International scientific and practical conference: Partnership in education and science. - Portland, Oregon, USA. - October 26-27, 2012.

ISBN 978-0-9847161-5-9, EAN 50995 / 9 780984 716159

THEORETICAL ASPECTS OF CHANGE MANAGEMENT

Yuliya Novitskaya

Kazakhstan-American Free University, Kazakhstan

Abstract. The article is devoted to the investigation of the external and internal factors initiating organizational change. External factors include changes in organizational external environment – economy, politics, technology, social life – and determine the nature of change. In their turn internal factors – organization development stage, product life cycle, organizational strategy – also shape the scale and the nature of transformations. The article presents an attempt of tying existing change theories to the character and source of change.

To be able to implement successful change in the organization managers should have a deep understanding of the environment the organization operates in, be aware of the changes happening in this environment, know the nature and internal forces of the organization, and strategies and tools for managing change with consideration of everything mentioned above.

The primary importance in understanding the nature of change is thoughtful consideration of the external organizational environment. External factors include political, social, economic and technological factors. Among the most influential change drivers there are government laws and regulations. Legal acts regulate emergence of organizations in the market, the way they operate and collaborate with each other. There are laws that regulate and coordinate organizational activity in all spheres: trade, manufacture, consulting, health, security, education, etc. No business can be successful without complying to the government regulations and current legislation in such spheres as environment, health and safety, environment protection, relations with customers, etc.

Economic factors that shape organizational behavior include globalization and marketization in all spheres of human activity, the rate of inflation, interest rates, employment and unemployment rates, etc. Customer purchasing power is of equal importance with the overall country’s economic growth and development. The ability and readiness of customers to buy a product or a service determines company’s policies and behavior. The amount of finances that the population of the country earns determines the amount of money invested into businesses. Level of employment and average family income dictate the demand and limit or enhance people’s purchasing ability. The general price level, which may include cost of raw materials and transportation, influences the cost of goods or services the company offers.

The development of technology also affects the way companies do business to stay competitive. Technology is used to manufacture new products, to automate processes, to market commodities and services, to store data, to sell goods, etc. at a lower cost. Technological advancements help to organize business effectively, reduce costs and thus increase income. Technological advancements also contribute to the spread of globalization which also forces organizations to adjust to the new environment conditions. Technologies make communication within the company and outside it more effective; huge amounts of information can be shared quite securely in seconds.

Social factors influencing the development of organization include the whole range of changes in social structures of the society. These factors may include religious views, language spoken, family traditions, demographic situation, tastes and buying patterns. A great impact on organizational development is made by values and culture of the society. Western societies value time while oriental countries place an utmost importance on relationships. Western societies have low power distance, while in the eastern countries; in the countries of the former Soviet Union tend to have high power distance. All this cannot but influence how organizations do business.

Among internal factors that influence organizations we can mention inadequate organizational performance, change in strategic objectives of the company, change of an organizational or product life cycles, human resource problems, etc. Inadequate organizational performance may be connected with the appearance of the new entrants in the market who employ better technology, advanced marketing strategies and highly qualified personnel.

Changes are also caused by the natural cycles of organizational development. Quinn and Cameron [1] compared nine different models suggested by various researchers and designed a model combining common features described by those authors. All of the authors distinguish three to five stages in operation of organization of any type from birth to maturity and decline.

Russian researchers (T. Bazarov, B. Yeremin) distinguish similar stages of formation, growth, stabilization and decline of organizations. Semenkov recognizes three stages: youth, when the organization can change easily adapting to changes in external environment despite lack of proper control; maturity, which is the stage when the organization is still very adaptive and flexible and at the same time controllable; and aging characterized by a tuned control but insufficient flexibility. Ivantsevich and Lobanov distinguish four phases similar to what we have already read in other sources: the stage of formation which includes determining the mission of the organization and its major customers; the stage of securing the position in the market when the organization works on its image, diversifies products and enlarge the circle of its customers; stabilization stage and, finally, the stage of crisis, when the organization has to look for alternative ways of its development.

Following Quinn and Cameron [1] we notice that despite the fact that all the models described are based on different organizational phenomena they still pass through the same stages of development.

Different causes for change entail different types of organizational change. There are several contemporary theories of change proposed in accordance with the factor causing this change. The most comprehensive typology of such theories was proposed by Van de Ven and Poole [2] and includes life cycle, teleological, dialectical and evolutionary theories. Later there were also proposed social cognition and cultural models.

The major assumption of evolutionary change theory is that change is a slow process of transformations occurring due to environmental influences. Organizations, being a part of the social system, evolve over time naturally and the nature of change is influenced by environment to a greater degree rather than people. Change is not planned, but managed once it occurs.

Teleological change is synonymous with planned change and scientific management. The basic assumption of teleological theory is that organizations are purposeful and adaptive, change happens because it is initiated by organization leaders, and organization staff is aware of necessity for change. The result of change is appearance of new structures and organizing principles.

Life cycle change approach is to certain extend similar to evolutionary theories of change but bare some differences. This difference is in emphasis placed on the importance of people in the process of change. This theory focuses on stages of organizational development: growth, maturity and decline. Change is viewed as part of these stages or as transition from stage to stage; it is viewed as a natural process which “cannot be stopped or altered” [2].

Dialectical theory of change assumes that every norm, value or pattern within the organization is always present with its opposite. Organizations go through long periods of evolutionary change and short periods of revolutionary change [3]. Sooner or later opposite beliefs clash resulting in radical change. Conflicts are viewed as a natural characteristic of human communication. Bargaining, persuasion, influence and power are used as tools of interaction. This theory does not assume that everyone is involved in the process of change – those who are involved belong to conflicting coalitions.

Social cognitions change theories have become popular in the last two decades. These theories tie the process of change to the process of development and learning. The theory introduces a phenomenon of cognitive dissonance, which occurs when two conflicting pieces of information are brought together, leads to change and contributes to learning. According to the theory change is not caused by external environment or organization management, but by cognitive dissonance between values or actions [3].

Cultural change theory combines principles and assumptions of social cognition and dialectical approaches to change. It assumes that change is a response to external environment and involves modification of beliefs, norms and values of the organization. According to this theory the process of change is slow and lasting; it is important to know and understand history since it contains facts about change; change outcomes can be both predicted and non-predicted.

For a better understanding of the change type Morgan proposes using metaphors in describing the way organizations work and compares organizations with machines, organisms, brains, cultures, political systems, psychic prisons, flux and transformations, and instruments of domination [3].

Considering strengths and limitations of each metaphor we, following Cameron and Green [4], will emphasize only four of them: organizations as machines, organizations as organisms, organizations as political systems and organizations as flux and transformations. Organizations working as machines can be characterized by well-defined organizational structures and job roles. Such organizations have clearly outlined standards and procedures and work as many of think organizations should work. Change in such kind of organizations is an agreed end state and its success depends on whether it is supported by the people in power positions and whether there is a good action plan. The underlying assumption of the metaphor “organizations as political systems” is that in organizations there are coalitions and groups competing for power and resources and often having conflicting interests. Staying out of political play in such organizations does not look possible. Change, in this case, is associated with development of coalitions and involves extensive negotiations. Another metaphor considers organizations as a living organism capable of adapting to environment. These are organizations with loose structures and they are most likely to survive in rapidly changing environment. Such organizations view change as response to the external environment and realize the need for change. Viewing organizations not as a separate system but as part of the environment leads to appearance of the metaphor of “organizations as flux and transformation”. This metaphor leads to the assumption that changes can be shaped but cannot be controlled [4].

Gilley, Gilley and McMillan [5] state that understanding organizational change includes investigating types of change within organizations. Following Weick and Quinn [6] we can assert that changes can be viewed as episodic and continuous. Episodic changes happen as a result of change in the market, mergers or acquisitions or change of organizational structure. Constant changes occur in attempts to keep up with the continuous changes in external environment such as continuous technological improvements.

Additionally, change can be viewed as transitional, transformational and developmental if we look at it from the point of view of organizational evolution. Transitional change, which is the most frequent type of change, is aimed at improving organizational performance through a series of ongoing changes in structure, technology or product, and may be both unit specific and affecting the entire organization [4]. Transformational change occurs when organizations attempt to make fundamental transformations in their culture and behavior and consequently in the way they do business. Transformational change often involves changes in leadership style and overall company strategy as a result of mergers and acquisitions. Developmental change is the least radical among all; it involves changes aimed at improvement of daily operations of the company. Development change is an on-going process to ensure company’s competitiveness in the market, and since these are day-to-day modifications they are not viewed as change by the employees and the degree of stress and risk here is minimal.

To conclude it is important to mention that both external and internal factors can cause social (unexpected, not planned) and teleological (expected, planned) changes depending on whether the organization is aware of what is happening in external organizational environment and within the organization. Changes in both external and internal environment can lead to transitional, transformational and developmental change or episodic and continuous change. Thus, we can state that there is no obvious dependence between the type of change and the locus of the force that drives it. However, there is a tendency to choose the strategy for change depending on its nature. Thus, episodic change is most likely to be managed with some “quick fix” tools, while continuous change requires extensive research and tailored strategies.

References

  1. Quinn, R.E., Cameron, K. Organizational life cycles and shifting criteria of effectiveness: some preliminary evidence. – Management science, Vol. 29, No. 1 (Jan., 1983), 33-51
  2. Kezar, A.J, Understanding and Facilitating Organizational Change in the 21st Century: Recent Research and Conceptualizations ASHE-ERIC Higher Education Report Volume 28, Number 4, 2001
  3. Morgan, G. Images of Organization. Sage, Thousand Oaks, CA, 1986
  4. Cameron E., Green M. Making sense of change management. A complete guide to the methods, tools and techniques of organizational change. 2nd edition. Cogan page, London and Philadelphia, 2009
  5. Gilley, A., Gilley, J.W. and McMillan, H.S. Organizational Change: Motivation, Communication, and Leadership Effectiveness. PERFORMANCE IMPROVEMENT QUARTERLY, 21(4) PP. 75–94 & 2009 International Society for Performance Improvement Published online in Wiley InterScience ( DOI: 10.1002/piq.20039
  6. Weick, K. E., & Quinn, R. E. Organizational change and development. Annual Review of Psychology, 1999. PP 361–386.