Types of changes
Organizational changes are of two types :
1. Reactive changes and
2. Proactive changes (planned changes). A brief description of these follows:
Reactive Changes
Reactive changes occur when forces compel organization to implement change without delay. In other words, when demands made by the forces are complied in a passive manner, such a change is called reactive change.
Proactive Changes
Proactive changes occur when some factors make realize organization think over and finally decide that implementation of a particular change is necessary. Then, the change is introduced in a planned manner.
The difference between reactive and proactive changes can made on the basis of behavioural angle.
1. Reactive change involves a reflexive behaviour whereas proactive change involves purposive behaviour.
2. Reactive change covers a limited part of the system but procative change co-ordinates the various parts of the system as a whole.
3. While reactive changes respond to immediate symptoms, procative changes address to underlying forces creating symptoms.
An example will help you distinguish the two changes in more clear manner.
Remember, you respond reflexively to a sudden intense light by blinking your eyes or by papillary contraction. Undoubtedly, your's this is an automatic and instant response to a force (intense light) without giving any thought. But, your purposive response to the same force would involve devising a plan either to shield the eyes or removing the light. Obviously, your's this action would involve coordination of central nervous system and psychomotor capacities.
Planned Changes
When changes are effected after working out when and how they will be carried out, planned changes occur. For initiating planned change, the manager needs to constantly watch the changes taking place in the external and internal environment of the business so that corrective measures are taken accordingly and the changes could be effected successfully.
Reasons for Changes
Following are some of the causes of organizational changes which lead to disequilibrium end resistance
1. Change in Tools, Machines and Equipment : Technological or mechanical changes in machines, tools and equipments may bring change in the organization. For example, installation of an automatic machinery in place of old machinery, may result in displacement or replacement of people or loss of job to people and may create disequilibrium.
2. Change in Methods and Procedures : Man is a creature of habits. He feels irritated when change occurs in methods and procedures of work of which he is accustomed to. As it takes time to adjust to the new environment, it creates disequlibrium till the complete adjustment to the new environment.
3. Change in Business Conditions : Changes in business conditions such as change in the quality of the product, change in the marketing system or practices, business cycles, change in industrial policy etc. all create disequlibrium in the work-environment and it needs adjustment accordingly.
4. Change in Managerial Personal : Change in the managerial personal in the organization may result in disequlibrium. A personnel may retire or change place or may be appointed afresh, this will all affect the policies, practices, procedures and programmes of the organization and the people are to adjust themselves accordingly.
5. Change in Formal Organization Structure : The formal organization structure establish a form and line of command of authority and responsibility in an organization. Along with these lines, channels of communication and interpersonal relations are established. If there is a change in this formal organizational structure, there will be a change in the formal relationship which creates disequilibrium.
6. Change in Informal Organization : Informal organization is a must in every formal organization and is a very important part of our existence because many of our motivational forces find satisfaction in these relationship. Consequently when management likes to introduce any change that disturbs the informal relationship established among people there is bound to be a state of imbalance.
A short list of some of the changes which affected almost all organization in the past few decades is given here :
♦ Technological innovations have multiplied, products and knowhow are fast becoming obsolete.
♦ Basic resources have progressively become more expensive.
♦ Competition has sharply increased.
♦ Environmental and consumer interest groups have become highly influential.
♦ The drive for social equity has gained momentum.
♦ The economic inter-dependence among countries has become more apparent.
All the reasons for organizational change can be classified into two categories external reasons and internal reasons.
External Reasons
A number of changes in the external environment may cause change in the organization. Here, we are mentioning some of the most common and obvious external reasons of organizational change :
1. Government Rules and Regulations : One can catalogue a long list of the Government's rules and regulations necessitating changes in organizations. For example, the recent slashing of grants by the University Grants Commission (UGC) to the Universities have forced them to strengthen their revenue generating functions, such as training programmes, consultancy, offering self-financing courses, etc. Likewise, the Government's policy to privatise the power sector encouraged Jayprakash and the DLF to diversify into the power sector.
2. Competition : The present time is the survival of the fittest. Organizations need to come up the challenges posed by the competitors to sustain and survive. In 1993, Mudra Communication decided to reorganise itself to counter the threats from its competitors Lintas and HTA.
3. Technological Advances : Technology has become the buzzword of the time. Rapid changes in technology has posed a question before the organization - either run or ruin. The revolutionary change in communication technology, i.e., communication satellite, cable networking, dish antenna, etc., compelled the Doordarshan to restructure itself by segmenting its services to different categories of viewers and become more competitive.
4. Change in People Requirements : Customers dictate organization what they actually require. With changing requirements of customers, the five-star-hotels have, of late, started to offer new services, such as business centres, conference hall facilities, secretarial services, etc.
Internal Reasons
Though there may be a host of internal factors that may also cause change in Organizations, some of the illustrative ones are listed here :
1. Change in Leadership
Leadership changes culture and values in the organizations. V. Krishnamurty of SAIL, Tapan Mitra of INDAL, Ratan Tata of Tata Sons are the examples how the change in leadership led to internal changes in these organizations.
2. Introducing New Technology
Introduction of new technology in an organization is bound to have consequences for other functions as well. For examples, the computerisation of the Examination Division of the M.K. University affected other aspects as well, such as reporting relationships, span of control, coordination mechanism and so on.
3. The Domino Effect
The source of change is change itself. The domino effect means one change triggers off a series of related changes. For example, establishing a new department, e.g., the Department of Business Administration may cause the creation of teaching and non-teaching positions, budgeting allocation, building construction etc. Ignoring domino effect leads to the problems of co-ordination and control.
Fig. 9.2: Five Phases of Organizational Growth.
4. For Meeting Crises
Just like human life, some unforeseen happening, say, crisis in the organization makes continuation of the status quo unthinkable and difficult. Sudden death of a CEO, the resignation of the executives holding key positions, loss of major suppliers, a drastic cutback in budget and civil disturbances are the examples of unforeseen crises. These make the organizational condition unstable and this instability becomes the stimulus for thorough self-assessement and reform to change the organization to overcome the crisis before it.
5. Organizational Life-Cycle
As human beings pass through certain sequential stages of life-cycle, so do the organizations also. As an organization grows from tiny sized to giant sized or from young to mature stage, according to Larry Greiner, it passes through five stages. Each stage creates new demands for adjustment for the organization and so, act as a potent sources of organizational change. Each stage culminates in a crisis (which Greiner calls 'revolution'), which the organization must overcome before graduating to the next stage. Griner's five phases of organizational life are shown in the following figure.
