What Is Change And Organizational Change

Published Date: 02 Nov 2017

Change is the act, process, or result of altering, modifying or transforming. Organizational change is defined as any alteration of an organization’s structure, technology, or people.

Any business in today's fast-moving environment that is looking for the pace of change to slow is likely to be disappointed. Businesses should embrace change. Change is significant for any organization because, without change, businesses would likely lose their competitive edge and fail to satisfy the needs of what most hope to be a growing base of loyal customers. Change has become part of manager’s job and because change can’t be eliminated, managers must learn how to deal with it successfully.

Categories of Organizational Change

When managers decide that change is needed, one of the first issues they face is: What to change? The specific areas of change a company might undertake-its technology, structure, and people. Any change will almost certainly involve at least one of these areas of focus, and the larger the change the more likely several areas will be involved.

Structure

The structure can be defined in term of tasks and responsibilities, work roles and relationships, and channels of communication. Structure makes possible the application of the process of management and creates a framework of order and command through which the activities of the organization can be planned, organized, directed and controlled.

Changing in structure includes any alteration in authority relationships, coordination mechanisms, degree of centralization, job design, or similar variables. For example, restructuring can result in decentralization, wider spans of control, reduced work specialization, and work teams. (Robbins, 2010) These structural components give employees the authority and means to implement process improvement. For example, Dell is a very flat organization with little bureaucracy to slow it down. An open office environment encourages free-flowing information and a friendly atmosphere. Most employees would describe it as a fun place to work. Employees are empowered to pull together a cross-functional team with the individuals he or she feels would be best to work on a specific project or problem. (Hanson, 1999)

Technology

Changing in technology includes alteration to the way work is completed or to the methods and equipment used. One organizational area where managers deal with changing technology is continuous improvement initiatives, which focus on developing flexible processes to support better-quality operations. Employees wanted to improve are constantly looking for things to fix, so work processes must be adaptable to continual change. This adaptability requires an extensive commitment to educating and training workers in problem solving, decision making, negotiation, statistical analysis, and team-building. (Robbins, 2010)

For instance, Dell use cutting edge technologies such as on-line training, CD ROM delivery options, and web-based educational tools, the system is designed for self-paced learning that allows employees to learn as they work. Michael Dell wrote in the Dell University’s annual report: "Our goal is ‘stealth learning’—education that is so seamlessly incorporated into our work that we don’t even realize we are learning." An extensive course catalogue is available on line, providing training on topics such as operations, finance, management, customer service, technology, ethics, sales skills, and project management. (Hanson,1999)

People

Changing in people refer to changes in people’s attitudes, perceptions, behaviors or expectations. For example, providing people with new information or a new way to look at problems, issues, or events can potentially create significant changes their behavior. (Hitt, 2011)

Moreover, people are changing which can involves directly enhancing their knowledge, skills, and abilities – typically through education, training and personal development activities. This can improve the performance of individuals, groups, and even larger units, regardless of any other changes a manager might initiate..

Dell had issued a stock grants under the Dell Amended and Restated 2002 Long-Term Incentive Plan ("the 2002 Incentive Plan") which was Employee Stock Plans. The 2002 Incentive Plan was to provide the granting of stock-based incentive awards to Dell’s employees, non-employee directors, and certain consultants and advisors to Dell (Dell, 2012).

Ninety percent of employees participate in a plan that allows them to purchase company stock at 15% discount for personal investment and investment in 401K retirement plans. This gives each Dell employee a very personal stake in the company’s success. On-the-spot awards for recognition of outstanding performance are used to further reinforce performance. Finally, compensation for the management team and key contractors has been designed to assure accountability for achieving the corporation’s objectives (Hanson, 1999).

What Causes Organizations To Change?

The causes of organizational change originate from either external or internal forces. A manager must be alert to all of them in order to achieve organizational goals and keep the company in leading position globally. Dell changes mainly because of external forces.

External Forces

External forces are arise almost totally from factors outside the organization or external environment such as economic or business conditions, technological developments, marketplace, or the others.

Marketplace

The marketplace reflects intense competition in recent years. Regardless of the state of the economy, most businesses and many other organizations are likely to be extremely sensitive to moves made by their direct competitors, especially those in response to changes in the market or customers’ preferences. The actions of other significant players in the immediate environment often can trigger changes inside a given organization.

For example, Dell faces huge encroachments from Apple’s phones and tablets, which are cutting into Dell’s consumer PC and notebook business. Other than that, it also faces threats from Quanta and other wholesale manufacturers as efforts such as Facebook’s Open Compute threaten to reduce its importance in the server-making business for large web scale buyers and even cloud companies ( Higginbotham, 2011).

Technological Developments

Changes in technology developed outside an organization frequently require it to respond, whether it wants to or not. Technological advances offer both opportunities and threats to organizations. If managers are slow to respond to technological changes, the consequences can be dire. Technology also creates the need for organizational change. The Internet has changed how we get information, how products are sold, and how we get our work done. Technological advancements have created significant economies of scale for many organizations. (Robbins, 2010)

While the use of IT in Dell greatly increases efficiency in production processes, it also is increasingly important in linking Dell to its broader network of suppliers, business partners, and customers, thereby enabling Dell to achieve "virtual integration" throughout the entire value chain (Magretta, 1998). Fully utilize the modern information technology and implemented in the company's entire organization levels is the key to Dell's success.

Economic Conditions

Obvious forces for change affecting business organizations are developments in the economic environment. If the economic weakens, companies may reduce their workforce or at least limit hiring; prune low-profit product lines; and make other cost-cutting decisions.

For example, in 2009, economic conditions hurt sales enough that Dell moved a major production facility from Ireland to less costly Poland, leaving 1,900 Irish workers unemployed. (Hitt, 2011)

Conversely, if the economy is vibrant and expanding, companies may consider adding new services of products, creating new units or division, increasing their geographic areas of operations, and undertaking similar growth changes. (Hitt, 2011)

Evidence of Dell’s solutions transition over the past 12 months includes acquiring eight companies providing strategic intellectual property for Dell’s growth as a solutions provider, creating a software organization, and opening 11 customer solution centre globally. The company also has doubled the number of its engineers developing enterprise solutions and more than tripled the number of its specialists selling solutions over the past five years. (Dell’s Enterprise Solutions Strategy Delivering on Financial Commitments; Company Adopts Quarterly Dividend Beginning in Third Quarter, 2012)