Introduction to Organizational Change
Organizational change in Business Management starts with a situation that needs to be changed, moves through a process testing solutions and concludes with implementation of an innovation. Changes occurs in the life of an individual, be it personal or professional. Just like that organizations experience changes too. An organization cannot deny change and simply live in its past.
For many years, change was regarded more as an evolutionary than a revolutionary process. The evolutionary assumption reflected the view that change is a product of one minor adjustment after another, fueled by time and subtle environmental forces largely outside the direct control of management.
Definition of organizational change in Business Management
This relatively passive philosophy of managing change is typically expressed in the following words:
“Our company is continuing to benefit from a dynamically expanding market. While our share of the market has remained the same, our sales have increased 15% over the past year. In order to handle this increased business, we have added a new marketing vice president and may have to double our sales force in the next two years.”
Such an optimistic statement was adequate in less competitive times. In those days when small changes occur, just by replacing a manager was sufficient to maintain profitability. However, now the environment around organizations are changing rapidly and are challenging for management which seek for more attentive and inventive than they ever were before.
Why organizational change in Business Management?
All organizations undergo ongoing change and studying the ways organization change provide perspective on the process. Organizational change refers to changes that are made in the way a business functions, the introduction of major business processes, changes in the organization’s structure, or cultural changes within the organization. It is a field of management theory that focuses on the stages that companies go through as they evolve. An organization might face both long term and short-term changes.
Organizational change can happen for a variety of reasons, but in the end, organizations change on how they do things and often how they are structured to better meet their goals–and very commonly, to grow.
Challenges to organizational change
As Changes are important, however, it does bring challenges to the existing environment. Change is a situation where one starts doubting his capabilities and skills to perform a task effectively. In such times, it is really necessary to recognize one’s core strength and know where he can put his play. At the same time, one should stay aware of developmental areas and work on improving those aspects.
It takes time and effort to shift an organization to new operating. Yet, organizations change constantly in order to implement new processes, adopt new technologies, introduce new services or improve performance. “Change is not only likely, it’s inevitable.” – Barbara Sher. An organization changes due to various factors. Some of them are:
- Performance Gap
- Identification of new opportunities
- External Environment: PESTLE (Political, Economic, Social, Technological, Legal and Environmental)
- Merger and Acquisition
- Reaction to Internal Pressure
Importance in Business management
It is a truth that continual change is necessary in any business organization. It is essential not only for business prosper but to survive too. “Change has a bad reputation in our society. But change isn’t all bad – not by any means. In fact, change is necessary in life to keep us moving, to keep us growing, to keep us interested. Imagine life without change. It would be static, boring, and dull.” – Dr. Dennis O’Grady.
Change facilitates organizations to keep up with advanced technologies and changes in marketplace. It is well known fact that the taste and preferences of customers do not remain same. Therefore, to satisfy the needs of customer, an organization needs to change. In such a dynamic environment, organizations should embrace change. Change is important for an organization because without change businesses would lose their competitiveness and fail to meet the need of customers. Few reasons behind the need of change in an organization are:
- Adoption of new technology
- Satisfy the needs of customer
- Growth opportunities
Reasons for failure
Many businesses organization that had been the leaders of a market has failed due to resistance to change. “Change is hard because people overestimate the value of what they have and underestimate the value of what they may gain by giving that up.” – James Belasco and Ralph Stayer. The Eastman Kodak Company, an American technology company that produced imaging products with its historic basis on photography.
In 20th Century Kodak held a dominant position in photographic film. Although Kodak recognized the rising threat of digital camera, and developed a digital camera, it dropped the product with the fear that it would threaten Kodak’s photographic film business.
While its competitors like Sony, Apple, Samsung, etc. did not resist change. In present days, Kodak is not a household name as other companies. Besides Kodak, many business firms such as Blockbuster Entertainment Inc., Pan American World Airways and the Polaroid Corporation, which have failed to respond to change. Studies have shown that organizations resist change and fail to respond to the need for change about 60 to 70 percent of the time.
Organization resists to change due to various reasons. Some of them are:
- Organizational culture
- Rigidity of the structure
- Sunk costs
- Contractual Agreement
- Negative attitude towards change of employees and key interest groups
Effects of organizational change in Business Management
Changes in an organization affect everyone within the organization, and external parties. Company executives, management and staff need to adjust to the new way of doing business. The change also affects interaction with vendors, business partners and clients. Executing an efficient change management policy requires involvement from each part of the organization, including employees. As organizational change in business management affects employees, it is always not necessary that they react positively to the change. Most employees, however, resist change as it alters the status-quo and demolishes the zones of comfort they have created for themselves.
“People don’t resist change. They resist being changed!”Peter Senge
Organizational change requites employees to come out of such comfort zones, unlearn existing precepts, and adapt to new uncertain conditions, the mastery of which may take considerable effort. Hence, it is very important to inspire employees to work for change rather than against it. The real reason for change should be communicated to the employees. Their involvement and participation in the organizational change management might actually help the business succeed.
Success requires adapting to change and leveraging the benefits of change. Employees should be conveyed that changes are actually beneficial to them. Changes usually comes with career coaching, career counsel
Changes can be painful, and unfortunately many might not even succeed. According to McKinsey’s study, only 38% of responding organization believed that, their transformation was completely or most successful at improving performance. The reason behind “why does an organization succeed or fail” lies on various factors besides time and effort. Some of the success factors are:
Active, committed leadership.
- A clear, compelling, business case for change
- Employee participation
- Embedded change, not programmatic change Evaluation of the work
An organization that wish to survive for longer period certainly must undergo changes. Every organization has its life cycle. Any type of organization, goes through four basic stages of product life cycle. To survive longer, organizations should change, be innovative and adapt to the changing environment. As Charles
Darwin says,” It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
Therefore, organizational change cannot be achieved alone, or in a single day. It takes time and effort and dedication. In conclusion, With the involvement and teamwork of employer and employees, organizational change can always succeed.