ORGANIZATIONAL CHANGE

Organizational change refers to the actions in which a company or business alters a major component of its organization, such as its culture, the underlying technologies or infrastructure it uses to operate, or its internal processes. Organizational change management is the method of leveraging change to bring about a successful resolution, and it typically includes three major phases: Preparation, implementation, and follow-through.

WHAT CAUSES ORGANIZATIONAL CHANGE?

Many factors make organizational change necessary. Some of the most common faced by managers include: 

·         New leadership at the helm of the company or within its departments

·         Shifts in the organizational team structure

·         The implementation of new technology

·         The adoption of new business models

 

TYPES OF ORGANIZATIONAL CHANGE

Organizational change is a broad term. Some change is sweeping: A substantial evolution in the direction of a company. Other shifts are less dramatic, focusing instead on a small aspect of a firm.

It can be helpful to think of change as a spectrum. On one end, you’ll find adaptive change, which speaks to those modest iterations. On the other, there’s transformational change, in which vast change is pursued.

Adaptive changes are small, incremental changes organizations adopt to address needs that evolve over time. Typically, these changes are minor modifications and adjustments that managers fine-tune and implement to execute upon business strategies. Throughout the process, leadership may add, subtract, or refine processes.

One example of an adaptive change is an organization that upgrades their computer operating systems from Windows 8 to Windows 10.

Transformational changes have a larger scale and scope than adaptive changes. They can often involve a simultaneous shift in mission and strategy, company or team structure, people and organizational performance, or business processes. Because of their scale, these changes often take a substantial amount of time and energy to enact. Though it's not always the case, transformational changes are often pursued in response to external forces, such as the emergence of a disruptive new competitor or issues impacting a company’s supply chain.

An example of a transformational change is the adoption of a customer relationship management software (CRM), which all departments are expected to learn and employ.

Many changes will fall somewhere between adaptive and transformational on the spectrum. For this reason, managers need to understand that the change process must be tailored to the unique challenges and demands of each situation.

A MANAGER’S ROLE IN ORGANIZATIONAL CHANGE

Within an organization, every employee has a different role in assisting with change. While many staff members may complete heavily detailed work, senior-level executives with longer tenure might have different goals. Even within management, leaders and managers perform different tasks.

Leaders, for example, have to be courageous by taking on risks. They need to look at the big picture and articulate high-level change to the company, explain why it’s occurring, and motivate people to support the transition. To be successful as a leader, you must be insightful and know who to put in charge of carrying out change processes.

Managers are more concentrated on making business transitions successful. They focus on implementing change by determining the discrete steps that need to happen and their sequence. Managers are also typically responsible for allocating resources, such as personnel, and determining how success is measured. Ideally, leaders will also be managers, but it’s the primary responsibility of a manager to know how to design, direct, and shape change processes.

To achieve this, managers must have a wide array of skills, such as:

• The ability to communicate clearly and effectively—this includes actively listening to their team and colleagues
• A highly developed level of emotional intelligence
• Strong organizational skills
• An eye for detail
• Problem-solving and decision-making skills
• Delegating without micromanaging

 

All the reasons for organizational change can be classified into two categories external reasons and internal reasons:

a. External Reasons:

A number of changes in the external environment may cause change in the organization. Here, we are mentioning some of the most common and obvious external reasons of organizational change-

1. Government Rules and Regulations:

One can catalogue a long list of the Government’s rules and regulations necessitating changes in organizations. For example, the recent slashing of grants by the University Grants Commission (UGC) to the Universities have forced them to strengthen their revenue generating functions, such as training programmes, consultancy, offering self-financing courses, etc.

Likewise, the Government’s policy to privatise the power sector encouraged Jayprakash and the DLF to diversify into the power sector.

2. Competition:

The present time is the survival of the fittest. Organizations need to come up the challenges posed by the competitors to sus­tain and survive. In 1993, Mudra Communica­tion decided to reorganise itself to counter the threats from its competitors Lintas and HTA.

3. Technological Advances:

Technology has become the buzzword of the time. Rapid changes in technology has posed a question before the organization – either run or ruin. The revolutionary change in communication technology, i.e., communication satellite, cable networking, dish antenna, etc., compelled the Doordarshan to restructure itself by segmenting its services to different categories of viewers and become more competitive.

4. Change in People Requirements:

Customers dictate organization what they actually require. With changing requirements of customers, the five-star-hotels have, of late, started to offer new services, such as business centres, conference hall facilities, secretarial services, etc.

b. Internal Reasons:

Though there may be a host of internal factors that may also cause change in organizations, some of the illustrative ones are listed here:

1. Change in Leadership:

Leadership changes culture and values in the organizations. V. Krishnamurty of SAIL, Tapan Mitra of INDAL, Ratan Tata of Tata Sons are the examples how the change in leadership led to internal changes in these organizations.

2. Introducing New Technology:

Introduction of new technology in an organization is bound to have consequences for other functions as well. For examples, the computerisation of the Examination Division of the M.K. University affected other aspects as well, such as reporting relationships, span of control, co-ordination mechanism and so on.

3. The Domino Effect:

The source of change is change itself. The domino effect means one change triggers off a series of related changes. For example, estab­lishing a new department, e.g., the Department of Business Administration may cause the cre­ation of teaching and non-teaching positions, budgeting allocation, building construction etc. Ignoring domino effect leads to the problems of co-ordination and control.

4. For Meeting Crises:

Just like human life, some unforeseen happening, say, crisis in the organization makes continuation of the status quo unthinkable and difficult. Sudden death of a CEO, the resignation of the executives holding key positions, loss of major suppliers, a drastic cutback in budget and civil disturbances are the examples of unforeseen crises.

These make the organizational condition unstable and this instability becomes the stimulus for thorough self-assessment and reform to change the organization to overcome the crisis before it.

5. Organizational Life-Cycle:

As human beings pass through certain sequential stages of life-cycle, so do the organizations also. As an organization grows from tiny sized to giant sized or from young to mature stage, according to Larry Greiner, it passes through five stages.

Each stage creates new demands for adjustment for the organization and so, act as a potent sources of organizational change. Each stage culminates in a crisis (which Greiner calls ‘revolution’), which the organization must overcome before graduating to the next stage.

 

Resistance to Change

Bringing about Change in Mind-sets

Creating Conducive Atmosphere for Change:

i.                     Develop a Compelling Vision:

ii.                   Empower People:

iii.                  Construct a Climate of Trust and Frankness:

iv.                 Prepare People to Shoulder Risks:

It pays to understand these-six-A in brief:

i. Awareness:

The starting logical point is to create an awareness about change via continuous communication to win- winning commitment. Proactive communication is more suitable than surprising people with a sudden change. Creating an awareness is conducive to build the atmosphere of trust and frankness.

ii. Agreement:

An agreement among the people at work to change, which is possible by addressing the issue in an objective and impartial manner by the leaders.

iii. Acceptance:

‘Acceptance’ and ‘agreement’ are the two entirely different things having a gap between them. Agreement is more at a mental level while acceptance is at emotional level. Getting the acceptance for change implies appealing to the hearts of employees by addressing their personal concerns.

Moving from agreement to acceptance is a long journey because these personal concerns are real and myth-both emotional and psychological. We very often see people reject change because of fear, insecurity and uncertainty. It is the leaders’ role separate real concerns from emotional and imaginary or psychological concerns. It is the effective leadership that turns the negative acceptance into positive by appealing the plus points of change.

iv. Action:

Action of the people is one of the tests of their commitment for change. That is why, leaders are to encourage people under them to act for change. The greatest weapon for this is reward system supported by their guarantee to stand by along with them during trial runs and outcomes emerging out of change.

To charge or stimulate their actions for change, the leaders are to ensure that they are safe and secure in the process of change. They should coach, teach and encourage to take bold actions and to learn from change.

v. Accountability:

There is need for a system of accountability to verify whether people are really acting towards change. Accountability is possible only when they are assigned certain responsibilities or tasks along with authority. The performance of the people is to he continually monitored through periodic reviews of progress chased.

vi. Assimilation:

This is the terminal stage where the total internalisation of the change within the people who are working for the organisation. This is the stage where their thinking, feeling and actions involved in change are integrated to bring about the expected change.

This is the final indicator which spells out or projects the degree of change as opposed to desired change. It is final test because, the total physical, emotional, psychological and intellectual change within the organisation to achieve the expected change have taken place.

vii. Resource Leverage:

While discussing the barriers to change two broad areas were touched namely, behavioural and resource constraint. As against resource constraints, resource abundance and the resultant ability to make multiple bets and to sustain multiple failures are substitutes for disciplined and creative strategic thinking.

8 Methods of Implementing Change in an Organization

 

(i) By transformational leaderships:

Transformational leaders are managers who initiate bold strategic changes to position the organization for its future. They articulate a vision and sell it vigorously. They stimulate employees to action and charismatically model the desired behaviors. They attempt to create learning individuals and learning organizations that will be better prepared for the unknown future challenges. Three important elements of transformational leadership are:

(a) Creating a vision,

(b) Figuring charisma and

(c) Stimulating learning.

(a) Creating Vision:

A vision is a crystallised long-range image or idea of what can be and should be accomplished. A vision may also integrate the shared beliefs and values that serve as a basis for changing an organisation’s culture.

(b) Communicating Charisma:

Managers as leaders need to persuade employees that the vision is urgent and to motivate them to achieve it. Charisma is a leadership characteristic that can help influence employees to take early and sustained action. Charismatic leaders are dynamic risk takers, who show their depth of expertise and well deserved self-confidence, express high performance expectations, and use provocative language to inspire the followers. Charismatic leaders are respected and trusted by employees as they introduce change and tend to be emotionally committed to the vision of such leaders.

(c) Stimulating Learning:

Transformational leaders develop people’s capacity to learn from the experience of change. This process is called double-loop learning. The employees, who are double-loop learners, develop the ability to anticipate problems, prevent many situations and to be more ready for the next change to be introduced in the future.

(ii) By use of group forces:

The group is an instrument for bringing strong pressures on its members to change. Since behaviour is firmly grounded in the groups to which a person belongs, any changes in group forces will encourage changes in the individual behaviour. The idea is to help the group join with management to encourage desired change.

(iii) By providing a rationale for change:

Capable leaderships reinforce a climate of psychological support for change. The effective leader presents change on the basis of the impersonal requirements of the situation, rather than on personal grounds. Change is more likely to be successful if the leaders introducing it have high expectations of success. Managerial and employee expectations of change may be as important as the technology of change.

(iv) By participation:

Participation encourages employees to discuss, to communicate, to make suggestions and to become interested in change. Participation encourages commitment rather than mere compliance with change. Commitment implies motivation to support a change and to work to ensure that the change is effective.

Employees need to participate in a change before it occurs, not after. When they are involved in the planned change, right from the beginning, they feel committed to the implementation of such change.

(v) By sharing rewards:

By ensuring that there are enough rewards for employees in the changed situation, managers can build employee support for change. Rewards also give employees a sense that progress accompanies a change. Both economic and psychic rewards are useful.

(vi) By ensuring employee security:

Along with shared rewards, existing employee benefits need to be protected. Security during a change is essential in the form of protection from reduced earnings when new technology and methods are introduced. Seniority rights, opportunities for advancement etc., are to be safeguarded when a change is made.

(vii) By communication and education:

Support for change can be gained by communication and education. All individuals or groups that will be affected by change must be informed about the change in order to make them feel secure and to maintain group cooperation.

(viii) By stimulating employee readiness:

Employers should be helped to become aware of the need for a change. Change is more likely to be accepted if the people affected by it recognize a need for it before it occurs.

It is also essential for managers to take a broader, systems-oriented perspective on change to identify the complex relationships involved. Organisational development can be a useful method for achieving this objective.