What is organizational change?
Organizational change is a transitionary period within a company. It can take many forms and may occur after extensive internal planning or unanticipated outside factors. Organizational change can cause major changes in areas like:
- Structure
- Policy
- Culture
- Strategy
- Technology
Whether the changes are sudden or take place over a longer period, they can require you to adopt new policies and adjust to new differences within the organization.
Causes of organizational change
Cost Cutting
Another element that leads to transformation in an organization is cost-cutting. Companies are compelled to drop the price of their products when a rival company releases a product with comparable features but at a cheaper cost.
Price is a factor that affects customers’ purchasing decisions. Either you have excessive confidence in your products, like Apple, or you must reduce costs to compete in the market.
Competitive innovation
Companies are forced to adapt through competitive innovation. When a rival company innovates or takes action that could be harmful to your product, you must adjust your plans to stay competitive and provide a product that is either identical to that of your rivals or offers something new that will draw people.
Companies that make cell phones are currently engaging in competitive innovation. Apple is regarded as a global leader in the smartphone industry and has a reputation for launching the most cutting-edge products. To stay competitive, other smartphone manufacturers like Google, Samsung, and OnePlus steal Apple’s concepts and add their flair.
According to the release of Apple’s iPhone 11, it appears that all businesses have now reached a threshold of innovation saturation. Even though Apple’s most recent iPhones have a ton of upgraded features, the company hasn’t made any ground-breaking innovations as it was known for under Steve Jobs.
Competitive innovation is both helpful and bad for businesses since it keeps them on their toes to stay ahead of rivals while also putting pressure on management and employees to constantly come up with new, creative ideas.
Products’ end-of-life
The market changes, and along with it, so does the demand for products. Some goods remain popular for a limited period before their demand gradually declines. At such a moment, the business must come up with some creative ideas to create fresh products to remain competitive in the marketplace.
For instance, a few years ago, keypad-only mobile phones were produced by mobile phone companies. However, when touch-screen mobile phones entered the market, the value of keypad phones drastically decreased, and companies were forced to change their production processes and begin producing touch-screen phones instead of keypad-only models.
We are all aware of Nokia’s downfall; once one of the top manufacturers of mobile phones, it is now barely keeping up with the rising standards of competition. Companies that have changed their production processes when the life of their product ends have continued to operate.
Change in the business structure
The alteration of the corporate structure is another internal aspect that affects a corporation. Change is unavoidable. To adapt to new technology or to increase organizational productivity, management must adjust the corporate structure.
Consider the era when businesses were forced to switch from bookkeeping to computerized account maintenance as a result of the introduction of computers into the workplace. To find workers who could handle the demands of new technology, personnel were trained and hired. Similar to how it was in the past, the organization’s structure evolved in the present when going online was necessary to meet customer demand.
Merger and acquisition
A shift in an organization can also be brought about by mergers and acquisitions. When two businesses combine to work, that is referred to as a merger. Companies that merge must alter their organizational structures to accommodate one another’s working environments.
Similarly to this, when a firm buys another business, it must reduce some of its operating expenses to fund the development of the newly acquired business or the purchase of additional goods and services.
This is an internal change that an organization makes on its own and is not compelled to make, as we have previously mentioned in the text, by any external changes.
To operate both businesses effectively, the organization may cut staff to retain individuals hired from a new organization or change the nature of some employees’ jobs.
Benefits of organizational change
Even though change may be a necessary component of the running company, neither employees nor managers nor business owners necessarily like it.
The familiarity of their comfort zone may make employees unwilling to leave it, or they may worry that they won’t be able to cope with the change. Even though dealing with change in the workplace can often be difficult in the short term, it can have a good long-term influence on a company’s success.
1. Promotes Invention
Without change, businesses can soon find themselves behind the times and lose ground to rivals. To stay up with our rapidly changing and technologically advanced times, they must be able to adapt and change.
Ideally, businesses should be able to change and adapt quickly. Workplaces that are too rigid can inhibit creativity, which is necessary for the emergence of new ideas. Organizations need to be aware that a procedure, rule, item, or service that is useful now could not be so in the future.
“Ideally, businesses should adapt and evolve quickly.”
2. Supports Skills Development
The capacity of an organization to foster new specialties and abilities will greatly benefit the entire company, including employees, who will become far more competent and well-rounded team members.
Employees who do the same tasks all day long will never have the opportunity to demonstrate their abilities or learn something new to contribute to the business. People will never learn to master new abilities if they consistently do the same thing.
3. Development of People
Although convincing workers to accept change can occasionally be challenging, those who can do so with a positive outlook will stand to benefit greatly from using the new approaches in terms of their personal development.
The employees who can perceive the advantages of change are frequently the most valuable to your organization since they will not only grow individually but also create circumstances in which the company will naturally expand along with them.
4. Fresh Business Prospects
Businesses will continuously identify and cultivate new business ideas and prospects with the support of their ability to accept change. Any business can advance into new domains brought about by new ways of functioning by having excellent change strategies. This could be done through joining forces with other businesses to grow, or just by making new contacts that increase sales.
5. Higher Employee Morale
Employees who perceive their employer as being more adaptable to changing conditions and responsive to change can observe good attitudes coming from above, believe that their contributions are constantly appreciated, and see their employer as relevant and eager to grow.
organizations that aren’t frightened to alter. They understand that firm executives are making every effort to improve their conditions, for example, a change in human resources that might result in a more laid-back work environment.
This will result in happier team members, which raises workforce morale and satisfaction.