7th, February 2013
Organizational change is crucial to all organizations, especially during this contemporary period that is influenced by globalization. Most organizations will want to optimize their performance through initiating different types of organizational changes. Normally, an organizational change will occur as a response to specific change in aspects of the organizational culture. Organizational change may also occur as a form of response to a crisis within the organization. Most importantly, a manager who is radical or progressive initiates this process. In most cases, companies will experience organizational change after undergoing a shift in executive powers. When organizational change happens, it does not result in self-adjustment, but requires appropriate management in order to be under control.
The business world today is competitive and therefore, companies need to keep adjusting in order to compete favourably in the market. In the fast-moving business environment, companies should embrace organizational change in order to satisfy the standards in the market. Organizations might undergo organizational changes due to a number of reasons. First, if new technology is introduced in a company, there will probably be some changes. Although this might be disruptive to employees, new technology tends to increase the productivity of companies (Burke, 2010).
Additionally, companies choose to initiate organizational change as a way of satisfying their customers’ needs. Customer needs today keep changing, even as technology changes. Therefore, a company might be forced to develop new types of products and services, in order to meet its customers’ changing taste. On the other hand, the aspect of economy might lead to both positive and negative organizational change in a company. If the economy is robust, there will be an increased demand for goods and services, and this could force a company to expand. In this case, organizational change occurs in the form of company expansion. On the other hand, if the economy is weak, this might force the company to adjust by cutting down on employee salary, among other measures that might threaten employees’ jobs.
Organizational change in an organization might also happen when employees are introduced to new skills and knowledge through training. All this is for the purpose of ensuring that the company makes good use of the growth opportunities in the market. Training for employees might be conducted using different ways, to ensure that their newly acquired skills enhance growth of the company (Burke, 2010).
There are different types of organizational changes a company might be involved in. These vary depending on the objectives of the company, and the outcomes they anticipate from the organizational change. Different scholars of economics have developed a variety of frameworks, through which an organizational change in a company can be viewed. Grundy (1993) developed a framework of categorization of organizational change. In this framework, there is the smooth incremental organizational change, there is the bumpy incremental, and the discontinuous organizational change (Grundy, 1993).
In the smooth incremental change, Grundy considered this to be any type of organizational change, whereby the changes occur in an evolutionary manner, slowly, and systematically. Such changes in an organization are therefore easy to predict. On the other hand, the bumpy incremental changes are characterized by periods of quiet change, which are interrupted abruptly by an increase in the rate of change because of various factors in the organization. An example of this is reorganizations. Finally, the discontinuous organizational change is one that is faced with much turbulence. When this happens, normally, the course of change will take a divergent breakthrough at various points. Therefore, as opposed to the smooth incremental change, the discontinuous change is highly unstable; therefore, it is hard to predict this kind of organizational change (Grundy, 1993).
Restructuring or reorganization of companies occurs when a company decides to redesign one or more of its elements. This process could be adopted because of different reasons. For instance, a company might want to increase its profitability in the market. A company might also wish to compete more favourably in the market or want to undertake a new direction in its business processes.
A company could reach a point where its original structure has outlived its usefulness, and no longer serves the needs in the new business environment. Therefore, in order to increase effectiveness of the company’s management, some departments in the company could be spinned off into subsidiaries. Apart from increasing the effectiveness of management practice, this move could also take advantage of tax breaks, thus allowing the company to add more revenue to its process of production. Reorganization is a positive step in an organization, as it aims at achieving optimum growth of the company (Burke, 2010).
A company might be compelled to undergo restructuring or reorganization when it is faced with bankruptcy, due to buy-outs, or because of corporate acquisitions. The company manager is the one in charge of the restructuring process, and therefore, controls the process. Some companies hire new managers to oversee this process. During restructuring, therefore, the manager in charge of the process will be faced with different responsibilities, including, restructuring of debt, implementing of new technology, or strengthening a particular area in the company. In some companies, restructuring might lead to layoffs and downsizing in the company. This is detrimental to the affected employees, but the company is compelled to do this as a cost reduction strategy. Nonetheless, whatever way a company uses to restructure itself must result in positive outcomes, as the process of restructuring is meant to increase company profitability.
There are various strategies, which organizations use in the restructuring process. First, a company might decide to add more positions to its current position. This is always with the aim of increasing efficiency in the company. Such a case happens when the company is faced with many tasks to execute, yet the workmanship is insufficient. On the contrast, a company might perform restructuring by reducing or eliminating some of its existing positions. In this case, the company might be trying to cut on costs. On the other hand, this happens when the company has many positions, but fewer tasks, meaning most employees in the position do not handle the minimum required workload (Burke, 2010).
Additionally, a company may choose to restructure by changing work assignments significantly. This might require the employees in the company to undergo significant training to acquire new skills or update their skills in order to perform the new tasks they are presented with. In the case of mergers, the newly formed company will have to undergo intensified restructuring in order to harmonize operations (Burke, 2010).
Conclusively, the processes of organizational change and reorganization or restructuring are important to companies. The business environment today is quite unpredictable, competitive, and prone to face many changes. Therefore, companies need to undergo restructuring and organizational change to adapt to changes in the business environment. For both processes, a company might choose to utilize different strategies in approaching the process depending on its specialties. However, the management in charge of the processes must ensure that these present positive outcomes for the company, such as stable structures and more financial flexibility.
Burke, W. (2010). Organization Change: Theory and Practice. New York: SAGE.
Grundy, T. (1993). Implementing Strategic Change: A Practical Guide for Business. New York:
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