Managing Organizational Change
Change is an ever-present feature that has become a constant in organizational life. This is because change is inevitable for companies that wish to stay competitive and profitable in a shifting environment. However, in employees, organizational change often induces fear and resistance which can have serious damaging organizational consequences. Therefore, it is important to discuss all the ways of how changing work conditions can impact workers and develop coping strategies.
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Reactions to organizational change vary from resistance to compliance and the enthusiastic support of the change, though the latter is rather an exception. There are two types of resistance distinguished, active, and passive (Palmer, Dunford, & Buchanan, 2017). Employees engaged in active resistance may sabotage the change efforts, start rumors, undermine the work process, arguing the need for change, and being overly critical about it.
In turn, employees who resist passively seem to agree in person but do not follow what they are told to do. These workers may procrastinate, feign ignorance, and do nothing allowing change to fail. Such passive resistors dislike the change quietly and can even seek a new job without expressing their concerns about the change. Another way of how workers can be impacted by changing work conditions is to become apathetic. In such a case, employees do not resist change but also do not support it; they just serve their time.
However, some workers may show grudging or formal compliance, which means that they do not fully embrace the change but do enough of what is asked of them. Workers who show genuine compliance not only do what they are asked to but also understand the benefits of the change. Employees who show enrollment devote their time and energy to the change implementation and are enthusiastic about it.
Special attention should be paid to individual reactions which have to be considered by change management when implementing change. For some people, the organizational change can appear to be rather traumatic, and they need to go through several stages before accepting it. These stages are denial (a person does not perceive new information), resistance (a person actively or passively resists as the stress increases), and exploration (a person reflects on the benefits of the change). The last stage is a commitment when an individual fully embraces change. However, it should be mentioned that while some employees can go through all these stages, others may become stuck at a certain one.
A suitable plan of action is a key thing in managing change. Change implementation and management is an ongoing process that takes not only time but also the dedication and a high level of expertise. Choosing a change management approach is an important step in successful change implementation. The most widely used models are the DICE model, the ADKAR change model, and the model offered by McKinsey.
The DICE model is used to determine whether a change program will succeed or fail by identifying four factors, which are “duration, integrity, commitment, and effort” (Palmer et al., 2017, p. 321). If the duration is short with frequent reviews, duration scores highly. If an organization has a skillful leader and employees are enthusiastic, integrity and commitment score highly. The factor of effort considers the actual effort the staff needs to exert apart from the current workload. The evaluation results are divided into different categories, which are win zone, worry zone, and woe zone, depending on potential risks (Palmer et al., 2017). The DICE framework allows a change manager to create a plan of action based on identified weaknesses.
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The ADKAR model is based on five components, which are awareness, desire, knowledge, ability, and reinforcement (Palmer et al., 2017). This framework is a diagnostic and planning change management tool that can be used for several purposes, in particular, to identify why change is difficult and develop communication strategies. This model pays specific attention to individual perceptions of employees whose enthusiasm and support are key to successful organizational change.
The McKinsey checklist includes several tactics that contribute to the success of the change. These tactics are goals, structures, involvement, and leadership, which allows for saying that the model is concentrated mainly on organizational, management, and leadership properties. By evaluating each of the tactics, a change manager can identify weaknesses of the change and gain insight into what should be improved. The checklist highlights that a successful change is possible only when these four powerful components are combined.
However, all three models are only theoretical guidelines that determine factors that should be addressed rather than explaining how. Organizations must always improve their performance to get a competitive advantage and produce greater profits (Anderson, 2017). An indispensable part of all the above-discussed models is the establishment of the need for change with further communication of this need to all the staff. Clear and timely identification of the need for change contributes to the successful process of transformation.
As a system, an organization depends on several factors that influence its functioning. These factors can be both internal and external and act as reasons for the organizational change. Among external factors, there are geopolitics, hyper-competition, reputation, mandate, demography, and fashion (Palmer et al., 2017). Fashion means following trends in organizational change with a low perspective of achieving benefit. Demographic changes are related to the aging of the workforce and the change in its composition. Geopolitical driving forces are associated with the intensification of global business relationships, technological innovations, and international trade.
Among internal organizational drivers, there is growth, new chief executive, integration and coordination, power and politics, and corporate identity (Palmer et al., 2017). Growth generates problems of a required increase in scope and complexity. Integration and coordination are common problems for larger organizations requiring better communication between different departments. A new chief executive can set a new direction and bring new ideas. Corporate identity provides for a shared goal, which is a valuable asset for any kind of organization. Power and politics drive organizational change and depend on the interests of stakeholders.
A comprehensive leadership model should include the following steps:
- Identification of the need for change based on both internal and external driving factors.
- A clear understanding of the type of driving factors and pressures that trigger organizational change.
- The rationale for what a leader wants to achieve as the result of the change.
- A clear view of the expected effects of a leader’s actions.
- Choosing an appropriate strategy for promoting change.
Depending on the type of change, in particular, the type of pressures driving it, there are different images of a leader. A leader has to act as a director if the change is a result of strategic pressure or low internal efficiency (Anderson, 2017). A leader has to act as a navigator if there are strategic threats. A leader has to act as a caretaker if there is a great number of pressures to an organization that cannot be managed at a time. In such a case, a leader has to care for an organization while it is subject to threats. A leader has to act as a coach if there is a need for coordinated teamwork aimed towards a common purpose. A leader has to act as an interpreter when an organization faces many internal and external pressures and they have to be communicated to the staff.
Any organizational change must be aligned with a clear vision and business idea. In such a case, it will be easier for a change manager to ensure that all the subsequent activities and interventions are coordinated and consistent. Visions help the personnel identify with an organization by motivating people to achieve corporate and personal goals. Whether vision describes a future scenario, the mission is focused on what a company is and what it does (Palmer et al., 2017). Therefore, before reporting a change initiative, it is crucial to do a “revisioning” exercise to determine how well an organization follows its vision and mission.
The plan of an organization’s change initiative thus includes the following components:
- Setting the direction (analyzing mission, vision, and strategy).
- Establishing a sense of urgency. This step involves the examination of market conditions and competitive realities with the identification of weaknesses and possibilities for improvement.
- Applying the opportunities to the vision and mission identified. Developing strategies to achieve that vision by an organization’s resources and capacities.
- Forming a powerful team. The members of the team should have the power and dedication to lead the change among employees.
- Communicating the vision and mission to employees.
- Empowering others to act on the vision. Identifying obstacles to acting on the vision and changing organizational structures that undermine the vision.
- Aiming to achieve short-term wins and motivating employees with monetary rewards.
- Consolidating gains. This step involves the change of policies and structures that do not correspond to the vision of an organization as well as choosing appropriate employees who can implement the vision.
- Shaping the corporate culture following the new vision and mission. Institutionalizing new approaches and linking the behaviors with corporate success.
Speaking of the cultural implications of the proposed plan, it should be mentioned that it includes reshaping corporate culture by the defined vision and mission of an organization. This may entail changes in both the social and cultural values of employees which should be promoted by leaders. If employees lack cultural identity, another component should be added to a plan of organizational change, which is a cultural change program. It should be established to enhance the commitment of staff, improve customer service, and strengthen the identity of an organization.
The selected organization is GE Capital, which is the financial services unit of General Electric. The causes of the organizational change are the following ones: slow decision making, lack of competitive advantage and, as a result, lower than expected profitability of the business, and, finally, lack of internal processes coordination. All the causes should be addressed by planning and implementing a deep organizational change.
The suggested change management model that can be used for summarizing a plan of action is the 7-S framework which considers that successful change depends on several factors (Palmer et al., 2017). They are the structure, strategy, systems, style, staff, skills, and subordinate goals.
In terms of the 7-S framework, the following components of organizational change should be addressed. Speaking of strategy, the product range should be expanded by acquisition. Speaking of structure, there is a need to provide decentralized decision making to give the departments more freedom as well as responsibility for the production processes (Palmer et al., 2017). Speaking of systems, a system of monetary rewards should be established to motivate employees to achieve short-term wins concerning change and thus orient them towards strategic objectives. Speaking of style, a new clear vision has to be created by a change strategy. This vision has to be delivered to employees to promote a performance-oriented focus.
Speaking of staff, the commitment of the personnel should be built to ensure that customers get only the highest-quality services and products. Communication strategies should be elaborated to educate the staff about the importance of quality and efficiency in building the company’s reputation (Palmer et al., 2017). Speaking of skills, special attention should be paid to the training and development of human resources, which is a direct responsibility of the human resources department.
In some cases, the senior management of the organization should consider hiring specific HR managers to address this component of the 7-S framework. Speaking of subordinate goals, the approach is vision-driven, which means that the organization’s vision has to be regularly communicated to the staff. The expected outcome of the implementation of the given change management model is an increase in profits, a faster decision-making process, improvement of internal processes, and boosted employee morale.
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Anderson, D. L. (2017). Organization development: The process of leading organizational change (4th ed.). Los Angeles, CA: SAGE.
Palmer, I., Dunford, R., & Buchanan, D. A. (2017). Managing organizational change: A multiple perspectives approach (3rd ed.). New York, NY: Mcgraw-Hill Education.