Large Corporations Managing Change - Assignment Example

Large Corporations Managing Change Introduction Organizations are dynamic entities. Thus given the inherent dynamism of firms, it is imperative that they have to change from time to time. However, the process of change is not easy and managing change is an uphill task. Organizational change is a very important term from the perspective of management. So, the linkages between organizational change and the factors those play a vital role in the business environment of the firm needs to be assessed. Change has been defined by various authors in a multitude of ways, mostly depending on the nature or context of change that we are concerned with. In the organizational context researchers define change as “necessary way of life in most organizations”1. Again, some other researchers have defined organizational change as “a relatively enduring alteration of the present state of an organization or its components or interrelationships amongst the component and their differential and integral functions, in totality, in order to attain greater feasibility in the framework of the current and future environment”2. The present study intends to investigate the reasons that compel firms to change, and how companies manage the change process. In this regard, the role of internal change drivers and catalysts is vital. 1. Reasons for Change Mills and Mills write in their book Understanding Organizational Change that the operations of a company as well as other organizations are affected by a variety to environmental factors such as leadership change, mergers and acquisitions, downsizing, introduction of new products, industrial disputes, political and legal climate, changing consumer preferences and technology3. Change is the only thing constant in the environment and is taking place every day. However, when we refer to organizational change, we are specifically referring to change that has significant impact how employees think about their organization and the changes they need to make in their work to cope with it. Organizational Change is thus referred to as a change in the core aspect of a company’s operations. 2. Resistance to Change It has been determined with the previous discussion that for organizations change is not merely inevitable but to a great extent essential for survival. However this does not automatically imply that people would be readily accepting the change. The truth is that changing an established behavior makes people uncomfortable, and the result is resistance4. Implementing change is a very challenging task. The unfamiliar makes the employees suspicious; it is their natural concern that transition from old to new would be difficult, especially if it involves learning something new and risking a chance of failure. The managers that are introducing the change need to understand that resistance to change is a very powerful and useful survival mechanism for their subordinates. Imagine that the subordinates have been doing their jobs in a particular manner for several years and have been pretty successful at it; they have made profits for the company and made money for themselves too. So when change is introduced, they are being offered an untested new way of doing business. Thus employees have the right even the responsibility to their company and the share holders to question the reasons for change and for impeding a previously successful way of doing business. This further implies that the biggest challenge to accepting change is previously successful strategies, and they should be because it accepts past achievements as well as questions ill-advised change5. 3. Change Management Change management and conversion of a change into its successful implementation requires planning and execution. A change is seldom implemented without resistance and in most cases whenever change is announced, employees start complaining. There are various reasons why employees resist changes and these reasons vary from person to person. In a deeper view, it is but the conflicting goals of the organization and the employee that creates such resistances among employees. So, the management needs to bring in change agents – people who would be held responsible for change6. Organizational change is basically a complex phenomenon and thus involves several people7. 4. Change Catalyst The word “catalyst” refers to an element that accelerates and speeds-up change at a rate which is faster than it would otherwise have been natural. It can also be referred to as a force that speeds-up action. As it has been already established that change is an ongoing process, this change causes turbulence in the environment of the organization. Once this environmental turbulence increases, it impacts the way an organization performs. This change catalyst determines the degree to which the organization will respond to it for their survival8. For example if there is low level of turbulence such as the competitor reduces the price of their product, the company may respond by making some basic operational changes. On the other hand if there is a higher level of turbulence such as a competitor comes up with a technology which can provide them with a strategic advantage, in this case the response would be both operational and strategic in nature. In terms of organizational change, the changes that take place within the context of the firm vary in its reach as well as objective. Thus the various stakeholders who are involved in these changes are as follows: people, purpose, strategy, structure, objectives, technology, tasks, and culture9. However, these changes find the objectives intertwined and thus the many or all of the stakeholders are also integrally involved these processes of change10. Thus for organizational change to occur, large corporations have to initiate processes that better the present state of affairs. 5. Concept of Change Agent A change agent is defined as one who acts as a catalyst and assumes the responsibility of managing the activities of change within the firm11. The key characteristics of such a change catalyst are challenging status quo, thinking outside the box and having a 360 degree view of the company’s strategies. In the early stages of change management, the organization would seek assistance of a change agent, a person responsible for executing the change effort12. Change agent helps management in identifying the need for change as well as suggesting a course of action. A change agent can be anyone, could be a consultant from outside the organization or an active member from within the organization. An inside change agent will have the advantage of knowing the employees, management expectation and the company operations, which can be very useful in designing a strategy which would be according to the company’s expectations. But an inside change agent may be too close or comfortable with the present situation to view it objectively. According to Perrott these change agents may not essentially exist at the top of the hierarchy, they need to possess personal attributes that are needed to motivate and inspire people13. They key element behind motivating people to accept change is to have infectious positive attitude that can overcome skeptical attitudes towards change. An outside change agent is expected to be less biased and objective. Finally the change agent collaborates and helps in execution of the change and resolving issues within departments and individuals. Change agents cannot limit themselves to a top-down rational approach. There needs to be coordination between the people making the strategies and those executing it. Thus staff members must be considered in drafting strategies, carrying out activities as well as identifying core competencies. 6. Internal Drivers of Change The drivers of change are agents that clarify what drives the need for change14. Change is catalyzed when there is a dynamic change in the organization’s environment, this results in new requirements for the organization to achieve success. These changes in the environment can result in a need to change organizational structure, updating technology or business process. If these catalytic changes are very significant or transformational in nature, an organization may need to do a complete overhaul in their culture. External drivers are those factors that mostly fall outside the control of an organization; this includes factors such as legal structure, economy, competitor activities and socio-cultural structures. The internal drivers are factors that fall within the organization; they propel the organization towards change. This includes factors such as limited finances, limited skill-set of employees, change in leadership and high turnover and absenteeism15. 6.1. Organizational change from the point of view of mergers and acquisitions Mergers and acquisitions are a very common phenomenon today, especially in this global economy. The functions as a strategic approach by many firms to accomplish objectives such as entering new markets, expand, gain and allocate capital16. Change management in this regard needs to be managed beforehand, the managers need to plan in advance so they have a systematic procedure to manage the change caused by resulting outcomes of M &A. Mergers and acquisitions lead to major changes in the organizational structure, the number of employees, the role of employees, and the like17. Thus managing these issues is one of the foremost imperatives for the management. The challenges brought about by Mergers and acquisitions in an organization are: aggressive financial targets, cultural clashes, restructuring, low employee morale and downsizing18. In case of M & A, there is extensive pressure on management to manage change, this is because now they have time constraint as well as a lack of integration in the environment. The role of managers becomes complicated as they need to manage effective communication, tackle unhealthy political activities and establish their position in the new company. In this case the role of change agents would be to have customer orientation, applying a defined leadership, effective communication and tackling resistance at every level19. 6.2. Organizational change due to financial problems Financial issues many a time lead to organizational changes. For example, Du Pont, the well-known MNC, had to usher in a lot of changes when they were faced with financial problems and in fact had to close down some of their units including their explosives unit20. Organizations, when faced with tough times and declining positions, are often forced to take a reevaluation of their operations, organizational structure, people, processes, products etc. Thus effective change management plays a key role in managing such situations as poor financial conditions of the company. It has been commented by researchers that the actual problem does not lie in poor financial performances or that they had piled up huge debts, but that the company failed to respond to the changing times21. 6.3. Organizational change due to Change in Leadership Management change often forces organizational changes in companies. Companies change their managing styles from time to time. Also, the top management changes after certain intervals of time. At times, management changes necessitate that various organizational changes be brought about in other personnel as well in order to suit the new or change management styles. For example, British Airways brought in a new chairperson who was instrumental in identifying some organizational problems and changing them effectively22. 6.4. Technological forces The given the level of importance that technological forces hold in the context of organizational change, it is imperative that firms have to keep themselves abreast of the changes that take place in the technological environment they operate in. In keeping with these trends, technological changes may have both positive as well as negative effects for the firm. However, irrespective of the positive or negative effect that any technological change may bring about, any firm should always make it a point to implement the processes of continual learning, adaptation as well as innovation in terms of individuals, teams as well as full firms so as to stay at par with the external technological environment that may otherwise become a deterrent to organizational change or even for that matter existence. 7. Managerial Framework for Change Management Change is often a result of conflict that arises when the standard operating procedures are challenged in favor of newer untested ideas. The change management process is based on the assumption that the organization will be better off after the change has been implemented. Since the organization function in a dynamic environment, continuous adaptability to the changing environment is an ongoing process in most organizations. Griffin and Moorehead define transition management as the process of systematically planning, organizing and implementing change that would allow the organization to shift from the present state of operation to a future fully functional state23. The management must take upon themselves to act like transition managers and coordinate activities with the change agent. The role of communication is very important in the transition process from all the key payers to suppliers and staff employees. Over the years many organizations have shifted towards leaner organizational structures, they key reason behind such a move is the higher degree of responsiveness to manage change. For change management the role of management and human resources has been greatly emphasized. 8. Conclusion Organizations work in a dynamic environment so adapting to change is a continuous process for survival. Change is ongoing but when we refer to organizational change we mean a change in the core aspect of a company’s operations. Implementing change is a very challenging task and employees become suspicious of change, as a result the company faces resistance to change. An organization is influenced by changes in the internal and the external environment within which it functions. A change catalyst is one that speeds-up the change process, if the organization is adaptable to respond to the catalyst in a timely manner, they can have a long-term survival. 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