Introduction to Organizational Change

Introduction
Change in organizations is a continuous process.
Once a change effort becomes successful, an organization will have to
bring about further changes.
Depending on its nature and scope, organizational change can be
categorized into two typestransactional and transformational.
Transactional changes are specific to some issues, such as change in
performance management systems, change in a particular work process
or system, and change in compensation policies.
Transformational changes are more holistic as they may require
considerable changes in the organization.
Organizational change is divided into four major areascontent issues,
contextual issues, process issues, and criterion issues.
1

 Content issues focus on the substance of contemporary

organizational changes.
Contextual issues centre on the forces or conditions present in the
external and internal environments of organizations.
Process issues concentrate on the actions undertaken during the
establishment of intended change.
Criterion issues, on the other hand, tackle outcomes usually
evaluated in organizational change.
To effect organizational change, it is important to go for OD.
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Contemporary trends in organizational change and

development
Sashkin and Burke (1987), while discussing the prospects of
OD and organizational change, had identified five
contemporary trends:
High integration of task and process aspects of OD (as in
networked organizations)
Increased attention to develop OD theory
Increased interest to manage conflict (particularly in cases of
mergers and acquisitions)
Increased thrust on OD research to identify improved
methodology for organizational change
Increased focus to design organizational culture to manage
change
3

Similarly, Woodman (1989), after summarizing the recent

developments in OD and organizational change, recommended
seven such trends, four of which match the trends suggested by
Sashkin and Burke. The other three trends of Woodman are as
follows:
Increased interest in high-performance and high-commitment
work systems
Application of change management research outcome to
internal organizational processes
Application of change research outcome to social movements
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Theories of organizational change

Contextual theory of organizational change emphasizes the
identification of forces and conditions in organizational internal and
external environments.
Process theories of organizational change deal with various process
issues, addressing the actions taken by organizations in their change
initiative. It focuses on the actions or organizational responses to
implement changes within the organizations and the employees
reactions to such organizational responses.
Content theory of organizational change deals with causes (conditions
of organizations) and the resultant effect based on the change in
individual and organizational performance data. Hence, it identifies
inbuilt transformational and transactional dynamics of a successful
organizational change.
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Needs for organizational change

To set right situations
To fix things that are needed
To grab opportunities to grow
To emerge as different entities

Philosophy of organizational change

Philosophies are the value systems and the guiding

force for organizational change.

Being adaptable
Being flexible
Being strategic
Focusing on behavioural issues
Following participative change processes
Being ethical
Balancing the stakeholders interests
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Steps to successful change (Kotters 8-step model)

Each step relates the responses of people to the change process,
where people see, feel, and then change. The following is a
summary of the eight-step change model:
Developing sense of urgency
Creating team to manage organizational change
Developing right vision
Communicating vision
Empowering people
Using incremental approach
Building on change
Reinforcing success
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Organizational Transition
Organizational transition process starts when organizations feel the need
or desire for a new future. Such needs emerge from the following three
important sources:
Changes in the external environment, which compels organizations
to find faster, cheaper, and better ways to meet the changing needs of the
customers and other stakeholders
Technological changes that requires introduction of new processes,
which, in turn, requires skill renewal and competency development of
existing manpower
Top-down change initiatives of managers and executives who prefer
to emulate the best practices of the industry
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Differences between organizational change, transformation,

and renewal
Organizational change alters the way an organization functions. Hence,
change, transformation, and renewal encompass organizational change.
Change introduces new ways of doing work in organizations and
assigns new goals to the employees. If the change process continues,
organizations can derive strategic advantages.
Organizational transformation is called a metamorphosis, as the
structure, functions, organizational activities, and attitudes of the people
radically change with the process of transformation.
The word transformation in organizational context is more appropriate
in cases of mergers, acquisitions, corporate gobbling, and so on when
cultural change in organizations becomes imminent.
Organizational transformation results in employee rightsizing, hiving
off businesses, redundancies, process changes, and so on. Hence, the
term metamorphosis, or renewal which means change or
transformation, is used in such instances.
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Change Triggers
Organizational change is necessary to enable
organizations to remain competitive, productive, and
profitable. The change process is initiated from the top
and is then cascaded down through the workforce. It
continues until it is integrated with the organization.
Although there are many reasons for organizational
change, the following are some of the common reasons:
Mergers and acquisitions
Management restructure
Introduction of new technology
Relocation of business premises
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Business Development-driven Organizational Change

Changes driven by business development encompass every factor in the organization that
exerts potential influence in organizational business expansion.
Change precedes a well-crafted business plan, which spells out the mission, goals, and
objectives and framing of strategies and action plans.
Some of the potential areas of organizational change driven by the business development are
as follows:
Sales development
New product development
New market development
Organizational structure, systems, and processes
Tools, equipment, plant, logistics, and supply chain
Attitude of people
Style of management
Way of communications
Training and development activities
Strategic collaboration and partnerships
Distribution network
Market focus
Disposal process

Environment-driven Organizational Change

The environment of an organization has a wide canvas.

In a global economy, even recessionary trend in one country (with
whom one may not have business relations) may require an
organization to prepare for change.
Environment-driven change requires an organization to review its
structure, relationships with its stakeholders, organizational
dependence on environment linked with its important activities, such
as buying and selling, that is, customers and suppliers, and compliance
with the changing government policies and programmes.

Culture-driven Organizational Change

Many organizations undergo cultural change to make their
organizational change process successful.
Developing the desired culture enables organizations to focus
on their changing goals and objectives, which, among others,
may require people to take a re-look at their attitudes and revisit
their perceptions about the customers and market situation.
Corporate culture also develops shared values and beliefs,
addressing diversity issues, which become more important in
cases of mergers and acquisitions.

Strategy-driven Organizational Change

When goals and objectives change, strategy also needs to change.
A strategy to achieve the objective of increased sales in the domestic
market will not hold good for achieving the objective of increased
sales in the international market.
A change in strategy requires organizational change; similarly,
organizational change may require change in strategy.
For example, a product differentiation strategy through a valueadded approach, which is often adopted by organizations to remain
competitive in the market, necessarily requires organizational change.
Similarly, organizational change enforced through organizational
restructuring requires change in organizational strategy.

Business Plan-driven Organizational Change

Strategic organizational change plans for an organization are usually
drawn at the strategic, corporate, or top level of an organization.
A business plan, usually drawn at the business or middle level of an
organization, translates strategies into specific tactics to facilitate the
process of achieving the desired results through desired change in the
organizations.
A strategy to achieve increased market share through customer
retention can be translated into tactics of ensuring customer retention
through increased level of discounts on successive buying or through
visiting the customers from time to time to ensure that the company is
with them.

Process-driven Organizational Change

Organizations are often required to undergo process

redesign to optimize resource utilization.
Process redesign may also be essential for achieving
increased level of productivity and performance.
Any technological change may lead to process redesign.

Competency-driven Organizational Change

Competencies are the aggregation of knowledge, skills, and abilities

of the people that together build the capabilities for the organization to
stay competitive in the market.

A systematic competency mapping identifies the competency gap,

and accordingly, organizations initiate training and development
activities to reduce the gap and to extend support for organizational
change.

Performance-driven Organizational Change

With the changing market requirements, organizations need to review
their objectives and accordingly alter the performance standards,
changing the key result areas (KRAs) or key performance areas
(KPAs) for the employees.
Such change in the performance levels requires organizational change.
Alignment of performance management systems with organizational
change initiatives yields better results.

Innovation-driven Organizational Change

Creating value for the customers in the true sense is the innovation
and not just creating new things.

Key elements for success in organizational change

Organizational change requires sustainable efforts from all members
of the organizations, with strategic focus on people-related issues.
Drawing a road map for successful organizational change requires
adherence to following elements:
Planning long-term
Establishing forums to communicate methods to review and
implement change
Empowering people to make decisions at operation level
Making strategic change process free from autocracy and interference
Encouraging, enabling, and developing people to be active in change
process
Making effective use of information systems
Using workshops
Making adjustment in recruitment, training, and development

Resistance to Organizational Change: Why and Why Not

Resistance to organizational change is one of the inevitable problems faced
by managements.
Rosabeth Kanter believes that there are 10 basic reasons why employees are
averse to change, which are as follows:
Fear of loss of control
Uncertainty associated with change
Inherent surprise factor in change
Difference change brings in schemes of things
Fear of being unsuccessful
Rise in anxiety regarding ones competence
Fear of increased work pressure
Ripple effects associated with change
Bad experiences from the past
Fear that anxiety over change may actually come true

TYPES OF CHANGE

Depending on the nature of the change trigger,

organizations adopt their change initiatives, which can be
classified into various types of change.
Planned vs. Emergent Change
Planned change
Unplanned change
Episodic vs. Continuous Change
Developmental, Transitional, and Transformational
Change

CHANGE MANAGEMENT STRATEGIES

Different strategies and procedures are used to categorize the change
environment. In organizations, change strategies are adopted on the basic
premise or assumption that people will volunteer to engage themselves in
the change process.
Normally, four types of change strategies are adopted by any
organization.
Normative-reeducative strategy
Rational-empirical strategy
Power-coercive strategy
Action-centred strategy