Effective interest method of amortization journal entries

We would like to acknowledge the many people who have helped to make this book possible. Our students and their reactions to the ideas and materials continue to be a source of inspiration. Cynthia’s Leadership and Organizational Change course, spring 2014, included Mshael Alessa, Daniella Comito, Katrice Krumplys, Jill Peterson, and other students who applied the concepts in this book and made a difference through their change projects at Simmons College.

Managers, executives, and frontline employees that we have known have provided insights, case examples, and applications while keeping us focused on what is useful and relevant. Ellen Zane, former CEO of Tufts Medical Center, Boston, is an inspiring change leader; her turnaround story at Tufts Medical Center appeared in the second edition of this book and is published again in this third edition. Cynthia has also been fortunate to work with and learn from Gretchen Fox, founder and former CEO, FOX Relocation Management Corporation. The story of how she changed her small firm appeared in the second edition of the book and the case continues to be available through Harvard Business Publishing (http://hbr.org/product/fox-relocation- management-corp/an/NA0096-PDF-ENG). Katharine Schmidt, a former student of Gene‘s and the CEO of Food Banks Canada, is another of the inspiring leaders who opened her organization to us and allowed us to learn from their experience, and share it with you in this edition.

Several colleagues have provided guidance and feedback along the way that have helped us test our logic and develop our thinking and writing. Cynthia would like to especially thank Professor Mary Shapiro, a colleague at the School of Management, Simmons College, who read each chapter thoroughly and gave insightful feedback on the manuscript. Dr. Paul Myers, consultant, Boulder, CO, read Chapters 2 and 3 with a fine- tooth comb and gave us astute criticism, allowing us—paradoxically—to both simplify and add complexity to those chapters.

Our research assistants have provided valuable support. John Schappert and Charles Newell assisted with the search for relevant research articles, reports of change initiatives, and websites of interest.

We owe a HUGE THANKS to Paige Tobie. She searched for articles and web-based materials, participated in our conference calls, made sure ideas and changes didn’t get lost, and kept us on track, on time, and working with the right versions of the manuscript. She provided valuable input on drafts of the manuscript from a student/practitioner’s perspective, and then read the entire manuscript one last time, catching problematic areas. She did all these tasks while retaining her sense of humor and remaining a pleasure to work with. Thank you so very much, Paige: You have been a wonderful project manager, researcher, and colleague!

As with the last edition, our partners Heather Cawsey, Bertha Welzel, and Steve Spitz tolerated our moods, our myopia to other things that needed doing, and the early mornings and late nights spent on the manuscript. They helped us work our way through ideas and sections that were problematic, and they kept us smiling and grounded when frustration mounted.

Our editors at Sage have been excellent. They moved the project along and made a difficult process fun (well, most of the time). Thank you, Maggie Stanley, our acquisitions editor, for keeping us on task and on time (or trying to keep us on time . . . ). We appreciate your style of gentle nudges. Nicole Mangona, editorial assistant, was constantly on top of the various parts of the book and helped us push through to the end.

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http://hbr.org/product/fox-relocation-management-corp/an/NA0096-PDF-ENG
Finally, we would like to recognize the reviewers who provided us with valuable feedback on the second edition. Their constructive, positive feedback and their excellent suggestions were valued. We thought carefully about how to incorporate their suggestions into this third edition of the book. Thank you, Jeff Zimmerman, Northern Kentucky University; Lorraine M. Henderson, Nazareth College of Rochester; Ross A. Wirth, Franklin University; Ericka Kimball, Augsburg College; Whitney McIntyre Miller, Northern Kentucky University; Sandra R. Bryant, Tiffin University; John Anthony DiCicco, Curry College; and Paul M. Terry, University of South Florida. In short, our thanks to all who made this book possible.

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Chapter 1 Changing Organizations in Our Complex World

It is not the strongest of the species that survive, nor the most intelligent, but the most responsive to change.

Chapter Overview The chapter defines organizational change as “planned alteration of organizational components to improve the effectiveness of organizations.” The orientation of this book is to assist change managers or potential change leaders to be more effective in their change activities. The social, demographic, technological, political, and economic forces pushing the need for change are outlined. Four types of organizational change are discussed: tuning, adapting, reorienting, and re-creating. Four change roles found in organizations are described: change initiators, change implementers, change facilitators, and change recipients and stakeholders. The terms change leader and change agent are used interchangeably and could mean any of the four roles. The difficulties in creating successful change are highlighted, and then some of the characteristics of successful change leaders are described.

Organizations fill our world. We place our children into day care, seek out support services for our elderly, and consume information and recreational services supplied by other organizations. We work at for-profit or not- for-profit organizations. We rely on organizations to deliver the services we need: food, water, electricity, and sanitation and look to governmental organizations for a variety of services that we hope will keep us safe, secure, well governed, and successful. We depend on health organizations when we are sick. We use religious organizations to help our spiritual lives. We assume that most of our children’s education will be delivered by formal educational organizations. In other words, organizations are everywhere. Organizations are how we get things done. This is not just a human phenomenon—it extends to plants and animals—look at a bee colony, a reef, a lion pride, or an elephant herd and you’ll see organizations at work.

And these organizations are changing—some of them declining and failing, while others successfully adapt or evolve, to meet the shifting realities and demands of their environments. What exactly is organizational change? What do we mean when we talk about it?

Defining Organizational Change When we think of organizational change, we think of major changes: mergers, acquisitions, buyouts, downsizing, restructuring, the launch of new products, and the outsourcing of major organizational activities. We can also think of lesser changes: departmental reorganizations, installations of new technology and incentive systems, shutting particular manufacturing lines, or opening new branches in other parts of the country—fine-tuning changes to improve the efficiency and operations of our organizations.

In this book, when we talk about organizational change, we refer to planned alterations of organizational components to improve the effectiveness of the organization. Organizational components are the organizational mission, vision, values, culture, strategy, goals, structure, processes or systems, technology, and people in an organization. When organizations enhance their effectiveness, they increase their ability to generate

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value for those they serve.*

The reasons for change are often ambiguous. Is the change internally or externally driven? In winter 2014, Tim Hortons (a Canada-based coffee restaurant chain) announced that it was aiming to open 1,000 new stores globally by 2018, joining their network of 3,468 outlets in Canada, 807 in the United States, and 29 in the Persian Gulf. It has also been busy revising its menu to shore up flattening same-store sales, adding Wi-Fi access, undertaking major store remodeling, and making changes to its sustainability and corporate social responsibility initiatives. What is driving these changes? The executives reported that they were undertaking these actions in response to competitive pressures, customer needs, market opportunities, and the desire to align their efforts with their values. For Tim Hortons, the drivers of change are coming from both the internal and external environment. Dunkin’ Donuts, a much larger U.S. chain with similarities to Tim Hortons’ business model and competitive pressures, seems to be pursuing similar adaptive responses.1 It is essential for managers to be sensitive to what is happening inside and outside the organization, and adapt to those changes in the environment.†

Note that, by our definition and focus, organizational change is intentional and planned. Someone in the organization has taken an initiative to alter a significant organizational component. This means a shift in something relatively permanent. Usually, something formal or systemic has to be altered. For example, a new customer relations system may be introduced that captures customer satisfaction and reports it to managers; or a new division is created and people are allocated to that division in response to a new organizational vision.

Simply doing more of the same is not an organizational change. For example, increasing existing sales efforts in response to a competitor’s activities would not be classified as an organizational change. However, the restructuring of a sales force into two groups (key account managers and general account managers) or the modification of service offerings would be, even though these changes could well be in response to a competitor’s activities rather than a more proactive initiative.

Some organizational components, such as structures and systems, are concrete and thus easier to understand when contemplating change. For example, assembly lines can be reordered or have new technologies applied. The change is definable and the end point clear when it is done. Similarly, the alteration of a reward system or job design is concrete and can be documented. The creation of new positions, subunits, or departments is equally obvious. Such organizational changes are tangible and thus may be easier to make happen, because they are easier to understand.

When the change target is more deeply imbedded in the organization and is intangible, the change challenge is magnified. For example, a shift in organizational culture is difficult to engineer. A change leader can plan a change from an authoritarian to a more participative culture, but the initiatives required to bring about the change and the sequencing of those initiatives are trickier to get a hold of than more concrete change initiatives. Simply announcing a new strategy or vision does not mean that anything significant will change since: “You need to get the vision off the walls and into the halls.”2 A more manageable way to think of such a culture change is to identify concrete changes that reinforce the desired culture. If management alters reward systems, shifts decision making downward, and creates participative management committees, then management increases the likelihood that it will create cultural change over time. Sustained behavioral change occurs when people in the organization understand, accept, and act. Through their actions, the new vision or strategy becomes real.3