Future generations, looking back on the last years of the twentieth century, will see a contradictory picture of great promise and equally at great uncertainty. The 1990s have all the symptoms of a “turning point” in world history, a moment when many of the structural “givens” of social development themselves become problematic and world society undergoes profound reorganization.
These developments occur within a framework of rapidly expanding social and economic interdependence on a global scale. Organizations evolve through periods of incremental or evolutionary change. The major work changes happening today are changes in organizational strategy, organizational structure and design, technology and human resources. A change in organizational strategy is an attempt to alter the organization’s alignment with its environment.
Mercedes, for example, is going to introduce this year the new Classe A, which is more oriented to the new young generation who wants to own a Mercedes. Though Mercedes wants to keep its image of a high-class car producer, it overtook this new strategy to reinforce its presence in the market. Organizational change might also focus on any of the basic components of organization structure or on the organization’s whole design.
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Nobuhiko Kawamoto, president of Honda, recently reorganized the Japanese automaker’s management hierarchy. He drew up a new organization chart, he created a planning board and he has taken steps to empower lower-level workers. All this in order to adapt better to the fierce market of car making.
Because of the rapid rate of all technological innovation, technological changes are becoming increasingly important to many organizations. One major area of change involves equipment, thus a change in work processes or work activities may be necessary. Timex, for example, 3-D design software from Toronto based software Alias Research Inc. to be able to turn out watches faster. Organization control systems may also be targets of such a change.
Another area of organizational change has to do with human resources. An organization might decide to change the skill-level of its workforce and the level of performance of its workers. Perceptions and expectations, attitudes and values are also a common focus on organizational change. Organizational change is anticipated or triggered because of different changing circumstances, an organization might incur a change because of forces bending its environment.
These forces might be either external or internal. The external forces derive from the organization’s general or task environments. The general environment is parted into different dimensions: the international, the economic, the technological, the socio-cultural and the political-legal dimension. A good example is Russia’s shift from a communist country to a capitalistic one.
This shift affected organizations inside and outside Russia, on the economical and political-legal levels, organizations inside the country had to take on drastic changes to flow with the environment nationally and internationally. On an international level, international organizations saw in Russia an interesting potential market.
As for the task environment, it includes competitors, customers, suppliers, regulators and strategic allies. Pepsi Lebanon had always been the only cola producer in the country since the early 1970s until lately, Coca-Cola entered the market once more. Pepsi realizing the danger of its competitor launched a new marketing strategy to keep its customers.
The internal forces are mainly related to the organization’s internal environment but some internal forces might be reflections of external ones. All organizations will experience change at one time or another. Obviously, expanding the boundaries of exchange and cultural contact creates both opportunity and risk. The challenge for managers is to adapt properly to the culture and the strategy of their organizations to their current environment.
Unfortunately, management isn’t working as it should: in a telling statistic, leading practitioners of radical corporate reengineering report that success rates are between 20% and 80%. Determined managers follow up with plans for process improvement. Managers look for enthusiasm, acceptance and commitment, but it gets something less. Hence, communication breaks down, implementation plans miss their mark and results fall short. This happens often enough that we have to ask why and how we can avoid these failures.
Although each company’s particular circumstances account for, some of the problems have common roots: n Managers and employees view change differently: top-level management sees change as an opportunity to strengthen the business and to advance in their career, but for many employees, including middle managers, change is never sought after or welcomed; it is disruptive and intrusive.
At Philips Electronics in the Netherlands, employees’ failures to understand changing circumstances drove the company to the brink of bankruptcy. Uncertainty is the biggest of employee resistance to change. In the face of impending change, employees may become anxious and nervous. They may worry about their ability to meet new job demands, they may think that their job security is threatened, or they may simply dislike ambiguity. RJR Nabisco Inc. was recently the target of an extended and confusing takeover battle, and during the entire time, employees were nervous about the impending change.
A change might threaten the self-interests of some managers within the organization, potentially diminishing their power or influence. Managers so affected may fight the change. Managers at Sears, Roebuck and Co. recently developed a plan calling for a new kind of stores. The new stores would be somewhat smaller than typical Sears stores and would not be located in large shopping malls. Instead, they would be located in smaller strip-shopping centres.
When executives in charge heard about the plan, they raised such strong objections that the entire idea was dropped. Many changes involve altering work arrangements in ways that disrupt existing social networks. Because social relationships are important, most people resist a change that might adversely affect those relationships.
Other intangibles that are threatened by change and that might give a feeling of loss include power, status, security, familiarities with existing procedures, and self-confidence. Steven Jobs hired John Sculley to bring professional management to Apple.
He later found that he did not like Sculley’s changes and wanted things as they were before. His own status and self-confidence were being threatened. Jobs tried to oust Sculley, lost power with the board of directors, and then left himself.
To close those gaps managers should know how to face and overcome resistance to change. Although there are no certain solutions, several techniques at least have the potential to decrease or even eliminate this resistance.
Participation is often an effective technique for overcoming resistance to change. Employees who participate in planning and implementing a change are better able to understand the reasons for the change. Uncertainty is reduced, and self-interests and social relationships are less threatened. Having had an opportunity to express their ideas and to understand the perspectives of others, employees are more likely to accept the changes more gracefully.
Educating employees about the need for and the expected results of an impending change may reduce their resistance. And if open communication is established and maintained during the change process, uncertainty can be minimized.
Several facilitation procedures, which include making only necessary changes, announcing those changes well in advance, and allowing time for people to adjust to new ways of doing things, can help reduce resistance to change.
By approaching these phases systematically and creating explicit links between employees’ commitment and the company’s necessary change outcomes, managers dramatically improve the probability of attaining demanding targets. That’s what a small family-owned business did. Eisai was one of the original manufacturers of vitamin E. Over the years, it developed drugs for the treatment of cardiovascular, respiratory, and neurological diseases. By the end of the 1980s, such drugs comprised 60% of the company’s total sales. Several years after becoming CEO, Naito formulated a radical new vision for Eisai that he called “Human Health Care” (HHC): it extended the company’s focus of manufacturing drugs to improving the overall quality of life.
To accomplish that mission, Eisai had to develop a wider range of product and services. Indeed, for his vision to become a reality, Naito knew that employees themselves should participate in implementing this idea. When Naito announced his new strategy, he initiated a training program for all his employees about the HHC and its derivatives.
Then he charged the managers to turn the insights from their experiences into proposals for the new products and services. Those managers operated outside both the normal organizational structure and the company’s traditional cultural boundaries, they had teamwork when designing new products or programs by putting together their ideas.
When they reported back to Naito he personally evaluated their performance. As a result, junior people had a chance to break out the old system and to shape the development of the company’s new strategy.
Although personal compacts at Eisai are still dominated by traditional cultural norms, Naito’s ability to lead his employees through a process in which they examined and revised the old terms, enabled them to accomplish major strategic change.
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We conclude that whatever the changes inside an organization might be, and whatever the reasons that made these changes necessary, a good way of implementing the changes successfully is for a manager to treat the participation and the communication with his employees as integral parts of the change process.
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