Organizational Change
Let us begin our discussion with the definition of change in organizations. Change according to Jick (1993) is a planned or unplanned response to pressures and forces. Change is inevitable and organizations undergo change. Technological, economic, social, regulatory, political and competitive forces push organizations to change. Because of the ever changing business and industry situation and environment, change has become a requirement for organizations to remain strong and to succeed. Globalization has also made the pressures more intense (cited in Mills 2003). Organizations today operate in a fast changing environment. In order to survive organization must be adaptive and they must adjust to new demands and opportunities.
The new global market demands for an organization that is able to improve production and enhance competitiveness continuously. Organizational change must be managed effectively because it plays an important role in the achievement of company goals. Organizations employ different strategies in order to remain competitive and to succeed. The objectives of the organization are achieved through its people. The aim of organizational change is to improve and strengthen organizational performance.
Planned Change
The aim of planned or market-induced change is to gain competitive advantage in a fast-changing world. Planned change involves the organization of work processes, development of the skills of the organization’s people and alignment and commitment of key stakeholders. The values of planned change are embedded in economic approaches and organizational behavior (Buelens and Devos 2004). Through the economic perspective, the shareholders and customers are viewed as the most important stakeholders. In order to achieve success, the organization needs to improve its performance. The organization behavior perspective on the other hand view human resources as the key to the success of the planned change. The aim of planned change is to create economic value. Planned change constitutes a deliberate and premeditated intervention designed to alter some aspect of organizational life. The aims of a planned change are achieved through some methodology. Planned change usually involves some methodological approach or set of steps (Stickland 1998).
Managing Organizational Change
Management of change is described as a structured approach to individual, team, organization and society transitions that move the target from a current state to a desired state. Change management in organizations is a process for managing the people-side of change. It is the integration and adaptation of a new business model into an organization to transform the organizational relationships with all its constituents. It is important that the management asses the current condition of the employees in order to identify the changes that the organization needs. It is also important to estimate the effect of management change on the employee behavior patterns, work processes, technological requirements and motivation. Management of change must be continuously monitored for effectiveness and must be implemented throughout the organization and must be adjusted in order achieve the desired goals.
Levels of Organizational Change
Organization Level
Theories based at the level of the organization see change as a product of: interactions between the subsystems of which they are composed and interactions; and interactions and changes across their boundary with an external environment. Change analysis and intervention tends to be holistic in nature (Stickland 1998).
Group Level
Another strand of organization change theory focuses on group and team behaviour. At the group level, the change dynamics are viewed in terms of group values, norms and roles and if effective change in to be achieves then these group characteristics should be identified and understood prior to attempting planned change. Organizational change is seen in terms of interactions, conflicts and relationships between groups, with particular functional or task groups exhibiting cohesive resistance to change (Stickland 1998).
Individual Level
The last area of organizational change theory is centered upon individual behaviour. At the individual level, emphasize is given to individual needs and motivations in order to counter resistance to change. The individual perspective argues that individuals are best able to cope with and facilitate change if they are involved and empowered to design and initiate it (Kanter 1984 cited in Stickland 1998, p. 44).
Planned Change and Organization Dynamics
It has been argued that when an organization is facing a planned change, the biggest challenge is to manage the dynamics not the pieces. The biggest challenge in every change effort is the management of the dynamics or the subtleties. One of important factors that must be considered and must be emphasized in the organizational culture. Included in the dynamics, are the prevailing beliefs, behaviors and assumptions that each member acquire over time. Culture according to Kotter (1996) refers to norms of behavior and shared values among a group of people. Norms are common or pervasive ways of acting that are found in a group and that persist because group members tend to behave in ways that teach these practices to new members, rewarding those who fit in and giving sanctions to those who do not. Shared values are important concerns and goals shared by most of the people in a group that tend to shape group behavior and that often persist over time, even when group membership changes. Culture is shared, providing cohesiveness among people throughout an organization, and developed over time. An organization’s existing culture is the product of beliefs, behaviors, and assumptions that have in the past contributed to success. Conner (1992) defines organizational culture as the interrelationship of shared beliefs, behaviors, and assumptions that are acquired over time by members of an organization (cited in Gilley and Maycunich 2000, p. 284). The prevailing beliefs, behaviors and assumptions of an organization guide what are considered appropriate or inappropriate actions in which individuals and groups engage. An organization’s collective beliefs, behaviors and assumptions affect daily business decisions, actions and operations on two levels, overt and covert. The overt level represents observable, intentional, and direct influences on operations. The covert level is characterized by obscure, unintentional, and indirect influences on operations. These latter influences are difficult to change because employees are often unaware of them. On the overt level, an organization operates on beliefs and observable behaviors. At the covert level, the organization is influenced by employees’ collective assumptions. These combine to influence oral and written communications, organizational structure, power and status, policies and procedures, compensation and reward systems, and the design and use of physical facilities (Gilley and Maycunich 2000).
Organizational change, particularly changes in organizational culture is very challenging and problematic. Organizational culture is difficult to change because it is deeply embedded in the shared behaviors of organization members and working relationships, which have developed over time. The culture of the organization defines appropriate behaviour, bonds and motivates individuals and asserts solutions where there is uncertainty. Organizational culture functions at all levels from subconscious to visible.
The Change Process
The planned change follows a method.
1. Analyze the Organization and its Need for Change
The manager of change must first have a clear idea of the organization’s current situation. The manager must conduct any one of the following:
- A full financial audit of the organization
- A structural survey in which different departments and their staff are identified
- A skills audit of the organization’s personnel
- A marketing analysis of the business within the industry
The organization’s operations including the way it functions in its environment, its strengths and weaknesses must be studied before planning for change.
2. Create a Shared Vision and Common Direction
It is important to engage every member of the organization to make the planned change successful. According to Jick and Peiperl (2003), uniting the entire organization behind a central vision is important to the success of the planned change. The vision should reflect the philosophy and values of the organization and should help it to articulate what it hopes to become. A successful vision aims to guide behavior and to aid an organization to achieve goals (cited in Randall 2004, p. 138).
3. Create a Sense of Urgency
The manager must create a sense of urgency and appeal to employees’ self-interests by clearly explaining that their future well-being is at stake.
4. Support a Strong Leader Role
The transformational leader must turn employee compliance to commitment.
5. Craft an Implementation Plan
For change to become successful, the manager must embark on a programme of involvement precisely at the point where decisions are to be made about what is to happen and how it is to take place.
6. Communicate and Involve People
Real Communication requires a dialogue among the different change roles. By listening and responding to concerns, resistance and feedback from all levels, implementers gain a broader understanding of what the change means to different parts of the organization and how it will affect them.
7. Reinforce and Institutionalize Change
Throughout the pursuit of change, managers and leaders should make it a top priority to prove their commitment to the transformation process, to reward risk taking and to incorporate new behaviours into the day-to-day operations of the organization. By reinforcing the new culture, they affirm its importance and hasten its acceptance.
Company Analysis
I work in the acquitting department of one of the credit card centers in Hong Kong. The company employs approximately 300 employees. The company is family-controlled. The organizational structure is primarily hierarchical and departments are established to deal with different business aspects. I can say that the hierarchy of authority in the company is centralized. The decision-making power usually rests on the top management.
Power and Control
Power and control are exercised on the top level of the organizational hierarchy. The Chairman is the one who oversees the entire operation. A board of directors was established to oversee the aspects of the business.
Challenges Faced by the Organization
The organization is now planning to facilitate organizational changes in order to enhance the performance of the organization and to achieve its goals and aims more efficiently and effectively. Below are some of the obstacles that the company needs to overcome in order to ensure the success of the planned change.
1. Absence of Clear Change Leadership
If the leaders lack credibility or credentials and if they fail to bring the rest of the management team to consensus, the change effort is likely to be unsuccessful.
2. Change Initiative Burnout
Another source of challenges is the burn out that the members organization feel after so many changes that produced inadequate result have been done. The organization at present has gone trough a number of change initiatives. Every change initiative have was expected to produce positive results. However, the changing organizational goals has led to the supplementation of other change initiatives. This caused a confusing mix of approaches with distinct methods, vocabularies, deliverables, and teams of outside consultants, and these comoete for a shrinking share of the organizational mind.
3. Organizational Culture
Planned change faces problems and difficulties that are commonly attributed to human factor, particularly, employee resistance. Strategic or planned change is defined as the realignment between the organization and its environment that affects the achievement of the organizational goals. The main aim of planned changes is to enhance the organization’s capability to survive through improved fulfillment of goals. Changes are seen by the employees and to some extent by the management as a threat to corporate cultures and careers (Eneroth and Larsson 1996). Often the rules of conduct and practice throught to be behind an organization’s earlier success are codified into rigid operating standards and styles. A more subtle form of resistance arises when the employees or middle managers think they are doing well and regard the new program as an implicit criticism of their efforts.
4. Lack of Urgency
If managers and employees do not feel the change in urgently needed, other more pressing concerns will push it aside.
5. Poor Implementation
Implementation problems range from not allocating enough resources or time to the benefits and goals not being clearly understood by employees. It is also very hard to sustain enthusiasm if there is a lack of early success or if successes are not celebrated properly.
The abovementioned obstacles point to the human factor that affects the success of the planned change. Employees and middle managers may be resistant to change especially if it threatens the established culture. In order to achieve success the management needs to involve the employees in the change process.
Resistance to Change
One of the biggest obstacles in the success of any planned change is employee resistance. Resistance affects a change program. People generally resist change because of its negative consequences. Some of the perceived negative consequences of change are:
- Loss of status
- Alteration of work
- Discomfort
Symptoms of Resistance
Bhutan (1995) that employees exhibit behaviors that can be considered as ‘symptoms’ of resistance to change. There are different causes of employee resistance to change. The resistant behaviors that employees exhibit during the change process can be categorized into two – active resistance and passive resistance. Employees who actively resist change exhibit the following behaviors:
- Finding fault
- Ridiculing
- Appealing to fear
- Manipulating
Employees show passive resistance to change through the following behaviors:
- Agreeing verbally but not following through
- Feigning ignorance
- Withholding information
It is challenging to affect a person’s state of mind. The success of the planned change depends on the support and commitment of the people. A person’s behavior and attitude towards change is affected by his beliefs, feelings and values.
Reasons for Resisting Change
One of the reasons why employees resist change is because they fear that they will not able to adapt to the changes. People usually are suspicious about the unfamiliar. Another source of resistance is the employee’s low tolerance of change. An employee who has a low tolerance of change resists change because he or she is not comfortable with doing his or her job differently. Employees may understand the importance of change but may have difficulties adapting to it. Another source of resistance is when the employees experience mistreatment during the change process. Employees who experience mistreatment often do not cooperate or even sabotage the entire process. The change process can also be seen as a treat to the ‘personal compacts’ between the employees and the managers (Bolognese 2002). There are different dimensions that make up personal compacts. These dimensions can be formal, psychological and social. The formal dimension is the most recognizable. The formal dimension includes job descriptions, employee contracts and performance agreements. The formal dimension establishes what is expected of both the employee and the management. The psychological dimension deals with the relationship that is established between the management and the employee. The psychological dimension entails the establishment of a relationship that is built on trust, loyalty and commitment. Lastly, the social dimension involves the culture within the organization. The organization’s mission statement, values, ethics and business practices are crucial in the social dimension. It has been argued that any disruption in the personal compacts will lead to employee resistance. Strebel (1996) points out that when these personal compacts are disrupted it upsets the balance, and increases the likelihood of resistance. People are said to exhibit resistance to change when:
- Change is seen as superfluous or when change is perceived to worsen the current situation
- Change is seen as a threat to security, finances, status etc.
- The employees are not involved in the decision-making process
- The plans for change are kept hidden from the employees
- The employees believe that the organization’s resources are not enough to facilitate the change (Wynn 2005)
On the other hand, people will commit and support change when:
- Change is seen as an opportunity for personal gain
- Change is seen as a challenge
- The employees believe that change is necessary
- The employees are involved in the planning for change
- The change champion is highly respected
- Employees believe that it is the right time for the change
We can see from the above discussion that the dynamics or the things that are not readily visible are more challenging to manage during the planned change process. The employees’ behaviors and attitudes affect the planned change. Employees develop their attitudes and behaviors through their perceptions, values and beliefs. It is a challenge for the management to motivate the employees and make them committed to the change.
References
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Conner, D 1992, Managing at the Speed of Change, Villard Books, New York.
Gilley , J W and Maycunich, A 2000, Organizational Learning, Performance, and Change: An Introduction to Strategic Human Resource Development, Perseus Publishing, Cambridege, MA.
Jick, T D and Peiperl, M A 2003, Managing Change: Cases and Concepts, McGraw Hill, New York.
Kanter, R M 1984, The Change Masters, Allen and Unwin, London.
Kotter, J R 1996, Leading Change. Harvard Business School Press, Boston.
Randall, J 2004, Managing Change, Changing Managers, Routledge, New York.
Sims, R R 2002, Changing the Way We Manage Change, Quorum Books, Westport CT.
Strebel, P 1996, Why do Employees Resist Change?, Harvard Business Review, pp. 86-92.
Stickland, F 1998, The Dynamics of Change: Insights into Organisational Transition from the Natural World, Routledge, London.
Wynn, G 2005, Managing Resistance to Change, Change Management, viewed 04 March, 2008, <http://managingchange.biz/manage_change_resistance.html>.
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