Topic

Theoretical
Foundations
of Change
Management

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1.

Explain the differences between the behaviourist theory and GestaltField theory;

2.

Describe the focus of change based on the group dynamics school;

3.

Evaluate the open systems view to organisational change.

4.

Describe the internal environment of an organisation; and

5.

Describe the external environment of an organisation.

X INTRODUCTION
Organisational change cannot be fully understood without reference to the
theoretical foundations of change management. This is especially so since change
management is not a distinct field with clearly-defined boundaries. Rather, the
theory and practice of change management draws on a number of social science
disciplines such as psychology, organisational behaviour and strategic
management. This topic examines three schools of thought that underlie the
theories of change management as discussed by Burnes (2004):
(a)

The individual perspective school;

(b)

The group dynamics school; and

(c)

The open systems school.

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While the focus of change under the individual perspective is individual

behaviour, the group dynamics school stresses the importance of social groups in
influencing individual behaviour and thus the focus of change is at the group
level. The approach of the open systems school, on the other hand, is to
determine how interconnected parts need to be changed to improve the overall
functioning of the organisation. These three theoretical perspectives on change
form the central planks of theory and practice of change management.

2.1

THE INDIVIDUAL PERSPECTIVE SCHOOL

As described by Burnes (2004), the supporters of this school are divided into two
groups, namely, the behaviourists and the Gestalt-Field psychologists. The
behaviourists view behaviour as resulting from positive reinforcement. The
Gestalt-Field psychologists, however, believe that this is only a partial explanation
of behaviour modification. They argue that an individuals behaviour is the
product of both environment and reason, not just the external stimuli.
The behaviourists believe that all types of behaviour are learned and that human
actions are conditioned by their expected outcomes. Individuals are passive
recipients of external stimuli such as monetary rewards. They are conditioned to
engage in a new behaviour if the behaviour is positively reinforced or rewarded.
Individuals will repeat behaviour that is rewarded and ignore behaviour that is
not being rewarded or reinforced. Therefore, in order to change behaviour, it is
necessary to immediately reward all types of desirable behaviour. Some
examples of positive reinforcement are bonuses, incentives and stocks paid to the
employees for good performance.
The Gestalt-Field psychologists argue that behaviour is not a product of external
stimuli only, but is a product of the interaction between the external stimuli and
the interpretation of the stimuli. Behaviour arises from how individuals use
reason to interpret these stimuli. Hence, learning is a process of changing
thought patterns and expectations. In order to change behaviour, individual
members must interpret the external stimuli and understand the situation being
changed. Consequently, the Gestalt-Field proponents seek to achieve
organisational change by helping organisation members change their
understanding of themselves and the situation in question.

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Table 2.1: The Behaviourist vs The Gestalt-Field Perspective

The Behaviourist Perspective

The Gestalt-Field Perspective

Behaviour is conditioned by external

stimuli.

Behavioural change is a result of learning

process.

Behaviour that is positively reinforced

will be repeated.

Individuals use reasoning to interpret

both external stimuli and the situation.

Positive rewards form the mechanism for

changing behaviour.

An understanding of themselves and the

situation in question will lead to changes
in behaviour.

These two views of individual behaviour modification have proven influential in

the management of change. Organisations have used both individual incentives
(external stimuli) and employee participation (reasoning and understanding) in
order to bring about organisational change. For example, Marriott International
provides postive reinforcement by honoring its employees who have exhibited
the basic values of the company effort, dedication, achievement and
perseverance. And GE Capital believes in employee participation to encourage
creative behaviour. Employees from all levels of the company attend strategy
and budget meetings to understand where the company is heading. With the
understanding of the vision and strategic direction of the company, the
employees are able to come up with viable commercial ideas which make the
company successful.
Let us now proceed to the discussion on thw group dynamics school, which
draws attention to the importance of social groups in influencing individual
behaviour.

SELF-CHECK 2.1
Explain the major differences between the behaviourist perspective and
the Gestalt-Field perspective.

ACTIVITY 2.1
Think about a change intervention at your organisation which is at the
individual level. Then, answer the following questions:
(a)

What type of employee behaviour was changed?

(b)

What were the incentives (or external stimuli) for the changed
behaviour?

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THEORETICAL FOUNDATIONS OF CHANGE MANAGEMENT

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THE GROUP DYNAMICS SCHOOL

This school of thought originated with the work of Kurt Lewin (a German Jew
born in 1890). Lewin was a humanitarian who aspired to solve social conflict. He
believed that the key to resolving social conflict was to facilitate learning to
enable individuals to understand and restructure their perceptions of the world
around them. That the group to which an individual belongs is the ground for
the individuals perceptions and actions is the central theme of his work.
The main argument of the group dynamics school delves into the influence of
group on individual behaviour. Group behaviour is an intricate set of
interactions and forces that not only affect group structures, but also have an
impact on individual members behaviour. Hence, individual behaviour is a
function of the group environment, or field, as Lewin termed it. This field
produces forces and pressure on each of the group members. Individual
behaviour must be seen as a result of the groups prevailing norms, roles and
values. These symbolise the forces and pressure for individual members to
conform.
Therefore, in this perspective, it is not as impactful to focus on changing the
behaviour of individuals to bring about change. Rather, the focus of change
should be at the group level influencing and changing the groups norms, roles
and values. The emphasis of the group dynamics school is on achieving
organisational change through teams or work groups, rather than individuals.
The group dynamics school has been very influential in developing both the
theory and practice of change management. This can be seen in the importance
that todays organisations place on teamwork and team structure. In fact, some of
the most popular change interventions nowadays are team-building activities,
the goal of which is to improve the effectiveness of various work teams within
the organisation. AT & T, Eastman Chemical (a division of Kodak), Hallmark
Cards, Xerox, and General Electric are team-based organisations. The factory of
General Electric in Puerto Rico uses teams to get the job done. The employees are
formed into teams of about 10 skilled members. They own parts of the work as
shipping and receiving, assembly, and other work activities in the factory. They
decide on their own how the work activities get done and they are responsible
for the work results.
Nevertheless, despite the emphasis that many place on the influence of group
dynamics on individual behaviour, there are others who argue that the correct
approach to change is to deal with the organisation as a whole. This leads to the
open systems perspective.

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SELF-CHECK 2.2
1.

Describe how a group can influence individual behaviour.

2.

How should change be introduced according to the group dynamics

school?

ACTIVITY 2.2
Describe an incident where you took a different action due to the
influence of your work group.

2.3

THE OPEN SYSTEMS SCHOOL

To understand the systems view of organisations, we need to understand the

following key concepts as explained in Table 2.2.
Table 2.2: Key Concepts of Systems Theory
Key Concept

Definition

System

A set of interrelated parts that function as a whole to achieve a

common purpose.

Systems Theory

A set of concepts and relationships that describe organisations as open

systems characterised by synergy and subsystem interdependence.

Open System

A system that interacts with the external environment.

Closed System

A system that does not interact with the external environment.

Synergy

The concept that the whole is greater than the sum of its part.
Source: Daft (2010)

Systems are viewed as unitary wholes composed of parts, subsystems or subunits.

A system serves to integrate all parts into a functioning unit. For example, an
organisation system comprises various departments such as production,
marketing, human resources, accounting and finance and information technology.
The organisation needs to coordinate all the activities of these various departments
so that they can function together to achieve organisational goals. Synergy can be
achieved when the organisation functions as a whole. Organisational units

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working together can accomplish more than the same units working alone. The
subsystems within an organisation are interdependent and the success of the
organisation depends on the joint contributions of each subsystem.
Organisations are seen as open systems, not closed systems. Open systems
frameworks are depicted in Figures 2.1 and 2.2 to help you understand how
organisations function in the environment.

Figure 2.1: The internal and external environment of an organisation

Source: Quick & Nelson (2009)

The internal environment of an organisation comprises four major components:

(a)

Task
An organisations vision, mission, purpose and goal for existing.

(b)

People
The human resources of the organisation.

(c)

Technology
The tools, know-how and methods used to transform input into output.

(d)

Structure
The systems of authority and roles, workflow and communication.

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In addition to these major internal components, the organisation as an open

system also has an external task environment. The external task environment is
composed of different stakeholders such as:
(a)

Government or regulatory agencies;

(b)

Competitors;

(c)

Suppliers;

(d)

Customers;

(e)

Unions; and

(f)

Stockholders.

The organisation system works by acquiring input from the external

environment, transforming it into output and delivering the output back to the
external environment, as seen in Figure 2.2:

Figure 2.2: The open systems view of organisations

Source: Daft (2010)

Figure 2.2 shows the basic systems theory of organisations. It comprises five
components:
(a)

Input
The materials, capital, human and information resources used to produce
goods and services.

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(b)

Transformation Process
The use of technology to change the input into output.

(c)

Output
Finished goods (tangible) and services (intangible).

(d)

Feedback
The knowledge of the results that influences the selection of input during
the next cycle of the process.

(e)

External Environment
Consists of legal and political factors, social and cultural factors, economic
factors, technological factors and ecological factors.

The actions of the government, competitors, clients and other stakeholders of the
external environment will affect the internal components of the organisation. In
other words, the existing forces of the external environment will have an impact
on the behaviour of people, structure and functioning of the subsystems in the
internal environment.
According to the open systems school, organisations are open in two aspects.
Firstly, organisations are open to and interact with, their external environment.
Secondly, organisations are open internally the various subsystems interacting
with each other. Therefore, internal changes in one part of the organisation affect
other parts, which in turn have an impact on the external environment, and vice
versa.
The open systems school sees organisations as composed of a number of
interconnected parts or subsystems. These subsystems are highly interdependent,
that is, any change to one part of the system will have an impact on the other
parts of the system. The success or failure of the organisation as a whole will
depend on the performance and contribution of its subunits or parts.
This school attempts to take a holistic rather than a particularistic perspective to
change. It is concerned with understanding organisations in their entirety. Its
approach to change is to determine how subsystems need to be changed to
improve the overall functioning of the organisation. Change at one level or in one
subsystem must take into account the effect it will have on the other parts of the
organisation. The emphasis is on achieving overall synergy, rather than on
optimising the performance of any individual subsystem.

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SELF-CHECK 2.3
Organisations are open systems. Discuss this statement.

ACTIVITY 2.3
Identify how the departments in your work organisation are
interdependent. Provide an example to explain how a change made in one
department can affect the other departments.
This topic has described three major theoretical foundations of managing change
in organisations. A comparison of the three foundations is presented in Table 2.3.
Table 2.3: Theoretical Foundations of Change Management A Comparison
Theoretical
Foundation

Level of Change

Change Mechanism

Major Criticism

Individual
perspective

Individual

Modifying
individual
behaviour using
intrinsic and
extrinsic motivators.

Fail to recognise the

importance of social
groups in organisations.

Group dynamics

Group

Modifying
individual
behaviour by
influencing and
changing groups
norms, roles and
values.

Ignore organisation in
its totality; an
organisation in its
entirety should be the
point of reference in
managing change.

Open systems

Organisation

Changing
interdependent
subsystems to
achieve
organisation-wide
change.

Organisations are
extremely dynamic and
complex entities; it may
be too great a challenge
in attempting to sort out
all the cause-and-effect
relationships among the
interrelated subsystems.

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These three foundations of change focus on different aspects of the organisation.

Each of these theoretical perspectives has different implications on what type of
change takes place and how it is going to be managed. Thus, different
perspectives may require different approaches to manage change.

The three schools of thought which underlie the theories of change

management as discussed by Burnes (2004) are: the individual perspective
school, the group dynamics school and the open systems school.

The supporters of the individual perspective school are divided into two
groups, namely, the behaviourists and the Gestalt-Field psychologists.

The behaviourists believe that organisational change can be achieved solely

by modifying the external stimuli that act upon the individual. The GestaltField psychologists, however, argue that organisational change can also be
achieved by helping individual members change their understanding of
themselves and the situation in question.

The emphasis of the group dynamics school is on achieving organisational

change through teams or work groups, rather than individuals.

The four major components of an organisations internal environment are

task, people, technology and structure.

The major forces in the external environment which have an impact on the
organisation are legal and political factors, social and cultural factors,
economic factors, technological factors, and ecological factors.

A system is a set of interrelated parts or subsystems that function as a whole

to achieve a common purpose.

Subsystems are interdependent. Subsystems depend on one another as parts

of a system. Changes in one part of the organisation affect the other parts.

The emphasis of the open systems school is on achieving overall synergy,

rather than on optimising the performance of any organisational subunit.
This can be done by determining how these interconnected parts can be
changed so as to improve the overall effectiveness of the organisation.

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Behaviourists

Internal environment

Closed system

Open systems school

External environment

Synergy

Gestalt-Field psychologists

System

Group dynamics school

System theory

Individual perspective school

Burnes, B. (2004). Managing change (4th ed.). Harlow, England: Prentice Hall
Financial Times.
Daft, R. L. (2010). New era of management (9th ed.). South-Western, Cengage
Learning.
Quick, J. C., and Nelson, D. L. (2009). Principles of organizational behavior:
Realities and challenges (6th ed.). South-Western, Cengage Learning.