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Heraclitus, ancient Greek philoshoper, is considered to be an author of the above quote as we know it today, but to be completely accurate we should point out; that he only rephrased originally Platos idea that nothing stays the same and everything changes.
These two very important and influential philosophers lived over 2500 years ago and yet, the idea that change is never ending and it is the only permanent aspect in our lives, is still strongly present nowadays.
It is not easy to define change. Various meanings of this word could be find in a dictionary, but essentially to change means to become different, to replace one thing with another or to transform from one phase, state or condition to another.
However change is much more than a few definitions in a dictionary. Change keeps people in motion and it pushes them out of their comfort zone. It is charged by dissatisfaction of current state or situation and it forces people to do things differently and better than they were done before. It gives a hope for brighter tomorrows, but it does not necesarilly mean that all change is for better.
Human beings are not the only ones who go through change. People are naturally reistant to change for number of reasons, but the whole world is changing wether humans want it or not. Cultures are changing, societies are changing and business environments are no different. In fact businesses went through enormous amount of transformations in last two centuries and because environments are not static, organisations in order to be successful or at least to survive need to either adjust to a change or change completely. This view was broadly supported by Dawson (quoted in Senior, 2002:13) who claimed; that managers need to 'be leaders of change or else, in an increasingly competitive environment, their organisations will cease to exist.'
The transformation process which a company goes through is called 'organisational change' and it is very complex and dynamic phenomenon which gained a lot of importance over last couple of years due to rapidly changing and competitive business environments. According to Dawson (1994:10) change in an organisation can be "any alteration in activities or tasks" ranging from small modification in procedures and processes (eg. installation of new computer software) to huge organisational changes such as restructuring. It is therefore necessary for managers and decision makers, who want to understand organisational change, to possess a good knowledge of organisation itself, its strategy, structure and behaviour.
Defining an organisation itself is not easy and straight forward as it may seem. Hutczynski and Buchanan defined organisation as "a social arrangement for achieving controlled performance in pursuit of collective goals" however Senior (2002) argues that this definiton as well as some others fail to take into account that relations between people, who are part of the organisation, are also subject of some management and supervision. Management of these relations is often a key to successful implementation of change in any organisation.
Organisational change comes in many different forms, shapes and sizes, for instance it could be introduction of new technology or working methods, job re-design, new product development, change of management in the organisation, or mergers and takeovers. Burnes (2002) outlined that many theorists concerned with organisational change (for example Grundy, Senior, Kanter, Stace and Dumphy, Pettigrew) have slightly different approach to categorising change, but generally three main types of change are recognised.
â-ºThe incremental model of change, acccording to Burnes (2004), happens when different departments of an organisation deal individually with one problem at a time which in the end leads to transforamation of the company. Based on Grundy's work Senior (2002) further distinguishes between smooth incremental change and bumpy incremental change. While smooth change is considered to be a slow process which evolves in organised and expected way, bumpy change is viewed as process where some changes in external environment are expected but company is not entirely sure what impact could those changes have.
â-ºThe punctuated equilibrium model of organisational transformation is characterised by 'sudden bursts of activity' (Price, 2009:15) and sometimes changes in the environment could be more drastic that company would expect and therefore it needs to change radically in response to these changes.
â-ºThe continuous transformation model of change is based on the assumption that environments keep changing dramatically and therefore companies keep changing and improving themselves continuously too in order to survive (Burnes, 2004). As noted by Hayes (2007:13) this change means that companies are 'doing things differently rather than doing things better'.
Managers would like to have an easy step guide which will tell them what should they do and how should they manage change in order to achieve their objectives, but in reality this is not possible. There is wide spectrum of methods that companies can adopt, when it comes to managing organisational change, but usually planned or emergent approach are used by most of the organisations, depending on the objectives, organisational behaviour and environment in which they operate.
Planned change is a result of deliberate and analytical decision of change agents (eg. managers, employees, outside consultants) to improve organisation's ability to react to changes happening in the environments while also focusing on organisational behaviour within the organisation (Burnes, 2004). This approach is mostly adopted by companies in relatively stable environments.
On the other side, emergent approach is adopted where the environments are more turbulent and changes happen in an unpredictable and unplanned way. Companies therefore concentrate more on organisational transformation through continuous change and invest in reinvention.
Both approaches have their supporters and critics, however many argue that a way forward today is by adopting the emergent approach. Dunphy contend that 'planned change is triggered by failure of people to create a continuously adaptive oganisation' which is also known as 'learning organisation' (Hayes, 2007:11).
Pedler at al (1991:1) define learning company as 'an organization that facilitates the learning of all its members and continuously transforms itself'. According to Robbins (2001) this company uses double-loop learning and when the errors occure, they are corrected by modification of company's objectives, policies and procedures, as opposed to single-loop learning, when company only rely on past or current practices and routines.
Change agents need to carefully consider which approach to adopt to best suit their company in order to improve its effectiveness, competitiveness and overall perfomance.
Kurt Lewin, who was concerned with organisational change, developed in 1947 Three-Step Change Model where he identifies 3 main stages of change. Unfreezing of current status quo - equilibrium (1), change or reformation to a new state (2) and refreezing (3), in other words stabilisation of the new situation so change becomes permanent.
In 1995 Kotter expanded on Lewin's idea and created more detailed approach. His Eight - Step Plan focuses on the various managerial failures in implementing change. First four steps (1. Establish a sense of urgency, 2. Form a coalition, 3. Create a new vision and 4. Communicate the vision) represent the 'unfreezing stage', next three steps (5. Empower others, 6. Reward short term 'wins' and 7. Consolidate improvements) are 'movement stage' and 8. Reinforce the changes stands for Lewin's 'refreezing'.
Another approach which ties closely with systematic and planned change is
Organisational Development. This approach is based on values such as respect for people, participation, trust and support in order to improve organisation's effectiveness and employee well being. Company focuses on planned-change interventions such sensitivity training, survey feedback, process consultation or team-building activies or intergroup development. (Mullins, 2007)
It is essential that managers and decision makers recognise, understand and also are able to analyze factors which cause change in the organisations and that these factors are influenced by both the internal and external environments.
When it comes to external environment, organisations have little or no power to influence what is happening in this environment, and therefore external changes have a tendency to influcene necessity for change in an organisation (Price, 2009). These drivers were groupped into different categories under the heading STEP or PEST which both stand for Political, Economical, Socio-Cultural and Technological factors.
Political drivers for change are represented by governmental ideologies, country's legislation or international laws, taxation, trades union activities or local regulations. By these governments are reflecting on current situation within country and changes happening worldwide such as wars, terrorism or environmental disasters. This eventually should lead to creation of safe and equal conditions for all businesses (Senior, 2002). Companies must be aware of the implications these political decisions have on them and how to react to them most efficiently to minimise negative impact they might have.
Equally important are economic factors and even a small change in economic environment can have vital consequences for some businesses, especially now when they are becoming more global than ever before. As Price (2009:5) pointed out 'national economies exist within a global economic climate'. Many figures show that businesses are facing biggest global recession since Great Depression which means significant changes, in the ways the business was done, for almost every company in most of the countries all over the world. Threat for competitors entering markets, suppliers relations, employment or wage rates, decrease in disposable income, changes from public to private ownership or currency exchange rates are all factors which can initiate changes for organisations. Drucker linked the importance of having enough information about what is happening outside of the organisation to a winning strategy as only well informed companies can face challenges from rapidly and unexpectedly changing global economic scene (Paton, McCalman, 2008).
Fast changing technology has undeniably massive influence on companies. What is new and modern today becomes obsolete tomorrow. However it is not only technology itself that hasn't stop evolving since industrial revolution, it is also procesess, means and procedures which are changing the way organisations function nowadays. It is hard to imagine modern businesses without using technology today and the Internet changed completely they way whole society live and also the ways comapanies function, trade and communicate. Technology offers enormous amount of new possibilities for companies how to do things better, quicker, less expensive and more efficient than before and therefore companies who wish to be ahead of their competitors should be aware of new technologies available to them. (Senior, 2002)
Socio- Cultural drivers for change such as demographic trends, attitudes to work and employment, business ethics, skills availability, lifestyle changes, shifts in customer preferences and expectations or cultural differences need to be all carefully considered by every organisation. Unless the company is able to reflect on the needs of changing society and cultural values it currently holds there is only a little chance to achieve its objectives.
Internal environment is 'the point at which organisational change takes place' (Price, 2009:11) and it is mostly concerned with internal issues of the organisation. This includes relationship between staff and managers, the organisation's structure and culture and the processes and the systems used within the organisation (eg. appointment of new CEO, new product line or restructuring).
Buchanan and Huczynski in 2006 identified another trigger which may cause companies wanting to change and that is the need to be ahead of their competitors and become proactive (Paton and McCalman, 2008).
It may seem that external drivers for change are more important than internal drivers, as internal changes happen in response to what is happening outside of the organisation, however these two environments are interlinked and interdependant and in reality it is difficult to separate them entirely (Senior, 2002). For example when there is a new technology on the market company may need to employ new qulified and trained staff to operate such technology.
Change si constant, unpredictable, ever evolving and sometimes inexplicable. It was always here and always will be. Many theorists were and still are concerned with the idea how to manage organisational change effectively and set of concepts, practices and management paradigms emerged over the years.
The word paradigm was first time used by Thomas Kuhn in 1962 and he defined it as 'a universally-recognised scientific achievement that over period of time provides model problems and solutions to a community of practicioners' (Burnes, 2004:85). From the organisatisational point of view paradigms stand for theories, models and methods that are accepted and shared in a specific field over some time, however with regards to the changing environment, some paradigms lose their imprortance and new ones come forward.
First comprehensive and detailed theories appeared at the end of nineteenth and start of twentieth century, mutually with creation of large industrial organisations and the need to solve problems with structure and management in these organsiations.
Taylor's Scientific Management theory (USA), Weber's Bureaucratic approach (Germany) and Fayol's Administrative theory (France) emerged all separately and focused on different organisational aspects, nonetheless together they form one of the most significant theories in study of organisations - The Classical Approach.
Classical approach sees the organisation in terms of formal structure and the purpose it serves (Mullins, 2007). Classical writers were looking for the 'one best way' to solve all common problems within the organisation. Main focus was on understanding how organisations work, how working methods can be improved and productivity increased to maximise profits. Taylor believed that this could be achieved through science, experiments, precise definitions, exact planning and calculation.
Main principles of scientific management are that
scientific approach should be adopted for each element of work (jobs specified and broken down into simple tasks, standardisation)
selection of workes should be systematic (based on analysis) and training provided by experts
managers should avoid conflict and rather cooperate with labour to ensure the work is done in the approved manner
work and responsibilieties should be equally divided between management and workes, so that everyone is doing what they are best fitted for (delegation)
Rational thinking of this approach could be demonstrated on Taylor's famous 'pig iron test' where he analyses how much iron is loaded by a man per day when offered a financial reward after following detailed instructions. Taylor saw workers as being lazy and solely motivated by money ('soldiering') therefore he believed that productivity will improve mutually with increased wages. In Taylor's view only management should have control over the work therefore roles and procedures must be clearly defined and employees' discretion removed.
Taylor's theory had many critics (Rose, Braverman, Burnes, Kelly) and it is still strongly criticised today mainly for seeing human beings as machines only driven by material incentives, for not taking into consideration human behaviour and emotions and also for giving management all the power and control. It created tedious and boring work which leads to alienation, low morale, job dissatisfaction and poor motivation. (Burnes, 2004)
Despite all the criticism, contribution scientific management had to study of organisations, work and management should not be underestimated, as it still remains probably the most common approach to management and dominates work organisations today (from car manufacturing to fast food restaurants, eg. McDonalds).
While Taylor was more concerned with technical aspects of an organisation and production, Weber tended to focus more on theory behind the structure, power and authority. He observed that classification of tasks, jobs and responsibilities led to 'permanent administration and standardisation of work procedures' (Mullins, 2007:48).and was looking for one best way how to manage activities within organisation through particular set or rules, regulations and practices - bureaucracy.
According to Weber main features of bureaucracy are hierarchical authority structure (clear division between management and workers), specialisation (applicable to the job), predictability and stability (as a result of formal rules and regulations), rationality (recruitment and selection), uniformity of decisions and impersonality (expected from administrators, workers, clients) (Mullins, 2007, Burnes, 2004).
Critics such as Robbins and Argyris argue that bureaucracy alienates both employees and customers and restricts personal development of an individual (Burnes, 2004); however there is a need for administration in companies and especially large organisations. Bureaucracy is still very alive today and as many organisations are trying to be more flexible and respond quicker to events from outside world, changing the old ways of working poses a big challenge for managers of change.
Fayol's main contribution to study of organisations was his recognition of five key management functions which are planning, organising, commanding, coordination and controlling. These still are vital; however commanding and coordination are in modern companies replaced by leading (Daft and Marcic, 2009). He also identified 14 administrative principles which were related to functioning of organisations (eg. discipline, division of work, unity of command, scalar chain, centralisation, order etc).
Human relations approach emerged as a response to classical approach and its failure to address issues such as behaviour of people at work, power of groups, leadership, communication, motivation or other social factors.
This era of new thinking started of with Hawthorne's experiments, originally conducted in scientific manner, which discovered that productivity was influenced also by other aspects then previously assumed. These were mainly documented by Elton Mayo who concluded that workers are motivated also by social needs, not only financial rewards, they perform better when part of the group and formation of these groups, together with leadership style, has significant impact on employees' behaviour at work too (Mullins, 2007). Organisations were seen as social systems made up of infromal structures and people weren't perceived as machines anymore.
This approach was criticised primarily for its simplicity, lack of empirical value, underestimating the role of organisation, ignoring society as a whole and environmental issues. Nevertheless this theory has an enormous value, as it acknowledged importance of informal structure and social factors, inspired work of many theorists concerned with motivation such as Maslow, Herzberg or McGregor and eventually layed down fundamentals of human resource management.
(Burnes, 2004, Daft and Marcic, 2009)
It was assumed that the classical approach was about 'organisations without people' while human relations approach about 'people without organisations' (Mullins, 2007:54). The Systems approach sees an organisation as an open system which interacts with external environment and not as closed system unaffected by outside world. It attempts to combine two previous thories by stressing out the importance of both technical requirements of the organisation and the need for informal structure. (Dafte and Marcic, 2009) This approach recognises that change in one area of an organisation causes change in another area and therefore it affects whole system.
Contingency theory can, according to Mullins (2007:57), be seen as 'an extension of systems approach'. It rejects the idea of 'one best way' for every oraganisation and it seeks 'one best way' for each organisation instead. Contingent means dependent, dependent profoundly on key variables such as environmental uncertainity, technology and size of an organisation, but as argued by Burnes (2004) these are still not agreed to be the key variables amongst theorists. Contingency theory indicates that there is a need to understand how decisions are made internally, but as argued by many, it fails to take into account overall complexity of organisational life and the ability to prove that perfomance is mainly related to structure is also disputable (Burnes, 2004)
All of the above mainstream theories had led to better understanding of organisational structure, change and management within organisations. Internal and external environments won't stop changing and even though some ideas and opinions might be outdated or not relevant to modern organisations anymore, many earlier concepts are sill of great imporatnce for managers today (for instance, principle of bureaucracy in public sector organisations).
No theory is perfect and applicable to every organisation, instead it provides framework and set of assumptions for managers who shouldn't be trying to find one best approach to fit their organisation, but concentrate on strengths and weaknesses of each mode and decide which aspects could be most beneficial to best facilitate company's efforts.
Change is ongoing process and comapanies need to find ways how to satisfy their needs and best adapt to the environment in which they operate. That is why the effective management of change is key in a competitive business world and why it became a necessity rather than option.