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Organizational Change is a process in which a large company or organization changes its working methods or aims, for example in order to develop and deal with new situations or markets: Sometimes deep organizational change is necessary in order to maintain a competitive edge.[1] Organizational change is both the process in which an organization changes its structure, strategies, operational methods, technologies, or organizational culture to affect change within the organization and the effects of these changes on the organization. Organizational change can be continuous or occur for distinct periods of time.[2] Organizational Change looks both at the process in which a company or any organization changes its operational methods, technologies, organizational structure, whole structure, or strategies, as well as what effects these changes have on it. Organizational change usually happens in response to – or as a result of – external or internal pressures. It is all about reviewing and modifying structures – specifically management structures – and business processes. Small commercial enterprises need to adapt to survive against larger competitors. They also need to learn to thrive in that environment. Large rivals need to adapt rapidly when a smaller, innovative competitor comes onto the scene. To avoid falling behind, or to remain a step ahead of its rivals, a business must seek out ways to operate more efficiently. It must also strive to operate more cost effectively. Ever since the advent of the Internet, the business environment today has been changing at a considerably faster pace compared to forty years ago. Organizational change is a requirement for any business that wants to survive and thrive.[3] Forces for Organizational Change[4]In practice, numerous factors affect an organisation and most of these are continuously changing. These forces leading to or causing change originate both within or outside the organisation, as shown in the figure below.
source: Business Management Ideas
As Griffin has rightly put it: In the international element of the general environment, a foreign competitor (such as Canon) might introduce a new product, increase prices, reduce prices, change standards or enter new markets, thus forcing domestic organisations to react.In the political element, new laws, court decisions and regulations all affect organisations. The technological element may yield new production techniques that the organisation needs to explore. Largely due to its proximity to the organisation, the task environment usually is an even more powerful force for change. Competitors obviously influence organisation via their price structures and product lines. Customers determine what products can be sold at what prices. The organisation must constantly be concerned with consumer tastes and preferences. In a like manner, suppliers affect organisations by raising or lowering prices, changing product lines, or even snapping trade relations with a company. Regulators can have dramatic effects on an organisation. Trade (labour) unions are a force for change when they demand and succeed in getting higher wages or go out on strike. Finally, subsidiaries can spur change as they add to or drain from the resource base of the holding company. Finally, cultural changes in such areas as modes of dress, reasons for people working, composition of the labour force, and changes in traditional female and male roles can affect the organisational environment. The socio-cultural element, reflecting societal values, determines what kinds of product or services will find a ready market. It appears that external change forces have a greater effect on organisational change than internal stimuli, as they are diverse and numerous and management has hardly any control over them. *Internal Change Forces: Pressures for change may also originate from within the organisation. In other words various forces inside the organisation may cause change. These forces might include managerial policies or styles, systems, and procedures; technology and employee attitudes. For example, top management’s decision to shift its goal from long-term growth to short-term profit is likely to affect the goals of various departments and may even lead to re-organisation. In short, if top management revises the organisation’s goals, organisational change is likely to result. A decision by Philips India Ltd. to enter the home computer market or a decision to increase a ten-year product sales goal by 3% would occasion many organisation changes. Other internal forces may actually be indirect reflections of external forces. As socio-cultural values shift, for example, workers’ attitudes toward their jobs may also shift and they may demand a change in working hours or working conditions. In such a case, even though the force is rooted in the external environment, the organisation must respond directly to the internal pressure it generates. For example, the development of a new set of expectations for job performance will influence the values and behaviours of the employees affected. The employees could adapt to these expectations to resist them. Types of Organizational Change[5]With organizational change strategies, companies can avoid stagnation while minimizing disruption as much as possible. Preparation is integral for success, especially during a change effort. However, one can’t prepare without knowing what type of change is occurring. Here is a list of 5 types of organizational change companies may undergo.
Theories on Organizational Change[6]Theories on organizational change try to explain why organizations change and what the consequences of change might be (Barnett & Carroll, 1995). Based on the argumentation that understanding the theory and practice of change management is fundamental in order to achieve organizational effectiveness and success (Arnold et al., 2005), there are two approaches that in the last 50 years have dominated the theory, practice, and literature on change, and sheds light on the current debate on how to best manage change.
New paradigms and ‘no such thing as one way to change’. Based on the acceleration of change situations in the last two decades, and despite the large body of research devoted to the topic, there is still considerable disagreement concerning the most appropriate way to change. Research shows that the previously dominating approaches do not fully cover thespectrum of change confronting modern organizations (Burnes, 2004), no universal rule on how to successfully manage change exists (Dawson, 2003), and even currently available theories receive restricted support, and moderate empirical evidence (Bamford & Forrester, 2003; Burnes, 2004; Guimaraes & Armstrong, 1998; Todnem, 2005). Burnes (2004) moves beyond the question of good or bad approaches to change and calls for a more profound debate on appropriate models, as there is increasing support for rejecting the idea that one or two theoretical approaches are suitable for all change situations (O’Brien, 2002). The Contingency theory, emerging in the 1960s as one of the first theories to reject the ‘one best way’ approach of how to manage change, emphasizes that organizational activities are dependent on situational variables. As structure, strategies, culture, shape and size differ from organization to organization, the ‘one best way’ to change for all organizations should be replaced by the ‘one best way’ to change for each organization, seeking the optimum fit in each situation (Dunphy & Stace, 1993). A more recent contribution is Burnes Framework for Change (2004) that encompasses possible change situations and allows managers a degree of choice related to change under the given circumstances. The framework attempts to combine various approaches to change, as combining approaches on how to best assign change is suggested beneficial for organizational survival in the long run. In a similar vein, Cao, Clarke and Lehaney’s (2003) present a four-dimensional view on how to manage organizational change. Similar ideas are found when combining Beer and Nohria’s (2000) economicoriented Theory E with the human-oriented Theory O, or Kanter et al.’s (1992) suggestion that large-scale transformations of Bold Strokes should be followed by slow small-scale transformations of Long Marches, in order to embed and succeed with rapid change. Strategic organizational change comprises, according to Kotter (1996), small- and large-scale changes, and despite their different nature, starting time and management, the overall aim is the same. A Model for Organizational Change[7]A large global retailer uses the model illustrated below to increase the speed and impact of change initiatives while reducing the downturn of performance, thereby achieving desired outcomes quicker. This model for organizational change includes a four-phase change management process:
source: SHRM Process and Phases of Organizational Change[8]Understanding the process of change requires careful consideration of the steps in the change process, employee resistance to change and how this resistance can be overcome. The management of change requires the use of some systematic process that can be divided into a few stages or sub-processes. This is the essence of the most representative model of managing change. It emphasises the role of the change agent who is an outsider, taking a leadership role in initiating and introducing the process of change. The process of change must involve the following so as to lead to organisational effectiveness. Firstly, there is a re-distribution of power within the organisational structure. Secondly, this redistribution emanates from a developmental change process. The figure below indicates that the process of change has to pass through six different phases source: Business Management Ideas
Techniques for Effectively Managing Organizational Change[9]Managing change effectively requires moving the organization from its current state to a future desired state at minimal cost to the organization. Key steps in that process are:
Change is natural, of course. Proactive management of change to optimize future adaptability is invariably a more creative way of dealing with the dynamisms of industrial transformation than letting them happen willy-nilly. That process will succeed better with the help of the the company's human resources than without. Challenges to Organizational Change[10]Organizations only do two things: change and stay the same. It's the organizations that change who own the future. Change isn't easy. The ability to change is one of the biggest differences between organizations. It's the reason some companies can innovate — while others seem endlessly stuck in the same old patterns. The following barriers to change are fundamental business gravity. Reduce these barriers and you'll effortlessly move forward. Let these barriers get out of control and you'll sink like a rock.
Benefits of Organizational Change[11]Change is scary, but change is good when it causes companies to rethink how they operate, find ways to increase efficiencies, explore new market opportunities and so much more. Among the many perks of organizational changes can be:
As companies face obstacles like having to implement change due to external forces, it’s easy for employees to panic if they feel the company's been backed into a corner for whatever reason. Overcoming those obstacles, though, can help the company grow stronger not just from a market standpoint but also thanks to improved morale. When a company proves to be resilient, employees have increased optimism for job security and greater respect for management, which can ultimately reduce turnover. Also, having to adapt to market forces means potentially unearthing new talents and leadership from existing employees who may step up to take on new roles as the scenario progresses. By listening to employee ideas and suggestions, it's possible for management to discover who's been overlooked and underutilized for too long. Being forced to change can really be one of the best things to ever happen to a company, but it all comes down to whether the management proves to be innovative and adaptable when that's needed. See AlsoOrganization References |