Structural Changes in Organisations - Term Paper Example

1 Introduction The heart of strategy lies in its competitive advantage (Porter M.E. 1980). When a firm becomes different by offering value, quality and some attributes through which it offers some uniqueness then it will become an above average performer in its industry. But to arrive at this stage the firm must make difficult choices. This calls for change. . However, when change is contemplated, organisations are faced with the dilemma of resistance from the employees and this becomes a major hurdle. Therefore, apart from other changes, managements now feel that employee involvement through empowerment takes priority in any change event. Indeed Cummins and Worley (2005:306) state that "Faced with competitive demands for lower costs, higher performance, and greater flexibility, organisations are increasingly turning to employee involvement to enhance the participation, commitment and productivity of their members." Failure of planned organisational change is due to many reasons, but none is as critical as the employees’ attitude towards the change event. Schein (1987) has addressed the failure of organisational change by arguing that the reason so many change efforts run into resistance or outright failure is traceable to the organization’s own inability to effectively unfreeze and create readiness for change before introducing a change plan. In this respect, organisations often move directly into change implementation before the individual or the group to be changed is psychologically and emotionally ready. As a corollary to this observation, others have directed their attention to a range of variables that may encourage change readiness among employees. The idea of readiness for change can be defined as the degree to which employees hold positive views about the need for change or change acceptance, besides the extent to which employees believe that such changes are likely to have a positive implication for them and the wider organisation (Armenakis et al., 1993). Cummins and Worley (2005:105) define Organisational Development as ‘a system wide application of behavioural science knowledge to the planned development, improvement and reinforcement of strategies, structures, and processes that lead to organisational effectiveness’ The process of organisational development begins with identifying a model for understanding the organisation. Successful diagnosis requires understanding of its architecture that is the design of the organization. One has to look at the informal and formal side of the organisation; whether the leadership is more bureaucratic or organic; and if it is operating in stable or changing environment? (Cummings & Worley 2005:83). 2 Models and Theories of Change Models are used for study the architecture and review the fit of an organization. It is important to identify a model that fits the member’s image of the ideal organization (Cummings & Worley: 2005). Fundamentally the models provide a framework for planning and executing organisational change, examining an organisation and deciding where and when change would be suitable (Cummings & Worley 2005). By using any of these models one can gain understanding of its current functioning and to develop strategies. The process of this diagnosis involves finding the right model that describes the relationships among different features of the organisation as well as its context and effectiveness The models tell Organizational Diagnosis practitioners what to look for in diagnosing different departments, groups or jobs; in other words they represent a road map for discovering current functioning (Cummings & Worley 2005) 3 Employee Resistance Most employers continue to believe in theory X (McGregor 1960) and assume that by nature employees are lazy, inherently disliking work and without any ambition. This assumption has lead to management policies of repression, coercion and non-appreciation of performances. This is in fact the main cause of employee resistance to change as they fear that they will bear the brunt of change without any satisfaction or reward. Derr (1986) and Driver (1988) have found during their research that although individuals differ somewhat in their preferences for stability and status quo, but they definitely are averse to change. Political resistance, occurs when change threatens powerful stakeholders (Cummings & Worley, 2005). Lewin (1951) suggested that reducing the forces resisting change was a better way to overcome resistance to change than increasing the forces crushing such resistance. Cummins and Worley (2005) have drawn upon and elaborated on Lewin (1958) and described the three phases of change. They argued that in Phase 1, organisations must unfreeze the system. This unfreezing phase may take a variety of forms: creating a sense of urgency about the need for change, educating managers to behave dif­ferently, merging with another organisation and so on; but the under­lying idea is that the system must be "shaken up," or confronted with a compelling need to do business differently, and must break free from its present way of doing things so that in a new, more compliant, perhaps even vulnerable state or condition, the system is accessible and amenable to change interventions. The second phase, then, is of movement, or changing the organisation by moving in new directions with different technologies and ways of oper­ation. Lewins (1958) point was that unless and until an unfrozen condition is achieved, the system will not move or change in any meaningful way. Once change, or movement, is underway, the third phase, refreeze needs to be initiated. The change that has occurred cannot be allowed to dispel or drift away. The new, changed condition or state therefore needs to be reinforced with a process and accompanying infrastructure in place to maintain the new system. This means, for example, having a different extrinsic and intrinsic reward system that will support the performance that are fitting with the new, changed conditions. The employees are then able to see a clear and direct relationship between the organisations mission and strategy and their individual roles and responsibilities. The point to be noted here is that as the new state is frozen in the early stages of change, it is tentative and somewhat vulnerable, and until it takes shape, is subject to further change that needs to be controlled in order that it remains on track. On the group level organisational culture has a powerful effect on the performance and long-term effectiveness of organisations. Research findings indicate the importance of culture in enhancing organisational performance (Cameron and Ettington, 1988 and Trice and Beyer,1993) .But culture change is intimately tied up to individual change. Unless managers are willing to commit to personal change, the organisations culture will remain unchanged. 4 Structural Changes Cummings and Worley (2005:150) state that “Interventions aimed at structural design include moving from more traditional ways of dividing the organizations overall work ... to more integrative and flexible forms”. Studies have shown evidence of this fact that the organisations that engaged in TQM and downsizing as strategies for enhancing effectiveness had to undertake change initiatives (Cameron, Bright, and Caza, 2004). It is clear that successful implementation of both TQM and downsizing programs, as well as the resulting effectiveness of the organizations performance, took place when these improvement strategies were set in a culture change. In cases where TQM and downsizing were implemented independent of a culture change, they were found to be unsuccessful. Again, when the organisational culture was an overt target of change, and the TQM or downsizing initiatives were entrenched in the overall culture change effort, they were successful. Culture change was found to be the key to organisation’s effectiveness. 5 Changing Organisational Culture The importance of change in the organisational culture can be understood in another way. When values, directions, definitions, and goals stay constant despite changes in procedures and strategies the organisations return quickly to the previous status or revert to status quo. The same holds true for individuals. Personality types, personal styles, and behavioral habits rarely change in any significant manner, despite change programmes. Without an alternation of the fundamental goals, values, and expectations of organisations or individuals, change remains only on surface and of is of short duration (Quinn, 1996). 6 Transformational Change When change is a total and revolutionary in context of the organization’s culture and design it becomes Transformational Change. The very basic elements that define the organisation are altered. Such transformational changes take place rapidly so that they are not delayed by politics or individual resistance. The major requirement of transformational change is that the majority of the individuals in an organisation must change their behavior (Cummings and Worley 2001). Most organisations in general experience periods of smooth operation and growth. During these periods of growth, small change occurs as part of the normal development of the organisation. However, external and/or internal changes in the environment often cause existing cultural and procedural makeup to become ineffective. In response, successful firms engage in transformational change projects to either overcome these threats or convert them into opportunities for competitive advantage. Swift transformational shifts in the structure, culture, and process allow the organisation to return to another smooth operation and growth. This cycle get repeated when external or internal pressures mount again to pose fresh challenges. In modern times these cycles are becoming shorter due to globalization and growing competitiveness. Therefore the faster an organisation can get through the transformational period, the sooner it can take advantage of the changes and again return to a smooth period of operation (Cummings and Worley 2001). 7 Empowerment of Employees Executive leadership has three key roles in transformational change. The first is envisioning. This involves articulating the new strategic direction and standards for performance. The second is energizing. Executives must demonstrate excitement for and be examples of the expected change. The third is enabling. Leaders must provide the resources necessary to accomplish the change by developing new management practices and using rewards to reinforce new behaviors (Cummings and Worley 2001). Cultural transformation in the entrepreneurial and small business organization is a change that takes place when top management realizes that it is important to step away from the familiar hierarchy style of management and integrate a team-oriented theme throughout the company. It is vital that the top management believes in the transformation and supports the change totally. According to Gilmore, Shea and Useem (1977), “when the change is successful, the company will be vision-driven, entrepreneurial, team-based and “boundary less”. This transformation requires the linking together of the organisation’s vision, management and enployees. The vision needs to be clearly defined, easily understandable and be achievable to be effective otherwise there will be a high rate of negativity towards the change. Employees will not try to change if they feel that the change is not within their reach. Atkinson and Millar (1999) believe that the answer to this is modeling or bench marking of excellence, motivating others to express their skills and attain results through teamwork. According to Atkinson and Millar (1999) there are three important steps need to be taken when preparing for a cultural transformation of the organisation. The first is to define future desired outcomes. This is vital, because the organisation and the employees needs to know what they are looking for in the end. The organisation needs to make sure that their employees do not feel that their efforts have no apparent reason. This has to be communicated in unequivocal language to all employees.. The second step is to formulate for contingencies against any factors that may hinder or help the transformation. This will include involving first-line workers as well as top management to get their views on the common goal the company is interested in achieving. They need to come together and reflect on any ideas that may help reach their goal. The third step needed is to work on any obstruction that may cause problems in the future. 8 Conclusions Structural changes in organisations that are planned for ushering in organisational developments cover all resources except the human resources. These are mechanical changes and can be brought about with diligence. But human resources are the most important and flexible ones that will bring about effective changes in the organisation. However they need psychological handling, emotional caring and involvement of individuals and teams and it is the Transformational leadership that can encourage them to give both commitment and performance. At the end of the day motivation comes from pull rather than push, and enjoining employees to collaborate is definitely the desired option for a successful change. 9 Bibliography Armenakis, Harris, and Mossholder. (1993). Creating readiness for organizational change. Human Relations, 46, 681-703. Atkinson P. and Millar I., Accelerated cultural transformation, Management Services Enfield 43 (1999) Cameron, K. S., Ettington D.R.: 1988, “The conceptual foundations of organizational culture”, in J.C. Smart (eds.), Higher education: Handbook of theory and research (New York: Agathon), Vol. 4, pp.356-396. Cameron, K. S., D. Bright, & A. Caza (2004), Exploring the relationships between organizational virtuousness and performance, American Behavioral Scientist, 47(6), 766-790. Cummings, T. G., & Worley, C. G. (2001). Organization development & change. 7th edition). Cincinnati, OH: South-Western College Publishing. Cummings, T.G. & Worley, C.G. 2005. Organization Development and Change, 8th ed. Mason, Ohio: Thomson Southwestern. Derr, C.B. Managing the New Careerist. San Francisco: Jossey-Bass, 1986. Driver, M. "Careers: A Review of Personal and Organizational Research." In C.L. Cooper and I. Robertson (eds.), International Review of Industrial and Organizational Psychology (1988), 245-277. Gilmore T., Shea, G., Useem, M. 1997. Side effects of corporate cultural transformation. Journal of Applied Behavioral Science. 33:174-189.  Lewin, K. (1951). Field theory in social science. New York: Harper & Brothers. Lewin, K. (1958). Group Decision and Social Change. New York: Holt, Rinehart and Winston. McGregor, D. The Human Side of Enterprise. New York: McGraw-Hill, 1960. Porter, M. E., Competitive Advantage. New York: Free Press: 1980 Quinn, R. E. (1996). Deep change. San Francisco: Jossey-Bass. Schein, E.H., ed. The Art of Managing Human Resources. New York: Oxford University Press, 1987 Trice, H., and Beyer J., 1993, The Cultures of Work Organizations. Englewood Cliffs, NJ: Prentice-Hall. Read More