ORGANIZATIONAL
CHANGE
WHAT IS ORGANIZATIONAL CHANGE?
- Organizational change means any significant shift or transformation in how a company
operates, particularly regarding its human resources practices. It includes
the organization’s growth and development processes in different forms.
- According to Porras, Silver 1999, organizations usually experience change as a result of
a response due to internal or external factors. It is more like a cause-and-effect
phenomenon within an organization dependent on factors such as time, processes,
environment, and other contexts.
INTERNAL FACTORS
1. Market Shifts
2. Competition
3. Technological Advancements
4. Changes in leadership
EXTERNAL FACTORS
1. Low employee engagement
2. High turnover rates
3. Management of employees
4. Change in policies and procedures
IMPORTANCE OF ORGANIZATIONAL CHANGE
- The importance of organizational change has a business perspective. Without change,
businesses cannot flourish. They will fail to keep up with the competitive world and
update themselves to growing consumer demands.
FOUR MAIN KEY POINTS OF THE IMPORTANCE OF ORGANIZATIONAL CHANGE
1. Adapting to Change Environment - as the business landscape changes to external
shifts and various other factors, it is important for organizations to adapt to these
changes. This enables them to remain relevant and sustainable.
2. Improving Performance and Efficiency - change optimizes processes, resources, and
technologies, leading to enhanced productivity, cost reduction, and faster decision-
making for better overall performance.
3. Growing Innovation and Development - changing market trends foster innovation and
encourage organizations to explore more horizons. This allows companies to stay
competitive and hones the way for expansion
4. Employees Become More Engaged - individuals (especially the millennial and GenZ
crowds) want to be a part of something that continuously evolving and is “trending” up to
the market standards. Involving them in the change process leads to higher morale and
job satisfaction.
CAUSES OF ORGANIZATIONAL CHANGE
1. Technological Advancements - new technologies can disrupt traditional business
models and require organizations to adapt to remain competitive.
2. Changes in the Market - changes in customer preferences, the introduction of new
products or services, or changes in the competitive landscape can all drive the need for
change.
3. Changes in Leadership - changes in leadership can lead to shifts in strategy or a
different approach to organizational management.
4. Legal or Regulatory Changes - changes in laws or regulations can impact the way
organizations operate and require them to adapt their practices.
5. Internal Challenges - low employee engagement, high turnover rates, or a need to
streamline processes and improve efficiency can also drive the need for change.
6. Mergers and Acquisitions - mergers or acquisitions can bring together different
organizational cultures, and processes, requiring changes to align with the new
organizational structure.
7. Globalization - increased globalization can require organizations to adapt to different
cultural norms, market conditions, and regulatory environments in different countries.
TYPES OF CHANGE
1. Strategic Change - when an organization changes its overall goals or mission to stay
competitive, it’s called strategic change. To manage this change, it’s important to involve all the
stakeholders to discuss how the changes should be executed further.
2. Structural Change - structural change involves changing the structure of the organization
with a merger or changing reporting lines. To manage such a change, employees need to be
involved extensively in the process, be communicated with the change clearly, and provided
support and training as needed.
3. Technological Change - when an organization introduces a new technology or changes its
existing technology, it’s called technological change. To manage this change, employees need
to be introduced to the new technology during its early phases. Proper training related to the
technology is required along with communicating the benefits of the new technology.
4. Cultural Change - cultural change is also referred to as people-oriented change. Since
people are the main elements of the company, changes in how the company deals with its
employees hold great value. Hence, cultural change demands transparency, efficient
communication, and productive leadership.
5. Fundamental Change - combines all the changes mentioned above and transforms the way
an organization operates complement. There are changes from procedures, such as workflow
or project management practices to culture, such as diversity policies. Since, there’s a lot of re-
shaping going on, such a change needs efficient leadership and management.
ORGANIZATIONAL CHANGE PROCESS
Step 1: Develop a Vision
When a change is introduced in an organization, a vision must be stated so that employees buy
and accept the change. The vision must be communicated competently for individuals to
understand the ‘what and why’ of the change.
Step 2: Recognize and Understand the Resistance
People have a natural defense mechanism that resists change. This resistance can appear
either positively or negatively. Regardless, it is the duty of the organization to acknowledge and
perceive resilience.
Step 3: Mitigate the Resistance
The third step is mitigate the resistance or reduce the negative responses and help the employees adapt
the change implemented.
Step 4: Communicating Mitigation Strategies
This is the final step which means sharing the actions that the organization is taking to address the
concerns of the employees.
APPROACHES TO MANAGING ORGANIZATIONAL CHANGE
1. Kurt Lewin’s 3-Step Change Model
Kurt Lewin’s 3-Step Change Model is a widely used framework for understanding and
implementing organizational change. This model emphasizes the importance of involving and
engaging employees in the change process to ensure its success. Here is a better
understanding of the model:
A. Unfreeze: Prepare the organization for change by recognizing the need for change and
creating an environment where change is accepted. This involves identifying the areas where
change is needed, communicating the need for change, and creating a sense of urgency.
B. Change: In this step, the actual change is implemented. This involves developing and
implementing a plan for change, communicating the plan to employees, and providing them with
the necessary resources and support to implement the change.
C. Refreeze: The final step involves stabilizing the change and making it a part of the
organization’s culture. This can involve reinforcing the new behaviors and processes through
training, creating policies to support the change, and monitoring the change to ensure its
success.
2. Prosci ADKAR Model
The Prosci ADKAR model is a change management framework that focuses on five stages of
individual change. It provides a structured approach to help individuals and organizations
successfully navigate change. The five stages are as follows.
Awareness – Why do we need to change?
Desire – What will you gain from it?
Knowledge – Forces of organizational change: How to go about it?
Ability – Implementing and achieving the desired change.
Reinforcement – Rewarding and appreciating sustainable change.
3. McKinsey 7-S Model
The McKinsey 7-S Model is a popular tool for assessing and optimizing organizational
performance. This model identifies seven interconnected elements that must be aligned and
integrated to achieve a cohesive and effective organizational strategy. The seven S’s are as
follows.
Strategy: The organization’s plan for achieving its goals.
Structure: The organization’s formal hierarchy and reporting relationships.
Systems: The organization’s processes and procedures for getting work done.
Shared Values: The organization’s core values and culture.
Style: The leadership style and management approach.
Staff: The organization’s employees and their skills.
Skills: The organization’s capabilities and competencies.
4. Bridges’ Transition Model
Bridges suggests that in typical changing efforts, 90% of the time leaders focus on promoting
the solution, while 10% of the attention is given to selling the problem. He proposes that this
ratio should be reversed. Here’s a brief of his model:
Ending, Losing, and Letting Go: Acknowledging the need to let go of the old ways and
behaviors.
The Neutral Zone: A period of confusion and uncertainty between the old and new
ways.
The New Beginning: Embracing the new way and making it a permanent part of the
organization’s culture.
BENEFITS OF ORGANIZATIONAL CHANGE
1. Continuous Progress - organizational development creates a continuous cycle of progress.
This cycle involves strategies being planned, implemented, evaluated, improved, and
monitored. This approach embraces change (internal and external) and leverages it for
renewal.
2. Improved Communication – improving communication is a goal of change to align all
employees with shared company goals and values leads. Candid communication leads to
an increased understanding of the need for change within the organization. When
communication is open across all levels, relevant feedback is received leading to recurrent
improvement.
3. Employee Growth and Development - the need for employee growth and development
stems from constant industry and market changes. Changing organizational culture with
evolving market requirements can be successful in developing their employees’
competencies too. This is achieved through a program of learning, training,
skills/competency enhancement, and work process improvements.
4. Product & Service Enhancement- change is a harbor for innovation. Both employee and
organizational development lead to product and service enhancement through innovation.
Changes encourage a rewarding and appreciating culture while boosting motivation and
morale. The forces of organizational change also increase product innovation by using
competitive analysis, market research, and consumer expectations and preferences.
5. Better Profit - through increased innovation and productivity, efficiency, and profits are
increased. Costs are also reduced by minimizing employee turnover and absenteeism. The
culture shift to continuous improvement gives the company a distinct advantage in the
competitive marketplace.
