C.K.W. (1997). Productive conflict: The importance of conflict management and conflict issue. In C.K.W.de Dreu & E. van de Vliert (Eds.), Using conflict in organizations (pp. 9–22). London: Sage. De Dreu, C.K.W., & de Vries, N.K. (1997). Minority dissent in organizations. In C.K.W.de Dreu & E.van de Vliert (Eds.), Using conflict in organizations (pp. 72–86). London: Sage. De Dreu, C.K.W., & Weingart, L.R. (2003). A contingency theory of task conflict and performance in groups and organizational teams. In M.A.West, D.Tjosvold & K.Smith (Eds.), International handbook of organizational teamwork and cooperative working (pp.15– 166). London: Wiley. De Dreu, C.K.W., & West, M.A. (2001). Minority dissent and team innovation: The importance of participation in decision-making. Journal of Applied Psychology, 68, 1191– 1201. Edmondson, A.C. (1996). Learning from mistakes is easier said than done: Group and organizational influences on the detection and correction of human error. Journal of Applied Behavioral Science, 32, 5–28.

284 WEST ET AL.

Edmondson, A.C. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44, 350–383. Eisenberger, R., & Cameron, J. (1996). Detrimental effects of reward: Reality or myth? American Psychologist, 51(11), 1153–1166. Emery, F.E. (1959). Characteristics of sociotechnical systems [Doc. No. 527]. Tavistock Institute of Human Relations: London. Frese, M., & Zapf, D. (1993). Action as the core of work psychology: A German approach. In H.C.Triandis, M.D.Dunnette, & L.M.Hough (Eds.), Handbook of industrial and organizational psychology (Vol. 4, pp. 271–340). Palo Alto, CA: Consulting Psychologists Press. Gollwitzer, P.M. (1996). The volitional benefits of planning. In P.M.Gollwitzer & J.A.Bargh (Eds.), The psychology of action: Linking cognition and motivation to behavior (pp. 287–312). New York: Guilford Press. González-Romá, V., & West, M.A. (2003). Demographic diversity and team innovation: Testing a curvilinear relationship model. Manuscript submitted for publication. Guzzo, R.A. (1996). Fundamental considerations about work groups. In M.A.West (Ed.), Handbook of work group psychology. Chichester, UK: Wiley. Guzzo, R.A., & Shea, G.P. (1992). Group performance and intergroup relations in organisations. In M.D.Dunnette & L.M.Hough (Eds.), Handbook of industrial and organizational psychology (Vol. 2, pp. 271–326). Palo Alto, CA: Consulting Psychologists Press. Hackman, J.R. (1990). Groups that work (and those that don’t). San Francisco: Jossey Bass. Hackman, J.R. (1992). Group influences on individuals in organizations. In M.D.Dunnette & L.M.Hough (Eds.), Handbook of industrial and organizational psychology (Vol. 3, pp. 199– 267). Palo Alto, CA: Consulting Psychologists Press. Hackman, J.R. (2002). Leading teams: Setting the stage for great performances. Harvard, MA: Harvard Business School. Hackman, J.R., & Oldham, G.R. (1980). Work redesign. Reading, MA: Addison-Wesley. Heller, F., Pusic, E., Strauss, G., & Wilpert, B. (1998). Organizational participation: Myth and reality. Oxford, UK: Oxford University Press. Hoffman, L.R., & Maier, N.R.F. (1961). Sex differences, sex composition, and group problem-solving. Journal of Abnormal and Social Psychology, 63, 453–456. House, R.J., & Shamir, B. (1993). Toward the integration of transformational, charismatic, and visionary theories. In M.M.Chemers & R.Ayman (Eds.), Leadership theory and research: Perspectives and directions (pp. 81–107). San Diego, CA: Academic Press. Innovating by numbers. (2003, June 21). Economist Technology Quarterly. Isen, A., Daubman, K., & Nowicki, G. (1987). Positive affect facilitates creative problemsolving. Journal of Personality and Social Psychology, 52, 1122–1131. Isen, A.M., & Baron, R.R. (1991). Positive affect as a factor in organizational behavior. Research in Organizational Behavior, 13, 1–53. Jackson, S.E. (1992). Consequences of group composition for the interpersonal dynamics of strategic issue processing. Advances in Strategic Management, 8, 345–382. Jackson, S.E. (1996). The consequences of diversity in multidisciplinary work teams. In M. A.West (Ed.), Handbook of work group psychology (pp. 53–75). Chichester, UK: Wiley.

DEVELOPING INNOVATIVE TEAMS 285

Jehn, K.A. (1997). A qualitative analysis of conflict types and dimensions in organizational groups. Administrative Science Quarterly, 42, 530–557. Katz, R., & Allen, T.J. (1988). Investigating the Not Invented Here (NIH) syndrome: A look at the performance, tenure, and communication patterns of 50 R&D project groups. In M.L. Tushman & W.L.Moore (Eds.), Readings in the management of innovation (2nd ed., pp. 293–309). New York: Ballinger/Harper & Row. Keller, R.T. (1992). Transformational leadership and the performance of research and development research groups. Journal of Management, 18, 489–501. Kim, Y., Min, B., & Cha, J. (1999). The roles of R&D team leaders in Korea: A contingent approach. R&D Management, 29(2), 153–166. Maass, A., & Clark, R.D. (1984). Hidden impacts of minorities: Fifty years of minority influence research. Psychological Bulletin, 95, 428–450. Maier, N.R. (1970). Problem solving and creativity: In individuals and groups. Monterey CA: Brooks Cole. Maier, N.R., & Solem, A.R. (1962). Improving solutions by turning choice situations into problems. Personnel Psychology, 15, 151–157. Maznevski, M.L. (1994). Understanding our differences: Performance in decision-making groups with diverse members. Human Relations, 47, 531–552. McGrath, J.E. (1976). Stress and behavior in organizations. In M.D.Dunnette (Ed.), Handbook of industrial and organizational psychology (pp. 1351–1396). Palo Alto, CA: Consulting Psychologists Press. McGrath, J.E. (1984). Groups, interaction and performance. Englewood Cliffs, NJ: Prentice-Hall. McIntyre, R.M., & Salas, E. (1995). Measuring and managing for team performance: Lessons from complex environments. In R.Guzzo & E.Salas (Eds.), Team effectiveness and decision-making in organizations. San Francisco: Jossey-Bass. Milliken, F.J., & Martins, L.L. (1996). Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21(2), 402–433. Mitroff, J., Barabba, N., & Kilmann, R. (1977). The application of behavior and philosophical technologies to strategic planning: A case study of a large federal agency. Management Studies, 24, 44–58. Mumford, M.D., & Gustafson, S.B. (1988). Creativity syndrome: Integration, application and innovation. Psychological Bulletin, 103, 27–43. Mumford, M.D., Scott, G.M., Gaddis, B., & Strange, J.M. (2002). Leading creative people: Orchestrating expertise and relationships. Leadership Quarterly, 13, 705–750. Munton, A.G., & West, M.A. (1995). Innovations and personal change: Patterns of adjustment to relocation. Journal of Organizational Behavior, 16, 361–375. Nemeth, C. (1986). Differential contributions of majority and minority influence. Psychological Review, 93, 23–32. Nemeth, C., & Chiles, C. (1988). Modelling courage: The role of dissent in fostering independence. European Journal of Social Psychology, 18, 275–280. Nemeth, C., & Kwan, J. (1987). Minority influence, divergent thinking and the detection of correct solutions. Journal of Applied Social Psychology, 9, 788–799. Nemeth, C.J., & Nemeth-Brown, B. (2003). Better than individuals? The potential benefits of dissent and diversity for group creativity. In P.Paulus & B.Nijstad (Eds.), Group creativity (pp. 63–84). Oxford, UK: Oxford University Press.

286 WEST ET AL.

Nemeth, C., & Owens, P. (1996). Making work groups more effective: The value of minority dissent. In M.A. West (Ed.), Handbook of work group psychology (pp. 125–142). Chichester, UK: John Wiley. Nemeth, C., & Staw, B.M. (1989). The trade offs of social control and innovation within groups and organizations. In L.Berkowitz (Ed.), Advances in experimental social psychology (pp. 175–210). New York: Academic Press. Nemeth, C.J., & Wachtler, J. (1983). Creative problem solving as a result of majority vs. minority influence. European Journal of Social Psychology, 13, 45–55. Nicholson, N., & West, M.A. (1988). Managerial job change: Men and women in transition. Cambridge, UK: Cambridge University Press. Nygren, R., & Levine, E.L. (1996). Leadership of work teams: Factors influencing team outcomes. Advances in Interdisciplinary Studies, 3, 67–104. Oldham, G.R., & Cummings, A. (1996). Employee creativity: Personal and contextual factors at work. Academy of Management Journal, 39(3), 607–634. Paton, R.A., & McCalman, J. (2000). Change management: A guide to effective implementation (2nd ed.). Thousand Oaks, CA: London: Sage. Paulus, P.B. (2000). Groups, teams and creativity: The creative potential of ideagenerating groups. Applied Psychology: An International Review, 49, 237–262. Payne, R.L. (1990). The effectiveness of research teams: A review. In M.A. West & J.L. Farr (Eds.), Innovation and creativity at work: Psychological and organizational strategies (pp. 101–122). Chichester, UK: Wiley. Pearce, J.A., & Ravlin, E.C. (1987). The design and activation of self-regulating work groups. Human Relations, 40, 751–782. Pelled, L.H., Eisenhardt, K.M., & Xin, K.R. (1999). Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44, 1– 28. Porac, J.F., & Howard, H. (1990). Taxonomic mental models in competitor definition. Academy of Management Review, 2, 224–240. Roloff, M.E. (1987). Communication and conflict. In C.R.Berger & S.H.Chaffee (Eds.), Handbook of communication science (pp. 484–534.) Newbury Park, CA: Sage. Schweiger, D., Sandberg, W., & Rechner, P. (1989). Experimental effects of dialectical inquiry, devil’s advocacy, and other consensus approaches to strategic decision making. Academy of Management Journal, 32, 745–772. Senior, B. (1997). Organisational change. London: Pitman. Shaw, J.B., & Barrett-Power, E. (1998). The effects of diversity on small work group processes and performance. Human Relations, 51(10), 1307–1325. Shipton, H., Parkes, C., West, M.A., & Patterson, M. (2003a, May). Organizational-level job satisfaction and innovation. Paper presented at the 11th European Congress on Work and Organizational Psychology, Lisbon, Portugal. Shipton, H., West, M.A., Dawson, J., Patterson, M., & Birdi, K. (2003b, May). Organizational learning as a predictor of innovation. Paper presented at the 11th European Congress on Work and Organizational Psychology, Lisbon, Portugal. Smith, K.G., Smith, K.A., Bannon, D.P., Olian, J.D., Sims, H.P., & Scully, J. (1994). Top management team demography and process: The role of social integration and communication. Administrative Science Quarterly, 39, 412. Sternberg, R.J., & Lubart, T.I. (1996). Investing in creativity. American Psychologist, 51, 677– 688.

DEVELOPING INNOVATIVE TEAMS 287

Stevens, M.J., & Campion, M.A. (1994). Staffing teams: Development and validation of the Teamwork-KSA test. Paper presented at the ninth annual meeting of the Society of Industrial and Organizational Psychology, Nashville, TN. Tajfel, H. (1981). Human groups and social categories. Cambridge, UK: Cambridge University Press. Tajfel, H., & Billig, M. (1974). Familiarity and categorization in intergroup behavior. Journal of Experimental Social Psychology, 10, 159–170. Tannenbaum, S.I., Salas, E., & Cannon-Bowers, J.A. (1996). Promoting team effectiveness. In M.A.West (Ed.), Handbook of work group psychology (pp. 503–529). Chichester, UK: Wiley. Thomas, K.W. (1979). Organizational conflict. In S.Kerr (Ed.), Organizational behavior (pp. 151–184). Columbus, OH: Grid Publishing. Tjosvold, D. (1982). Effects of approach to controversy on superiors’ incorporation of subordinates’ information in decision making. Journal of Applied Psychology , 67, 189–193. Tjosvold, D. (1985). Implications of controversy research for management. Journal of Management, 11, 21–37. Tjosvold, D. (1991). Team organization: An enduring competitive advantage. Chichester, UK: Wiley. Tjosvold, D. (1998). Co-operative and competitive goal approaches to conflict: Accomplishments and challenges. Applied Psychology: An International Review, 47, 285–342. Tjosvold, D., & Field, R.H.G. (1983). Effects of social context on consensus and majority vote decision making. Academy of Management Journal, 26, 500–506. Tjosvold, D., & Johnson, D.W. (1977). The effects of controversy on cognitive perspectivetaking. Journal of Education Psychology, 69, 679–685. Tjosvold, D., Wedley, W.C., & Field, R.H.G. (1986). Constructive controversy, the Vroom-Yetton Model, and managerial decision-making. Journal of Occupational Behavior, 7, 125– 138. Tsai, W. (2001). Knowledge transfer in intra-organizational networks: Effects of network position and absorptive capacity on business unit innovation and performance. Academy of Management Journal, 44(5), 996–1004. Turner, J.C. (1985). Social categorization and the self concept: A social cognitive theory of group behavior. In E.J.Lawler (Ed.), Advances in group processes (Vol. 2, pp. 77–122). Greenwich, CT: JAI Press. Ulich, E., & Weber, W.G. (1996). Dimensions, criteria and evaluation of work group autonomy. In M.A.West (Ed.), The handbook of work group psychology (pp. 247–282). Chichester, UK: John Wiley. Watson, W.E., Kumar, K., & Michaelsen, L.K. (1993). Cultural diversity’s impact on interaction process and performance: Comparing homogenous and diverse task groups. Academy of Management Journal, 36(3), 590–602. West, M.A. (1987). Role innovation in the world of work. British Journal of Social Psychology, 26, 305–315. West, M.A. (1989). Innovation among health care professionals. Social Behavior, 4, 173–184. West, M.A. (1990). The social psychology of innovation in groups. In M.A.West & J.L.Farr (Eds.), Innovation and creativity at work: Psychological and organizational strategies (pp. 309–333). Chichester, UK: John Wiley.

288 WEST ET AL.

West, M.A. (1996). Reflexivity and work group effectiveness: A conceptual integration. In M.A.West (Ed.), Handbook of work group psychology (pp. 555–579). Chichester, UK: Wiley. West, M.A. (1997). Developing creativity in organizations. Leicester, UK: British Psychological Society. West, M.A. (2000). Reflexivity, revolution, and innovation in work teams. In M.M.Beyerlein, D.A.Johnson, & S.T. Beyerlein (Eds.), Advances in interdisciplinary studies of work teams: Product development teams (pp. 1–29). Stamford, CT: JAI Press. West, M.A. (2002). Sparkling fountains or stagnant ponds: An integrative model of creativity and innovation implementation in work groups. Applied Psychology: An International Review, 51, 355–387. West, M.A., & Anderson, N. (1996). Innovation in top management teams. Journal of Applied Psychology, 81, 680–693. West, M.A., Borrill, C.S., Dawson, J.F., Brodbeck, F., Shapiro, D.A., & Haward, B. (2003a). Leadership clarity and team innovation in health care. Leadership Quarterly. West, M.A., Borrill, C.S., & Unsworth, K.L. (1998). Team effectiveness in organizations. In C. L.Cooper & I.T.Robertson (Eds.), International review of industrial and organizational psychology (Vol. 13, pp. 1–48). Chichester, UK: Wiley. West, M.A., & Farr, J.L. (1990). Innovation at work. In M.A.West & J.L.Farr (Eds.), Innovation and creativity at work: Psychological and organizational strategies (pp. 3–13). Chichester, UK: Wiley. West, M.A., Patterson, M., Pillinger, T., & Nickell, S. (2000). Innovation and change in manufacturing. Birmingham, UK: Aston Business School, Aston University. West, M.A., & Richter, A. (in press). Climates and cultures for innovation and creativity at work. In C.Ford (Ed.), Handbook of organizational creativity. Mahwah, NJ: Lawrence Erlbaum Associates, Inc. West, M.A., & Rickards, T. (1999). Innovation. In M.A.Runco & S.R.Pritzker (Eds.), Encyclopedia of creativity (Vol. 2, pp. 45–55). London: Academic Press. West, M.A., & Rushton, R. (1989). Mismatches in work role transitions. Journal of Occupational Psychology, 62, 271–286. West, M.A., Tjosvold, D., & Smith, K.G. (Eds.). (2003b). International handbook of organisational teamwork and co-operative working. Chichester, UK: Wiley. West, M.A., Utsch, A., & Dawson, J.F. (2003c). Diversity, demands, group processes and innovation in health care teams. Manuscript submitted for publication. Willems, E.P., & Clark, R.D., III. (1971). Shift toward risk and heterogeneity of groups. Journal of Experimental and Social Psychology, 7, 302–312. Wilson, D.C. (1992). A strategy for change. London: Routledge. Wood, W. (1987). Meta-analytic review of sex differences in group performance. Psychological Bulletin, 102, 53–71. Zenger, T.R., & Lawrence, B.S. (1989). Organizational demography: The differential effects of age and tenure distributions on technical communication. Academy of Management Journal, 32, 353–376. Zhou, J. (2003). When the presence of creative coworkers is related to creativity: Role of supervisor close monitoring, developmental feedback, and creative personality. Journal of Applied Psychology, 88, 413–422.

289

EUROPEAN JOURNAL OF WORK PSYCHOLOGY, 2004, 13 (2), 301–304

AND

ORGANIZATIONAL

Book review

Paulus, P.B., & Nijstad, B.A. (Eds.). (2003). Group creativity: Innovation through collaboration. Oxford, UK: Oxford University Press. Pp. 346. ISBN 0– 19–514730–8. £32.50 (Hbk). Sawyer, R.K. (2003). Group creativity: Music, theater, collaboration. Mahwah, NJ: Lawrence Erlbaum Associates, Inc. Pp. 214. ISBN 0–8058– 4436– 8. $22.50 (Pbk). The importance to understand creativity as a social phenomenon is the common theme of two books on group creativity that appeared in 2003. Although their titles might suggest overlap, nothing is less true. The book edited by Paulus and Nijstad provides us with an overview of the state of the art of group-creativity research in cognitive psychology, social psychology, organizational psychology, and information management. Keith Sawyer on the other hand zooms in on one specific form of group creativity: improvisation in music and theatre. Based on interview data and drawing on semiotics and communication theory he develops a theoretical approach that describes the process of group interaction during improvisations. The book Group Creativity: Innovation Through Collaboration, edited by Paul B.Paulus (Chair of the Department of Psychology, University of Texas at Arlington) and Bernard A.Nijstad (Assistant Professor at the Department of Psychology, University of Amsterdam), aims to contribute to the integration and further development of psychological research in the emerging field of group creativity. The overarching theme of the book is the search for factors that inhibit or facilitate creativity in groups. After a short introduction by the editors, the book consists of 13 chapters written by various—and partly well known— researchers from the United States, Germany, The Netherlands, and Great Britain. The book is divided into two parts. The first part deals with cognitive and socialpsychological processes that can inhibit or facilitate idea generation in groups. Here we find research on information processing and mental blocks, group diversity, authentic dissent, common-information bias, and various processes related to the brainstorm technique. The second

BOOK REVIEW 291

part of the book focuses on contextual factors that affect creative behaviour, idea implementation, innovation, and learning in groups and organizations. Topics dealt with include informational vs. controlling rewards, the role of newcomers, mentoring and outside contacts, team and leadership processes, learning from indirect experience, and national culture and Zeitgeist. The final chapter, written by the editors, combines the various perspectives into four common themes: group diversity, process losses, group climate, and environment. The book ends with an integrated model of group creativity and the indication of avenues for future research. The book by Paulus and Nijstad can certainly be considered a valuable source of up-to-date knowledge for scholars, practitioners, and students wishing to gain a better understanding of factors influencing group creativity. Despite a slight overemphasis on brainstorming and a certain lack of focus in part two of the book, the editors managed to compose and interesting and informative whole. Not only the breadth and quality of the selected material but also the insightful integration of these different approaches in the final chapter add to the value of the book. Improvisation—a topic not covered by Paulus and Nijstad—is the focus of the second book on group creativity. Group Creativity: Music, Theater, Collaboration by Keith Sawyer, an associate professor in the Department of Education at Washington University, provides us with an in-depth analysis of the process of improvisational creativity in music and theatre groups. The aim of the book is to explore specific processes of group interaction that lead to the emergence of a form of creativity that is distinct from the creativity of individuals in the group. In terms of readership, the book mainly addresses researchers studying group creativity in music and theatre. However, implications for organizational psychologists or sociologists who are interested in understanding improvisation in teaching, management, and problem-solving teams are also provided. The first two chapters of Keith Sawyer’s book introduce key elements of improvisation and provide a short literature review on group performance and creativity from the fields of anthropology, musicology, conversation analysis, sociocultural psychology, and organizational behaviour. Sawyer describes improvisation as a complex systems-level phenomenon that is different from task-oriented creativity because in improvisations the process of creating together is the product. Three major features of improvisation Sawyer distils are: synchrony and flow in group interaction, the balance between structure and innovation, and the collaboration of the audience. Chapters 3–6 develop a theory of symbolic interaction in creative improvisation drawing on semiotics, © 2004 Psychology Press Ltd http://www.tandf.co.uk/journals/pp/ 1359432X.html

DOI: 10.1080/13594320444000100

292 BOOK REVIEW

conversation analysis, and pragmatics. Sawyer describes creative improvisation as an immediate interaction process between performers that is confined to the moment of creation and mediated by musical or verbal signs. The constantly changing nature of the collaborative performance is seen as emerging from individual creative acts that are constrained by genre characteristics, previous creative acts, and responses to the act by other performers. This theory mainly explains the process of conversation or negotiation between actors that lead to a balance between innovation and coherence of the performance. Based on his theory, the author then analyses similarities and differences between product creativity and process creativity as well as improvisational and ritualized interaction. The final chapter of the book discusses implications of the theory for studies of individual creativity, group creativity in notated genres, and collaboration and teamwork. The book has been composed out of several originally independent articles. Nevertheless, the author succeeded in generating a coherent book that provides good guidance to the reader. One exception is Chapter 4, which is a sort of excursion on product creativity in the arts. Overall, although not always clear and consistent in his terminology, Sawyer managed to write an interesting and inspiring book that tries to capture the elusive phenomenon of interdependent performance in improvisation. For readers from the field of organization change and learning, the topic of improvisation is probably not new. Thanks to a jazz symposium at the Academy of Management Meeting in 1995 and a special issue of Organization Science in 1998 dedicated to jazz improvisation, the jazz metaphor has received quite some attention among organization scholars. Typically, the metaphor is used to increase our understanding of organizational learning and innovation. In this context, improvisation is seen as constant renewal and reinvention, an alternative to planning that builds on a balance between flexibility and structure, and offers a way to deal with the contradicting and unpredictable demands faced by modern organizations. The book by Sawyer differs from this literature as it does not use improvisation as a metaphor but studies it as a phenomenon in its own right. As such, the book offers interesting new perspectives and a theoretical elaboration that can contribute to a better foundation of analyses of improvisation in organizational settings. Although the theoretical approach the author chose might not appeal immediately to people without prior knowledge in semiotics, for scholars interested in improvisation in teams or organizations it is certainly worthwhile to study. In conclusion, both books provide valuable contributions to the emergent field of group creativity. Given their differences in scope and perspective, they can be seen a complementary. Yet, not surprisingly, they also come to some shared conclusions. Both books stress the fact that under certain conditions something of a new order can emerge in groups that leads each individual to perform at a higher level than he or she would have been capable of alone. Furthermore, they both make an important point in stating that creativity is never an individual-level

BOOK REVIEW 293

phenomenon as it always involves social interaction, be it for stimulation, collaboration, or evaluation. URSULA GLUNK Universiteit Maastricht, The Netherlands