Organizational change refers to adjustment in the structure of an organization that may involve a change in the operations or the management structure of the organization (Mills, 2008, p.27). It results in significant changes in the culture of the organization in order for it to adapt to changes in the internal or external environment. Organizational change is caused by internal and external factors. Internal factors motivate organizations to change their strategies while external forces motivate organizations to evolve to enable them adapt to changes (Mills, 2008, p.29). It is vital for organizations to initiate changes in their strategies and operations in order for them to attain significant growth. Organizational change is a critical issue that is important to the success of organizations.
Internal Drivers of Organizational Change
Internal drivers of organizational change include adjustments in policies and systems, changes in management, negative employee attitudes, financial constraints, reorganization and relocation of an organization (Mills, 2008, p.36). Any change in an organization’s management necessitates adjustments in its structure to help deal with the uncertainties that result from changes in the management structure. For example, when the CEO of an organization departs the organization enters into a state of uncertainty. On the other hand, when a new CEO takes over the management of an organization, possible changes include new policies and systems that lead to an overhaul in the organization (Mills, 2008, p.38). In such cases, change is important because such scenarios create fear and insecurity in employees. Change in management comes with change in policies and systems because the new management may want to change the existing operations of the organization to improve performance.
Financial constraints compel organizations to explore all available options in search for a solution to the problem. Financial constraints solutions include downsizing, reducing operation costs or eliminating unprofitable programs (Mills, 2008, p.39). Cost-cutting measures result in significant changes in an organization’s operations and structure. The most common cost-cutting measure is the downsizing of staff. This results in the allocation of more or different responsibilities for retained employees. Downsizing brings organizational change because it results in elimination of certain departments or organizational roles that necessitate new structures and systems (Mills, 2008, p.41).
Organizational change occurs when an organization changes its system and policies. This is done in an effort to improve efficiency and productivity. In addition, it may be caused by employees’ attitudes. Negative attitudes result in low productivity and reduced efficiency. An organization may initiate change to inculcate positive attitudes in employees that improve productivity and efficiency, and encourage teamwork and cooperation. For example, in 2011, HP (Hewlett and Packard) announced organizational changes that were meant to capitalize on market opportunities that were available while at the same time improving its productivity and efficiency (Myers et al, 2012, p.62).
External Drivers of Organizational Change
External drivers of change include competition, market dynamics, new technology and political and economic stimuli (Myers et al, 2012, p.68). When a piece of new technology emerges, organizations incorporate it in their operations. This motivates the organization under focus to embrace the technology in order to compete effectively with other organizations (Myers et al, 2012, p.69). The new technology changes it operations and organizational structure. Other factors that drive organizational change include market dynamics and competition. Competition may come from other organizations that supply similar products or services at a lower price. In addition, it may be initiated by consumers’ failure to purchase the products of a certain organization. For example, Etislat, a telecommunication company in the United Arab Emirates, changed its strategies to quell the stiff competition it was experiencing from other companies (Myers et al, 2012, p.71).
Rival telecommunication companies introduced low call rates and low internet charges that rivaled the high charges by Etislat. Such changes in the market necessitate changes in the organization. Political and legal factors have a significant influence on the operations of any organization. Changes in these factors initiate organizational change because they affect their operations. Another factor that drives organizational change is social adjustment. Social changes are caused by factors such as changes in level of education, changes in taste, change in preference, and urbanization (Myers et al, 2012, p.73). These changes affect the behavior of employees, thereby necessitating organizational change to match the attitudes and behavior of employees.
Organizational change involves a change in the culture of an organization in order to enable it to adapt to changes either in the internal or external environment. Organizational change takes place under different circumstances. It can be caused by internal factors such as changes in an organization’s strategies and polices, or it can be caused by external forces such as competition. These factors force the organization to evolve in order for it to adapt to new changes in the markets. There are internal and external drivers of organizational change. Internal drivers of change include change in policies and systems, change in management, employee attitudes, financial constraints, reorganization and relocation. On the other hand, external drivers of organizational change include competition, market dynamics, new technology and political and economic stimuli. These factors initiate changes in organizations and help them adapt to current organizational needs.
Mills, J. (2008). Understanding Organizational Change. New York: Taylor & Francis.
Myers, P., Hulks, S., and Wiggins, L. (2012). Organizational Change: Perspectives on Theory and Practice. London: Oxford University Press.