Account Directorate Internal Structure Change - Literature review Example

Account Directorate Internal Structure Change Heraclites once said on change: "everything is born in strife and constant flux; and whatever lives, lives by destroying something else." Socrates, of that peerless mind, gave his own reasoning to the subject of change. His protégé Plato and, later, Aristotle had their own coruscating theories. All said and done, change is inevitable. Time warrants so. In the cutthroat world of business organizations today, change is almost the byword for success. Companies that stall remain wedged somewhere back in time, asleep, never to catch up with the world again. Yet, however necessary the change man’s desire for adventure is rivaled by a commensurate fear of the unknown. Implementing change in the modern world is harder than perceived. Characteristically, the notion of organizational change regards wholesale change. Experts refer to this metamorphosis as organizational transformation. In other words, the change has to do with radically re-directing the operations of an organization. Organizational changes can be fuelled by a myriad number of factors, including substantial cuts in funding, need for big increases in productivity et al. The top management – the chief executive and his board - is crucial to a successful organizational change. Usually you find an inspirational leader who champions the cause, by being farsighted, influential and consistent. However, change is best carried out as a team effort. Communication regarding change should be recurrent and with all organization members1. Implementing change is much easier said than done. The entire structure of the organization is affected during the process of change. Resistance from employees becomes inevitable. The most effective approaches to tackle resistance to change are through augmented and continual communication and education. The leader should let all managers and staff know the reasons for the change and how the change will be carried out. The planning process should be handled carefully. If the plans change, as it very well may, it is imperative to communicate clearly to everyone concerned the reasons for the change of the plan. Organizational changes are shaped by various internal and external factors. The internal environment is the conditions that are prevalent within the organization. The internal environment includes factors like organization members, the nature of their communications, and the physical surroundings in which they operate. Organizational culture is a term that generally denotes conditions within organizations, and comprises of a structure of norms, beliefs, and shared values etc. that bring together members of an organization. The planned management process happens within the organization’s culture. It is often believed that executives working in successful companies are sensitively committed to the company’s culture, but culture can restrain strategic management in a couple of ways. Firstly, managers are liable to overlook important external environmental changes because they are so rooted to their cultural beliefs. Secondly, organizations do not want to change a successful culture, even during times that warrant strategic change. 1. (http://www.managementhelp.org/mgmnt/orgchnge.htm) An organization's effectiveness is greatly influenced by its external surroundings, in other words, outside forces that can potentially harm or benefit its success. The external environment, also known as the mega-environment, comprises of the extensive external conditions and trends within which the organization runs. The external environment consists of five major elements2 .The first is the Technological Element. The technological element evolves through phases of incremental change interrupted by technological breakthroughs. The breakthroughs can either improve or destroy the capability of firms. The second element is the Economic Element. This element involves the present systems of producing, dispensing, and consuming wealth. Organizations are controlled greatly by economic factors over which they have insufficient control, such as inflation and interest rates. The Legal-Political Element, the third of the five elements, includes the governmental and legal systems within which the organization functions. Laws that mold the manner of their functioning administer organisations. They are expected to operate within the legal framework of the countries in which they function. Political pressures also influence the legal system and can also sway the extent of government directives of various laws. The fourth element is the Social-Cultural Element. The social-culture elements are the values, norms, beliefs and behaviors connected with the demographic nature of a given region. Multinational companies in particular face the barrier of diverse socio-cultural differences in the countries in which they are based. Socio-cultural considerations are liable to change, so domestic firms must also be aware of this facet of the external environment as much as multinational firms. The fifth is the International Element. The international element concerns primarily with developments in countries beyond the firm's home country that can potentially influence the workings of the organization. Changes in international trade and investment can change the way an organization operates. Organizations operate as open systems and a relationship between internal and external forces is always present. The top people of an organization must realize that external and internal forces can be greatly interrelated. When they are able to identify change as well as the internal and external settings in which the metamorphosis is happening, the organization can appropriately respond and espouse strategies that will make it effective. There are a few basic guidelines on how to successfully implement change in an organization3. They are: 1.The need for a consultant. A highly experienced and competent consultant can work wonders for organization-wide change. 2. The top people should clearly communicate the need for change, and what they consider doing about it. 2. Tushman and Anderson (1986). 3.www.managementhelp.org/org_perf/methods.htm 3. Employee feedback is invaluable, like their take on the problems, what they feel should be done about them. The manager can work with a team of employees to manage the change. 4. A change in the organization should be brought about when the situation demands such action. Companies make the mistake of implementing change simply for the sake of change. 6. There should be adequate planning involving subjects like how to reach the goals, what is needed to reach them, the time that it would take to accomplish the goals etc. The focus should be on the harmonization of all the departments in the organization, not on individual parts. There should be a competent person in charge of the plan. 7. All employees, if possible, should be reporting to one person. 8. Handing over decisions to employees, like granting them the power and responsibility to get the job done, is necessary. 9. The process will invariably take a longer time than initially perceived. 10. All the while, the organization should keep a sane head amidst the euphoria. The needs of the customer or clients should be regularly met. 11. Organization-wide change is a highly stressful process. The organization should take care of itself. 12. An organization should expect change, appreciate it and learn to manage it. The health and well being of an organization is unswervingly and inextricably linked to the maturity of its internal culture. A mature internal culture breeds higher morale, creativity, productivity and quality of service. Similar to individuals, organizations mature and grow. When people start feeling detached from each other, immaturity creeps in. An organization where departments and people feel connected, with a high level of cooperation and trust can be described as mature. Connection with other employees helps in meeting psychological demands. There is nothing like a sense of belonging. Only then can an employee feel connected to people around him/her and address the higher needs of meaning, control and fun. Without a sense of community, employers cannot relinquish their fears, bitterness and need to be protected. This aborts their learning at all levels.4 The direct opposite of community is competition. Internal competition within organizations is commonplace. This leads to lack of cooperation, collaboration and creativity. Competition, in other words, means disconnection. When an organization experiences damaging conflict and tension, it is because community and trust have broken down. This creates a fertile ground for fear and the seeds of internal competition are sown. To restore harmony, a sense of community has to be re-established. The employees themselves must experience this sense of community. Keynote speakers and inspirational managers can only do so much. The maturity of an organization’s culture mirrors the attitudes, beliefs and behaviors of the employees, which are either learned or developed through their lives’ experiences. For community to be established, certain things must be done. Employees need to feel 4. http.temcrs.org/index.htm respected as people and professionals. They need to learn from one another and make an effort to know each other at a deeper level. If these things are done effectively, employees tend to lower their barriers, gain self-worth and start developing empathy for others. Organizations need to be creative and sensible if they are to compete and survive. People make organizations — with a blend of feelings, ambition and fears. When the organizations’ human side is satisfied, change and success follow. People can achieve nearly everything if their desire overrides their apprehensions5. However, as much as change is beneficial to an organization, getting there is much easier said than done. The need for change is often clouded by the fear of the unknown. Many people do not try to understand the need for change. Many are intrinsically cynical about change. The majority are doubting Thomases who think major organizational change cannot be accomplished. Also, often there are contradictory goals in the organization. For example, increase resources to achieve the change yet concomitantly cut costs to remain viable. Organization-wide change frequently goes against the old values that members in the organization hold close to their heart. In other words, the change may directly go against how members deem things should be done. The reactions to change can be varied. Those who are not so eager to get involved, wait in the wings, hoping that somebody else will take the lead before following. Victims strongly oppose change and feel annoyed or depressed about having to change. They tend to isolate themselves and go into a shell. This is the time when you will see a wave of critics come up and give reasons to why the change will not be successful. They dispute the suitability of change and go out of their way to reveal that the current way of doing things is much better than the projected way. Then you get technical resistors, those that question the technical details and reasons for change, and feel incompetent in the face of change because of a different technology. Political or organizational resistors relate change to a loss of power. They strongly prefer the status quo. There are some basic techniques to conquer resistance to change. It is important to clarify the importance and exigency for the need to change. Facilities and support to implement the change should be provided throughout the organization, in the most efficient and resourceful manner. There is a need to identify and tackle differences in receptiveness to change in every individual. Employees should be helped to accept and manage change. Human resource practices vary with the changing of the organization, and strategic modifications are being arranged more regularly by human resources in response to change. To survive efficiently, organizations necessitate a reasonable amount of certainty and order. Individuals bring their personal requirements to the organization where they work. These needs are partly material and economic, and partially communal and psychological. The employees’ personal needs can have major effects on organizations, particularly in a constantly changing environment. There are several conditions in organizations that are responsible for low quality work life and reduced job satisfaction. Stress, burnout and related performance and competence problems that are hastened by organizational change are significant. Rapid change is 5. www.expressindia.com extensively deemed as a major factor connected with job stress. The costs of stress to organizations can be sub-divided into direct and indirect costs. Direct costs include work stoppages, absenteeism, grievances, work quality and quantity, accidents, inventory shrinkages etc. Indirect costs include low motivation, displeasure, communication breakdowns, doubt, hostility, poor work relations, and lack of morale. These direct and indirect costs have an important and direct impact on the human resource management of organizations. The responsibilities of human resource managers change rapidly as companies economize and restructure in the present world, as a counter to dynamic external environmental changes. The human resource manager’s strategic responsibilities include training and development, assessing staffing needs, and bringing about a manpower plan for efficiently implementing strategies. Any change in management system can turn into a damp squib if inadequate attention is given to the human resource side of things. Human resource problems that crop up when businesses implement strategies are implemented can be traced to three causes: disturbance of political and social structures; failure to match individuals' skills with execution tasks; and insufficient top management support for execution activities. Human resource managers in the present world should help plan and implement changes in organizational structure like: 1. Staffing changes that arise from downsizing, restructuring, acquisitions or mergers. 2. Increase creativity, innovation, and flexibility essential to improve competitiveness. 3. Manage the execution of technological change through better training, staffing, and communicating with managers and employees. 4. Promote internal changes in professional affairs with unions, particularly those that will improve cooperation, efficiency, and flexibility. 5. Anticipate and control the management impact of court decisions, varying legislation, and other developments. Communication and employee participation is a vital component of any tactical plan execution. In building a model to guide human resource managers in energetic environments, communications should be considered the major focus. The Communications Initiative Model (CIM) is structured as a foil to the practical human resource process of staffing, planning, evaluation and development, and maintaining efficient workforce relations. The CIM is intended to guide human resource managers in managing human resources in unstable environments. This model, like almost all organizational plans, depends largely on top management support for the success of its objectives. The Communications Initiative Model deploys several components. The first is communication. Communication affects how employees in organizations relate to one other. Without efficient communication, managers can achieve very little, particularly in an environment that is rapidly changing. Managers must communicate the strategies effectively and in an appropriate manner so as to make the proposed change successful. Proposed strategy, change and other significant information affecting the employees should be communicated in a suitable manner that will augment employee commitment. One of the major responsibilities of the human resource manager is to keep supervisors and managers within the organization aware of changes in laws, regulations, and trends that can affect organizational activities. The inherent value of organizational communication is validated by plentiful studies (e.g., Argyris, 1994; Axley, 1984) that reinforce the worth of organizational communication and the gains of effectual communication. Human resource managers should also be aware of the obstacles to effective communication and the methods for overcoming the same. The second component of CIM is participation. Organizations face lesser resistance to change when they promote employee participation. When probable resisters are involved in the implementation of the strategy, they are less disposed to oppose the change6. When change is inevitable, participation can be extremely helpful as it farms greater commitment on employee’s part. Participation increases the understanding of the change, facilitates employees to provide their own ideas in making the change successful, and regularly improves the final outcome. There is proof that managers tend to under-use participation as a means of conquering resistance to change7 . As a consequence, participation is emphasized as a significant component of this model. The third component is ownership. Participative leadership leads to ownership and dedication to the initiative by the organization’s members. Change that is portrayed by consulting with subordinates, listening to their suggestions, and considering their input when making executive decisions gives employees a sense of personal involvement and ownership in the proposed strategy 8 (Evans, 1970). CIM’s third component is implementation. The shift from strategy formulation to strategy execution requires a transition in accountability from the strategists to functional managers. Managers and employees are usually motivated by apparent self-interest than by the firm’s interests. That is simply how the human psyche works. The worth of participation can never be understated at this critical stage in the CIM model. Through implementing appropriate communication and participation methods, managers are able to highlight and build upon facets of the present culture that will sustain new strategies and change. Studies by Bayles (1977) and Erez and Kanfer (1983) validate the implementation component of the CIM model. The last component of the CIM model is facilitation. After implementation, the CIM Model utilizes facilitation as a means of averting entropy (loss of momentum), and lack of commitment and leadership for the strategy. At this stage, the manager serves as an anchor, coach, resource person, and mentor. This section of the model identifies that it is important to enjoy steps toward progress and results. 6. Brett, Cron, & Slocum, 1995 7. (Behar, 1987). 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