Organization Changes - Essay Example

Organization Changes Organizational modification is a substantial issue in modern world. It is a systematic procedure by which any organization improvestheir performance as it works in the direction of its ideal state. Organizational change happens as a response to an ever-changing environment, a reaction to a current crisis situation (political or economic or social), or is triggered by top authorities of the company itself. Effective organizational change is not just a procedure of modification, but also needsadequatehandling capabilities. Along with implementation of changes, organization must also consider why it is important to know the reason of changes. Finding out the reason of organization change in present and past is important for not only the people associated with various companies but also for the common men to get a clear view about the changing job pattern and organization restructuring around them. Introduction: Changes are necessary in order to accomplish goals and objectives such as improving efficiency, cost effectiveness, competing for money and resources, or improving services to clients (Quinn et al, 2007, p. 76). All organizations across the globe need to accommodate changes in their system to remain competitive in the market. According to Burnes (2004) revolution is a key featureof every organizational life, both at an operative level and strategic level. In order to maintain effective position in the competitive market there should be no uncertainty on the subject of the importance to any association of its capability to recognize where it needs to be in the years to come, and how to accomplish the changesessentialin order to getting there. The most common known targets of organizational change include vision, strategy, culture, structure, system, production technology, and leadership style (Yang, Zhuo, & Yu, 2009). From a submissive viewpoint, organizational change happens as a response to fluctuating environment or as a reaction to present crisis situation. Amore active viewpoint is that it is caused by progressive top management and the changes are more evident when the organization has just undergone a transfer of executive power (Haveman, Russo & Meyer, 2001). The main objective of this paper is to analyze the external and internal forces which are responsible for the changes in the organizations and also a detail discussion about one specific internal and one specific external factor associated with the organization changes. Factors associated with organization Changes: The factors associated with these changes can broadly be classified under two distinct heads. One is the external factors and the other one is the internal factors. Among internal factors one most important factor is the growth of the organization. To ensure steady growth various organization undergone several changes both structurally as well as functionally. In order to ensure continuous growth the top management introduces these changes in the system. Not only the growth factor, factors such as integration and collaboration (when a company used to merge with other or acquire other small business entities), keeping the brand image in-tact (identity crisis), difference of approach of the top boss of the company (when a new person take charge) and political pressure from inside the organization also play key role in promoting change in the operation and structure of the organization. Apart from the internal factors, there are few external factors as well. Among various factors one important one is the geographical-political pressure. Various organization in the USA change their mode of operation after the 9/11 incident. The fall of Berlin Wall in 1989 changed the market for ever in the European countries. Companies like 3M changed their operation forever after the structure of European market changed in 1989. Another external factor is mimetic isomorphism-which refers to changes copied by one organization of another one who are successful in their own field. Mandated pressure is also another external factor which affects the organization changes. Apart from the above mentioned external factors, Forces such as, change in government regulations (example: Workplace Relations Act 2009), use of technology (highly refined and very expensive analyticalapparatus for hospital and medicinalcenters), monetary conditions (fluctuating interest rates, changes in monetary policy), and social values- all these are part of external factors. Additionally, some forces of change are resulting from internal creativities that may or may not be connected to external forces for change.Bearing in mind, that whichever force of change dictating (external or internal), organizations need to align their strategies (of change) with both the external environment and the internal environment as pressures from these could be highly risky (Groupa & Ulen, 2008, pp.1565-1567). External Factors affecting organizational changes: Currency Factor: Based on the economy of various nations, several organizations across the globe have incorporated various changes in their organizational structure as well as their way of operation. Among various economic factors, currency plays a major role initiating various changes in the organization functionality. With the changing time at present “economic well-being is no longer measured by exchange value and GNP but by the use value of a product and the wealth presented by the stock of existing goods.” (Stahel, 1986). In order to combat the effect of currency changing its value across the countries companies like Xerox started to sell their service to the customer instead of particular product. Stahel in his review mentioned this strategy as “selling the use of goods instead of the goods themselves” (Stahel, 1986). The economic structure (mainly the currency) must make the most of the return from these new possessions:” a fleet of existing goods in a dispersed market”. (Stahel, 1986). A revision of modern time’s eco­nomic, legal, and tax arrangements to these new supplies may be an important requirement for countries to appeal and raise effective organization for development of the society. For example, Schindler now promotes themselves as a provider of “carefree vertical transport” in the field of elevator elevators, a plan that delivers all the facilities needed by customers. And Xerox as an organization now designing their plan based on selling photocopying ser­vices in place of photocopiers. All these strategies are incorporated to ensure people get value for their money. Companies with foreign branches are depending largely on the global currency fluctuations. In case of the private investments, changes in exchange rates can cancel out profits margin drastically. One of the latest examples of fluctuating currency is being observed with McDonald as in 2011 although their sales volume increased in the European market but due to Weaker Euro, their actual profit comes down. To resolve this the easiest way for the organizations is to monitor the scenario closely and take appropriate action based on the performance of the currency of the particularnation. Company can also adopt “lock into an exchange rate for a fixed period of time by setting up a forward contract. If the exposure estimates are correct, this can be a beneficial approach.” (Euroinvestor, 2012) Companies can downplay or minimize the loss they have incurred from devaluation of one currency by earning more from other countries where the currency is performing strongly. To achieve the same company must have a flexible operational plan in place to incorporate sudden changes in their mode of operation. Internal factors affecting organizational Changes: Growth of the organization Like the external factors, internal factors are also associated with the changes in the organization structure and operations. There are mainly five different internal pressure associated with the organizational restructure. These are: Growth, pressure associated with integration and collaboration, pressure developed from creating new image of the company in new era, change in the top management and internal political pressure (Palmer, 2005, p.61). Among all these Growth is an important factor. In order to ensure the growth is organic and stable the top management needs to introduce various kinds of changes in the organization. These changes may be structural as well as functional. For example, Kevin Sharer in the year 1992 joined Amgen Inc., the world’s largest biotech. Organization and to achieve his objective to making the company a major pharmaceutical one he went beyond the strategies of the earlier days which was based on hallway conversations. The marketing strategies were made without considering the actual market condition and sales force was also less responsible. To ensure the growth he implemented the concept of individual sales performance evaluation instead of regional concept, monitoring of the sales performance weekly basis, introducing data entry by the sales force related to business calls and continuous evaluation of the sales process. All these operational change alongside the structural change of individual sales force ensure drastic growth for the company (Palmer, 2005, p.61). Economy and Growth-how these two factors change the organization: A Case study Microsoft is the leading company in the world of information technology. The company was founded by Bill gates and slowly over the year it has able to get a strong hold in the It market across the globe. If the organizational structure of the company is analyzed, then it is very clear that there is a distinct restructuring taken place throughout the year. The most important fact is that, being a multinational company the organization need to change its functioning depending on the country of operation as different countries have different economic policies. If we consider the internal factor first that is the growth option then it is very clear that to achieve growth there was fair bit of changes that took place in the company. When Robert J. Herbold joined the company from P & G, he was surprised to see the lack of discipline in the company and more importantly he was surprised to see that in terms of decision making as well as prioritizing the importance there was lack of discipline among the staffs of the company. While analyzing the performance of the company, he found that this indiscipline hampering the growth of the organization. In order to ensure growth, the old concept of hallmark corridor of decision making was abolished as this was not appropriate to control large organization like Microsoft. To ensure the growth, he implemented the policy of formalized decision making system and prioritizing the objectives related to decision making more systematically. He also made changes which were necessary to balance the organizational creativity alongside introduce more discipline in the overall operations (Plamer, 2005, p.61). Likewise, during economic slowdown Microsoft also faces economic challenges like other big companies and with effective measurement they able to face this challenge. Craig Mundie, chief research and strategy officer of the company informed that, despite the financial crisis the organization will continue investing in R & D which they consider as a tool or way to fight the financial crisis. At the same time, Microsoft was focusing on “lowering customers total cost of ownership, tighten its own spending to encourage operational efficiency, and choose its investments carefully in the near term as the U.S. and global economic outlook continues to be volatile.” (Montalbano, 2008) In their plan to manage expense and invest more in R & D, Microsoft reduced its expenditure $500 million during the financial crisis phase in 2009 by reversing its recruitment strategies and cutting operative costs such as transport expenditures etc. (Montalbano, 2008). Oiaga (2009) in his review supports the strategy adopted by Microsoft and mentioned that “Companies that continued pouring money into research and development during the Great Depression of the past century, found themselves in a position to take advantage of innovations developed at the end of the crisis” (Oiaga, 2009)- this was the mindset of the top employees of Microsoft as well. Why the ‘Reason of Changes’is Important: Finding the reason of change is absolutely important to find new direction. The changes that different companies incorporated over the time give ideas for others regarding how to fight adverse condition. “Why Change”-answer to this question is absolutely important because without these answer changes become a luxury or hobby. (Lawler, 2008, p. 249) He in his review mentioned that “changes need to have compelling reasons behind it, not just vague scenes that is something ‘nice to do’. (Lawler, 2008, p.49) Finding the answer of ‘why change’ is also important as it is best way to justify and also compares the organization’s competitive environment and how much fit it is in this environment. The answer of this question also helps the world to understand the culture and nature of the workforce of a particular organization because any change in the organization, whether it is structural or operational,affects the workforce directly. The culture of the company can also be studied from analyzing this question (Schabracq, 2009, p.8). Conclusion: Davis in his analysis has also mentioned the fact that “when an organization needs to change, frontline employees often best understand customers’ needs and feel the urgency to improve, and top leaders have access to the most information and the clearest view of the goal.” (Davis, 2014) Finally, there must be similarities and balance between change plan and organizational context- as this coordination plays a substantial role in the accomplishment or failure of organizational change. The main objective of organizational modification is to inaugurate new pattern of thinking and behavior among the employees as well as in day to day operation. If the new design conflicts with the existing ones to develop resistance and if that resistance is more powerful than the change initiated then the process of organization change is bound to be a failure. Therefore, while planning a change, the organizational context must be taken in to attention along with external and internal factors. References Burnes, B. (2004), Managing Change: A Strategic Approach to Organizational Dynamics, Harlow: Prentice Hall. Davis, P (2014), What makes an Organization Change? Yale Insights; retrieved on 18.3.2014 from http://insights.som.yale.edu/insights/what-makes-organization-change Euroinvestor, (2012), How exchange rate fluctuations affect companies, retrieved on 27.3.2014 from http://www.euroinvestor.com/ei-news/2012/07/17/how-exchange-rate-fluctuations-affect-companies/19796 Garoupa, N. and Ulen, T. 2008, Responding to change: internal and external factors in organizational successes, Alabama Law Review, Vol. 59, No.5: 1555-1633. Haveman, H. A., Russo, M. V., & Meyer, A. 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