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INTRODUCTION When an organization is undergoing change, the manner in which change decisions are communicated determines the nature of the perceived risks involved in the change process and the extent of resistance to change. To illustrate the importance of communication in managing change, this paper draws upon the literature on risk preference and preference reversal for individuals facing uncertain decisions. Based upon the manner in which a change decision is communicated or framed individuals will alter their resistance to change alternatives. Framing occurs when the context or presentation of a decision creates a climate that influences the decision. In general, the issue of framing occurs when decision-makers evaluate a proposition on the context in which the outcome is presented, not just on the underlying outcomes (Parker and Spears, 1999). Framing in the communication of human relation decisions is important for an organization facing restructuring, job loss, or change. Framing has been used to explore questions involving the importance of perceptions on insurance, gambling, and medical decisions. Experimental studies have documented that decision-makers react differently to the same proposition depending upon the manner in which it is presented. This phenomenon is known as preference reversal and violates a strict expected utility analysis of decision making (Machina, 1987). Framing is one aspect of the growing literature in behavioral finance. This research specifically recognizes the influence of psychology on the behavior of financial practitioners (Shefrin, 1999). Furthermore, framing is influenced by individual factors such as personality types and gender (Parker and Spears, 2002). A survey instrument is used that parallels the classic framing of disease and death to analyze the framing of restructuring and job loss. This approach permits us to determine that framing within the communication of human relation decisions exhibits the preference reversal phenomenon for corporate restructuring issues. Since framing is a significant factor for decisions involving restructuring and change, the communication of change decisions will influence an organization's attitude toward and resistance to change. It is the purpose of this paper to explore the link between framing and managing the organizational change process. THE COMMUNICATION OF CHANGE Communication is an important aspect of organization design, change, and strategic management. Managing the communication of change is of vital importance to the organization and determines how organizations adapt to the environment (Daft, Bettenhausen, and Tyler, 1995). Communication by managers after both internal and external decisions are made is as big a part of a strategic initiative as gathering information is prior to decision-making. For example, the news of a Fortune 500 company making a large number of employee layoffs can be framed quite differently by internal and external communication sources. Is the company in trouble and destined for failure, or is the company making strategic changes that will strengthen the organization? Consequently, an announcement of layoffs may result in either increases or decreases in the stock price of the company depending upon the frame accepted by investors. The framed structure can be defined as the configuration of information and control systems within an organization as well as the formalized configuration of roles and procedures for managing the communication process (Ranson, Hinings, and Greenwood, 1980). To be successfully objective about what change is required, a new frame has to be viewed. Since it is difficult to correctly identify cause-and-effect relationships, there is a blurring between success and failure as results become interpreted using personal perspectives and frames of reference (Van de Ven and Poole, 1995, Van de Ven, Angle, and Poole, Van de Ven, Dooley, and Holmes, 2000). …
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