Organizational Change in todays business environment

Organizational change is a concept that regularly occurs due to the nature of today’s business environment. (McNamara, 2007) It is common in business communications, strategy, management and leadership. (McNamara, 2007) Change occurs when an organization revolutionizes parts or its entire strategy and/or wants to change the way it operates. (McNamara, 2007) Thus, it involves the realigning of organizational processes and operations. In order to remain competitive and successful in today’s business environment, organizations must continually undergo changes by being innovative. (McNamara, 2007) Therefore, change plays a major role in the longevity, maturity, and success of any organization.

In today’s business environment, there are many factors that compel organizations to change such as globalization of markets and rapidly evolving technology. “Organizations must change because their environments change,” according to Andrew Sturdy in his article Management Beneath and Beyond Organizational Change Management: Exploring Alternatives. (Sturdy, 2003, p. 652) Today, businesses are bombarded by incredibly high rates of change from a large number of internal and external sources. (Nadler, 1981) Internal pressures tend to come from top managers and lower-level employees who push for change. (Goff, 2000) On the other hand, external pressures tend to arise from changes in the legal, competitive, technological, and economic environments. (Goff, 2000)

People have deep attachments to their organization’s normal work groups, duties, processes, and operations. (McNamara, 2007) Therefore, every change in an organization experiences some level or sort of resistance. Change resistance involves the pessimistic feelings and thoughts about a change(s) in an organization. (McNamara, 2007) It can result in jeopardizing or experiencing losses in productivity and profitability in an organization. (Oreg, 2006) Thus, managing and overcoming the resistance to change in an organization is essential to its survival.

Managing organizational change is the process of planning and implementing change in organizations in order to minimize employee resistance while maximizing the effectiveness of the change effort. (Nadler, 1981) It involves promoting the concept of change in organizations and having the skill to manage and lead change effectively. (Nadler, 1981) Furthermore, the purpose of this research is to explore the driving forces and resistance of organizational change and strategies for overcoming the resistance to change in today’s business environment.

INTERNAL DRIVING FORCES TO CHANGEOrganizational change proposals often come about as a result of problems faced by an organization. (Varelas, 2005) According to McNamara (2007), “Change commonly occurs because the organization experiences some difficulty,” “But sometimes the most constructive change takes place not because of problems but because of opportunities.” (McNamara, 2007) Internal driving forces or factors that stimulate change originate from inside the organization via employees and/or managers. (Varelas, 2005) Some internal driving forces that influence or stimulate organizational change are budget, working conditions, and/or internal politics. (Varelas, 2005) Thus, the decision to implement organizational change can arise from problems that the organizations face or from presented opportunities. Some examples are: when an organization reallocates its resources to enter a new area of business or when an organization makes productivity improvements to increase cost efficiency.

Many organizations tend to implement changes in order to increase cost efficiency either through budget cuts, layoffs, and/or equipment upgrades. (Varelas, 2005) These changes are not always permanent in nature due to the fact they are stimulated by problems faced by the organization. (Varelas, 2005) If organizations overcome their issues, they usually rehire those who were laid off and raise their budgets to standards. (McNamara, 2006) On the other hand, if equipment upgrades necessitate a specific knowledge or skill, this could lead to a continued effect of the change and employee replacements. (Varelas, 2005)

Managers and employees also have the capability to initiate and influence organizational change. (McNamara, 2006) Managers who want to incorporate improvements in the organization have the power to authoritatively initiate change. (McNamara, 2006) However, it can be sometimes difficult for managers or employees to influence change in an organization based off leadership alone. (McNamara, 2006) The power of influence in organizations rests with those who are held in high regards concerning expertise and merit by their peers and/or co-workers. (McNamara, 2006) Therefore, employees often times hold more influential power than managers in this case.

In some situations, organizations are encouraged to change for more positive reasons such as profitable opportunities. (McNamara, 2006) For instance, Burger King and McDonald’s recently decided to extend their operating hours because of the opportunity to increase profits based on a survey on late night eating habits. This organizational change provided each organization the opportunity to excel in a very lucrative market. According to Varelas (2005), “the difference between a company’s actual performance and the performance of which it is capable,” is called a performance gap. (Varelas, 2005) Recognition of a performance gap often provides the movement for change, as companies strive to improve their performance to expected levels. (Bateman & Zeithaml, 2002) Moreover, this is the type of gap where numerous entrepreneurs stumble on opportunities to venture in new areas of business. (Bateman & Zeithaml, 2002)

EXTERNAL DRIVING FORCES TO CHANGE

According to Hoisington (2007), there are several external driving forces that spark and influence organizational change such as increases in scientific knowledge and technology, global competition, etc. (Hoisington, 2007, p. 137) As new technology arises, organizations must change or adapt in order to consistently compete with their competitors. (McNamara, 2006) As organizations globalize, the number of competitors increases and make it more important for organizations to be flexible when it comes to change in order to remain competitive. (Hoisington, 2007, p. 137-138) As organizations enter the marketplace internationally, they are susceptible to foreign regulations and government policies. (Varelas, 2005) Thus, they must change and/or adapt to these regulations and policies in order to do business in foreign nations.

There are strong reasons to support the notion that the increase in scientific knowledge and the explosion of technology is a major external factor that drives organizational change. (Hoisington, 2007, p. 141) As technology increases and the demand for specialized knowledge increases, organizations are pressured to change. (Hoisington, 2007, p. 141-142) These changes include retraining current employees, hiring specialized workers, and updating archaic equipment. (Sturdy, 2003) Technology enables an organization to expand in terms of output and input while reducing the number of necessary personnel. Moreover, technology and scientific knowledge are linked to the deskilling of the workforce even though it can also be linked with increases in the employment. (Sturdy, 2003) Technology has lifted the ratio of skilled to unskilled workers due to the fact that skilled workers are called upon to maintain and interact with apparatus that has replaced unskilled workers. (Sturdy, 2003)RESISTANCE TO CHANGE

The most common cause for organizational change efforts to fail is resistance from employees. For many employees, change appears threatening which makes it hard to receive their support to implementing changes. The notion of change resistance suggests that pessimistic feelings and thoughts about change exist. (Pardo et al, 2006) Moreover, “individuals aren’t really resisting the change, but rather they may be resisting the loss of status, loss of pay, or loss of comfort.” (Dent & Goldberg, 1999) Resistance to change can be thought of as a barrier to any organization’s goals and/or strategy.

Resistance to change is defined as “behavior which is intended to protect an individual from the effects of real or imagined change.” (Dent & Goldberg, 1999, p. 34) It is also defined as “any conduct that serves to maintain the status quo in the face of pressure to alter the status quo.” (Bridges, 1991, p. 76). In addition, it is defined as “employee behavior that seeks to challenge, disrupt, or invert prevailing assumptions, discourses, and power relations.” (Folger & Skarlicki, 1999, p. 36)In today’s economy, change is customary in all organizations and it usually happens at a fast pace. Employees usually hasten to defend the “status quo” when their comfort zone or security is threatened. (Pardo et al, 2006) Resistance is an unavoidable reaction to any major change in an organization. Thus, it can hinder organizational prosperity if not handled properly.

It is important to differentiate between the behaviors of resistance to change, which are active resistance and passive resistance. (Pardo et al, 2006) Behaviors of active resistance consist of blaming, ridiculing, and manipulating. Behaviors of passive resistance consist of verbally complying with the new rules but not actually abiding by them. (Pardo et al, 2006)Typically, employees resist change if they are forced to learn or perform a new task. (Bovey, 2001) In addition, resistance is caused when there is a fear that a person will not be able to become accustomed to the new required skills. Therefore, employees may resist due to fear of job loss or status, because they may be ignorant to the purpose of the change or because they disagree with management on the change. (Bovey, 2001) Furthermore, when implementing change in an organization, managers should anticipate to some resistance from employees. (Oreg, 2006)MANAGING AND OVERCOMING RESISTANCE TO CHANGE

There are numerous avenues in which managers can take in managing and overcoming the resistance to change. Education and communication is one common way managers can reduce resistance by employees. (Kotelnikov, 2001) This strategy involves managers informing employees about the nature and reasoning of the change before it is implemented. (Kotelnikov, 2001) They can do this via rich channels (face-to-face meetings), reports, emails, teleconferences, or individual meetings. (Kotelnikov, 2001) Another common avenue utilized by managers to manage and overcome resistance is via participatory management and employee involvement in both the design and implementation segments of the change effort. (DeLuca, 2007)

“Employees who are involved in management decisions understand them better and are more supportive,” DeLuca explained. (DeLuca, 2007) Moreover, this approach is one of the best approaches for dealing with organizational change is to have an open line of communication between managers and employees. People deal with change better when they are involved and empowered in management decisions. (DeLuca, 2007) Management should ensure employees understand why, when, and how the change is occurring. People are more positive about change when they are not worrying about the unexpected.

An organization may be able to deter some of the resistance met by change by hiring change leaders who use rich channels in communicating the change to employees. (Schuler, 2003) Change leaders are typically credible people who possess respect, merit, and expertise in the organization. Change leaders can be a valuable asset to any organization who plans or does implement a change because studies have shown that “employees are more willing to listen and follow leaders with informal power rather than managers with authoritative power.” (Schuler, 2003)Additionally, several organizations overcome resistance to change via negotiation and rewards. (Schuler, 2003) This involves offering employees incentives to ensure their cooperation with the change efforts. (Schuler, 2003) Conversely, some organizations punish employees who do not cooperate with the implemented change by employment termination and increased workloads. (Bateman & Zeithaml, 2002)

A reduction in productivity will occur in any type of organizational change because people need the time to adapt and adjust to the change. (Bateman & Zeithaml, 2002) The criteria used to determine if the organizational change was successful is the amount of productivity lost and the amount of time it takes to regain the original productivity level of the organization. (Bateman & Zeithaml, 2002) Thus, the chief goal of managing organizational change is to “ensure that strategies for dealing with human reactions to change are completely incorporated with other aspects of the change effort in order to reach the desired goals intended by the implementation.” (Bateman & Zeithaml, 2002)”The figure below, based on a 1990 U.S. Department of Labor study, illustrates the change impact and recovery process both with and without the application of a formal organizational change management process. ” (Self, 2007)

According to Bateman and Zeithaml, “managing change effectively requires moving the organization from its current state to a future desired state at minimal cost to the organization.” (Bateman & Zeithaml, 2002). The authors identified three steps for organizations to follow when implementing organizational change:”Diagnose the current state of the organization. This involves identifying problems the company faces, assigning a level of importance to each one, and assessing the kinds of changes needed to solve the problems.

Design the desired future state of the organization. This involves picturing the ideal situation for the company after the change is implemented, conveying this vision clearly to everyone involved in the change effort, and designing a means of transition to the new state. An important part of the transition should be maintaining some sort of stability; some things-such as the company’s over-all mission or key personnel-should re-main constant in the midst of turmoil to help reduce people’s anxiety.

Implement the change. This involves managing the transition effectively. It might be helpful to draw up a plan, allocate resources, and appoint a key person to take charge of the change process. The company’s leaders should try to generate enthusiasm for the change by sharing their goals and vision and acting as role models. In some cases, it may be useful to try for small victories first in order to pave the way for later successes.” (Bateman & Zeithaml, 2002)There is no one correct course of action or strategy when managing and overcoming organizational change resistance. (Elving, 2004)

Thus, each situation is different and requires a different strategy or set of strategies. According to Bateman and Zeithaml, “Effective change managers are familiar with the various approaches and capable of flexibly applying them according to the situation.” As a result of this truth, change management is a highly sought after skill in today’s business environment. (Bateman & Zeithaml, 2002)CONCLUSIONOrganizational change is inevitable and organizations must be prepared to deal with planned or unplanned change accordingly. (McNamara, 2007) For organizations to develop, they often must endure change at various checkpoints in their development. (Muir, 1996) Knowing how to deter some of the potential negative resistance to change can aid in the success of an organization’s overall strategy. (Muir, 1996) Understanding organizational change in conjunction with the behaviors of resistance to change is optimal for any firms’ success. (Muir, 1996)

Thus, organizational change efforts with little or no resistance improve the performance of organizations and the employees in those organizations. (Armenakis et al, 1996)Employee resistance to organizational change is a multifaceted issue facing management in the diverse and ever-changing business environment of today. (Armenakis et al, 1996) The process of change is unavoidable and employee resistance has been recognized as main contributor to the collapse of many efforts to implement change within organizations. (Armenakis et al, 1996) Regularly, large amounts of resources are expended by organizations in order to familiarize employees in innovative operations and processes. (Patrick, 2001) The tendency for employees to preserve the “status quo” displays challenges that management must overcome in order to bring about desired change.” (Bateman & Zeithaml, 2002)

In addition, for managers to facilitate an easy transition from the old way of doing things to the new way of doing things, they must have an understanding of change management. (Armenakis et al, 1996) In short, the process of managing and overcoming change resistance involves influencing employees to buy into the idea of the change(s) as well as handle any resistance that may occur.

This investigation emphasizes that organizational change can at times be a good or bad idea. Organizations should take the time to develop strategies for implementing organizational change. In addition, organizations should also plan to encounter resistance to change in every aspect of their proposal to change. In my opinion, organizations should never change for the sake of change, because fixing a problem that doesn’t exist is creating a problem in my eyes. Conversely, I do believe that organizations should change if necessary and try to keep up with the times concerning technology and competitors.

Furthermore, if organizations study change management, then they can better conceive on how to reduce or eliminate employee resistance to change if it occurs. (Armenakis et al, 1996) In my opinion based upon this research, the only true way to effectively manage and overcome resistance to change is to understand the exclusive circumstances within each employee that is causing the resistance to change. This however is an unrealistic task in most cases due to a lack of resources and time constraints.

ANNOTATED BIBLIOGRAPHY

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4.Armenakis, A., Harris, S., & Mossholder, K. (1993). Creating Readiness for Organizational Change. Human Relations, Vol. 46, No. 6, 681-703. Retrieved November 9, 2007, from Sage Journals Online database.

5.Goff, L. (2000). Change Management: Retrieved November 9, 2007, from ComputerWorld Quick-study. Website: http://www.computerworld.com/news/2000/story/0,11280,41308,00.html.

6.Elving, W. J. (2004). Communicating Organizational Change: the role of information, communication climate, and uncertainty on readiness for change, results from three cases. Retrieved November 8, 2007, from All-Academic, Inc. Website: http://www.allacademic.com/meta/p112743_index.html7.Bovey, W. & Hede, A. (2001). Resistance to organizational change: the role of cognitive and affective processes. Leadership & Organization Development Journal, Vol. 22, No. 8, 372-382.

8.Oreg, Shaul. (2006). Personality, context, and resistance to organizational change. European Journal of Work and Organizational Psychology, Vol. 15, No. 1, 73-101.

9.Dent, B. & Goldberg, S. (1999). Challenging “Resistance to Change”. The Journal of Applied Behavioral Science, Vol. 35, No. 1, 25-41.

10.McNamara, Carter. (2006). Driving Forces and a New Organizational Paradigm. Retrieved November 4, 2007, from Free Management Library. Website: http://www.managementhelp.org/org_thry/paradigm.htm11.Varelas, Elaine. (2005). Driving organizational change. Retrieved on November 7, 2007, from HR Center: The Hire Authority.

Website: http://www.boston.com/jobs/hire_authority/110705.shtml12.Hoisington, Steven. (2007). Implementing Strategic Change: Tools for Transforming an Organization. New York: McGraw-Hill.

13.Self, Dennis. (2007). Organizational change – overcoming resistance by creating readiness. Development and Learning in Organizations, Vol. 21, No.
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16.Patrick, Frank. (2001). Taking Advantage of Resistance to Change to Improve Improvements. Retrieved on November 9, 2007, from Focused Performance. Website: http://www.focusedperformance.com/articles/resistance.html17.Pardo del Val, M. & Martinez- Fuentes, C. (2006). Resistance to Change: A Literature Review and Empirical Study. Retrieved on November 9, 2007, from Valencia University, Spain.

Website: http://www.uv.es/~pardoman/resistencias.PDF18.Kotelnikov, Vadim. (2001). Organizational Innovation: How To Manage the Complex Process of Organizational Change. Retrieved on November 10, 2007, from Business -eCoach. Website: http://www.1000ventures.com/business_guide/crosscuttings/change_organizational.html19.Sturdy, Andrew. (2003). Beneath and Beyond Organizational Change Management: Exploring Alternatives. Organization, Vol. 10, No. 4, 651-662.

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