The Use Of Managing Change In Organisations Business Essay

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The evolution of the management area change stems from psychology, business and engineering. Therefore, it is some of the models produced in terms of organizational development, while others are based on individual models. Therefore, this section is divided into two subcategories: Individual Change Management and Organisational Change Management.

Organizational change can be better understood by individual (human) changes. There are two types of individual changes, which try to adapt and adopt the changes occurring in the external environment, such as offering a new job, illness, competition or loss of property. Second, even if nothing changes in the external environment remains that individual changes (age, family obligations, etc.). Consequently, changes in organization occur because the situation changes in environmental requirements (competition is increasing and development).

1.2 Background to change affecting the economy


As the economy has moved from the industrial age to the information age, the driving force of innovation has excited some and frightened others. Personal computers, fibre optics, communication satellites, the World Wide Web and a host of other fascinating ideas have changed the way we work and play. Seemingly overnight, new industries have popped up with a host of new jobs to offer, while obsolete industries and jobs have gone by the wayside. The paradox that innovation is both central to economic progress and, at the same time, the cause of many economic difficulties is called the churn. The churn can be frightening to those whose lives may change because of new technologies, but we should remember that change is necessary for progress. Our challenge is to be prepared for the opportunities it affords us.

Credit Crunch:

The crunch is generally caused by a reduction in the market prices of previously "overinflated" assets and refers to the financial crisis that results from the price collapse. This can result in widespread foreclosure or bankruptcy for those investors and entrepreneurs who came in late to the market, as the prices of previously inflated assets generally drop precipitously. In contrast, a liquidity crisis is triggered when an otherwise sound business finds itself temporarily incapable of accessing the bridge finance it needs to expand its business or smooth its cash flow payments. In this case, accessing additional credit lines and "trading through" the crisis can allow the business to navigate its way through the problem and ensure its continued solvency and viability. It is often difficult to know, in the midst of a crisis, whether distressed businesses are experiencing a crisis of solvency or a temporary liquidity crisis.

In the case of a credit crunch, it may be preferable to "mark to market" - and if necessary, sell or go into liquidation if the capital of the business affected is insufficient to survive the post-boom phase of the credit cycle. In the case of a liquidity crisis on the other hand, it may be preferable to attempt to access additional lines of credit, as opportunities for growth may exist once the liquidity crisis is overcome.

A prolonged credit crunch is the opposite of cheap, easy and plentiful lending practices (sometimes referred to as "easy money" or "loose credit"). During the upward phase in the credit cycle, asset prices may experience bouts of frenzied competitive, leveraged bidding, inducing inflation in a particular asset market. This can then cause a speculative price "bubble" to develop. As this upswing in new debt creation also increases the money supply and stimulates economic activity, this also tends to temporarily raise economic growth and employment.

Often it is only in retrospect that participants in an economic bubble realize that the point of collapse was obvious. In this respect, economic bubbles can have dynamic characteristics not unlike Ponzi schemes or Pyramid schemes.

As John Maynard Keynes observed in 1931 during the Great Depression: "A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him."

Source: (Financial Times, 02 October 2007)



The full impact of a recession on employment may not be felt for several quarters. Research in Britain shows that low-skilled, low-educated workers and the young are most vulnerable to unemployment in a downturn. After recessions in Britain in the 1980s and 1990s, it took five years for unemployment to fall back to its original levels.


Productivity tends to fall in the early stages of a recession, then rises again as weaker firms close. The variation in profitability between firms rises sharply. Recessions have also provided opportunities for anti-competitive mergers, with a negative impact on the wider economy: the suspension of competition policy in the United States in the 1930s may have extended the Great Depression.

Social effects

The living standards of people dependent on wages and salaries are more affected by recessions than those who rely on fixed incomes or welfare benefits. The loss of a job is known to have a negative impact on the stability of families, and individuals' health and well-being.


There is no commonly accepted definition of a global recession, although the IMF regards periods when global growth is less than 3% to be global recessions. The IMF estimates that global recessions seem to occur over a cycle lasting between 8 and 10 years. During what the IMF terms the past three global recessions of the last three decades, global per capita output growth was zero or negative.

Source: Economic & Social Research Council September 2009 & Financial Times April, 5 2002.


Many companies have been adversely affected by the downturn in today's economy. That being said, lower pay increase budgets and higher insurance costs are found across the board and are creating new challenges for HR professionals. Designing attractive, yet cost-effective, compensation plans continues to be the focus of many companies. Over the next few months, organizations will continue to take a conservative approach to their compensation package. This will be critical as it is unknown how long the effects of this recession will last.

As organizations across the country make changes, HR professionals should keep in mind the lasting impact these changes will have on their organizations. Communication and informed decision making will be the key to each organization's success in the coming months.


2.1 Introduction:

The bureaucratic model of organization is the most common organizational model of private and public sector organizations around the world. The bureaucratic model is not producing organizations are in excellent customer satisfaction and achieving 'quality' of their products. A number of Japanese companies, almost inadvertently, to change the basic bureaucratic model, and managed to dominate many of the competitive world unchanged bureaucratic business organizations. Companies throughout the industrialized world, in response to increasing global competition, trying to become "customer focused" or adopting some form of "Total Quality Management." Early on, both TQM and become "customer focused" reduce the negative symptoms of bureaucracy. Ultimately, however, the underlying bureaucracy is the greatest obstacles to these organizations achieve their goal. At some point, these agencies will be forced to face the fact that organized according to the bureaucratic model.

Monopoly is the most important ally of bureaucracy. Bureaucracies can be achieved only when protected by tariffs, patents, copyrights, placing on the market, oligopoly, or outright monopoly. In really competitive fields unchanged bureaucratic organizations rarely earn customer satisfaction necessary to compete. The bureaucracy seems to be the organizational form that produces the highest levels of personal satisfaction for those at the top of an organization. It seems that almost every organization is protected from market forces eventually becoming increasingly bureaucratic.

Source: Busting Bureaucracy: Kenneth Johnson

On the other hand, in a free market and less bureaucratic organizations competitive pressure on bureaucratic organizations to be forced to be guided by the market to survive.

According to Max Weber bureaucratic organizations were the dominant institutions of industrial society. Acknowledged technical superiority. For Weber, bureaucracy resulted in the removal of the traditional forms of power and the focus was on rational legalism, to achieve efficiency. An analysis of organizational innovations in Germany, early 20th century, Weber identified the key elements of bureaucracy as the division of labour, priority-based recruitment, hierarchy of authority, clearly defined goals, etc. But he fears that it would be a threat to responsible government if there was strong political control. Weber identified three types of legitimate authority.

• Rational legal

• Traditional

• Charismatic

2.2 Strength of Bureaucracy

This report highlights some successes of the bureaucracy as follows;

The bureaucracy is an essential foundation for a better understanding and application of newer approaches to organizational design.

Operational efficiency and effectiveness can be improved despite changes in technology and attitudes of workers by the selective application of these principles as the bureaucratic division of labour, hierarchy of power, consistent rules and procedures, placement on experience etc.

Social research shows that many workers to thrive spiritually bureaucratic environment. According to this survey bureaucrats have higher levels of education, personal responsibility, self-direction, and open-mindedness.

Providing the paperwork for employees includes professional insurance, retirement, special needs etc.

2.3 Weaknesses of the Bureaucracy

There are a strong emphasis on critical accounts of bureaucratic forms and are listed below:

Number of disorders, such as rigidity, the ritual observance of the rules and regulations, even if the rule was wrong.

Competences can be unclear and used contrary to the spirit of the law; sometimes a decision itself may be considered more important than its effect.

The study of the tobacco industry, noted that mass production of standardized products were ideal to bureaucratization. However, the unpredictable nature of the failure of the machinery under bureaucratic systems meant the maintenance staff cannot work.

Red tape is suitable for the unpredictable, non-traditional settings. Example: Survey development, information technology, where change is rapid.

Distinction between two types of organizations: Mechanistic Vs Organic. Shows that the bureaucratic form is unsuitable for work where innovation, creativity and flexibility are essential.

Overspecialization, making individual officials not aware of larger consequences of Rigidity and inertia of procedures, making decision-making slow or even impossible when facing an unusual case, and similarly delaying change, evolution, and adaptation of old procedures to new circumstances;


3.1 Introduction

The term organisation development is used loosely since the late 1950s to describe a philosophy, process and set of approaches and methods to improve the functioning of organizations. Typical proponents are Argyris, Beckhard, Bennis, Blake, Lewin, Maslow, McGregor, Schein, Senge.

There is no agreed definition of OD, but a very influential one was given by Richard Beckhard in his 1969 book Organization Development: Strategies and Models: "a planned effort that is organization-wide, managed from the top, to increase organization effectiveness and health, organized through planned interventions in the organization's processes, and based on behavioural science knowledge". Behavioural sciences include psychology, sociology, cultural anthropology, economics and political science. Typical for most Organization Development approaches are underlying soft, humanistic, democratic and socio-ecological values. OD normally involves consultants. The main functions of these change agents are to help the sponsoring organization define and solve its own problems. OD is traditionally sceptical towards harder practices and methods such as strategy, restricting, downsizing, information technology and a business orientation in general.

3.2 Types of Organisational Development

Every program manager should be concerned about organizational structure, but it is often the last thing on his or her mind. An effective structure facilitates management and clarifies relationships, roles and responsibilities, levels of authority, and supervisory or reporting lines. By reviewing an organization's structure, a manager will be able to determine which human, financial, and technical resources are available, how they should be allocated, and which resources are lacking.

Since 1970 there has been a major conceptual change in work organization and production. As some authors claimed, the era of "Post Fordism" was launched.

Japanese (Lean Production)

The model of the Japanese companies (1970 and 1980), does not fit as an ideal type of bureaucracy. Particular emphasis was on practice room and quality. (Quality circles, total quality management, WE Deming) Some of these features include:

Bottom-up decision making

Less skilled

Job security

Integration of life and privacy

Consensus decisions

Zero inventory

Just in time system, etc.

Usually 'culture' is seen as the key element in accounting for the increase of Japanese firms. Examples: Honda. The Nissan, a Toyota.

Culture-Excellence approach

Culture is seen as a pervasive factor in shaping the entire business environment. Attempted by Tom Peters & Robert Waterman, 1982; Rosabeth Moss Kanter, 1989, and Charles Handy, 1989, provide for and promote ways in which companies operate in future in order to succeed.

Geert Hofstede (1991) identified a number of important cultural values that can be used to explain differences in business practices and behaviour of employees.

The work of Peters and Waterman challenged the rational theories of management. According to him, are the hallmarks of great companies out of flatter structures, innovation, entrepreneurship, middle management, compensation, etc.

Therefore, it is important for culture, individual performance and all-round excellence was emphasized throughout this difference.

Organization of Learning

It is believed that the "arbitrariness of Mintzberg (1988), is a useful practice. Committees formed then and there to handle issues as and when a matter arises. Also called the «Learning Organization", there is less vertical hierarchy and delaying.

The Ad-hoc structure most suitable for industries where processes are unpredictable such as interior design, Microsoft and fashion.


Another example would be the traditional networks, such as "Chinese Family Business" (1992). They are mainly small and medium-sized enterprises operating in an environment of low trust. Based on the fundamental principles of Quanxi (links), dignity and respect (Mianzi). These systems are known for speed and flexibility and allow for opportunistic variations.



The rise and fall of rationalization followed the conceptual change towards flatter management and specialized agencies. The organizational theories ranging from the classic approach of human relations in the new standards emerged in the 1970s, as Japanese models, address the issue of managing change.

For the classical school, the management of change seems easy from managers and employees are regarded as rational beings. You need to accept all changes based on logical reasoning. Considering that the human relations approach suggests that persuasion and leadership plays a key role in changing organizations. According to the change of HRA is not a rational process, the human element comes in their way. Culture of Excellence approach of combining bold strokes and long marches in the change, but failed to address" how the change will be achieved. While learning is explicitly aimed at enabling organizations to change, his supporters are unclear and inconsistent on how leads to others, and how the ultimate goal to become a learning organization can be achieved. Japanese model, however, more specific and recommended the creation of a vision for the future. Conversely, it is questionable whether this approach will be successful in many Western countries.

Although new models have their strengths, but also represent the disadvantages (Especially in western companies are under review). For this reason, no one has achieved the same spiritual and practical sovereignty, as compare to previous examples implemented.