Managing Organizational Change

A rapidly changing environment places many demands on leaders and employees, including the need to plan for and manage organizational change effectively. Pressures for change stem from globalization, the increasing use of information technology as a communication channel, the rise in the number of powerful social networking groups, and the mixing of different generations of employees in many organizations. Each of these pressures for change requires leaders to adapt their behaviors in order to achieve their organization’s goals.

The two major approaches to achieving planned organizational change are economic and interpersonal. The economic approach focuses on changing the organization’s design, reward system, and technology to achieve change and improve stockholder value. The organizational development approach focuses on the development of employees’ interpersonal competencies. This approach requires employees and leaders to become emotionally involved with the organization and be committed to its values and goals. Many successful planned change programs sequence these two basic approaches, starting first with the economic and then shifting to the organizational development approach.

Individuals may resist change because of their perceptions or personalities. In addition, habits, threats to established power and influential relationships, fear of the unknown, and economic insecurities may generate further resistance to change. Organizational resistance to change may be caused by organizational design and culture, resource limitations, and interorganizational agreements. By performing a force field analysis, various resistances to change can be explored in more detail.

Organizational diagnosis involves collecting information about the change and then developing the organization’s capacity to change. Oftentimes employees have information about needed changes but are reluctant to share this information for fear of looking foolish or not being rewarded for making suggestions. An organization’s capacity for change focuses on leaders creating a sense of urgency to break the status quo and managing employees’ expectations about the change.

Three methods are available for promoting organizational change: interpersonal, team, and organizational. The interpersonal method focuses on changing employees’ behaviors so that they can become more effective performers. This method usually involves some use of survey feedback. The team method focuses on ways to improve the performance of entire teams, and team-building activities are its foundation. The organizational method is aimed at changing the organization’s structure, reward system, level at which decisions are made, and the like.