Managing Change in Organisation - Case Study Example

Managing Change in Organization Contents Introduction page 3 2. Background to change page 3 a. Bureaucracy - organizational change and structure : page 4 b. Hierarchy - organizational change and structure : page 5 c. Advantages and disadvantages Bureaucracy, Hierarchy : page 5 d. Different forms of organizational changes : page 7 3. System for understanding and involving others in the process of change : page 8 4. Models for ensuring ongoing change : page 10 a. Technological change : page 10 b. Opportunity-based changes : page 10 5. Summary of the main findings : page 11 6. Conclusions : page 12 7. Recommendations : page 12 8. References : page 13 Introduction The current global economic crisis has affected most areas of human life. No country or industry seems to be free from the negative impacts of the unexpected entry of global recession. Auto industries, IT sector and real estate industries were the worst affected areas in many countries. In America and Britain many people working in these sectors have lost their jobs and many others spending their day and night amidst the threat of losing their jobs. This report mainly focuses on the real estate sector in general and construction sector in particular to analyse the necessity of organizational changes under the present business environment. Moreover this report analyses the current business climate by taking references from the activities of one of the worlds largest real estate companies, Emaar Properties. “Emaar is perhaps best known for its Burj Dubai tower in the United Arab Emirates, still under construction but already the tallest man-made structure ever built. Construction of the tower is expected to be finished in late 2009, although the final height and number of floors is being kept under wraps until completion” (Emaar Properties PJSC, 2009) Emaar is an international real estate company having projects in Middle East as well as in Europe, North Africa, North America, and Asia. Background to change In fact all the organization irrespective in which sector they are operating, facing the challenges of reducing operating costs, to maintain their profit margins in the current economic scenario. They need to adopt suitable changes in their functioning, behaviour, culture and attitudes in order to overcome the current problems caused by the drastic economic situations. Change is inevitable in organizational setup, structure, planning, policies and strategy making as well. The objectives and the goals of the organization must be restructured in order to stay in the market. For example, an organization aimed to invest heavily on expansion projects before the economic crisis must rethink about their strategies on the basis of the current problems. Apart from all the above mentioned problems Bureaucracy and Hierarchy of the organization also can affect the change process in an organization Bureaucracy - organizational change and structure Max Weber, outlined the key characteristics of an organizational bureaucracy as: specification of jobs with detailed rights, obligations, responsibilities, scope of authority, system of supervision and subordination, unity of command , extensive use of written documents, training in job requirements and skills , application of consistent and complete rules (company manual), assign work and hire personnel based on competence and experience. (Borgatti, 1996) Bureaucracy is one of the essential segments of any organizational structure. “A bureaucracy is a form of organization based on logic, order, and the legitimate use of formal authority.” (Bureaucracy Basics, 2009) In Max Weber’s opinion, Bureaucratic organizations were an attempt to subdue human affairs to the rule of reason-to makes it possible to conduct the business of the organization "according to calculable rules (Borgatti, 1996) Bureaucracies need to be highly efficient and organized for the proper functioning of an organization. No organization can sustain their development with the help of an incompetent bureaucracy and bureaucratic structure. The changes in policies and strategies formulated by the top management in order to face the challenges from the market and the competitors must be implemented by the bureaucrats of the organization. If they failed to execute the vision and mission of the organization, then it will be difficult for the organization to function properly. Hierarchy - organizational change and structure Organizational hierarchy is important in ensuring proper control of activities within and outside the organization. For example, each employee of an organization must know who are their superiors and subordinates. Moreover they should have definite knowledge about the assigned duties and authorities of each and every person in the organization. A typical organizational hierarchy is given below. (Hierarchical Organisation, n.d)  Advantages and disadvantages Bureaucracy and Hierarchy Employees in an organization can function either individually or as part of different teams/groups. For example, marketing people function as a team in an organization where as the secretary, sweeper or driver functions individually. The top management of the organization can assign specific duties to the individual or the groups based on their skill set. Moreover the organization can advice the employees like; What is the individual or the group doing that they should continue doing? ; What is the individual or the group doing that they should improve in some way? ; What is the individual or the group not doing that they should begin doing? What is the individual or the group doing that they should stop doing?’ (Bellinger, 2004) On the other hand, bureaucracy has certain disadvantages as well like; Multiplication of administrative functions ,Vertical structure, Many levels of management, Much paperwork, routine and "red tape" Impersonal officials working to a fixed routine etc. (Bureaucracy Disadvantages, n.d) It is difficult in a bureaucratic structure to take quick decisions. Since the organization functions as a democratic institution, each and every decision regarding the functioning of the organization needs endorsements from different power segments. For example, in order to purchase some raw materials in Emaar properties the purchaser at first needs the permission from the purchase manager. The purchase manger will inform the accounts department and later the matter will be directed to the financial controller for approving the purchasing activities. Thus every action will be a time consuming process in a bureaucratic organization. Many levels of management and lot of paper works are other disadvantages of a bureaucratic organization. Hierarchy in organizations on the other hand defines the authority and responsibility of each employee quiet clearly. Moreover the employee will get a clear picture about the possible career options in that organization because of the hierarchical structure. Employees will exhibit better loyalty towards the organization in a hierarchical structure. The specialists will be inspired to function more efficiently in a hierarchical structure. On the other hand hierarchy at times can cause problems as well in organizations. The communication between the organization and the customers or the market will often slow down because of hierarchy and bureaucracy. The horizontal communications especially between the employees may be poor in such organizations. If rivalry exists in between departments rather than the organization will benefit from it (Hierarchical Organisation, n.d) For example, in Emaar properties, the planning department will plan the projects with respect to the market requirements and the economic conditions of the company. They may have specific laws regarding the amount to be spent in purchasing materials for each and every projects based on the price quoted for the project. If the quality/technical department withhold the materials with respect to inadequate quality, the production may not run smoothly. In some cases the interdepartmental rivalry between the planning, quality and production departments may create problems in Emaar properties because of the hierarchical and bureaucratic structure.  Different forms of organizational changes Organizational change happens when an organization deliberately make conscious efforts to improve the efficiency of the organization. There are many different forms of organizational changes. Structural changes and functional changes are two prominent forms of organizational changes. In structural change, the organization make valiant effort to restructure the organization by promoting efficient people to suitable positions, shifting some employees from one department to another etc. For implementing functional changes, the organization usually redefines its policies, strategies, functioning etc with respect to the external business environment. “Functional resources can be transferred to maximize the value creation as the environment changes” (Hien, n.d) Microsoft has announced major structural changes in their top management team of its wholly-owned Indian subsidiary - Microsoft India in 2003. The chief executive officer and the managing director became one person now instead of two. (Structural changes at Microsoft, post of prez junked, 2003) Microsoft has found problems in their functioning in India with two power centers. The two power centers, the CEO and MD failed to combine well in their Indian operations which forced Microsoft to think in terms of a single power centre. In order to reinforce the recovery of its electronics business, Sony has announced major functional changes in their organization in 2007. In addition to consumer electronics, semiconductors and component device businesses, B to B will become one of the pillars of Sonys future growth. (Sony Announces Personnel Appointments and Organizational Changes, 2007) The growing competition from consumer electric world has forced Sony to think in terms of diversification in order to stay in the market. System for understanding and involving others in the process of change “Stakeholders are defined as “individuals or organizations that stand to gain or lose from the success or failure of a system” (Boutelle, 2006) The main stakeholders in real estate sector or Emaar properties where the organizational change can be implemented are the owner and the shareholders of the company, customers, suppliers, banks, labour unions, employees, competitors, media, etc. “A stakeholder is any person with an interest in the process or the outcome of the proposed organizational change” (Change Program Stakeholders, 2008) The implementation of a new technology like a new accounting program can definitely bring considerable change in the accounting department of Emaar properties. The better functioning of accounts department will be beneficial to the suppliers and customers of the company. So a new technology introduced within the organization can bring positive changes internally and externally. Changes in the decision making body like the board of directors also can bring positive changes in Emaar properties. Better experienced and qualified professionals at the top of the company will always be an asset to the company. It is not necessary that the old traditional CEO’s and directors may be well aware of the current development in organizational principles especially under the globalized environment. Better coordination and functioning of financial institutions like banks can also affect bring reasonable changes in the organization. Some banks may impose strict norms for sanctioning loans or financial transactions which can be rectified by making changes in the organization’s financial activities with the banks. Changes implemented in the supplier and customer database can also bring positive results in Emaar properties. It is better to avoid bad suppliers and customers who fail to reach the standards set by the company. “Stakeholders are often in conflict with one another” (Boutelle, 2006). It is not possible to keep the interests of all the stakeholders at the same time. Any changes made on the organizational functioning will affect some stakeholders positively while others may have to suffer little bit. For example, cutting the expenses under the current economic crisis scenario is an essential measure required for all the organizations. Such expense cutting may result in salary reduction or termination of jobs for some of the employees. On the other hand expense cutting will help the organization to stay in the market which will be beneficial to the shareholders. Models for ensuring ongoing change Technological change Technological change in organizations means the introduction of new technologies in the whole functioning areas of the company. For example, before the implementation of computer and internet most of the organizations used, typewriters, telephones and fax machines for communication purpose. The introduction of internet and e-mail has multiplied the speeds of communication and the efficiency of the organizations has improved a lot. Moreover the conventional ways of paper works, book keeping and filing were given way for electronic data storage. Accounting people has got their job reduced a lot with the introduction of accounting software and electronic data storage. At present no company can survive in the business world with a type writers or telex instead of computers. The invention of cell phones has made another breakthrough in the communication methods of organizations. Organization can communicate with any of its employees and customers any time because of the cell phones. Most of the organizations nowadays provide their employees with cell phones in order to contact them whenever the organization requires their service. Such advanced technology implementation has made revolutionary changes in organizational functioning and behaviour. Opportunity-based changes Opportunity based changes are changes that are not anticipated ahead of time but are introduced purposefully and intentionally during the change process in response to an unexpected opportunity, event, or breakdown. (Orlikowski and Hofman, 1997) For example, World Wide Web (www) has opened the world of immense possibilities in front of the organizations. It is easy for the organizations to reach the individual customers using the customized marketing strategies through www and internet. Online marketing has become one of the prominent segments of marketing for every business organization nowadays. It is not possible for a real estate company like Emaar to stay without a web page in the modern market. Emaar’s World Wide Web home page will provide the customers enough information about the company and its functioning globally. Another important example for opportunity based changes is the current global economic crisis. No organization can survive in the current economic world without taking measures to counter the threat from the current recess. It is not possible for Emaar like real estate company to go ahead with all their projects same way as before the economic downfall happens. They have to either cancel or postpone those projects which are not sure about bringing profits to the company. In other words Emaar needs to reanalyse or restructure their objectives based on the unexpected economic crisis. Summary of the main findings Organizational changes are inevitable based on the changes happening, both inside and outside of the organization. Changes are inevitable in organizational setup, structure, planning, policies and strategy making based on the changes happening around the world. Bureaucracy and hierarchy are two essential components of most of the modern organizations which needs changes in order to change the organization as a whole. Bureaucracy and hierarchy have advantages and disadvantages as well. It can make or break an organization. There are different forms of organizational changes like structural and functional. Technological change models and opportunity based change models are some of the popular models of change management in organizations. Conclusions Organizational changes are intended for the improvement and better functioning of the organization. It can affect all the stakeholders of the organization. Some stakeholders may be affected positively and some others, negatively. It is not possible to keep the interests of all the stakeholders equally well at the time of implementing the change. Changes are mainly happening at the structural levels and functional levels of the organization. The organization must update all its activities based on the current business environment and culture. No organization can keep a blind eye towards the developments around us and still functions well. Diversification of business activities and implementation of new methodologies are part of change management in organizations. Recommendations Organizations must analyse the business climate well before implementing changes. Changes implemented in one organization may not be suitable for another organization. Organizations must go for tailor made changes for their organization rather than imitating others. Organizations must be flexible enough to meet any catastrophe events like the current global economic recess. The change strategies must aim at such unexpected events as well. Changes must bring positive results and the organizations must study the possible outcomes of the proposed changes before implementing it. References 1. Emaar Properties PJSC, (2009), Retrieved on 1 July, 2009 from http://www.hoovers.com/emaar-properties/--ID__157900--/free-co-profile.xhtml 2. Bellinger, Gene, (2004), Bureaucracy & Organizational Politics, Retrieved on 1 July, 2009 from http://www.systems-thinking.org/bop/bop.htm 3. Bureaucracy Basics, (2009), Retrieved on 1 July, 2009 from http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/Bureaucracy-Basics.topicArticleId-8944,articleId-8880.html 4. Hierarchical Organisation, (n.d), Retrieved on 1 July, 2009 from http://www.learnmanagement2.com/hierarchical%20structure.htm 5. Borgatti Stephen P., (1996), Bureaucracy, Retrieved on 1 July, 2009 from http://www.analytictech.com/mb021/bureau.htm 6. Bureaucracy Disadvantages, (n.d), Retrieved on 1 July, 2009 from http://www.maxwideman.com/issacons3/iac1356/tsld005.htm 7. Hien, Pham Hoang, MBA, PG (CSU), (n.d), Types and forms of organizational change, Retrieved on 1 July, 2009 from http://www.scribd.com/doc/13754469/CHAPTER-10-TYPES-AND-FORMS-OF-ORGANIZATIONAL-CHANGE 8. Sony Announces Personnel Appointments and Organizational Changes, (2007), Retrieved on 1 July 2009 from http://www.sony.net/SonyInfo/News/Press/200703/07-031E/index.html 9. Change Program Stakeholders, (2008), Retrieved on 1 July 2009 from http://www.businessperform.com/html/stakeholders.html 10. Boutelle Jonathan, (2006), Understanding Organizational Stakeholders for Design Success, Retrieved on 1 July 2009 from http://www.boxesandarrows.com/view/understanding_organizational_stakeholders_for_design_success 11. Orlikowski Wanda J. and Hofman J. Debra, (1997) , An Improvisational Model of Change Management: The Case of Groupware Technologies Retrieved on 1 July 2009 from http://ftp.ida.liu.se/~TDEI30/CCSWP191.html Read More