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Model Management of Organizational Change

Introduction

Theoretically, the process of change in an organization begins with an awareness of the requirement for change. Organizational structural change is an economic process that involves changes in the functions or operations of an industry (Armstrong, 2006). It is the process of ensuring that an organization can develop and implement major change programmes that will ensure that it responds strategically to new demands and continues to function effectively in the dynamic environment in which it operates. Structural transformation activities may involve radical changes to the organization’s structure, culture and processes. This may be in response to competitive pressures, mergers, acquisitions, investments, disinvestments, changes in technology, product lines, markets, cost reduction exercises and decisions to downsize or outsource work. Structural changes may be forced on an organization by investors or government decisions. It may be initiated by a new chief executive and top management team with a purpose to turn around the business.

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Structural change means that significant and far-reaching developments are planned and implemented in corporate structures and organization-wide processes. The change is neither incremental (bit by bit) nor transactional (concerned solely with systems and procedures). Transactional change, according to Pascale (1990), is merely concerned with the alteration of ways in which the organization does business and people interact with one another on a day-to-day basis.

Bolman and Deal (2003) argue that it is impossible to really understand an entire organization without using a multi-framing perspective. By viewing an organization through the structural, human resources, political and symbolic frames, leaders are better able to avoid – and solve unforeseen problems. Bolman and Deal (2003) explain that the political framework sees organizations as a place where alliances are formed, battles are waged, negotiations are underway and power is key. These sorts of interactions take place everywhere—from the Oval Office to a small non-profit agency, to a suburban high school.

A structural frame puts emphasis on goals, roles, formal relationships, and the rational side of organization. A human resource frame puts emphasis on needs, attitudes, skills, and the human side of organizations. And lastly, a symbolic frame explores how organizations create meaning and belief through symbols, including myths, rituals, and ceremonies.

The prerequisite for a successful programme is the presence of a transformational leader who, as defined by Burns (1978), motivates others to strive for higher-order goals rather than merely short-term interest. Transformational leaders go beyond dealing with day-to-day management problems; they commit people to action and focus on the development of new levels of awareness of where the future lies, and commitment to achieving that future. Burns contrasts transformational leaders with transactional leaders who operate by building up a network of interpersonal transactions in a stable situation and who enlist compliance rather than commitment through the reward system and the exercise of authority and power. Transactional leaders may be good at dealing with here-and-now problems but they will not provide the vision required to transform the future.

In order to manage change effectively, the following crucial factors have to be considered in the implementation of the transformation; 1) Recognizing the need for change – this happens after scanning the organizations environment (internal and external); 2) Motivating the change – creating readiness for change by preparing people for the change and overcoming resistance to change; 3) Creating a vision – the ability to visualize and communicate the desired future state; 4) Developing political support – for change to be successful, leaders of change much identify key stakeholders and then develop support within the key political groups. Once the key leaders are brought on board, they can , in turn, generate energy in support of a change; 5) Managing the transition –i. Activity planning-design the road map and noting specific events and activities that must be timed and integrated to produce change, ii. Commitment to planning-starts with identifying key political powers in the organization, iii. Management structure; 6) Managers can play a big role in maintaining the drive for change through provision of resources, and development of new competencies and skills.

One of the best change theories is that developed by Lewin (1951). The basic mechanisms for managing change, according to Lewin (1951), are as follows; Unfreezing – altering the present stable equilibrium which supports existing behaviors and attitudes. This process must take account of the inherent threats that change presents to people and the need to motivate those affected to attain the natural state of equilibrium by accepting change.; Changing – developing new responses based on new information; Refreezing – stabilize the change by introducing the new responses into the personalities of those concerned. Lewin also suggested a methodology for analyzing change which he called ‘filed force analysis’. This involves: analyzing the restraining or driving forces that will affect the transition to the future state; assessing which of the driving or restraining forces are critical and; taking steps both to increase the critical driving forces and to decrease the critical restraining forces.

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Considering the case of Enron which was the largest US gas pipeline company when Kenneth Lay took over as the CEO in 1985. The company was faced with deregulation, thereby creating both threats & opportunities. Lay looked for ways to grow the business & boost the share price. Enron’s market grew from $2 billions in 1985 to $70 billions in mid 2001. This was in a span of 15 years. Enron expanded into other diverse areas whose financial maneuvers inflated revenue.

Outsourcing has been a common structural change practice all over the world. This refers to contracting business functions outside the organization. Organizations from various sectors use outsourcing as a means to reduce costs, enhance employee efficiency and productivity, and focus on core business functions. Common examples include manufacturing entities contracting smaller firms to manufacture parts and institutions like hospitals outsourcing laundry or catering services. Information, Communication and Technology (ICT) has increased the demand for, and facilitated outsourcing. ICT specifically enables services to be provided outside the country (offshore), often in lower cost destinations such as China, perceived to have lower standards and exploitative human rights and labor practices. Today, companies need to be competitive both domestically and globally. Businesses’ internal use of information and communications technology across the enterprise has further redesigned business processes, creating new outsourcing needs and patterns. Use of ICT itself has lead to the need for technical support, which seldom can be provided in-house, given its complexity and the high degree of expertise required to install, use and maintain information technology systems. Falling telecommunications costs have facilitated increased international activities for firms; not only can firms trade in goods, but services can be provided from anywhere in the world, if the telecommunications infrastructure is available.

The practice of outsourcing should be seen as a fundamental structural economic adjustment to an internationalized economy where international mobility of capital-including labor-is increasingly possible. The basic economic case suggests that moving outsourcing offshore lowers costs and boosts productivity. For the economy as a whole, the result is lower inflation and interest rates and higher economic activity.

Conclusion

Change in organizations can be very stressful. Bolman and Deal (2003) point out that managers need to think multi-dimensionally if they are to be cognizant of the many elements that are part of the change process. Their framework helps provide managers with a guide for how to look at complex operations. This framework can be helpful to institutions in planning and evaluating change. By looking at the process from a variety of perspectives, managers are more likely to recognize multiple opportunities for advancing an agenda while keeping watch for problems and concerns that may arise during the change process. Often managers concentrate on one or two aspects of an organization, missing subtle parts of the process. Successful change requires an ability to frame issues, build coalitions, and establish arenas

References

Armstrong, M (2006) A handbook of Human Resource Management Practice, 10th edition, Kogan Page, London.

Beckhard, R (1989) A Model for the Executive Management of Transformational Change in G Salaman, (ed) Human Resource Strategies, Sage, London.

Bolman, Lee G. and Deal, Terrence E. 2003. Reframing Organizations. Third Edition.

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Burns, J M (1978) Leadership, Harper & Row, New York.

Lewin, K (1951) Field Theory in Social Science, Harper & Row, New York.

Pascale, R (1990) Managing on the Edge, Viking, London.

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