“Organisational change is an irreversible adoption of any feature of its strucutre, personel, products or processes” (J.Naylor)
Today’s business environment is forcing entities for changes. If we would think from corporate point of view it is essential for the companies’ success to be in accordance with new markets demands. On the other hand, individuals are ruling the companies and the companies` corporate strategy heavily depends on them so it is important to have eligible management who is ready to respond quickly fast and reliable on any possible challenge. Why to make changes? Changes are needed in different situations and companies` conditions. If we would think, there is always necessary force which is puling management for smaller or bigger changes in order to maximize its profits. Moreover, there are varieties of environmental factors which can influence demand for the change.
Not only that but if we would think about Eastern European markets and its past we can see that the process of transition is one big change which is leaded by deep economical reforms based on changing companies management and way for doing business. In today’s world globalisation is one of key driving economic factors and as a result of that mergers and acquisitions are part of daily news. Regardless of the type of M&A they are main causes for certain changes from different points of view. Therefore, the most common change is result of profit maximization and headcount reduction what usually is product of new organisational strategy. In addition, thinking about merger, changes are even more usual due to the differences which might occurred between two entities.
In today’s world most sophisticated companies from point of view of Economic as a science are Consulting companies like BSG Group or McKinsey & Co. They represents sophisticated experts which are dealing with management problems, however, they are offering wide range of services while the most recognised one is so called management consulting. One of the management consulting segments is change management which is subject of this assignment.
In the real life changes are inevitable parts of our existence. The same “rule” can be adapted to the corporations. According to the changes we can clearly define four models of change agents:
LEADERSHIP models represents model where change agents are senior managers responsible for identifying and delivering strategic/transformational changes. This model is usually used when corporation are wiling to change its executives due to the bad performances or some other type of failures. However, sometimes the companies` interest is even above the individual performances. One of the typical examples can be recent Merrill Lynch CEO replacement where bank failed to be profitable in 3rd Q of 2007 due to the significant write-off of its CDO assets while improving performances in other divisions. CEO has been replaced, even though was generating significant profit in past six years, and the banks reputation staid consistent while indirectly blaming its top executive for losses.
MANAGEMENT model is used where change agents are seen as middle-level managers/functional specialists who have responsibility for delivering or supporting specific elements of strategic change programs or project. This type of change is more often because is not causing high impact on organization due to the fact that it is divisional change. However, in some companies middle management is a key driver of corporate strategy implementation so changes on those levels can be delicate.
CONSULTANCY model represent change agents are external or internal consultants who can be called on to operate at any level. This model do not requires management replacements it requires usually external experts who are capable of defining critical point and advising on its changes into right direction. In this situation, company’s management does not represent enough sufficient and eligible body to undertake changes within organization. External experts are hired to use their experience and implement it on the targeted company.
TEAM model means that change agents are seen as teams that operate at various levels in an organization and which are composed of the requisite managers, employees and consultants necessary to accomplish the particular change project set them.
The most recognized are tree types of schools which are different by its approaches how changes should be undertaken within an organization.
THE INDIVIDUAL PERSPECTIVE SCHOOL – the supporters of this school can be divided into two different group:
Behaviorists – represents folklore of change management theories. In practice behavior modification involves the manipulation reinforcing stimuli so as to reward the desired activity. The aim is to reward immediately all instance of the wanted behavior, but to ignore all instances of unexpected behavior (because even negative recognition can act as reinforcer). This is based on the principle of extinction: behavior will stop eventually if it is not rewarded. Not surprisingly given the period when it is emerged, the Behaviorist approach faces in many respects that of the Classical School representing human as machine responding only to external stimuli.
Gestalt-field psychologists – learning is process of gaining or changing insight outlook, expectation or thought patterns. Under the section of explanation of individual’s behavior the groups take into account not only the person’s actions and responses but also interpretation of individual places on theses. The Gestalt-field perspective, behavior is not just product of external stimuli as it was case with behaviorists’ school, but rather it arises from how individual uses reason to interpret these stimuli.
THE GROUP DYNAMICS SCHOOL – the key concepts is group change rather than individuals. According to the theory, groups are made of individuals and change should be undertaken from the group point of view so that individuals will be influenced all together linearly. The three key areas to change in this situation are changing group’s norms, roles and values. Norms represents rules or standards that define what people should do, think or feel in a given situation. Roles are patterns of behavior to which individuals and groups are expected to confirm. Values represents ideas and beliefs that individual or groups hold about what is right and wrong. The Group dynamics school has proven to be very influential in developing booth, the theory and practice of change management and stands for one of the oldest theories.
THE OPEN SYSTEM SCHOOL – understands the organization as composition of number of interconnected sub-systems. It follows that any change to one part of the system will have an impact on the other parts of the system and, in return on overall performance. The open school’s approach to change is based on method of describing and evaluating the sub-system, in order to determine how they need to change so as to improve the overall functioning of the organization. There are four principle organizational sub-systems:
Goals and values
The school’s approach is to make changes based on a method of describing and evaluating above mentioned sub-systems, in order to determine the need for organizational change and to have as a final product improvement of the overall organizational performance and functioning. It is important to mention that the organization is open to interact with their external environment and open internally while the sub-systems are interacting among each other.
There are several types of organizational changes depending on the various factors. On the graph below there are stated possible types of changes. From the point of time they are divided into planed and emergent. It means that in case the organization has recognized need for change will try to undertake them firstly planning than and later on implementing. On the other hand in case that change is inevitable and has to be implemented immediately due to the environmental or changes the organizational will undertake so called emergent-unplanned changes. In addition, type of change can be differentiated by the level of change. According to the graph there are two types, incremental and radical. In case of incremental changes it is needed to undertake certain “small” steps in order to improve performances. On the other hand, radical changes are requiring deep changes within organization and must bee resulted from low performances. Under the bais of time frame and scope of change we can find 4 different types of changes which are result of mixcure of before mentioed situations. All four types are representd on the below graph.
In addition, as it was stated previously efficiency is one of the crucial drivers for changes in all segments of the companies. Besides types of changes it is important to understand some of the crucial aspects and questions which should be raised in order to undertake and implement successful change within organization. According to the graph below there are eight crucial points (power, time, scope, preservation, diversity, capability, capacity and readiness) of the strategic change program.
Understating the process of change it is important to take into consideration many aspects. Regardless, the type of change it is important to see what kind of power has to be used in order to take changes, however, it depends on the size of the change. In case that there are going to be changes on executive levels shareholder would represent only power eligible to impose them. Time is very important factor due to the fact that success of changes sometimes heavily depends on the available time frame. Scope will state the question about the size of changes which should be undertaken.
Preservation will represent where the “change drivers” would need to understand available resources for implement the changes. In order to understand the organization more deeply it is necessary to see how homogenous are the staff groups in organization? Capacity segment will raise the question, who should try to impose the changes, is management enough sophisticated to do it or the company should find external experts? Readiness not necessarily will be the last segment however, in case the organization can fulfill all before mentioned requirements.
This paper has provided short description of type of changes as well as well known schools. The main idea was to understand how changes are important not in corporate life, however, they are equally important for individual and their existence. The more we are eligible to changes the better future can be expected.
MANAGING CHANGE: A STRATEGIC APPROACH TO ORGANIZATIONAL DYNAMICS BY BERNARD BURNES
MANAGEMENT OF CHANGE; INTERNATIONAL BUSINESS SCHOOL, LECTURE MATERIALS
INTERNATIONAL BUSINESS POLICY AND STRATEGY; INTERNATIONAL BUSINESS SCHOOL, LECTURE MATERIALS
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