ORGANIZATIONAL CHANGE

Organizational change is about reviewing and modifying management

structures and business processes. Small businesses must adapt to survive
against bigger competitors and grow. However, success should not lead to
complacency. To stay a step ahead of the competition, companies need to look
for ways to do things more efficiently and cost effectively. There is no need to
fear change. Instead, small businesses should embrace change as a way to lay
the foundations for enduring success

DRIVERS
A company's change drivers include the competitive environment, new
technologies, consumer demand, economic conditions and government policy
actions. Information technologies have changed how businesses operate and
interact with one another. New business models, such as outsourcing and virtual
collaboration, would not be possible without high-speed communications and
the Internet. Government regulations also force businesses to adapt, as do
changing consumer preferences. Recessions usually lead to layoffs, which may
require restructuring, and mergers and acquisitions lead to changes in
organizational culture.

SIGNIFICANCE
Companies that refuse to embrace change may disappear. However, change is
difficult because it involves modifying people's behavior. Resistance may come
from employees who are generally skeptical of change initiatives, especially if
they have lived through botched implementations in the past. Successful
organizational change requires top management leadership and a clear
explanation of how the contemplated changes can help employees do their jobs
more efficiently.

IMPLEMENTATION
Organizational change typically consists of three stages: establishing the need,
implementation and monitoring. To establish a need for change, senior
management could articulate where the company wants to be in five to 10 years
and what it needs to do to get there. For example, a saturated local market may
force a company to consider international expansion. The second stage involves
changing structures and processes, such as reducing the number of management
layers, combining business units, reassigning management, reducing employee
headcount and giving division managers more decision-making flexibility. The

final stage involves monitoring the results from the organizational changes and
making appropriate adjustments.

Issues
Change efforts fail for different reasons, including lack of focus and inadequate
communication. Change initiatives that try to do too much tend to fail. It is
better to succeed with small change projects, such as improving the response
time in customer service centers, and then building on this success to implement
complicated changes. Leadership should talk to employees in one-on-one and
group settings to answer questions, exchange ideas and generally alleviate
concerns.
Types of Change

Every day for the past 30 years, Robert went to work at Cheapo Toys in the
marketing department. He loved his job and was proud of all of his
accomplishments. One day, on his way into work, he was greeted by a human
resource manager. The manager took Robert aside and informed him that the
company was having a corporate-wide layoff. Robert was laid off immediately
and given a severance package. He was in total disbelief! Cheapo Toys' layoff
was a huge change for the organization, and it occurred due to a number of
factors.
Planned and unplanned are the two types of changes that can occur with an
organization. Planned change occurs when deliberate decisions are made in an
organization, while unplanned change is a result of unforeseen occurrences.
Ironically, the layoff was a planned change for Cheapo Toys, but an unplanned
change for Robert. External factors and internal factors can cause both of these
types of changes within a company. Let's take a look at specific examples of
each with Cheapo Toys as our backdrop.
External Forces of Change

An external force of change occurs from an outside influence on the

organization. There are four main external forces of change:
Globalization
Workforce Diversity
Ethical Behavior

 Technology
Cheapo Toys' original employees consisted of American employees who
operated at two East Coast locations. Due to the globalization of the economy,
the company was forced into many changes over the last 20 years. Cheapo Toys'
competitors did not just consist of American companies but foreign as well. The
kid population was declining in the U.S., so Cheapo Toys had to look elsewhere
for sales. A big change for Cheapo Toys was building factories and selling
overseas. The company now operates in over 10 different countries, ranging
from France, London, Japan and India.
A diverse workforce has also created a huge change for the company. When
Cheapo Toys began years ago, most of their workforce consisted of men. Now,
females are represented equally and all ethnicities exist within their various
international locations.
The third external force of change is society's expectation of ethical behavior.
Companies are now held to a higher standard of ethics. For example, companies
have a social responsibility to ensure that their products do not damage the
environment during the production process. Companies also have to conduct
themselves ethically when it comes to their finances. Cheapo Toys has had to
make huge changes in how they design, manufacture and sell their toys. All of
their toys now have to be made with plastics made of safe chemicals for kids. In
addition, the company has had to hire additional quality engineers to make sure
that the products are designed for all of the changed safety standards.
The last external force that creates change in organizations is technology.
Companies constantly have to change every aspect of their work life to ensure
that they remain competitive. For example, Cheapo Toys just completed a threeday sales training session. All of their sales reps' laptops were traded for tablets.
The tablets allow for easy presentations, traceability and sales order processing.
Companies need to stay ahead of the technological curve or they will be left
behind. Only 15 years ago, Cheapo Toys relied on just voicemail and emails for
their sales reps' daily workload.
There are also numerous internal forces of change that companies must monitor.
Internal Forces of Change

An internal force of change occurs from internal sources, such as employees or

company performance. These types include:

 Poor Financial Performance

Internal Crisis (such as a strike)
Changes in Employee Expectations

Unplanned Versus Planned Change

Unplanned change usually occurs because of a major, sudden surprise to the
organization, which causes its members to respond in a highly reactive and
disorganized fashion. Unplanned change might occur when the Chief Executive
Officer suddenly leaves the organization, significant public relations problems
occur, poor product performance quickly results in loss of customers, or other
disruptive situations arise. Planned change occurs when leaders in the
organization recognize the need for a major change and proactively organize a
plan to accomplish the change. Planned change occurs with successful
implementation of a Strategic Plan, plan for reorganization, or other
implementation of a change of this magnitude. Note that planned change, even
though based on a proactive and well-done plan, often does not occur in a
highly organized fashion. Instead, planned change tends to occur in more of a
chaotic and disruptive fashion than expected by participants.

CHANGE AGENT
Is anyone who has the skill and power to stimulate, facilitate, and
coordinate the change effort.
Change agents may be either external or internal.

ROLES OF CHANGE AGENT

1. Consulting
As a consultant, the manager places employees in touch with data from
outside the organization or helping organization members to generate data
from within the organization. The overall purpose is to help employees
find solutions to problems through analysis of valid data.
2. Training

To help organization members derive implications for action from the present
data and to provide organization members with a new set of skillsthe
ability to retrieve, translate, and use new data to solve future problems

3. Research
Finally, and closely associated with the previous role, the manager may
assume the role of researcher. As researcher, the manager may train organization
members in the skills needed for valid evaluation of the effectiveness of
action plans that have been implemented.

Types Of Change Agent

1. Outside Pressure Type
These change agents work to change systems from outside the organization.
They are not members of the company they are trying to change and use
various pressure tactics such as mass demonstrations, civil disobedience, and
violence to accomplish their objectives.

2. People-Change-Technology Type
The focus of activity for this type of change agent is the individual. The change
agent may be concerned with employee morale and motivation, including
absenteeism, turnover, and the quality of work performed. The methods used
include job enrichment, goal setting, and behavior modification.

3. Analysis-for-the-Top Type
Changing the organizational structure so as to improve output and efficiency.
The change agent uses operations research, systems analysis, policy
studies, and other forms of analytical approaches to change the
organization's structure or technology
4. Organization-Development Type

Focus their attention on internal processes such as intergroup relations,

communication, and decision making. Their intervention strategy is often called
a cultural change approach, because they thoroughly analyze the culture of the
targeted organization.

SKILLS OF CHANGE AGENT

Empathy
This is the skill of understanding the feelings of another person. Empathy leads
to improved communication and understanding between the change agent and
organization Members.
Linkage
This refers to the extent to which the change agent and organization members
are tied together in collaborative activities. The greater the collaborative
involvement (the tighter the linkage), the more likely the change agent will be
successful.
Proximity
This refers to the physical and psychological closeness of the change agent and
organization members.
Proximity has relevance to open door policy and the visibility of the
change agent during working hours.
Structuring
This factor refers to the ability of the change agent and organization members
to clearly plan and organize their activities concerning the change effort. A
clearly designed change effort is more likely to be understood and implemented
by the employees.
Openness
This characteristic refers to the degree to which the change agent and
organization members are willing to hear, respond to, and be influenced by one
another.
Reward
This refers to the nature and variety of potential positive outcomes of the
change effort that might accrue to the change agent and organization members.

Change efforts should be designed so that the employees are rewarded for
changing.

RESISTANCE TO CHANGE
1. Individual Resistance
2. Organizational Resistance

Individual Resistance
Individual sources of resistance to change reside in basic human characteristics
such as perceptions, personalities & needs.
Reasons of Individual Resistance
Economic Reason The economic reason of resistance to change usually focus
on:
Fear of technological unemployment.
Fear of demotion & thus reduced pay.
Fear of reduced work hours & consequently less pay.

Fear of Loss- When a change is impending, some employees may fear losing
their jobs, status particularly when an advanced technology is introduced.
Security people with a high need for security are likely to resist change
because it threatens their feeling of safety.
Status quo- change may pose disturbance to the existing comforts of status quo.
Peer Pressure- individual employees may be prepared to accept change but
refuse to accept it for the sake of the group.
Disruption of Interpersonal Relation- employees may resist change that
threatens to limit meaningful interpersonal relationships on the job.
Social Displacement- introduction of change often results in disturbance of the
existing social relationships. Change may also result in breaking up of work
groups.

Organizational Resistance
Individual sources of resistance to change reside in basic human characteristics
such as perceptions, personalities & needs.

Reasons of Organizational Resistance

Resource constraint- resources are major constraints for many organizations.
The necessary financial , material & human resources may not be available to
the organization to make the needed changes.
Structural inertia some organizational structures have in-built mechanism for
resistance to change.
Example: in bureaucratic structure where jobs are narrowly defined & lines
of authority are clearly spelled out, change would be difficult.
Sunk cost - Some organization invest a huge amount of capital in fixed assets. If
an organization wishes to introduce change, then difficulty arise because of the
sunk cost
Threat to expertise- Change in organizational pattern may threaten the expertise
of specialized groups. Therefore, specialists usually resist change.
Politics- Organizational changes may also shift the existing balance of power in
an organization. Individuals or groups who hold power under the current
arrangement may fear losing these political advantages.

MANAGING RESISTANCE TO CHANGE

Education & Communication
Communication about impending change is essential if employees are to adjust
effectively. The details of change should be provided & its potential
consequences. Educating employees on new work procedures is often helpful.

Participation
It is difficult for individuals to
resist a change decision in which they
participated. Prior to making a change, those opposed can be brought into the
decision process.

Empathy & Support

Active listening is an excellent tool for identifying the reasons behind the
resistance. An expression of concerns about the change can provide important
feedback that managers can use to improve the change process.

Negotiation
Another way to deal with resistance to change is to exchange something of
value for reduction in resistance.

Manipulation & Cooptation

It refers to covert influence attempts. Twisting & distorting facts to make them
appear more attractive, withholding undesirable information & creating false
rumors to get employees to accept a change .

Coercion
It is the application of direct threats or force on the resisters. They essentially
force people to accept a change by explicitly or implicitly threatening them with
the loss of their jobs, promotion possibilities & transferring them.