Introduction
Organizational change is a necessary measure every company employs to be able to follow the market dynamic and fulfill consumer demand. As trends change in terms of organizational management and products that consumers prefer, firms have to adapt and implement resilience.
However, it is essential to acknowledge the potential barriers and both adverse and beneficial circumstances correlating with said tool. Organizational change is the notion highlighting alterations in how a company operates, its leadership, and its use of resources. Such processes can correlate with shifts in the business model, the workforce, and new policy employment.
The importance of change is linked to its necessity since, as mentioned previously, the market is changing, and so are entities operating in their industries. However, it is essential to highlight that the change in relation to the workforce correlates with the potential effects on well-being and performance. Job satisfaction and employee turnover can, indeed, change based on internal alterations.
The current paper will examine the positive and negative effects of change on the workforce. Namely, a theoretical framework will be constructed based on relevant theory, and the adverse and beneficial outcomes will be presented before illustrating examples of two companies, namely, Microsoft and Yahoo.
Theoretical Framework
Managing the workforce, especially under the condition of a change being implemented, is a challenging task that requires well-defined approaches that have previously been applied in practice. However, there are evidence-based approaches that allow leaders to have an understanding of what to expect in regard to how said alterations will be met by the team members.
Person-Job Fit Theory
For example, a theory that will be discussed throughout the paper is the Person-Job Fit Theory. The model highlights that a person’s individual traits will directly or indirectly affect adaptability within a company. Thus, in this case, an employee who will perceive the organizational change as aligning with their personality will be more likely to be motivated to be engaged in said transition (Nielsen et al., 2020). For instance, an employee who is more efficient when working in a team will be satisfied with a change, implying that performance will be measured based on units rather than individual KPIs.
Theory of Planned Behavior
Another theory that is to be considered is the theory of planned behavior. In this case, an individual who has the necessary mindset will more likely be resilient. Thus, an employee with the ability to work under new conditions, the motivation to be engaged in the transition, and the resources to implement said alterations will be transformative (Stouten et al., 2018). The concept will, likewise, be discussed further when highlighting the positive and negative aspects of organizational transitions. Nonetheless, the model highlights that, in order for organizations to implement a new measure, they are to build a system in which employees are ready to cope with the changes.
Positive Aspects of Organizational Change on Employees
Organizational change can cause stress and resistance within the workforce. However, the reasons why it is employed in the first place are linked to the positive outcomes that follow transformations. Said alterations can align with transitions to different leadership styles of business models (Milella et al., 2021).
Maximizing Productivity and Efficiency
In the current paper, change will be discussed from the perspective of well-being and performance. From an optimistic viewpoint, alterations within companies can improve employee job satisfaction as well as maximize productivity and efficiency. However, this implies that the change correlates with the phenomenon that the employee views as positive and aligned with their own skills and opportunities.
It has been mentioned previously that one of the theories that are often highlighted when examining change is the person-job fit one. Thus, employees tend to have positive outcomes if they perceive change as something that would benefit them as people and workers. Researchers show that the perception of organizational transformation as positive is connected to employee resilience (Bertuzzi et al., 2023). Hence, team members are able to quickly change their way of operating in the firm and reach similar or higher productivity levels in a short amount of time despite the alterations. In this case, well-being and performance increase as the transformation is considered positive, and the process does not negatively impact efficiency.
Increasing Engagement and Resilience
An organization that implements a change that benefits employees is more likely to see high engagement and resilience. Indeed, the workforce is more likely to maintain high well-being and productivity if the transformation correlates with positive outcomes for the people working for the firm (Lundmark et al., 2020).
Moreover, effects on well-being and performance can be even more positive if the workforce perceives the environment or jobs as dissatisfactory prior to the change. Employees perceive the leader as an obstacle to the expression of organizational creativity, which is why the change will generate positive psychological and social changes within the firm. The fact that such alterations are perceived positively by people dissatisfied with their positions is well-documented (Nielsen et al., 2020). Thus, improvement is the goal that is not only illustrated in the aims of the leadership but also in the entire workforce.
Improving Workforce and In-Person Performance
Research, indeed, shows that change, in theory, leads to improvements in the workforce and generates high in-person performance. The employee is motivated to exemplify high efficiency since the transformation correlates with the fact that working for the company will become more enjoyable (Yan et al., 2022). On the one hand, well-being is beneficially affected as people view the transformation as a new opportunity for them to improve their work conditions, creativity, and participation in decision-making.
On the other hand, alterations aimed at assisting the workforce lead to performance improvements as team members have the tools to work more efficiently. However, resilience implies the presence of factors that maximize readiness to change. For example, not implementing multiple changes at the same time or consecutively positively affects the workforce (Fløvik et al., 2019). Thus, there are measures leaders can employ to address potential barriers.
Factors Maximizing Positive Outcomes Correlating with Change
Organizations can generate more positive outcomes when employing transformational strategies. Nonetheless, such tools assist in reaching high resilience, being open to alterations, and not being hindered in terms of productivity and job satisfaction. However, the implementation of said factors requires long-term planning and effective decision-making processes that affect the workplace constantly rather than only during an organizational change.
Organizational Culture
Implementing an organizational culture that welcomes change rather than avoids it is vital to generating positive results. Research highlights that cultures that are based on people, growth, improvement, and stability are more likely to encourage resilience in the workforce (Wijethilake et al., 2021).
Thus, before the alteration is practically employed, organizations are to make sure that the workforce is ready to make the necessary adjustments by constructing a climate of change (Figure 1). This implies having the right mindset, not being stagnant, and understanding the importance of change both for the firm and its employees.
Organizational culture has also been linked to a commitment to the company in which the employees operate (Nguyen et al., 2019). As a result, a corporation with well-defined values, such as innovation, is more likely to have a team that will be committed to the cause despite the need for internal alterations. As a result, the change will be welcomed as a necessity, and the barriers will be overcome.
Leadership
It is important to recognize the importance of leadership when it comes to maximizing the benefits of organizational change for the workforce. Relevant literature highlights that effective leadership helps build confidence and addresses gaps in decision-making concerning the involvement of the workforce (Khaw et al., 2022). On the one hand, management tools can be applied to create an environment in which each team member has the confidence that the change will be beneficial and that the transition to the new way of operating will be smooth.
On the other hand, leaders will generate opportunities for employees to be active members in decision-making meetings. This will ensure that each transition is considered from the perspective of the human factor. Last but not least, the leaders can implement measures that will encourage resilience, such as monetary rewards.
Negative Aspects of Organizational Change on Employees
While the positive aspects of organizational change are significant enough for said transformation to be performed, it is essential to consider the negative ones in regard to potential opportunities to minimize them. Researchers mention that studies illustrate the failure rate of change as being between 20 and 70% (Albrecht et al., 2022). Based on these statistics, it is inevitable that negative aspects persist and can significantly compromise potential results.
Negative Perception of Change
As argued previously, employees are more likely to be resilient if the change is perceived as beneficial. The same finding was highlighted concerning opposite circumstances. Namely, if the transformation is subjectively viewed as something negative, resistance increases (Belschak et al., 2020). For example, a company that shifts to a remote way of team operation can meet resistance from employees who prefer the work environment of an office.
Poor Employee Well-Being and Low Performance
Another negative aspect of change correlates with employee well-being. Researchers have found a link between rewards, job roles, and work environment and the psychological state of the team members (Khwaja et al., 2020). If the change correlates with the shift that implies lower salaries and bonuses, disadvantaged work conditions, and an adverse change in professional roles, job satisfaction decreases. This may lead to low productivity due to a lack of motivation as well as an increased likelihood of lower employee retention, which negatively impacts organizations from a financial standpoint.
The Needs Increased Due to Organizational Changes
Another factor that adversely affects the work process is the increased needs that occur due to organizational changes. For example, changing the software that the company uses implies that team members are required to learn how to operate with the new system. As a result, they may experience burnout. Studies highlight that overworked employees are more likely to report job dissatisfaction (Yean et al., 2022). From this perspective, organizational change can, indeed, negatively impact well-being by generating adverse work conditions and productivity by facilitating high turnover (Lundmark et al., 2020). This factor needs to be considered when making transitional decisions.
Examples of Positive and Negative Change Factors
Microsoft
In order for organizational change to be examined from a practical perspective, it is essential to assess existing practices that have either been linked to the success or lack thereof. The first example is Microsoft, a leading tech company and one of the most profitable corporations worldwide.
Researchers highlight that due to its business structure, Microsoft was experiencing tremendous internal competition between different departments, which led to hostility in the work environment. This was maximized by the policy of forced ranking (Woike & Hafenbrädl, 2020). As a result, employees were overworked and focused on outperforming their internal rivals rather than focusing on consumers and competition outside the company. However, organizational change has minimized said factor and has generated a more welcoming and healthy internal setting. The strategy of forced ranking was dismissed, and the workforce perceived said change as a positive implementation.
Yahoo
Yahoo, on the other hand, is a company that has failed to implement change due to its approach as well as the perceived change that the transformation would exemplify. The company has been stagnant due to its leadership and the need for opportunities to compete with more successful platforms (Uyan, 2020). However, instead of employing transformational leadership that would inspire the workforce to be innovative through example and motivation, the decision was to employ the same strategy that Microsoft wanted to avoid, which is forced ranking. Needless to say, instead of generating success, the corporation has created more problems by maximizing internal rivalry, which ultimately led to the establishment of a more hostile workplace.
The example highlights the aforementioned framework of the Person-Job Fit model. Namely, employees who perceive the change as positive for themselves and their personal opportunities will be committed to the company and its goals (Lundmark et al., 2020). For Microsoft, the workforce comprehended, and the leaders are willing to change the work environment for the good of the people by minimizing internal competition. In the case of Yahoo, the leaders were ready to prioritize innovation over human force, which negatively affected them in the long run. Similar effects can be highlighted when there is a lack of clear vision and communication (Errida & Lotfi, 2021). The transformation becomes inefficient as the team members feel not considered or included in the decision-making process.
Conclusion
Organizational change is an essential measure that companies implement to be competitive in the market and generate financial, social, and cultural benefits within their internal environment. If perceived as positive, transformations lead to beneficial outcomes for employee well-being and productivity.
However, if aligned with adverse consequences for the workforce, corporate changes may lead to low job satisfaction, decreased work process smoothness, and low commitment. Leaders, the organizational change climate, and resilience employed as a value within the corporation can minimize adverse outcomes. Based on the examination of relevant examples and theoretical frameworks, the conclusion aligns with the idea that transformations require planning and efficient management.
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