Organizational Change

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.

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.

Forces for Organizational Change

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

• External Change Forces:

External forces for change derive from the organisation’s general and task environments. External forces causing changes may include technology, competition, govern­ment actions, economic variables and social values. Government regulations on health, safety, and the conduct of business affect an organisation. Labour laws influence hiring, pay, training and promotion decisions. Tax laws change. Economic conditions- such as recession, money supplies, inflation, and interest rates — are sources of change.

As Griffin has rightly put it:
“Changes in any of the elements of the general environment (that is, the economic, international, political, technological and socio-cultural environments) or in the task environment (customers, competitors, associates, unions, regula­tory and suppliers) may necessitate a change in the organisation itself. Change may also be brought about internally by a new manager or by the new philosophy of an existing manager.”

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.

Techniques for Effectively Managing Organizational Change

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:

• Understanding the current state of the organization. This involves identifying problems the company faces, assigning a level of importance to each one, and assessing the kinds of changes needed to solve the problems.
• Competently envisioning and laying out the desired future state of the organization. This involves picturing the ideal situation for the company after the change is implemented, conveying this vision clearly to everyone involved in the change effort, and designing a means of transition to the new state. An important part of the transition should be maintaining some sort of stability; some things—such as the company's overall mission or key personnel—should remain constant in the midst of turmoil to help reduce people's anxiety.
• Implementing the change in an orderly manner. This involves managing the transition effectively. It might be helpful to draw up a plan, allocate resources, and appoint a key person to take charge of the change process. The company's leaders should try to generate enthusiasm for the change by sharing their goals and vision and acting as role models. In some cases, it may be useful to try for small victories first in order to pave the way for later successes.

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.

See Also

Organization
Organizational Commitment
Organizational Commitment Questionnaire (OCQ)
Organization Design
Organizational Agility
Organizational Capability
Organizational Architecture
Organizational Change Management (OCM)
Organizational Culture
Organizational DNA
Organization Chart
Organizational Absorption
Organizational Configurations
Organizational Development
Three- Component Model Questionnaire (TCM)

References