Challenges of Organizational Change - Essay Example

Challenges of Organizational change Change is regarded as the manner in which individuals will talk about an event where one thing turns into something different and where this new thing is regarded as an outcome or result (Choi & Ruona 2011, p. 47). Usually organizational change is introduced with the aim of improving an organization and making it more productive, effective or even adaptive to its circumstances (Singh 2005, p. 3). Therefore, if organizational change is meant to bring about positivity, it is important to find out why most attempts at organizational change fail. When it comes to organizations, change is regarded in various lights based primarily on the perspective of the researcher. There are two most fundamental schools of thought regarding organizational change. Scholars with a background in strategic management define organizational change as a procedure for the implementation of the corporate strategy that is created by the decision makers and leaders of the affected organization (Gilley et al 2009, P. 39). On the other hand scholars from the organizational development school of thought maintain that change is a deliberate effort to make a variation in the organization’s work environment so as to enhance individual development and to improve the organization’s performance (Choi & Ruona 2011, p. 47). It is generally accepted that even though the modes and types of change that organizations go through could be different, all organizations are subject to the influence of a vast number of changes. Further, modern scholars especially the ones that prescribe to the complexity theories, are of the opinion that change is a state of possibility for all organizations. They state that organizational change is not an exceptional outcome that is manufactured under definite conditions and only by certain individuals (Choi & Ruona 2011, p. 47). To them change in an integral part of human actions and only occurs in the context of their social interactions. So bearing in mind that organizations are made up of human beings whose actions are continuously evolving then they are of the view that change precedes the organization. Based on this school of thought then it is concluded that organizations are always in a constant state of change and in order for these organizations to survive they have to keep on changing for development (Espedal 2006, p.670). Organizational change can be very tricky to carry out and there have been more cases of failure than there have been cases of success. Most research into organizational change has been in private sectors but even public sectors have registered their fair share of organizational change failures. Failure of organizational change can lead to what can be termed as organizational decline. This is where an organization gets significant reduction in clientele, consumers, and market value which may cause the organization to stop all its operations as they are, give up its existing corporate identity or its ability to manage itself (Amankwah-Amoah & Debrah, 2010, p. 639). Scholars argue that companies get into a state of organizational decline when they fail to expect, recognize, neutralize, evade or adjust to the internal and external pressures that endanger their long term survival (Amankwah-Amoah & Debrah, 2010, p. 639). Some scholars have also argued that organizations that exhibit characters such as risk aversion, low levels of innovation, conservatism and slow growth are usually on a path of decline. Symptoms of such a decline which can also translate to causes of failure of organizational change are the blaming of the company’s leaders, centralization of any change efforts, and resistance to change (Schwartz 2011, 312). An example of a failed organizational change attempt is when the California State signed a contract with SAP to provide a 371 million dollar software to manage its payroll. The project however was haunted by major delays and errors causing the State to terminate the contract. The company took up the project in 2010 and launched the first phase in June 2012 only to be riddled by a massive amount of troubling errors. Not a single payroll run for 8 months produced one pay cycle that did not have material errors. This exposed a system that had serious errors. In this case the state got impatient with the failure of the change process and terminated the contract (Kanaracus 2013, p.1). The inability of both parties to communicate and come up with a solution to the system’s errors so as to make it effective led to the failure of what could have otherwise been a great and beneficial change. Organizations go through change throughout their lifespan (Sorge & Witteloostuijin 2004, p.1206). Studies show that some of the organizations that are around today may not have existed two decades ago (Lee & Alexander 1999, p. 228). This is because of the changes that organizations face which lead to the organizations’ death, success or plain survival. According to the management theory, organizations go through two phases. The first is the phase of evolution which is followed by the period of revolution. Most of the changes that occur in organizations are forced by the business environment that the organization operates in, while a few are triggered by personnel who feel a need to develop the organization (Business case studies, p. 1). A great success case would be of Dixons Group and how the group of companies came up with a strategy that enabled it to lead in the electrical and electronic market. The Dixons group identified its corporate aim as that of being the leader in the electrical and electronic market (Business case studies, p. 1). By being clear about its strategic direction Dixons enabled its personnel to have clear focus on the change process. This was done through strategic management. Strategic management I defined as the process of defining the direction an organization will take in order to change (Pandey & Verma 2005, p. 57). It also sets the plans and policies to achieve this corporate aim. This is fueled by strategic decisions which are the means to achieve the goals set. The decisions taken include the definition of the business, the businesses products, and the markets it intends to serve. They also encompass the functions involved and the essential policies required to effect these decisions. A look at the major decisions that Dixons took show just how the organization managed to get to where it is and how it managed to become a formidable chain of business that is able to cater to the needs of vast types of clients. In 1948 when Sir Stanley Kalms joined Dixons, the business had a turnover of about 105£ a week. Currently it is the largest publically listed retail business in the United Kingdom and has a turnover of close to 3billion pounds. The Dixon Group comprises of Dixons that deals in consumer electronics such as computers, video and still photography equipment, Currys that specializes in domestic electronics, PC World that specializes in computers, The Link which is a high end retailer that deals in communication equipment and services, and Mastercare which provides after sales services for electronics bought at the other chains. When deciding on the procedure to take to reach its goal, The Dixons Group had two alternatives. The first alternative was for it to develop on its own by expanding internally. The other option was to look into expansion from external channels. This would be done by acquiring businesses that maximized the effectiveness of Dixons as a whole business. They settled on a strategy that used a mix of both alternatives. It developed its internal capacity as Dixons by investing in the growth and diversification of the Dixons stores and by creating and growing the new arm called the link. So that not only was it targeting the majority low end clients but also the minority high end clients. Dixons went a step further to conduct external acquisitions by acquiring Currys, PC World and Mastercare. These were strategic acquisitions because they were in areas that Dixons felt were relevant to their business and that had potential for growth. This strategy allowed Dixons to acquire Currys which was an already existing big chain of electronic stores while also gaining another company that had great future prospects. By acquiring Currys Dixons also acquired Mastercare, which was part of the Currys. This was great for Dixons as it meant a step forward in the service sector since Mastercare would serve as an after sales service point for all its stores giving it an edge over competitors. For Dixons the acquisitions of these organization Currys and PC World meant horizontal growth for the company. The company absorbed a company that ran parallel and competitor enterprise, Currys, and that added to Dixons network of presence and distribution. By acquiring PC world Dixons entered a market that was parallel to its business but that has high prospects for growth as this was the time where acquisition of computers was moving from corporate entities to individuals. This gave it an edge as the acquisitions complemented the original company and helped it gain market share. From the acquisitions, Dixons accrued some benefits. First the fact that it now became a group of companies meant that it could develop its business horizontally while maintaining its authority as a leading electronics and electronic retail company. When the resources of these companies were fused Dixons gained more from economies of scale and gave it efficiency its commercial activities. Dixons also greatly benefited from the synergy that emerged from the acquisitions. According to the synergy equation 2+2=5, a group of businesses is more advantageous than a single one. This is because the group commands more influence in purchasing, distribution channels, customer care, service, product development and management. In 2008 IBM announced the results of a study involved more 1500 change management personnel who came from 15 countries. The study revealed the major impediments to change implementation revolved around corporate culture and people. Close to 60% of the personnel and project managers surveyed said that the biggest challenge to implementing change in their respective organizations was changing the mindsets and attitudes of the employees. Another 49 percent of this surveyed population was of the opinion that corporate culture was the biggest obstacle to change implementation. These two challenges, corporate culture and employee mindsets and attitudes, were viewed as more important than challenges such as shortage of resources. This led to the conclusion that corporate culture and employee mindsets were hard to change even in the presence of abundant resources (NBC, 2008, par1). Of the projects surveyed only 41% were described as successful while the remaining 59% considered as being failures. Of the 41% that succeeded the top 20 percent who were apply named change masters by the study had an 80% success rate in their projects. On the other hand the bottom 20 percent of the sampled organizations named the change novices, reported a success rate of only 8% in their projects. Because today’s economy is globally integrated, companies need to adjust their traditional perspective of what is supposed to be normal within their organizations. These companies need to expect change and to develop categorical systems that they can use to deal with change in a timely and effective manner so as to stay ahead of their competitors. According to this survey, organizations need to be most competent in the management of change. In order to come up with recommendations, the survey looked at the differences between the enterprises that registered 80% success in their projects and those that registered a mere 8%. The survey discovered a big connection between the success of a project undertaken and some four key areas of focus which collectively are referred to as the change diamond. . These areas of focus are: Factual insights and real actions: This means that organizations need to have realistic perspectives of changes that they face and their degree of complexities. Organisations then need to follow this up with targeted actions aimed at addressing these challenges. According to the survey, the organizations that are aware of the challenges facing them are more likely to succeed than those which do not. The survey outcomes showed that they were two times more likely to succeed and have 27% less failed or troubled projects. Concrete methods, concrete benefits: this approach requires that an organization comes up with methodical approach that targets the outcomes of change and that follow set project management strategies. According to the survey, organizations that followed set procedures for change implementation registered 52% project success rate. Those organizations that did not follow a specific strategy and made it up according to the situation registered a dismal 36% success rate in their projects. Superior skills, better change: This approach states that the organization needs to disburse resources so as to ensure that top management sponsor the change, that dedicated change managers are identified and the personnel are equipped to implement the change. According to the survey, employee engagement is very important as 72% of project leaders believed that this was crucial. 70% of these project leaders also stressed the importance of well-timed communication and honesty. Accurate investment, right impact: this approach suggests that an organization understand the types of investments that offer greater returns that translate to project success and invest more in them. The surveyed organizations spent an average of 11% of the project’s budget on the actual activities of change. The top 20% most successful companies spent only 2% more on change. They however spent it on targeted activities like creating awareness of the toughness of the project and skills development among the employees to tackle the project. This is what made them more successful. For an organization to successfully implement change it has to ensure that all four approaches are used. If the organization fails to implement even one facet, its success in implementing change will be inhibited. Other studies have shown that the work output of individuals is undermined if they are subjected to an environment where the patterns of relationships are mechanical, repetitious and unchanging behaviors and perceptions. The individuals within the organization see each other in ways that are not subject to scrutiny, and where they perceive each other based on set roles and that allow for some behaviors while denying others. This element is characterized by split and projection mechanisms. This is where the individuals insolate (split) various emotions and project them on each other. This is such that, individuals perceived to hold a certain emotion, like the clown, are only recognized when their perceived skill is needed and used. For example the perceived clown gets recognition when he cracks a joke to relieve a tense situation. In the long run this undermines individual work output as individuals become partly present and partly absent as aspects of him become available for expression while others remain hidden. This sabotages work collaborations since collaborations are usually based on individuals jointly negotiating influence and authority depending on the tasks at hand instead of rigid perceptions (Kahn 2004, p. 8). If such perception persists then they hinder the change managers from working effectively with the personnel in the organization to achieve change and it also makes it hard for the individuals to focus on the task and to collaborate (Graetz et al 2012, p. 2). So change mangers must help individuals within the organization to let go of this pathological certainty about each other. They should also provide what is termed as a holding environment where the individuals are safe to discuss their opinions and perceptions of one another and the limiting patterns they have. This will help them come up with new ways to relate to one another that will be more beneficial to the change process. This strategy is drawn from the infant-mother relationship where mothers “hold” infants to make them feel safe enough to experience new stimuli without getting over exited or stressed by it (Kahn 2004, p. 9) Organizational change is meant to boost an organization’s performance and to make it more competitive in its business environment. Businesses have to continuously reinvent themselves in order to remain relevant in the ever changing global business environment. They cannot afford to remain complacent as change is inherent in human nature making it a real fact facing organizations today. Failures in organizational change are mostly individual based where individuals may not be ready for change or may not be well equipped to execute or accept te change. Fact is that even if all other resources are abundant, the individual remains the most important determinant of the success of organizational change. Taking an example from the Dixon Group it is important that organizations determine clear goals that are effectively communicated to its personnel and that these personnel are well facilitated to effect and accept these changes. Only then will organizational change be effective. References Amankwah-Amoah, J & Debrah, Y 2010, ‘The Protracted Collapse of Ghana Airways: Lessons in Organizational Failure’, Group Organizational Management, Vol. 35, No. 5, pp. 635-665 Andrews, R, Boyne, G.A., & Enticott, G 2006, ‘ Performance failure in the public sector’, Public Management Review,Vol. 8, 273-296 Business Case Studies 2014, Organisational Change: A Dixons Group Case Study, Business Case Studies UK, retrieved 5 May 2014, Carmeli, A, & Schaubroeck, J 2008, ‘Organizational crisis-preparedness: The importance of learning from failure’. Long Range Planning , Vo.l 41, 177-196. 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