Why Do Organizations Decline?

¶ … organizational change? Describe and explain the forces for and resistances to organizational change.

According to Chapter 10, organizational change is a process by which an organization shifts from an existing state to a desired future state. Effective organizational change must be planned and is designed to enhance and maximize efficiency and productivity. It must also be designed to potentially circumvent potential future challenges. Change may impact a wide variety of organizational capabilities: human, functional, and technological. Forces for change include the need to outflank competitors on issues pertaining to "efficiency" and "quality" along with "innovation" which motivate consumer buying decisions (Jones 2010). Change can also be propelled by economic, political, and global forces such as those demanded by international expansion; changes in consumer and employee demographics; and changes in legal and ethical standards.

However, as compelling as these forces may be, there are also profound forces to resist change. Organizational-level power conflicts and fear of losing one's organizational clout can cause resistance combined with an unsupportive organizational structure, and mechanistic and functional resistance (Jones 2010). Group-level resistance can arise in pockets of the organization due to competing norms, negative groupthink, group cohesiveness at the expense of organizational cohesiveness, and commitment to the group over the organization (Jones 2010). Individual resistance can be motivated from a personal sense of insecurity (losing one's power and/or job), selective perceptions (seeing the organization only from an immediate personal rather than a macro-level perspective); and from simple intransigence and habit.

Q2. Why do organizations decline? What steps can organizational leaders take to halt decline and restore organizational growth?

According to organizational lifecycle theory, all organizations go through a natural series of phases, cumulating in death. Decline occurs when organizations fail to anticipate changes and refuse to adapt to them. Organizations must seek to neutralize the negative effects of long-term changes or their survival will be in doubt (Jones 2010). But a bureaucratic culture which is change-resistant may not be sufficiently flexible to encourage such behavior. Sometimes inertia is the main cause of organizational decline, although it can also be generated by an excess of growth. An organization might become too ambitious and forget the reasons that it was so successful in the first place. Management may seek to enhance its own rewards and thus increase organizational size even though this is not in the long-term best interests of the organization. Or uncertainty can make it difficult for management to anticipate organizational needs (Jones 2010).