Pressure and Changes in Various Organizations - Literature review Example

Running Header: Change Management Report Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Executive Summary Change is the adjustment of strategies and ways of how an organization works or functions in its departments. Managers are usually faced with a challenge when it comes to implementing change within an organization. Changes are mainly used to bring around some improvements within an organization as well as assisting to increase efficiency of the organizations. New technologies, re-engineering, total quality management among others are some of changes within several organizations. Changes are in most occasions brought about by some inner and outer pressures within an organization. Both internal and external pressures have been well illustrated with examples of various organizations whereby they have effected change within various organizations. Some of these pressures include reduced market demands, hyper competition among others. Market share pressure affected Microsoft Company at one point which made it to change its strategies. Several other forms of changes have occurred in various organizations like Forte Hotel, Bank of America, Morgan Stanley Company, EDS, Boeing Company, Chevron Texaco, AOL, and Walt Disney Company due to pressures of various forms either within the organizations or even outside those organizations. Several organizations or companies have been outlines in the report and various types of changes they underwent through. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Pressure and changes in various organizations 5 External Pressures 8 Environment and change 13 Images managing change 14 Challenges facing change in organizations 15 Conclusion 15 Recommendations 16 Reference list 17 Introduction Managers are faced with an inconsistency when it comes to issues to change the culture of their organizations. It is vital for managers to change their organizations or they risk perish of their organization. On the other hand, managers are faced with a dilemma towards embracing change in that change may bring around some disruptive impact which may risk business from perishing. Organization changes efforts are geared towards the improvement of organization performance and people in the organization. Organization change is the wide changes that take place in an organization. They include change of mission, mergers, rightsizing, new technologies, restructuring operations, re-engineering, and introduction of new programs like Total Quality Management among others. Organization change can as well be referred to as organizational transformation. Organizational change is a strategy that aims at achieving some overall goals. Pressure to changes usually comes from internal organizational pressures and external organizational pressures. There are several types of pressures that managers face towards enforcing change in their organizations. Pressure for change may come from several directions like the discovery of deviations, new desires and vision of the future, the environment and the fundamental nature of organizations themselves. External pressures include hyper-competition, fashion, market decline, reputation and credibility, and geopolitical. Internal pressures for change in an organization include identity, power and political, growth, integration and collaboration, and new broom. Navigator is usually used as an image for managing pressure changes. Strategic change is in response to external and internal pressures. There is needed to take into account multiple pressures that managers face or encounter within an organization. Another image that assists in managing change is coach. Kotter, (1996, p. 45) argues that it is significant to shape and develop organization’s capabilities in such a way that it will be capable of enhancing the outcomes of the organization. Nurturer is also another image that requires to be taken into account when dealing with organization change. Managers should be capable of enhancing adaptive ways of managing and nurturing the changes arising within an organization. Managers should stabilize that which is unstable and destabilize that which is rigid; anticipate the future as well as adapting to the present. Pressure and changes in various organizations Herbold (2002, p. 233) maintains that environmental pressures are the main factors behind explanation of how change takes place and occurs within an organization. Reduced demand and sale for goods leads to some significant aspects of change within the organizations. Market share decrease and bad decisions on investment also results for change demands. Internal pressure like growth pressures occur when existing processes and systems in an organization are no longer applicable as the size of the organization increases. Therefore, this imposes a lot of pressure in the organization like in case of Microsoft organization. The growth and development of the organization usually results to some changes being required in order for the organization to be able to adjust with the growth and developments. A company like Microsoft had to undergo through some notable changes as the demand and growth of its operation aspects increased. Robert Herbold joined Microsoft from Procter & Gamble. Robert noted lack of discipline in terms of making decisions and setting out priorities in Microsoft Company. Robert laid out changes in establishing decision making process that was formalized as well as other protocols so as to balance entrepreneurial creativity while installing discipline in Microsoft regarding its size and operation scale. Those changes were as a result of company growth outcome and they were implemented in order to handle complexity in business operations while bringing rigor of running business operations. Most small organizations find their systems and processes becoming inapplicable with increasing expansion hence demanding for several overall organizational changes. Increased growth and expansion of the organization calls for change in its goals and objectives hence the overall change of the organization processes. These Identity pressure usually comes from a common organizational identity as well as unified commitment of staff in various departments that is usually difficult to manage hence encouraging change. This change will ensure a reduced common view by the staff members does not bring around some ineffectiveness within an organization. Antoine Cau became CEO of Forte Hotel in January 1998. He found that hotel employees lacked cultural identity with the hotel as well as its brand name of the market. It is crucial for organizations to encourage change within their departments before culture and identity takes root and controls the culture and operation processes that may hinder developments. He also found out that service excellence was the main ingredient towards achieving satisfaction of the customer. In order to address the issues, Cau made some changes through the creation of four different market segments that included Travelodge, Post-house, Le Meridian, and Heritage. He also developed a major program for cultural change across the hotel groups with the aim of enhancing the identity and commitment of staff to the brand of Forte. Organizational changes to help in meeting those ends included promoting development of people as well as employee recognition schemes so as to enhance satisfaction in job for hotel operators. New broom pressure is the pressure due to changes at the senior management level that is catalyst in an organization. This has been experienced in Bank of America by change of CEO in the top most management. Kenneth Lewis in April 2001 took over as Bank of America CEO. He instituted what was referred as quiet revolution taking the business away from empire building to valued creation. He did downscaling of the operations in the bank in order to grow profits by getting rid of businesses that were underperforming like divesting unprofitable customer segments and auto leasing. He also brought in new managers who were to introduce new ideas to the organization and sought to improve service towards customers through enhanced training programs for tellers. The change encouraged from moving away from organizing around product lines in customers favor as well as product cross-selling by tying salaries of executive to performance targets. New incoming managers may come up with other strategies and ways of making decisions. The new management in most occasions acts as a catalyst of change within organizations. New managers in most cases induce some internal pressure in the organization hence calling for some changes within the organization. This has been most prevalent in several organizations as they try to change their top management structures as illustrated by (Leana, and Barry, (2000, p. 753). Power and political pressures are mainly due to relations in power and politicking which can change decision making and internal processes. Politics and power among the managers have been seen to be effect some internal pressures within the whole organization. This is usually as a result of changes at board and CEO levels. This has been identified in Morgan Stanley Company where the power and politics within management initiated some internal pressures. This was as a result of tussle between John Mack and Philip Purcell for CEO position. Struggle by some managers to gain power within the organizations usually generates some internal pressures that eventually lead to change. Integration and collaboration pressure is another force behind the change within an organization. It is important to have some changes in the organization in order to integrate the organization or even create economies of scale across various different units of business. Integration and creating economies of scale can eventually lead to pressure that has amounted to several changes within organization like in the Electronic Data Systems (EDS) organization which is currently referred to as HP Enterprise. In January 1999, Dick Brown who became CEO of EDS that was a pioneer in IT services noted its market share being eaten away by other upcoming new companies. This caught the attention of Brown towards changing the sharing of information and coordination. Communication between various departments and units was not effective. This meant that some departments were involved with activities that had been tried and rejected due to failure by other units within the organization. Brown started a series of structural and cultural changes in the company that were designed to provide better coordination across EDS and produce better customer collaboration and coordination across several units of the company. There is importance of focusing on strategic, intentional and large scale type of change. Believing that organization change is possible through planned and coordinated approach is crucial in the initial stages of effecting the change. Change within an organization occurs through various steps and processes that depend upon the used models according to Pettigrew, Woodman and Cameraon, (2001, p.700). External Pressures External organization pressures have as well brought about some significant aspects of change within organizations. Fashion pressure has initiated a lot of change within organizations as they try to adopt practices and policies being used by other successful organizations. Boeing Company is one such organization that has imitated other organizations like GE. Boeing Company in 2001 started series of changes under Philip M who was CEO. Those changes resembled those that were made by Jack Welch at GE which was a recognized company in making several numbers of transformational changes that were successful over the past decades. Some of those changes included setting up of corporate learning and training unit at St. Louis, changing the culture, restructuring the business into 3 main areas which included space, military and commercial. Other mimetic changes by Jack Welch at GE included giving CEOs of those units greater freedom on ways of running their business. Neo-institutionalism has increased some internal pressure within organizations that has eventually led to changes. This neo-institutional refer to mimetic isomorphism whereby organizations imitate other organization’s practices and structures in their industry in the organization usually regarded as successful according to Cooper and Kulkowski, (2002, p. 16). Dunphy, Griffiths and Benn, (2003, p.53) maintains that it comes to some moments when changes arises from mandatory pressures within the organization. Mandated pressures or directives from governments or other relevant authorities build some pressure for organization to follow hence this call for some changes within the organization. An organization changes through requirements that are mandated to formally or informally by relevant organizations responsible for changes. This eventually leads to organizations bringing changes due to that amounting external pressure. Chevron Texaco in 1996 settled a law suit on racial discrimination against it on amount of money totaling to $176 million. Some staffs who were African-American filed the Company who alleged that the company was involved in some acts of racism through the Company’s Managers as well as employees. Racism was institutionalized in the practices and culture of the organization to an extent that it made Chevron to become branded as the worst corporate rogues. Other companies like Shoney’s and Denny’s in 1992 and 1994 respectively. Chevron Texaco’s part of settlement agreement included changes in the organization in that an external diversity task force was established. This was meant to monitor the practices of the company and make sure that all minority staffs were treated fairly. This led to major changes in Chevron Company in all cultural and policy practices. Staff at Chevron Texaco started attending diversity training while minorities were main targets for the new hires that took place. Several new programs for change were planned and implemented and aimed at eliminating racism from retention, promotion and hiring decisions. Change is forced into organization through mandated requirements. This is referred to as Coercive Isomorphism whereby organizations are forced to undertake similar activities to other organizations due to demands impacted on them in order to do that. Geopolitical pressures include immediate crises or long term realignments in geographical processes. 3M Company formerly known as Minnesota Mining and Manufacturing Company was faced with such pressure which led to change on its ways of operations and entire management. Longer-term realignments in geographical factors in the 1990s enforced 3M to start a chain of organizational changes. At one point the 3M was unable to meet its needs like purchasing order that were involved in its operation. This was after the establishment of European Economic treaty where European countries started trading freely which ended up integrating the markets in Europe. 3M found its old structure mainly organized and being independent with the operations that were country based being unsuitable for the new context. Such pressures forced 3M to reorganize its country’s specific structure and ended up creating regional organizations throughout Europe responsible for profit and loss throughout European product lines. This is a clear indication of how external pressures like geopolitical pressures can bring out some changes within an organization. Decline of market and number of consumers usually amounts to some significant amount of pressure for organization or company to change to other ways in order to be able to adjust to other means of finding new customers. In most occasions, when current markets start declining, pressure starts to mount on the company to search for more viable and newer markets. Changes in marketing strategies are put in place and implemented to ensure that the organization is able to adopt towards those market changes. AOL Time Warner Company is such organization that had to change its in order to avoid losing more customers. Introduction of broadband in United States households was a potential threat towards continued growth of AOL. In 2002 fourth quarter, AOL subscription declined for first time with broadband services growing 59 percent. This was a major threat to AOL because people were not willing to pay $15 per month to use AOL services in what was referred to as redundant services but rather they preferred paying $50 per month so as to receive broadband. AOL had to adopt some other strategic changes which included partnering with cable companies as well as other options that would move it from dial-up services over-reliance. Hyper-competition pressures are another external factor behind organization change in its production ways. Competition from other companies or organizations usually demands for some changes within the production sector of the organization. Rapid responses by the competitors are some of the hyper-competition pressures in organizations. Competitors change of tactics and strategies usually forces organizational at all levels whether a product manufacturing or service provider organization to change their ways of production. Hyper-competition calls usually produces change at organizational level. Gateway a personal computer company was facing a competitive business in 1998 where Dell its direct-sales was overshadowing it. Ted Wait who was Gateway CEO and founder took the company through a major change where he hired 10 new mangers while changing the way on how the business was being done. Such changes included changing its products, name, business strategy and alliances. Such changes are a clear indication of the hyper competition that some companies face in the process of operating their business. Failure to take and implement such changes would mean that the company would continue to face stiff competition from its competitors and it may end up loosing its market share. In process of trying to increase and maintain credibility and reputation of the organization, they are some forces and pressures that arise within the organization in order to ensure the reputation of an organization, services and product remain high. Organizations have in recent days come up with ways of protecting their reputation and credibility without through avoiding any form of scandals that may destroy their reputation. This has called for changes within the organization like it occurred in Walt Disney Company which is one of the largest media and Entertainment Company in the world. Walt Disney Company has come up with several strategies to ensure its reputation is high in order to enable its products maintain higher levels of credibility. In 1990s, Walt Disney Company had worst corporate board in U.S. according to Business week. Some of the issues it was related to included close ties between directors and CEO. It was also said to lack management experience with minimal oversight of the Company. Walt Disney entered into a range of changes in order to rectify the practices and body structure of its board. Some of the changes that Walt Disney underwent included limiting on the number of board members of which directors can be members. Directors were also required to have a minimum of $100,000 in company’s stock. The changes also included allowing only independent directors on the compensation and audit committee. Company and directors ties were severed while consulting firms were not used for purposes of financial audits. Reputation and credibility pressures have forced several organizations to change their management and marketing strategies. Strategies like improving products quality and services are meant to improve the strategies and credibility of the organizations. Environment and change Environment has roles to play in the organization towards ensuring change is achieved or it becomes achievable. External pressures facilitate the change processes in any organization. External pressure usually makes organizations to learn on various ways towards adapting to changes while becoming rigid to the changes that may occur as a result of those changes. However, in some occasions, the environmental factors may inhibit the process of change within an organization. Environment is in some occasions treated as an objective entity whereby managers must respond to this kind of environment. Environment as a cognitive construction emphasizes on manager’s centrality on the interpretation of environmental conditions or situations as a key behavior determinant. Environmental factors also involve some forces. These may be external forces that vary depending on situations that the organization is in during the time the forces get into the organization. External forces within the environment may in some occasions promote stability or promote change in an organization. Forces like competitors change of strategy usually leads to promotion of change as the organization try to adjust to changes in order to be capable of adjusting to those forces from competitors. External forces like stabilizing of the economy after some period of economic crises usually results to stability in any organization as they are no kind of adjustments that are required to adjust with the stabilized economy as illustrated by (Palmer, Dunford and Akin, (2008, p. 89). Images managing change According to McKinley, Zhao and Rusat (2000, p. 230), there are relationship between the images of change and purpose of communication within organizations. Director as an image of Managing change ensures people understand whatever is happening and that what is required of them. It provides answers to why, who, when, what, and how questions including value-proposition that is involved in the change. Navigator is also another image that is similar to director image in terms of nature of change outline but paying attention to alternative interest’s identification. Caretaker is another image that focuses on letting people knows the reason for change. It gives reasons behind the inevitability of change and how well to cope with change and survive that change. Coaching is another image that focuses on ensuring people share similar values and that they are aware of suitable actions to take. Coach focus on getting buy-in to the change via shared values as well as use of the positive emotions. Interpreter as an image for change gives staff a sense of what is happening through story telling and so on. Interpreters are aware of multiple senses making which goes on in organizations from various groups on proposed change. Interpreters focus is on giving sense to various groups across the organization while presenting the most persuasive account in making sure many people share the common understanding of the change. Challenges facing change in organizations According to Deaner and Miller (1998, p. 16), Managers face a lot of challenges when trying to implement any form of changes within their organization and when they try to change the way their staffs do their work. Other members and colleagues usually fail to corporate with managers hence making it a challenge for managers to be able to implement the change. Managers are faced with a major dilemma when deciding on impacting change in organizations. They are not sure of the impact the change will have on their organization. This is because some changes may result to negative or positive results within their organizations. Some changes in most occasions demand for a lot financial inputs for them to be effective. This poses to be a big challenge towards several organizations together with their managers due to financial constraints that those organizations find themselves. Initiating change within an organization can result to several challenges at top managerial positions of an organization. Managers should inform every person in the organization about the change as well as informing people about the change importance in their organizations. Another strategy towards implementing change by managers should ensure that change require to be introduced slowly and not abruptly. Conclusion Changes have assisted several organizations to attain and improve their performance levels. It has assisted in overcoming the pressures from their competitors as well as assisting them from loosing their market sizes and reputations. Managers in several organizations and companies have assisted in initiating changes within their organizations in order to increase efficient and quality of delivered services to their consumers. Companies or organizations like Microsoft, Forte Hotel, Bank of America, Morgan Stanley Company, EDS, Boeing Company, Chevron Texaco, AOL, and Walt Disney Company have initiated several changes through their managers and top management to enhance the changes within their departments or organizations. Several images of change like navigator, caretaker, coaching, interpreter, and director have played a major part in communication purposes. Managers have been faced with challenges in trying to implement change in their organizations; however, this should not deter them from impacting those changes in those companies. Recommendations Managers and organization leaders should adopt and implement change within their organizations in order to implement change in order to increase efficiency. Managers and other top department managers should adopt change whenever there are some problems in any of the operation areas. Change is always required and encouraged among the organization structure and operations so as to increase efficiency of any organization. In case there is reduced performance of the organization, and then there is need to change the efficiency of the performance and other strategies. Reference list Cooper, E and Kulkowski, L 2002, ‘GE changes name of brand. What consolidation next?’ On Wall Street, vol. 12, no. 10, pp. 15-18. Deaner, P and Miller, K 1998, ‘Organization development: An evolving practice’, Organization Development Journal, vol. 16, no. 3, pp. 11-18. Dunphy, D, Griffiths, A & Benn, S 2003, Organizational change for corporate sustainability, Routledge, New York. Herbold, R 2002, ‘Inside Microsoft: Balancing creativity and discipline’, Harvard Business Review, vol. 80, no. 1, pp. 233-258. Kotter, J 1996, Leading Change, Harvard Business School Press, Boston. Leana, C and Barry, B 2000, ‘Stability and change as simultaneous experiences in organizational life’, Academy of Management Review, vol. 25, no. 4, pp. 753-59. McKinley, W, Zhao, J and Rusat, K 2000, ‘A socio-cognitive interpretation of organizational downsizing’, Academy of Management Review, vol. 25, no. 1, pp. 227-243. Palmer, I, Dunford, R & Akin, G 2008, Managing organizational change: a multiple perspectives approach, 2nd edn, McGraw-Hill Irwin, New York. Pettigrew, A, Woodman, R & Cameraon, K 2001, ‘Studying organizational change and development: Challenges for future research’, Academy of Management Journal, vol. 44, no. 4, pp. 697-713. Read More