Dealing Effectively With Organizational Change: A Study

Introduction

Organizational change is a growing area of importance for modern organizations' strategic development. Effective organizational change management represents an imperative for organizational success. Quantitative data was collected by administering employee satisfaction questionnaires to obtain statistical data on attitudes toward the organizational change process and job satisfaction. Qualitative data was also collected through interviews with random participants in order to gain personal responses from employees experiencing change.

We all have our own assumptions about how organizations work, perhaps developed through a combination of experience and education. Organizations are continually forced to make changes to nearly every aspect of their operations due to a growing global economy, political pressure, social stress, technological advances, and a vast array of other internal and external influences. Managers at all levels, whether in a public or private business environment, have found that the only constant is change. Regardless of whether the change affects the individual or the organization as a whole, it is human nature to resist moving from the familiar to the unknown. The effect of this phenomenon grows rapidly as the proposed change goes beyond superficial organizational adjustments and imposes risk and uncertainty on deep-rooted cultural aspects of the organization.

Remarkably, despite the perpetual state of change in organizations, research has shown that three out of every four organizations that have initiated large-scale change efforts have not realized the significant organizational improvements that were intended, often at a tremendous cost (Choi & Behling, 1997). In an attempt to better understand the change process, academic researchers and practitioners from various disciplines have attempted to classify different stages of change — whether it involves health and human services, educational systems, psychology, or general business environments. "Understanding the dynamics of the change process and the factors that influence it, both positively and negatively, may facilitate the diffusion process" (Moore, 1993).

Perhaps the most simplistic interpretation is the three-stage process introduced by Kurt Lewin (1947), who described the change process as a force field model involving three steps: (a) Unfreezing; (b) Changing; and (c) Refreezing. Although this original view of change seems elementary, countless other scholars have studied change and developed their own stages, indicators, and factors contributing to acceptance or resistance. For instance, the Transtheoretical Model (TTM) offers a more modern interpretation of the change process (Prochaska & DiClemente, 1982). The TTM uses a five-stage construct to represent the transient, motivational, and constancy aspects of change and prescribes a different intervention strategy for each stage. The five stages are: (a) precontemplation, in which an individual is not intending to make changes; (b) contemplation, in which an individual is considering a change; (c) preparation, in which an individual is making small changes; (d) action, in which an individual is actively engaging in a new behavior; and (e) maintenance, in which an individual is sustaining the change over time.

While more contemporary views add granularity to the change process by identifying additional factors and offering more detailed stages, the process of implementing change generally distills into three intertwining stages: (a) readiness, when the organizational environment, structure, and members' attitudes are receptive to a proposed change; (b) adoption, when the members of the organization temporarily alter their attitudes and behaviors to conform with the expectations of the change; and (c) institutionalization, when the change becomes an established element of the employees' permanent behavior (Holt, 2000).

Based on the dismal success rates of change implementation, managers are being encouraged to be proactive by utilizing change measurement instruments to gauge their organization's demeanor before implementing changes (e.g., Jansen, 2000; Simon, 1996). Largely, the results have been poor due to the fact that few organizations actually assess readiness for change prior to implementing it. One of several factors that experts have attributed to these less-than-desirable outcomes is the organizational members' initial readiness for change, which represents the initiating stage of the change process. It is a primary assumption of this research that organizations able to gauge readiness before implementing changes will be able to develop focused readiness development programs and positively influence more successful change initiatives.

A significant impediment to managerial efforts to gauge readiness for change is the vast number of change instruments readily available. In reviewing the academic literature for this paper, over 40 different measurement instruments were found that claim to measure some aspect of readiness. Because of limited perspective, no one instrument has emerged as a standard, and instruments are often used inappropriately without regard to their psychometric properties (Holt, 2000). The purpose of this portion of the research was to analyze the existing instruments available to measure readiness for change and integrate those that have empirically demonstrated reliability, utility, and validity into a new synergistic instrument that can be utilized across various research disciplines.

It is anticipated that the development of a more comprehensive change measurement instrument will facilitate future research concerning readiness and foster a better understanding of the complicated dynamics of organizational change. Specifically, this new instrument was designed to comprehensively measure four main research perspectives dealing with organizational change. The first perspective was the process of change, or how leadership will encourage change in an organization. The second was the context of change, which examines why the change is needed. A third perspective concerned the content of change with regard to the nature of the change and what exactly is involved. Finally, because of the critical role that individuals within an organization play in the success or failure of organizational change, the individual perspective — the who of change — was also of interest. In the research analysis, each perspective is broken down into smaller elements to ascertain the specific variables necessary to accurately measure it.

Beyond the confusion imposed on organizational managers by the sheer number and variety of instruments available to measure readiness, two other issues must also be addressed. First, the research surrounding each instrument carries its own interpretation of what readiness is and what is required to measure it. Second, when searching for an appropriate change instrument, how is an organizational manager supposed to make meaningful comparisons among existing instruments?

Problem: The need for change is increasing and often necessary for an organization to succeed. This study identifies the factors that frequently cause change within an organization.

Purpose: The purpose of this study is to identify, through extensive research, how individuals adapt to and are affected by organizational change. Human beings are certainly familiar with change and often prove they are quite capable of adapting to it.

Theoretical Perspective on Managing Change

Change in an organization can be induced at three broad levels: at the management of the industry environment, at the company level, and at the individual level — where change concerns the performance of employees within an organization. Porter (1980) asserts that each level must be separately addressed. He highlights key points and identifies the role of general managers in managing change at each respective level.

At the highest level, the environment in which the industry operates is the focus. The industry's environment hosts a company's competitors and other vital external factors that affect the organization. These factors play an important role in affecting the speed or velocity with which change is brought into an organization (Porter, 1980). This has significant implications for general managers who must manage the timing of introducing change. Sometimes the external environment is favorable for experimenting with new approaches and implementing change first; at other times, the industry only welcomes change that has been tried and adopted by others (Porter, 1980). Opportunities must be identified by general managers so that they can be exploited in favor of the organization. At the same time, threats should remain in focus.

At the company level, general managers are required to analyze markets and organizational features. Analyses that evaluate the organization's strengths and weaknesses are helpful, as companies can highlight their strengths while operating and can work on their weaknesses to enhance performance. General managers must also evaluate the company's capacity to change and its general attitude toward change (Porter, 1980). Factors that affect an organization's capacity and willingness to change must be examined and addressed. Organizational culture — a set of shared values and assumptions followed by the members of an organization — plays an important role in shaping the organization's attitude toward change. If an organization's history has been resistant to change, it is highly unlikely that the organization will readily accept change in the future. Sometimes, core competency can assist in the process of change (Porter, 1980).

At the individual level, the process of change is completed when it is implemented within a company. The task of the general manager then becomes one of envisioning the future of the change and facilitating cooperation among the workforce. The general manager is also responsible for implementing change at various levels of production, development, and distribution. In particular, what must be examined is the speed with which change ought to be introduced into the company and how the business will strive to attain it. Employees may sometimes favor change in certain areas but oppose change in other divisions. In such cases, it may be more beneficial to alter the type of changes sought rather than changing the method of implementation (Porter, 1980).

Strategic management is one of the primary concerns of general managers, which includes setting direction and goals and allocating resources efficiently so that unnecessary costs are avoided and targets are achieved (Chandler, 1963). General managers are required to be forward-looking so that threats and opportunities can be identified and operations adjusted accordingly while putting strategies into practice (Mintzberg & Waters, 1985). Other companies in the industry must also be considered when drawing up and following strategies.

Change can refer to novelty, originality, or anything new in general. It can also refer to changes within a company, even if it is the last company in an industry to adopt a change already initiated by others. These represent two opposite extremes, and in reality most cases fall somewhere between them. These situations call for attention to competitors, and it is essential to know how competitors are responding to change (Porter, 1980).

Porter (1980) identified key forces operating in the industry environment that are now widely considered when drawing up business strategies. He claims that general managers should look not only at existing competitors' strategies but also at firms that could enter the industry and increase competition. Porter also argues that substitute products represent a third force that must be identified when pursuing business strategies and implementing change. Even present competitors can become a serious threat if they exploit change to find and manufacture substitutes (Porter, 1980). The general manager should also consider customers' views and opinions concerning products or services from different companies in order to bring improvement. Generally, a marketing analysis is carried out by specialists for this purpose, but such research can be very helpful for the general manager who must have the big picture of the industry in mind when setting and implementing important business policies related to change (Porter, 1980).

Generally, if a company introduces change before its competitors have time to do so, it can secure major competitive advantages and attract customers. For instance, in the pharmaceutical industry, patents on medicines ensure that competitors cannot immediately enter the market, allowing the innovating firm to enjoy high profits. Likewise, in the software business, copyrights restrict the entrance of competitors (Porter, 1980). If the product finds favor with customers, it is likely to generate loyalty that persists even after other firms enter the market. Therefore, the company that introduces change first can take advantage of these situations and establish a long-term competitive position (Porter, 1980).

However, in some cases the competitive advantages do not accrue to the first mover but rather to organizations that chose to wait and implement change later. Later companies can assess whether there is customer preference for the product introduced by the first mover by weighing the first company's success (Porter, 1980). Moreover, other companies can identify mistakes and threats that occurred and address them when implementing change themselves. The delay in implementing change can be compensated by gauging customer preferences, identifying additional factors, making important decisions, and finding newer ways to bring change into the company (Porter, 1980).

One of the factors most important to general managers is the speed with which change is brought into an industry. In industries where the velocity of change is high, general managers must be alert to every opportunity to introduce the right type of change and be first to gain competitive advantage (Porter, 1980). Semiconductor and computer industries experience change at a high pace because of immense technological development and advancement (Eisenhardt, 1989). Some of the complexities faced by general managers include the problem of obtaining current information. As the process of change is rapid, it is very difficult to find up-to-date, complete, and accurate information (Porter, 1980). Moreover, general managers may suffer setbacks in recovering research and development costs when a product becomes outdated due to rapid change by competitors. On the other hand, the furniture industry is very resistant to change and evolves at a very slow pace. Service industries such as life insurance and banking also lag behind when it comes to change (Porter, 1980).

Mainly, three factors determine the feasibility of change: industry analysis, the timing of change, and the pace of change. This analysis is necessary because international markets are continuously evolving, and companies that do not take advantage of change at some point are likely to face financial difficulty or closure (Porter, 1980).

Innovation and constant change are considered contemporary methods for designing and executing corporate strategy. By continuously innovating, a company sets itself apart from its industry rivals in ways that are difficult to replicate. Both innovation and change can take place in any corporate department — finance, accounts, marketing, or sales (Porter, 1985). The core competence approach recommends that the set of unique abilities enabling a business to maintain a competitive edge over other companies should be emphasized and maximized in all business activities, such as production, distribution, or marketing (Prahalad & Hamel, 1990).

Automotive companies such as Honda and Volvo typically advertise their core competencies to attract a larger market share. Honda prides itself on developing and designing engines for small motors, while Volvo highlights its core competence in maintaining vehicle safety and comfort. Core competence can therefore be used not only to differentiate a company from its competitors but also to commercialize or market goods and services (Porter, 1980).

A general manager can gradually bring about change in the culture of an organization. The same is true of core competence, which can be managed by general managers for the benefit of the organization, given their higher level of authority and responsibility. The general manager can facilitate coordination and communication to enable change (Porter, 1980). As of yet, change has not been defined as an organization's core competence in itself, but it can be considered part of core competence. The Hewlett-Packard Company, for example, is well known for developing and marketing innovative tools for scientists and has also developed improved, up-to-date models in computers and printers (Porter, 1980).

If a company wants to be the first to innovate, it requires extra effort from general managers, who are responsible for managing and coordinating creative ideas, applying the organization's core competencies to bring about change, and managing the pace of that change. If the company is not an inventor but rather an adopter of change generated by others, a different sort of management skill is required (Porter, 1980).

It is only in small companies that managers are responsible for nearly every business activity, from strategic to operational management. In large corporations, general managers are not responsible for following the small steps necessary to carry out change, nor are they directly answerable for marketing, functional, or research and development departments. They are generally not responsible for supervising other functional departments. A general manager need only be concerned with the general actions and decisions of the workforce and ensuring that they do not deviate from the strategic direction or targets of the business. This involves managing change at the individual level (Porter, 1980).

Hypothesis: Change is accepted when organizations promote an understanding of their strategy, articulate the vision, and provide a climate in which employees are motivated to achieve a common goal.

Review of Literature

Research Questions:

1. The need for change is increasing and often necessary for an organization to succeed — what factors frequently cause change within an organization?

2. What are the types of organizational changes?

3. What are the impacts of change?

4. How is successful change achieved?

Change is inevitable; it occurs in one's personal and professional life, and it is no surprise that change and uncertainty are challenges that businesses face as well. Assessing change depends on perspective — viewed objectively, it is a means for endless opportunities in business and personal life. How proficient one is at dealing with change begins with being open-minded and flexible. This allows for an awareness of what is happening in one's immediate world, anticipating change before it happens, and planning to take advantage of new situations and opportunities. A business may need to restructure its organization by asking questions and seeking information when things do not work out as expected.

The best way for an organization to demonstrate that it is truly customer-driven is by properly managing information, making that information available to staff, and training staff to use that information to build valuable relationships with customers. The organizational background of a business clarifies the company's focus. Developing a clear plan of direction will assist in defining the organization's culture. Individuals within the organization must modify their behaviors in order to create the desired culture. Employees must have clear expectations and a recognizable understanding of what constitutes acceptable behavior within the organization. Training is the best way to ensure effectiveness in both communicating expectations and teaching new behaviors.

Conclusion

This study aims to evaluate the effectiveness of the corporate workforce in managing and dealing with any form of organizational change. The literature review highlighted and revealed that any change in an organization can turn out to be stressful and full of anxiety. The literature review also showed that organizational change affects workforce performance and can influence employee feelings negatively.