Organisational Change and its Reasons

Essay 2017 12 Pages

Business economics - Business Management, Corporate Governance


Worldwide climate of economical and political instability and turbulence made change an inevitable part of any healthy organisation in society. Even company with dominant position in its market such as Apple after introduction of iPad has always to innovate and keep their products up-to-date (Robbins & Judge, 2013). Simplistically change means making things in a different way. Currently change is studied on the individual, group, national and multinational levels during different time periods, from days to years (Mullins, 2006).

Organisational change is a process when companies modify working methods, organisational structure and culture, mission and vision in order to survive, develop and cope with faced problems or situations (Robbins & Judge, 2013). According to Fincham and Rhodes (2005), change management is the leadership of the organisational change process, which includes important factor of minimizing change barriers.

The need for organisational change can be driven by lots of external and internal forces. According to Buchanan and Huczynski (2008), triggers of change are factors indicating that current organisational structure, procedures and working processes do not work towards the organisational success. External forces for change such as unstable economic conditions, technological advances, globalisation and political events originate outside the organisation, whilst internal forces such as changing nature of workforce, ‘Quality approach’ and social trends come within the organisation (Kreitner & Kinicki, 2010). Interestingly, organisational change often is initiated within the company, whereas the most of triggers come outside the organisation (Mullins, 2006). Unstable economic conditions are one of the external forces, which can create a volatile environment. For example, collapse of financial and housing markets in 2008 in the USA caused the global recession so demand for normal goods decreased, and companies in order to survive were forced to lower supply and create more affordable products. Another external driver of change is technological developments. Many organisations use technological advances as a tool to increase productivity, customer service, saving costs at the same time. For instance, there are more and more options of self-service from the Internet banks to grocery retailers. In 2008, for visitors of Adour Alain restaurant in New York there was offered a new option to order wine by tablet in order to increase the quality of customer service and add to give enjoy for visitors by learning about wines by choosing country or origin and wine extract (Ante, 2008). Globalisation of markets and the internationalisation of business is powerful external driver of change as it forced many companies to integrate, compete and use outsourcing to lower production costs (Mullins, 2006). Political events are considered as external forces of change as well. For instance, war in Iraq created job places for contractors and organisations like Halliburton (Kreitner & Kinicki, 2010).

One of the most broad internal trigger is changing nature of the workforce as under the effect of globalisation it became more culturally diversified, also caused by demographic issues as ageing population and increased immigration (Robbins & Judge, 2013). Social trends become popular trigger for change. Example how social trends drive the change is global concern about greenhouse effect and rising energy costs, which forced many industries to change. Moreover, Microsoft employees began to use free shuttle bus to go to work rather than use their own cars, they saved more than $1 billion during the first year only (Kreitner & Kinicki, 2010). In addition, due to flexibility in organisational structure many organisations are becoming ‘flatter’ in order to ensure better communication and effectively manage change. Another important trigger of change is ‘Quality approach’ or known as Kaizen concept of continuous improvement, which is based on increased demand from customers for high-quality good and satisfaction. Consequently it forced many organisations to seek customer feedback about various issues within their organisation. As example, through consumer feedback McDonalds identifies consumers’ tastes and preferences and then changes menu (Kreitner & Kinicki, 2010). Low performance, high staff turnover (Buchanan, 2008) and organisational conflict (Mullins, 2006) are also considered as internal forces for change.

As with any change there are some risks and rewards. Spectrum of organisational change consists of 4 types of change known as automation, rationalization, reengineering and paradigm shift. Automation and rationalization are related to incremental (evolutionary) changes as the present modest returns and low risks, whereas reengineering and paradigm shift are related to transformational changes and offer high rewards, however with high probability of failure. Incremental adjustment involves many small unplanned changes such as modifications to business planning and management processes, whilst transformational change includes change in the way of thinking, solution of problems, defining boundaries and doing business. For example, banks may decide to use revolutionary change and eliminate branch banking, whereas IT companies prefer automation and rationalization implementing incremental changes (Burnes & James, 1995).

According to Robbins and Judge (2013), all theoretical approaches for change management are based on planned change, which is intentional and task oriented. When it comes to plan and implement change the fundamental technique was developed by Lewin (1951) who suggested 3-step Behaviour Modification technique. These stages are unfreezing the status quo (equilibrium state), movement to a desired state and refreezing change to make it permanent. During the unfreezing change agents identify initial problem and gather necessary data. The key point of this stage is motivation creation for change. Change agents try to persuade people to replace old working methods, attitudes by innovative and desired by management (Kreitner and Kinicki, 2010). In the ‘unfreezing’ stage managers identify key reason of change and prepare employees to modification process. During the movement stage change takes place. Managers introduce new information, procedure, equipment, technology or new view on culture and structure. The aim of this stage is supporting and stabilizing implemented changes. Support for workers is provided by helping them to combine implemented processes with past formal way of working. Monetary rewards is commonly used practice during this stage of change for employees who show performance and willingness to change.



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Title: Organisational Change and its Reasons