Meaning of Organizational Change
Organizational change refers to any changes taking place within the total work environment of a business organization. It is simply defined as a process where an organization perform alterations in its strategies, structure, technology, operational methods, or organizational culture for bringing the required changes. The process of organizational change can either be continuous or one taking place at a distinct period of time. It is a key characteristic of almost every business enterprise as changes within an organization are unavoidable in progressive culture. Every organization should develop better adaptability to market changes or otherwise they would be left behind or swept away by forces of change. Modern and huge business enterprises at the present point in time, are highly versatile, dynamic and adaptive to a variety of market changes.
Today almost every business enterprise faces a fast-changing environment in the market. In order to survive in such a dynamic environment, businesses are required to adapt to these changes. Organizational changes within the business usually occur as a result of external changes or internal pressures. The activity is mainly concerned with reviewing and modifying structures, especially the structure of management as well as business processes. Companies always seek ways to cope up with these inevitable market changes, in order to step ahead of their rivals. The process through which companies leverage changes for bringing successful resolution is known as ‘Organizational change management’, typically involving three phases: Preparation, implementation and follow-through.
Features of Organizational Change
The features of organizational change are as follows: –
- Movement from one state of balance to another- Organizational change involves shifting from one state of balance to another state. Whenever there is any type of change in the organization, a new equilibrium is developed as a result of disturbance in old equilibrium coming out of such change. The newly developed equilibrium is totally dependent upon degree of change and how it affects the organization.
- In whole or in parts- It can either bring alterations in whole organization or only in a few parts of organization such as people, organizational structure or technology. Also, if the change is brought in one part of organization then it can directly or indirectly affect the entire organization. For example, change in technology will require changes in people’s learning pattern and may be in a structure for adopting that technology.
- Responsive to Environmental factors- Organizational changes is at large governed by environmental factors that are both internal and external to business enterprise. The external factors involve technological changes, social changes, variations in market conditions, political and legal changes, varying competition, etc. Whereas, internal factors involve inefficiency of the administrative process, change in leadership, the introduction of new technology, and change in the workforce.
- Pervasive- Organizational change is a pervasive function that need to carried out necessarily by every organization in order to survive in highly dynamic environment. It is not limited to one business or one nation but is worldwide phenomenon. The whole globe, all nations, each and every organization, their members and personnel change the pattern of working from time to time. However, the nature and degree of change varies from one organization to organization.
- Continuous activity- The organizational change is not a one-time process but is done on continuous basis. Companies keep on changing their policies from time to time for surviving and growing in competitive market. However, few changes are of minor nature that get adjusted in system via internal adjustments, whereas major changes are brought via change agents.
- Essential activity- Change is essential activity but not a force to which business may or may not respond. It needs to accepted by every business enterprise in order to survive in market. However, organizations can either plan the change or react to change that is totally dependent upon them. Overall, the activity of organizational change is much required for reaching better growth and development.
Types of Organizational changes
Various type of organizational changes is well-described in points given below:
- Organization-Wide Change: The organization-wide change can be defined as large scale transformation influencing the overall structure of the business enterprise. This type of organizational change involves resizing of any type, restructuring or collaboration -that is basically a step towards bringing change in the company’s nature.
Also, Organization wide changes irrespective of their type do have influence on culture of organization, and as an end result influencing the behavioural patterns of people and workforce. These types of changes are of long-term nature and requires a proper planning as can be highly disruptive, if not planned well.
Example of such changes can be transforming highly reactive business enterprise to a stable and corporate development.
- Transformational Change: Companies in order to ensure better growth and continuity need to regularly evaluate the underlying organizational policies. It is must to be in touch with surrounding environment and bring the required changes from time to time. It can comprise of keeping updated with cultural trends, knowing the social climate and having close watch on technological advances.
As per the study conducted by MIT, it is found that maturing digital businesses pay attention on integrating digital technologies such as mobile, social, analytics and cloud, in direction of transforming how operations are carried out by businesses. Whereas, digital businesses of less mature nature are more focused towards solving distinct business issues using the individual digital technologies. In todays highly digital environment, companies based on technology are taking risk to the point of becoming a cultural norm.
- Personnel Change: Personnel change refers to change where company undergoes mass layoffs and hiring. This process brings alterations in culture as well as policies of company. Whenever company expands its operations rapidly, new employees are hired thereby involving different complexities in onboarding new personnel’s. Every new employee is fitted into new role and there may also be scenarios where every new role is yet to be defined. Overall, personnel change needs to be carried out with proper care as can bring lots of inefficiency and chaos within the organization, in case if not managed properly.
The organizational layoffs occur of distinct reasons such as financial restraints and government regulations. They have huge influence over present employees of business enterprise and can also have negatively impact on employee morale.
Therefore, all organizations should learn how to efficiently and fairly manage the workload and disperse it. The personnel’s who took more responsibility as compared to what is originally given can become inefficient, and although it is a temporary measure to fill gaps but at the same time can lead to shaky transitioning period.
- Unplanned Change: A business enterprise can also undergo a number of unplanned changes in between the endless data analysis and planned policies. These are sometimes even more drastic than the planned ones. Unplanned changes occur as a result of variations in demographic composition of business enterprise and are introduced in unplanned manner. These changes can also term as typical unplanned internal changes.
Distinct external factors such as changes in government regulations and economic uncertainties plays a key role in compelling business enterprise to bring changes. In addition to this, natural disasters being totally wild and unforeseeable also bring unplanned response from organizations.
The unplanned changes are expensive and chaotic, prompting companies to respond within limited period of time. It is due to this only that solutions serve as short term fix to present issues.
- Remedial Change: Remedial changes are changes brought by business organizations for improving their poor performance or to overcome from state of distress. The performance level of companies generally tends to drop whenever they are going through financial stress. These remedial changes serve as corrective actions thereby helping in raising the functionality of business. They also assist in reviewing organizational strategies that were earlier considered as profitable for company but at present seems to be detrimental for organizational structure.
Example of remedial change: Suppose, the environment in which business organization exist becomes heavily polluted as a result of its operations. Now company must pay attention on cleaning this pollution for the safety and welfare of society. It should start financing the remedial action for the same or apply for getting finances to do so.
Reasons of Organizational change
The reasons for organizational change can be categorized into 2 categories: External reasons and Internal reasons.
External reasons include changes taking place in external environment thereby bringing changes in business organization. The most common and obvious external reasons behind organizational change are described in points given below: –
- Changes in Technology and equipment- Advancements in field of technology serve as major external cause of organizational change. Today, modern world is facing rapid changes in technology, information system, decision support systems and computerisation. A business enterprise won’t be able to survive in market, if in case, they are unable to keep themselves updated with technology and management information system.
- Competition- In present highly competitive environment, only fittest organizations are able to survive for longer term. The organization should take proper care of all types of challenges posed by competitors for continuing their operations swiftly. For example, Mudra communication in year 1993 decided to get itself recognized in order to combat all challenges coming their competitors such as HTA and Lintas.
- Changes in people requirement- Every business enterprise operate primarily for serving the needs of people. Customers dictate the organizations with what they actually require. With ongoing variations in customer needs, the 5-star hotels have started to provide new services such as conference hall facilities, secretarial services, business centres etc.
- Government rules and regulation- Manytimes, Government’s rules and regulation necessitates the changes in business organization. For instance, UGC has recently slash the grants to universities thereby forcing them to strengthen their functions of generating revenue, such as consultancy, training facilities, providing self-finance courses etc.
- Social and Political changes- No business enterprise can exercise control over social as well as political changes taking place within the country. Any drive going on in society for bringing social equality or relations between government and business are few factors that compel companies for bringing changes in their organizational structure.
There may be dozens of internal factors that can bring changes in organization, few of the illustrative one are explained below: –
- Changes in Managerial Personnel- Any change in management team or executives of company serve as most frequent reason for bringing the organizational change. The management of one person differs from another one in terms of skills, style or managerial philosophies. No two managers can be same but are dynamic who introduce change in order to lead the market. A change occurring in one business organization forces other one to adopt the same.
- Introduction of new technology- Whenever a company introduces any newer type of technology then it is bound to bring negative consequences on other activities as well. Like for instance, a process of computerising the examination division of M.K. University will also influence its other key aspects such as reporting relationships, mechanism of coordination, span of control and many more.
- Deficiencies in existing organization- Different types of deficiencies may come within business enterprise over a period of time. These deficiencies can be in form of imbalance among narrow and wide span of management, communication system, centralization and decentralization, line and staff relationships etc. A change in organizational structure is required to overcome these deficiencies, otherwise may add inefficiency to business thereby bringing huge losses.
- Changes in workforce- The organizational changes are also brought due to changes in operative personnel of business enterprise. When new workers joining a company are more skilled, educated and competent then accordingly changes need to be brought in values and beliefs for matching them with organization. They may be required to bring changes in leadership styles and motivation system for dealing with the knowledge workers.
- Internal pressures- The changing attitude of internal employees of business organization also enforce organizational change. Distinct scenarios such as dissatisfaction with working conditions, inter-personal relationships and pay structure brings negative behaviour among employees towards their managers thereby forcing them to change policies, strategies and procedure. A change is therefore brought to develop cordial relationships within the business organization.
Process of Organizational Change
There are basically three phases in the commonly accepted model suggested by Kurt Lewin for bringing organizational change:
- Unfreezing- The unfreezing phase of organizational change defines that individual is made to realize that his behaviour, feelings and beliefs are no longer adequate for meeting the current situation in the business enterprise. Once the people get convinced, they may get ready for changing their behaviour. The reward for those willing to change and penalty for others may assist to a great extend in this matter.
- Changing- A individual once get agree and ready to change, learn new ways of behaviour under this phase. The model is provided to person initially where he identifies himself. He will accept that particular model gradually and behave in same manner as suggested by model. Now in another process known as internalisation, person is put into situation where new behaviour is demanded of him if he wants to perform successfully.
- Refreezing- The refreezing phase of organizational change is one where individual need to practice and experiment with new model of behaviour and examines if it effectively mixes with his other behavioural aspects. A reinforcement is provided via continuous or intermittent schedules, in order to develop a permanent set in the individual.
Resistance to Organizational Change
The common reasons due to which people resist to organizational change are as described in points given below: –
- Loss of status or job security in organization- It is commonly seen that people do not support changes that they see would cause harm to their current situation. In terms of the organization setting, any type of technological and administrative change going to eliminate or reduce the role of employees, managers and peers will be resisted by them. From their perspective, the organizational change is creating harm to their position in business organization. Therefore, forcing a change over others has also its own place. In case if the same approach is overused for bringing the change, then its effectiveness will be harmful over the long term and others will find ways to resist either directly or indirectly. In absence of thoughtful strategy for addressing the organizational change, a strong resistance and organization turnover will be triggered.
- Fear and surprise of unknown- The team members should be well-versed with organizational changes prior to implementing them. Lesser the team members are aware about changes and its impact on them, then more fearful they will become. Leading the changes do not require springing surprises on business organization but organization should be well prepared for changes. If there is no adequate two-way communication in team, grapevine rumours are going to sabotage the efforts of change. In fact, continuing communication serve as one of critical tool for handling the resistance to change.
- Poorly aligned rewards system- It is commonly said that whatever managers reward then they are going to get back the same. The organizational stakeholders are going to resist change, in case they don’t see any rewards. Team members working under the managers will always seek reward for implementing any type of change. In absence of reward, there is lack of motivation among team members for supporting change over long-term. This means that reward systems of organization need to be altered in some ways for getting the support towards change need to implemented.
- Climate of mistrust- Presence of mistrust climate negatively influence the implementation of meaningful organizational change. Trust is must that involves faith in intentions and behaviour of others. The mutual mistrust will bring failure in a well-conceived change. If change is going to be implemented in environment where most of the individuals working together mistrust each other, then overall outcome will have limited success. Under such scenarios, more time need to be spent towards rebuilding trust for getting better results out of change effort.
- Fear of Failure- Introduction of changes on job will cause team members to doubt them with regard to their capabilities in performing their duties. The team member may start resisting as they are concerned that they cannot adapt to new work requirements. A fear is great motivator that can encourage people’s intention to resist towards the efforts for implementing change. Team members should be helped in moving beyond such fears, in order to make the change efforts successful.
- Peer pressure- All people are social creatures, irrespective of being either introvert or extrovert. The stakeholders of organization are going to resist against change for protecting the interest of group. It is seen that team members are compelled to resist for organizational change in order to protect their co-workers. For example, a senior executive making efforts for bringing changes may found that managers reporting to him are resisting for the sake of work group rights.