Organisational Change

Introduction

Except for change, nothing is permanent. It has become an unavoidable part of existence, a fundamental feature of historical development. In a progressive culture, change is inevitable. In truth, change is accelerating in our culture. Political, scientific, technical, and institutional revolutions are taking place. Organizations cannot protect themselves from environmental volatility. Internal and external influences both cause change. Management’s principal task is to meet the challenge of change. A company with no adaptation to change has no future. Good management requires the ability to adapt to change. Modern managers are responsible for developing management methods that best handle new problems and capitalise on chances for organisational growth.

The topic of managing change comes the closest to expressing the entire scope of a manager’s job. Almost everything a manager does is related to executing change in some way.

1. Hiring a new employee—Changing the workgroup
2. Purchasing a new piece of—Changing work methods equipment
3. Rearranging workstations—Changing workflows All necessitates understanding how to handle change effectively.

Organizational change is modifying or transforming an organization’s structure, procedures, or goods. Flexibility necessitates organisations being open to change in all areas, including the organization’s structure. Employees in a flexible organisation cannot think of their roles in terms of a job description. They frequently have to switch tasks and gain new abilities. The most adaptable organisations have a culture in which

(a) values evolve and

(b) management understands how to execute changes effectively.

Forces for Change in Organisations

More and more organisations face a dynamic and changing environment, which necessitates adaptation. In most organisations, change has become the norm. Most businesses have experienced plant closures, failures, mergers and acquisitions, and downsizing. Organizations that are adaptable, flexible, and responsive are those that will thrive in meeting the competitive difficulties that enterprises face. Previously, organisations could prosper by claiming competence in one of three areas: quality, dependability, or affordability. Today, however, this is not the case. The contemporary climate necessitates brilliance in all areas.

 

 

Why is organisational reform so critical? A multitude of forces press for change both inside and beyond the organisation. “We live in a world of continual change” has become a tired but critical cliché. Change pressures are generated both inside and outside the organisation. To survive, organisations must forge ahead of these pressures. Some of these are external, originating outside the corporation, while others are internal, originating within the organisation.

1. External Forces: When the general or task environment of the organisation changes, the organization’s performance typically depends on its ability and willingness to adjust as well. The modern manager is change-conscious and works in an ever-changing environment. External changes bombard modern organisations, making change unavoidable. The broad environment’s social, economic, legal, political, and technological components are all present. Any of these can create a need for change. Significant pressures for change in recent years have included advancements in information technology, globalisation of competition, and demands that organisations take greater responsibility for their environmental impact. These forces are addressed in more detail below:

• Technological Change: Rapid technology innovation is a major factor for change in organisations, and those who fail to keep up will fall behind swiftly. It is possibly the most important factor that businesses must consider. According to C. Handy, “the rate of technical development today is greater than at any other time in history, and technological advances are responsible for changing the character of jobs performed at all levels in the organisation.” For example, substituting computer control for direct supervision results in managers having broader spans of control and flatter organisations.
• Globalization: The global economy makes competitors more likely to emerge from across the ocean. Multinational and transnational corporations are the global market’s dominant players. This has caused businesses to think worldwide. There are no mental differences between domestic and international business. An organisation’s globalisation entails rethinking the most efficient methods of using resources, disseminating and gathering information, and developing people. It necessitates not just structural changes but also mental shifts among employees. Successful organisations will be those who can adapt to changing market conditions. They will be quick on their feet, capable of rapidly designing new goods and bringing them to market.
• Social and Political Changes: Environmental influences such as social and political changes also impact a firm’s fate. Every time a new legal provision affects an organisation, several new legal provisions are implemented in the corporate sector.
• Workforce Diversity: A challenge associated with globalisation is workforce diversity. Workforce diversity is a significant change agent in organisations. The following demographic trends will contribute to workforce diversity:
  1. The workforce will experience increased female participation, as most new workers will be female.
  2. The workforce will be more diversified than ever before (part of this is attributable to globalization).
  3. The workforce is getting older. There will be fewer youthful workers and more workers in their forties and fifties.
• Managing Ethical Behaviour: Employees encounter ethical quandaries regularly. Organizations have undergone many modifications due to the requirement to govern ethical behaviour. Most revolve around the premise that an organisation must foster an environment that supports ethical behaviour. Society expects organisations to act ethically internally and interact with other organisations. Ethical behaviour is demanded in customer relationships, the environment, and society. These expectations may be informal or formalised by higher legislative obligations.

These challenges are external influences that pressure organisations to change. In the face of environmental constraints, organisations cannot afford to remain rigid and inflexible; instead, they must be dynamic and viable.

For Tata Iron & Steel Company, international investors (capital providers) constitute a fresh force for transformation. Previously, Tata focused on job creation in its Jamshedpur neighbourhood, a city in eastern India. Tata’s 78,000 employees are guaranteed lifetime employment and accessible housing, education, and medical care. The company has profited from a complete lack of strikes in the last 60 years. However, investors interested in Tata have questioned how the corporation will raise its 3.7 percent profit margin. (Note: Jamshed Irani, Tata’s managing director, stated, “We will now be obliged to balance loyalty against production.”)

2. Internal Forces: Besides responding to or anticipating external changes, an organisation may change because someone inside believes a new way of doing things will be helpful to or vital. Change pressures inside an organisation often indicate that something must be changed. These internal forces are addressed in more detail below:

• Changes in Management Personnel: One of the most common reasons for significant organisational changes is a shift in top executives. No two managers have the same management styles, skills, or philosophies. Because managerial behaviour is constantly selective, a newly appointed manager may favour a different organisational design, objectives, processes, and policies than a predecessor. Changes in management staff are thus a perpetual source of pressure for reform.
• Declining Effectiveness: Falling effectiveness puts pressure on you to change. A corporation that suffers losses is compelled to take action. Some businesses respond by introducing layoffs and large cost-cutting programmes, but others perceive the loss as symptomatic of an underlying problem and work to solve it.
• Changes in work climate: An organization’s work atmosphere can also stimulate change. A sluggish, unmotivated, and disgruntled workforce is a symptom that must be addressed. This symptom is typical in companies that have had layoffs. Workers who have avoided layoffs may find it challenging to remain productive. They may be concerned about being laid off and feel anxious about their jobs.
• Deficiencies in existing systems: Another source of internal pressure for organisational reform is system flaws. These flaws can include unmanageable spans of control, a lack of coordination between departments, a lack of conformity in politics, a lack of cooperation between line and staff, and so on.
• Crisis: A crisis can also cause change in an organisation; for example, strikes or walkouts might force management to restructure the wage structure. One issue that drives the company to reconsider the composition of its management team and its role is the resignation of a key decision-maker.
• Employee Expectations: Changes in employee expectations can also cause organisational change. These pressures could include:
  1. Employees’ desire to participate in decision-making.
  2. Employees’ desire for an efficient organisational framework.
  3. Increased employee expectations for job satisfaction and a pleasant work environment.
  4. The desire of employees for increased pay.

All of these causes require organisational transformation. In addition to these pressures, a company that recruits a group of young arrivals may encounter expectations that differ greatly from those voiced by older personnel.

Although organisational changes are necessary, managers should attempt to implement them only when they make strategic sense. A significant adjustment or two every year might be overwhelming for staff and cause misunderstanding about priorities. According to a logical conclusion, managers should examine internal forces for change with the same care that they evaluate external forces.

Forms of Change

In most organisations, change has become the norm. Adaptiveness, flexibility, and responsiveness are concepts used to define organisations that will thrive in two primary types of change to address firms’ competitive difficulties. Organisations have two kinds of change: planned change and spontaneous change.

1. Planned Change: Planned change is a change that occurs as a result of a purposeful choice to transform the organisation. It is a deliberate, goal-oriented action. The goals of planned change are as follows:
   1. First, it seeks to increase the organization’s ability to adapt to environmental changes.
   2. Second, it aims to influence the behaviour of its personnel.

2. Unplanned Change: Not every change is anticipated. Unplanned change is thrust on the organisation and is frequently unanticipated. Organizations must be highly flexible and adaptable to respond to unforeseen change. Changes in government rules and changes in the economy are examples of unplanned changes.

The Role of Change Agents: Organizational change is unavoidable, but it is a manageable process. A change agent is an individual or group that takes on the role of bringing and managing change in an organisation. There are two kinds of change agents:

Internal Change Agents: Internal change agents, such as managers or staff appointed to oversee the change process, can be used. Internal change agents offer several advantages when managing the change process. They are as follows:

1. 1. They know the organization’s history, political system, and culture.
   2. Internal change agents are more inclined to be cautious about managing change since they must live with the outcomes of their work.

There are other drawbacks to utilising internal change agents. They are as follows:

1. They may be affiliated with specific factions inside the organisation and be accused of favouritism.
2. Internal change agents may be too close to the problem to see objectively what must be done.

External Change Agents: External change agents, such as outside consultants, can also be used. They bring an objective outsider’s perspective to the organisation.

External change agents provide the following benefits:

1. Because of their neutrality, they may be preferred by employees.
2. They have more influence in guiding changes if employees view the change agents as trustworthy, knowledgeable, and have a track record that establishes credibility.

There are other drawbacks to using outside change agents. They are as follows:

1. External change agents confront several challenges, including a lack of information about the organization’s past.
2. They may be viewed with distrust by members of the organisation.

Resistance to Change

As the manager considers and starts a change in the organisation, one phenomenon that is very certain to develop during the change process is resistance to change. People frequently oppose change as a sensible response motivated by self-interest. Change resistance may not always manifest itself in predictable ways. Overt, implicit, immediate, or postponed resistance: When resistance is overt and immediate, management finds it easier to deal with it. The harder challenge is managing implicit or postponed resistance.

Sources of Resistance

Individual and organisational sources of resistance to change can be distinguished.

1. Individual Resistance: One characteristic of humanity that has remained relatively constant is its natural reluctance to change. Individuals resist change because they place a high value on maintaining the status quo. Individual sources of resistance to change can be found in fundamental human qualities such as perceptions, personalities, and needs. The causes are as follows:
   1. Economic Reasons: Economic causes for fear of change typically centre on one or more of the following:
      1. Concern about technological unemployment.
      2. Concern about shorter work hours and, as a result, lower remuneration.
      3. Fear of being demoted and so earning less money.
      4. Concerns about speeding up and decreasing incentive wages.
   2. Fear of the unknown: Change is frequently accompanied by significant uncertainty. Employees confronted with a technical change, such as implementing a new computer system, may oppose the change merely because it adds ambiguity to what was previously a comfortable setting. This is especially problematic when there has been a breakdown in communication on the shift.
   3. Fear of Loss: When a change is imminent, some employees may dread losing their jobs, especially if modern technology is deployed. Employees may also be concerned about losing their standing due to a change. Another prevalent concern is that changes may undermine the beneficial aspects of the individual’s employment. For example, computerising customer service positions threatens the autonomy previously enjoyed by sales personnel.
   4. Security: People who strongly need security are more inclined to oppose change since it undermines their sense of safety.
   5. Status quo: Perhaps the most important and valid reason for reluctance to change is the status quo. We are creatures of habit, and change may disrupt the prevailing comforts of the status quo. When confronted with change, our inclination to respond in familiar ways becomes a cause of resistance. Change necessitates the development of new methods for controlling themselves and their surroundings, which may or may not be as effective as those in use.
   6. Peer Pressure: While individual employees may be willing to accept change, they may refuse to do so for the sake of the group. When peers are unwilling to embrace change, they drive those who wish to accept change to reject it.
   7. Disruption of Interpersonal Relationship: Employees may resist change that threatens to impair meaningful interpersonal interactions. The introduction of change frequently disrupts established social relationships, and it may also dissolve work groups.

 

          2. Organizational Resistance: Organizations are, by definition, conservative. They actively seek to avoid change. The following are some examples of organisational resistance:

1. 1. Resource Constraints: Many organisations face significant resource constraints. They may not have sufficient financial, material, and human resources to make the essential changes. Furthermore, those groups in organisations that control significant resources frequently regard change as a danger. They are usually pleased with the way things are.
   2. Structural Inertia: Some organisational structures are designed to resist change. The change would be difficult under a bureaucratic organisation where occupations are carefully defined and lines of authority are well defined. This is because formalisation provides individuals with job descriptions, rules, and procedures to follow. People are employed in organisations based on their fit; they are then shaped and directed to act in specific ways. Structural inertia is a counterbalance to maintain stability when an organisation faces change.
   3. Sunk Costs: Some businesses invest a lot of money in fixed assets. Change is difficult to implement in an organisation because of these sunk costs.
   4. Politics: Organizational transformation can potentially affect an organisation’s existing power balance. Individuals or organisations in power under the current system may lose these political benefits if the system changes.
   5. Threat to established power relationships: Any transfer of decision-making authority within an organisation can jeopardise long-standing power ties. If managers feel threatened, they may reject change that introduces participatory decision-making.
   6. Threat to expertise: Changes in organisational patterns may jeopardise specialised groups’ competence. As a result, specialists typically resist change.
   7. Group Inertia: Even if individuals want to change their behaviour, group norms might hinder them. For example, if union standards require resistance to any unilateral change made by management, an individual union member who might ordinarily accept the changes may object.

Managing Resistance to Change

Although change resistance is widespread in organisations, it is essential to remember that not all changes are opposed. If we examine any organisation closely, we would likely discover that considerably more changes are accepted than resisted. Many organisational initiatives to decrease resistance to change have served to exacerbate it. According to the current paradigm, resistance is merely feedback that can be used efficiently to manage the change process.

1. Education and communication: Providing correct and timely information about the change will help prevent the spread of unwarranted worries and potentially harmful rumours. Educating individuals about the potential effects of the change is also advantageous. Employee education on new work methods is frequently beneficial.
2. Participation: It is difficult for people to oppose a change decision in which they have a say. Those opposed to the change can be brought into the decision-making process before implementation. Employees are more dedicated to change when they are permitted to participate.
3. Empathy and Support: Another technique for dealing with resistance is offering empathy and support to employees struggling to cope with the change. Active listening is an effective strategy for determining the sources of resistance and discovering anxieties. Concerns about the change can provide valuable feedback that management can use to strengthen the change process.
4. Negotiation: Another strategy for dealing with potential resistance to change is to give something of value in exchange for a reduction in resistance.
5. Manipulation and Co-optation: Manipulation refers to attempts at covert influence. Manipulation includes twisting and distorting facts to make them appear more appealing, withholding undesirable information, and spreading false rumours to get employees to accept a change.
6. Coercion: Coercion is the use of direct threats or force against resisters. Employers can coerce employees to accept change by overtly or tacitly threatening them with job loss, advancement opportunities, and transfer.

Behavioural Reactions to Change

According to H. Woodward and S. Beechholz, people exhibit four main identifiable reactions to change: disengagement, dis-identification, disillusionment, and disorientation.

1. Disengagement: Psychological detachment from change is referred to as disengagement. The individual may appear to be losing initiative and interest in his or her work. Employees who are disengaged lack motivation and dedication. They are present physically but not psychologically. “No problem” or “This won’t affect me” are common disengagement comments. The fundamental managerial method for dealing with disengaged employees is to confront them with their reactions and draw them out so that they may identify the issues that need to be addressed.
2. Disidentification: Disidentification is a reaction to change in which employees believe that change has harmed their identity and that they are highly vulnerable. Employees who are not identified frequently exhibit unhappiness and worry. They frequently perceive themselves as victims of the transition process. Disidentified personnel must understand that work and emotion may be separated, i.e., they can let go of old habits and react well to new tasks. Managers investigate their feelings and assist them in transferring their positive feelings to the new circumstance.
3. Disenchantment: Negativity or rage are common expressions of disenchantment. Employees dissatisfied with their jobs may try to rally the support of their coworkers by establishing coalitions. As a result, destructive behaviours such as sabotage and backstabbing may occur. The phrases “This will never work” and “I’m leaving this company as soon as possible” are common expressions of dissatisfaction. Disenchantment is particularly dangerous in the workplace since it is highly contagious. It is frequently challenging to reason with disgruntled personnel. As a result, the first step in controlling this reaction is to shift these employees’ highly negative, emotionally charged mental states; the opening method is to accept that the employees’ anger is natural and that the manager does not hold it against them.
4. Disorientation: Disoriented personnel are disoriented and often unsure of their feelings. They become highly detail-oriented and ask a lot of questions. Employees who are bewildered are prone to “analysis paralysis.” They inquire, “Now what do I do?” or “What do I do first?” The managerial method for dealing with this reaction is to describe the change to minimise ambiguity. Once the confused employee understands the larger context of the change, the manager can devise a sequence of measures to assist the person in adjusting. To work on, the individual must have a feeling of priorities.

Managers must be able to identify these four types of reactions to change. Because each reaction raises severe and unique problems, no single universal solution can assist all employees in adjusting.

Politics of Change

Change usually poses a danger to the status quo. As a result, change implies political effort. A study on change resistance would be incomplete without a brief mention of change politics. According to politics, the impulse for change is more likely to originate from those new to the organisation or the primary power structure (they are likely to gain from change). Managers who have risen to a senior position in the hierarchy frequently have substantial barriers to change (they risk losing their position/power due to change). Change itself is a very real threat to their status and position: power battles within the organisation will influence the speed and quantity of change to a considerable extent.

Approaches/Models to Managing Organisational Change

Change is difficult for most people. Even though we know things may be better, we find comfort in a familiar location, people, and methods of doing things. As a result, managers who follow a well-thought-out approach to implementing change are more likely to succeed. The models below indicate which tactics can improve the effectiveness of change strategies.

1. The Lewin Change Model
2. The Nadler Organizational Model.
3. A Change Analysis Contingency Model

Lewin Change Model

Kurt Lewin, a social psychologist well-known for his contributions to organisational theory, established a change process model that has survived the test of time and continues to impact how organisations handle planned change. The concept of force field analysis underpins Lewin’s paradigm.

The three-step paradigm described by Lewin is seen in the Figure below.

Steps in the Change Process

1. Unfreezing: The process begins with unfreezing, an essential first step in the transition process. ‘Unfreezing’ refers to the melting of resistance to change; those affected by the change accept the need for it. People tend to resist change since it causes anxiety and stress and may jeopardise their self-interest. Unfreezing entails helping people abandon old habits by disrupting the equilibrium state that preserves the status quo. Individuals must unfreeze to accept that change is required. When events or information-customer complaints, rising losses, or accidents cause people to conclude that the status quo is untenable and that change is worthwhile, resistance to change “melts.” Individuals surrender by allowing the borders of their status quo to be pushed open in preparation for change.
2. Change or moving: If unfreezing is successful, people desire to change but must first perceive a way to a better state. During the migrating stage, new attitudes, values, and behaviours replace old ones. Moving forward is accomplished by introducing new possibilities, explaining the rationale for the change, and giving training to assist staff in developing the necessary new abilities. The transformation stage necessitates changing one or more aspects of the work environment:

(a) the organization’s structure and systems;

(b) social variables – employee traits, interactions, and organisational culture;

(c) the organization’s technology and/or

(d) the physical surroundings. The implication is that changes in the work environment will lead to changes in individual behaviour, improving the organisation’s outcomes.

3. Refreezing: For the change to stick, it must be reinforced as part of a new system. Lewin refers to this as ‘refreezing’. The final stage of the transformation is refreezing. This step establishes new attitudes, values, and behaviours as the new status quo. People affected by the change will benefit in some situations. The rewards that result will strengthen the change. In other circumstances, the manager must actively participate in enforcing the change. The new modes of operation must be established and reinforced. Managers must ensure that the organisational culture and formal reward structure foster new behaviours while not rewarding old ones.

Force Field Analysis

Kurt Lewin’s force-field analysis method is valuable for understanding change scenarios. This technique discusses and analyses the different factors that operate in social systems to maintain balance or change. According to Lewin’s theory, two forces function in any system: forces that drive change (the driving forces) and forces that oppose change (the resisting forces). The system is in equilibrium when the strengths of the two sets of forces are equal.

The forces that sustain the status quo must be overcome to achieve behavioural change. This can be accomplished by strengthening the forces of change, reducing the forces of the status quo, or a combination of the two.

Nadler’s Organizational Model

David Nadler’s methodology can help you discover and manage the internal forces that drive or prevent change. His model is based on the organisational open systems model. The organisational model of Nadlers is depicted in Figure

As illustrated in Figure The three-step paradigm described by Lewin, Nadler defines the transformation process as an interaction between four essential components of the organisation: its task, its individuals, its formal organisational arrangements (structures, processes, systems), and its informal organisational arrangements (patterns of communications, power and influence, values and norms).

When an organisation changes, its components begin with one set of characteristics and progress through a transitional state to a future state with a different set of characteristics.

A change in one of the organisational components (for example, task) will necessitate changes in other components during the transition and in the future state, as shown around the outside of Figure The three-step paradigm described by Lewin.

1. Resistance: Individuals in the organisation may be resistant to change. They may (a) be concerned about the change. (b) Fear of losing control, (c) inability to cope, or (d) vested interest in the current state of affairs
2. Control: During and after the transition, this formal structure may no longer be effective. Managers may lose the ability to track performance and make necessary adjustments.
3. Power: Changes disrupt the existing balance of power, causing individuals to engage in political (power-seeking) behaviour, particularly during the transition state.

Managers can prepare for successful change implementation by being aware of these problem areas.

A Contingency Model of Analyzing Change

Kotter and Schlesinger proposed a contingency framework for matching methods to organisational situations.

The model’s various approaches are described below:

1. Education and Communication: disseminating facts and information; increased communication about the change.
2. Participation and involvement: Giving those affected a say in how the change will take place.
3. Facilitation and support: offering change training, effective listening, counselling, and understanding of emotional reactions to change.
4. Negotiation and agreement: Bargaining over many aspects of transformation (negotiation and agreement).
5. Manipulation and co-optation: Selectively using information concerning change or seconding a group representative (or informal leader) to participate in the change’s design.
6. Explicit and implicit coercion: Using power and intimidation to compel obedience.

While implementing change, managers must choose which technique best matches the scenario. Each strategy has advantages and limitations, so it is only appropriate in certain situations.