INTRODUCTION This topic provides a basic understanding of o rganisational change , which refers to the modification of the existing organisation to enhance its effectiveness and efficiency. It introduces the basic concepts of organisational change and describes the various forms of change, the sources of change (internal and external) and the focus of change (people, structure and technology). In todayÊs complex business environment, the magnitude, speed and impact of change on organisations are increasing. Organisations are confronted almost daily with the need for change. Over the last few decades, many new products and services have been introduced into the market; local markets have become global markets; protected industries have been opened up to competition; and public institutions have either been privatised or found themselves adopting more market-oriented practices. In other words, change has become both pervasive and prevalent. By the end of this topic, you should be able to: 1. Ident if y di fferent types of ch ang e using a c hange spectrum; 2. Gi ve e xamples of interna ll y and ex terna ll y generat ed c hange ; 3. Desc ri be the areas of or ganisational change ; 4. Dete rmine th e impa ct o f ch ange o n busi nesses; and 5. Just if y t he importance o f c hange f or organisat ions. LEARNING OUTCOMES T T o o p p i i c c 1 1 The Nature of Change
INTRODUCTIONThis topic provides a basic understanding of o rganisational change , which refersto the modification of the existing organisation to enhance its effectiveness andefficiency. It introduces the basic concepts of organisational change and describesthe various forms of change, the sources of change (internal and external) and thefocus of change (people, structure and technology).
In todayÊs complex business environment, the magnitude, speed and impact ofchange on organisations are increasing. Organisations are confronted almostdaily with the need for change. Over the last few decades, many new productsand services have been introduced into the market; local markets have becomeglobal markets; protected industries have been opened up to competition; andpublic institutions have either been privatised or found themselves adoptingmore market-oriented practices. In other words, change has become bothpervasive and prevalent.
By the end of this topic, you should be able to:
1. Identify different types of change using a change spectrum;
2. Give examples of internally and externally generated change;
3. Describe the areas of organisational change;
4. Determine the impact of change on businesses; and
5. Justify the importance of change for organisations.
Hence, change is inevitable in organisations. As the environment changes,organisations must adapt if they are to survive in the market. An organisationÊsability to change will have a significant impact on its performance and success.
Thus, managing change effectively is a major challenge facing organisations.
MAGNITUDE OF CHANGE
The nature and pace of change can vary substantially from one organisation toanother. Change experienced by organisations can be distinguished by their scaleand importance. Generally, the change continuum ranges from i ncrementalchanges which involve fine-tuning the organisation to q uantum changes whichrequire the transformation of the organisation (Burnes, 2004). The incremental
perspective views change as being a process whereby individual organisationalsubunits deal with changes incrementally and separately with one problem andone goal at a time. On the other hand, the quantum or transformationperspective, sees change as radical and unpredictable due to the complexenvironment in which the organisation is operating. Figure 1.1 presents thechange spectrum where change ranges from small-scale and incremental to large-scale and transformational.
Figure 1.1: The continuum of changeSource: Burnes (2004)
Changes can be triggered either by internal or external events. I nternal forces forchange are those factors originating from the organisation that give rise tochanges (Paton & McCalman, 2008). There are a large number of such factors.Some examples are:
(a) Product innovations as a result of research and development;
(b) New marketing plans;
(c) Organisational restructuring to fit a new product line;
(d) Job redesign to fit new organisational structures;
(e) Improving work processes to increase productivity;
(f) Computerised human resource systems to better manage human resources;
(g) Development of databases to facilitate the decision-making process;
(h) Attitudinal and behavioural changes to improve employee performance;
(i) Change in composition of workforce;
(j) Changing employee attitudes, expectations and needs;
(k) Organisational growth;
(l) Leadership and management team succession;
(m) Expansion through acquisition or merger; and
(n) New company policies.
External forces for change are generated from the outside environment. Externalchanges that organisations are currently facing include (Paton & McCalman,2008) the following:
(a) Government LegislationThese are governmental interventions in terms of changes andimplementation of government laws and regulations for example,strengthening health-related legislation, new systems of handling foreignworkers, emission control legislation, carbon free policy, new tax laws andtightening international trade.
(g) Unpredictable Environmental CatastrophesUnpredictable catastrophes have been and will always be, a source ofdisruption and despair. Examples are the tsunami disaster in Indonesia, the
fallout of Hurricane Katrina in the United States, and the meltdown ofnuclear power in Japan in recent years. Since these catastrophes areunavoidable, they must be effectively managed when they occur. In short,organisations must change and adjust to regain their footing when thesedisastrous events take place.
The manner in which a trigger or driver for change impacts upon a situation, to acertain extent, depends on its source, nature and magnitude. Internally generatedchange is likely to be managed far more proactively and effectively due to priorknowledge and understanding. Table 1.2 highlights the differences between
internally and externally generated change.Table 1.2 : Differences between Internal and External Sources of Change
FOCUS OF CHANGE – DETERMININGWHAT SHOULD BE CHANGED
Changing an organisation is the process of modifying an existing organisation inorder to increase organisational effectiveness. Most managers, at one point or
another, will have to make some changes in their workplace. These changes aretermed o rganisational change . The focus of organisational change can be people,structure and technology (Certo & Certo, 2009; Robbins & Coulter, 2009). In otherwords, managers may make three types of organisational change – changes inpeople, structure and technology.
(a) People Change Emphasises the improvement of job performance by changing certainaspects of organisation members such as their work attitudes and work behaviour. Managers may attempt to make this kind of change when
human resources are shown to be the major cause of organisationalineffectiveness.
(b) Structural Change Helps increase organisational effectiveness by changing organisationalcontrols which influence organisation members in performing their jobs.Managers may choose to make structural changes within an organisation ifthey believe that the present structure impedes organisational effectivenessand efficiency.
1.3
We experience change throughout our lives. List three significant triggersof change, identify their sources and rank your feeling of „control‰ incoping with each change.
Trigger SourceInternal/External)
Ranking5 – High Level of Control;1 – Low Level of Control)
(c) Technological Change Focuses on modifying the level of technology in both the management andproduction systems. Managers can change the technology used to convert
input into output to increase production efficiency. Today, technologicalchanges usually involve the introduction of new machinery, equipment,tools or methods. For instance, the evolution in ICT has given birth toonline businesses.
Table 1.3 depicts the features of these three areas of change.
Table 1.3: Categories of Organisational Change
Focus of Change What It Involves
People People factors are the competencies and all other characteristicsof human resources within the organisation.
Changes in employee attitudes, expectations, perceptions, skillsor behaviour.
Examples:
Training given to employees to learn new computer skills.
Stress management programmes to enhance employeesÊwelfare.
Structure Structural factors are organisational controls, such as policies andprocedures.
Any modification in authority relationships, chain of command,coordination mechanisms, degree of centralisation ordecentralisation, job design, spans of control, work specialisation,departmentalisation, formalisation, standardisation, or team building.
It may involve major changes in the actual structural design.
Changing conditions or changing organisational strategies oftenlead to changes in the organisational structure.
Examples:
Revision of job specification and job description.
Modifying organisational structure to fit the communicationneeds of the organisation.
Decentralising the organisation to reduce the cost ofcoordination, increase the controllability of work units,increase employee motivation and gain greater flexibility.
Technology Technological factors are any types of equipment or taskprocesses which assist organisation members in performing their jobs.
Changes in work processes, work methods, or tools andequipment used.
Examples:
Automation of production facilities.
Computerisation of human resource systems.
It has been generally accepted that organisational effectiveness dependsprimarily on activities centered around these three classes of factors. Figure 1.2
shows the interrelationship among these areas of changes in relation to achievingorganisational effectiveness.
Figure 1.2: Determining organisational effectiveness based on theinterrelationships among people, structural and technological changesSource: Certo & Certo (2009)
Note that these three types of organisational changes are interrelated inimproving organisational effectiveness. For example, structural changes musttake people and technological factors into account. Similarly, changing peoplenecessarily involves some consideration in terms of structure and technology.Hence, a change that affects any one factor will, to a greater or lesser extent,interact with the other factors and create a chain effect.
As mentioned in the beginning of this topic, change is inevitable in organisations.There are various factors which contribute to the need for an organisation tomove from its status quo. The most obvious are those significant factors in the
external environment. To understand the impact of change, just think about howthe organisation will be affected by the following changes in the externalenvironment:
(a) Changes in communication technologies;
(b) Changes in consumer attitudes;
(c) Changes in societal values;
(d) Changes in population demographics;
(e) Changes in government laws;
(f) Changes in the competition landscape; and
(g) Changes in the supply chain.
For example, changes in consumer value towards green environment andenvironmental protection laws are some of the forces driving manufacturers touse green technology in the production process so as to produce goods withoutcausing further damage to the environment. The depletion of natural resourcesalso prompts manufacturers to look for more efficient energy sources or stopharvesting animals and sea lives which are in danger of extinction.
In short, changes in consumer attitudes and values, business conditions,economic events, technology, society, and the political and legal environmentwill have an impact on the production methods, work processes, and productsand services provided by the organisation.
1.4
Identify what areas need to be changed at your workplace. Then, classifywhether the change is people, structural or technological change. Explainyour answer.
THE IMPORTANCE OF CHANGEManagers of organisations, be they in the public or private sector, ormanufacturing or service line, will continue to be judged by their ability toeffectively manage change. If an organisation is to thrive, it must changecontinually in response to the changing world. Change is crucial to the success ofthe organisation and so employees should be encouraged to generate ideas toachieve beneficial changes. Certo and Certo (2009) cited General Motors (GM) asa classic example. GM provides its employees with a „think list‰ to encouragethem to develop ideas for organisational change. The employees of GM arereminded that change is vital to the continued success of GM. The think listincludes such questions as:
(a) Can a machine be used to do a better and faster job?
(b) Can the handling of materials for the machine be improved?
(c) Can the quality of a part be improved by changing the sequence of theoperations?
(d) Can the materials be cut or trimmed differently for cost efficiency?
(e) Can the operation be made safer?
(f) Can paperwork be reduced or eliminated?
(g) Can the established procedures be simplified?
1.5
Describe how each of the following factors has impact on yourorganisation:
In conclusion, change is important to organisations because it is a contributingfactor to the following:
(a) Flexibility to adapt to the changing environment;(b) Innovation and creativity for new product development;
(c) Organisational learning;
(d) Effectiveness and efficiency in both management and work systems;
(e) Competitiveness;
(f) High-performing organisations;
(g) Sustainable growth; and
(h) Ultimate survival.
Organisations come in all shapes and sizes and offer a wide variety ofproducts and services, but also face a host of challenges. Perhaps the onlyfactor common to all organisations is change.
Organisations experience different types of change, and the speed andmagnitude of change vary from one organisation to another over time.
Changes range from small-scale and incremental to large-scale andtransformational.
It is widely recognised that the ability of an organisation to manage changeeffectively is crucial for its success.
Changing an organisation is the process of modifying an existingorganisation to increase organisational effectiveness.
Why is change important for your organisation? Give an example tosupport your answer.
Forces in the external environment are the major cause for change inorganisations.
The focus of organisational change can be people, structure and technology.
Managers must be able to determine the appropriate changes and thenimplement such changes successfully to enable their organisations to be moreflexible, innovative and effective.
