The concept of organizational change is in regard to organization-wide change, as opposed to smaller changes such as hiring a new person, modifying a program, buying a new computer for the department etc. Examples of organization-wide change are a change in mission statement, restructuring operations (e.g., restructuring to self-managed teams, layoffs, etc.), new technologies, mergers, major collaborations, “rightsizing”, new programs such as Total Quality Management, Business Process Re-engineering, etc. Some experts refer to such change as “organizational transformation”. Organizational change means that there is a fundamental and radical reorientation in the way the organization operates.
Business organizations should reconsider the best changes in order to remain competitive. Every business that wants to remain competitive should be ready to embrace new managerial or operational changes. Every successful firm adapts new changes every time. Organizational change helps a firm survive and achieve its goals in a timely manner. Failure to initiate the relevant changes and strategies in a firm will make it less competitive. Our modern society is changing at a very fast rate. Every company is producing new services and products in order to fulfill the changing expectations of its consumers.
Reasons for Organizational Change
Organizational change helps a firm thrive and achieve its goals. A number of reasons can force an institution to change its strategy. The first factor that can promote a new change is competition. Every profitable industry is capable of attracting new players or competitors. The entrance of a major competitor in a given industry forces every existing firm to change its business strategy. Many companies will implement new practices in order to deal with competition. Every stakeholder and leader should be involved in the change process. These individuals should be committed in order to make the firm successful and more competitive. Every business firm that decides to ignore new competition will become less competitive.
Modern technologies can compel a company to formulate new changes. A good example occurs when a company decides to introduce new computers. This situation will force the company to train its employees. The practice will ensure the company’s employees can use the computers to provide quality services to every customer. Every business is using new technologies in order to increase its productivity. This situation explains why more companies are implementing new operational changes. Such technological changes will ensure every company realizes its goals and objectives. Failure to consider such technological changes will make a firm less competitive.
A firm can implement new changes in order to grow. A business organization might decide to change its activities and operations in order to achieve its goals. Such a company will introduce new products and services. This strategy calls for better practices in the firm. This change will also ensure the company provides the best services and goods to its customers. The company can also open new stores and outlets in a different location. This change will make it easier for a firm to achieve its goals. The company might also initiate new practices or services in order to remain competitive.
The other possible cause of organizational change is the need to implement new business processes. A business might choose to increase its output. The firm will be required to hire new experts and employees. The firm will also train its employees in order to improve its manufacturing process. The company can also initiate a new production system. Lean production is a good option for every firm that targets to improve its business process. This change will ensure the business realizes its objectives. The process will make every firm more profitable and successful.
The external environment can also force a company to implement new changes. Some of these factors include social, economic, and political forces. The company might also rearrange its operations. The company might also adopt new technologies and programs in order to achieve its goals. The changing consumer needs can also force a company to align its business strategy. The approach will ensure the company remains profitable. Business leaders should always examine these external forces before implementing every new change. The leaders should also monitor the targeted change if the firm is to attain its goals.
The state might present new policies and safety procedures. These policies are necessary because they ensure every person works in a safe environment. These policies and regulations will also force a company to initiate new operational changes. Every firm should reexamine every regulation before instituting the proposed change. Failure to undertake these changes will make a firm less productive or competitive. A business firm that ignores these new regulations will not sell its products. The above operational changes will ensure the company provides quality services and goods to its customers.
Forces of Organizational Change
Change should not be done for the sake of change — it is a strategy to accomplish the overall goal. Usually organizational change is provoked by some major outside driving force, e.g., substantial cuts in funding, address major new markets/clients, need for dramatic increases in productivity/services, etc. It may also be triggered by various internal factors. Organizations must undertake organization-wide change to evolve to a different level in their life cycle, e.g., going from a highly reactive, entrepreneurial organization to more stable and planned development. When a new chief executive is appointed, it can provoke organization-wide change when his or her new and unique personality pervades the entire organization.
“Organizations are systems that exist in the context of an external environment, in a dependent relationship and that interact with it in order to survive and grow.” Any factor in the environment that interferes with the organizations ability to attract the human, financial and material resources it requires, or to produce and market its services or products becomes a force of change. Some internal factors, which operate within the organization, may either support or hinder organizational functions, or processes. These internal and external factors have been variously referred to as the drivers of change or the forces of change.
External drivers of change
The external drivers of change are those forces of change, which prevail because of the external environment. They are: –
- Political Forces for e.g. Opening up of the economy of South East Asia, collapse of the USSR, the Gulf war and so on.
- Economic Forces: fluctuating interest rates, decrease in productivity, oil prices fluctuation
- Technological Forces: technological advancements like IT, Computer technology, etc
- Government Forces: Signing of the GATT, WTO regulations, foreign exchange regulations, Anti trust laws
- Increased Global Competition: relocating companies to developing countries to cut labor costs, outsourcing, etc
- Changing customer needs expectations and preferences: product innovation, customization to suit customer needs.
Internal drivers of change
The internal drivers of change are those forces, which exist inside an organization and trigger it to move from the current state to a desired state or sometimes even an unexpected state.
- Organization Dynamics: internal politics, group dynamics within the organization, formal and informal relationships within the organization.
- Administrative policies and rigidity: inadequate administrative processes, lack of autonomy, outdated rules and regulations
- Expectations of the internal customer: Career growth expectations, individual ambitions, insecurities, fears and frustrations, etc
- Structural inadequacy: structural changes to reduce costs increase productivity, like downsizing, delayering etc.
- Technological factors: change in work process, use of information technology in routine and non-routine tasks, automation
- Human Resource planning: acquisition of persons with advanced skill sets for expansion, need of different competencies
- Profitability Issues: loss of market share, fall in revenue
- Resource Constraints: shortage of money, material, machinery, manpower, information, etc
Read More:
- Factors Affecting Organizational Change
- Approaches to Organizational Change
- Unplanned Organizational Change
- Managing Planned Organizational Change Process
- Importance of Change in an Organization