Organizational Change
Chapter 1 Organizations and their changing environments
Organizational change is influences by: Internal system, history and external environment.
(1) Internal system
The view of organizations draws on the concept of an organization as a system of interacting
subsystems and components set within wider systems and environment that provide inputs to the
system and receive its outputs.
- Two mains subsystems:
1. Formal subsystem
Management
Strategy
Structure
Technology
Operations
Goals
2. Informal subsystem
Culture
Politics
Leadership
The subsystems and elements interact with each other in some kind of transformation process.
- Taking inputs such as materials & knowledge and transforming them into product or service
outputs.
- Not only end products/services are the primary reason for the organization’s existence.
Outputs that are particularly relevant to the informal subsystem are employee commitment
and satisfactions. This affects employee behavior.
Stacey’s sees the organizations as complex systems
- Unpredictability by emphasizing the multitude of interactions in and between the individual,
social, organizational and environmental domains.
(2) History
, (3) External environment
Different environmental factors – PESTLE:
- Political factors
Government legislation & ideology
International law
Universal rights
Wars
Local regulations
Taxations
Trades union activities
- Economic factors
Competitors
Suppliers
Employment rates
Wage rates
Exchange rates
- Socio-cultural factors
Demographic trends
Lifestyle changes
Skills availability
Attitude to work/employments
Gender issues
- Technological factors
Information technology (internet)
New production processes
Waste management/recycling
- Legal factors
Frequently categorized as political factors
- Ecological factors
Frequently categorized as economic factors
Al the factors influenced one another. Often, the factors are connected with each other. The factors
influence the way organizations are set up, run and managed.
Political triggers
- Not only do changes in the political environment influence organizations directly, they also
interact with changes in the economic environment.
- Working practices have changed in response to legislation (wetten) addressing
discrimination, equal pay and flexibly hours.
Economic triggers
- Political and economic environments are closely related since political decisions shape
economic outcomes and economic changes influence political decisions.
- Four key economic indicators have to keep in balance
Economic growth
A healthy balance of payments
Low inflation
Low unemployment
Socio-cultural triggers
,Examples of how changed in the socio-cultural environment influence attitudes to work and trigger
changes:
- Expectations for continuous increases in the standard of living
- Demographic changes such as as the age composition (samenstelling) of the workforce and
the mobility of labour.
- Changes in family structures and the roles of men and women which influence preferences
for working hours and provision of child care
- Heightened awareness of equality and intolerance of unfair and unethical practices
- Heightened awareness of and sensitivity to cultural and religious differences.
Organization cultures can tolerate, even promote, sexist or racist banter (plagen, dollen). Where this
happens, managers have to act to eliminate it.
Managers need to take care, when negotiating overseas contracts or working on projects in other
countries, to study the business conventions and ways of operating before they go.
Technological triggers
Organizational level: Investment in technology is sees as a driver of productivity
National level: Investment in technology is sees as aggregating (verzamelen) organizational output.
Technology:
Creates new and different jobs requiring new skills (The need of new skills increases).
Enables new products to be marketed (communication technologies/biotechnology).
In terms of technology, organizational can be seen in two ways:
1. Most just adopt/use technology to help in production and delivery of goods/services.
2. Some exist through the creation of technology itself. (Microsoft, telecoms companies). Their
business is technology-driven and invest heavily in R&D
Influence of technology:
- It affect how organizations choose to structure for efficiency
- It affect the knowledge/skills that employers want and which employees need to retraining.
- It shrinks time and space, because it enables employees to communicate in new/better ways.
- ICT enables employers to monitor how employees spend their time
Triggers for change come not only form outside, but also from inside.
Internal triggers for change:
Another triggers for change is the power of big ideas.
Internal/indicative triggers for change (Hucynski and Buchanan….)
- A new chief executive or other senior managers
- Falling organizational performance
- A new vision and mission statement
- High employee turnover, low employee morale
- Recognition (erkenning) or de-recognition of a union.
- Relocation/redesign of a factory or office layout
- The adaption of new technology
- Takeover, divestment, or merger/acquisition
- Labour shortages or surpluses (overtollige…).
Thus, organizational operate in at least three types of environment.
, 1. The historical developments bringing changes over time
- Range from those activities that are mainly sector-focuses to those which rely more on
knowledge and human capital (focused intelligence, Handy (1994)).
- The temporal environment = An environment that influences organizational in at least two
ways: (1) In a general way, through the cycles of industry-bases innovation. (2) In a specific
way, through the life cycle of the organization itself (its history built up from its founder
through periods of expansion and decline).
2. The PEST framework (external environment)
3. Internal environment
These changes are the first-line responses to changes in the external and temporal
environment
Environment turbulence
Five levels:
(1) Level 1: predictable
A environment characterized by stability of markets. Change is slower than the organization’s
ability to respond; the future is expect to be the same as the past.
(2) Level 2: Forecastable by extrapolation.
Complexity increases but managers can still extrapolate (verwachtingen uitspreken) form the
past and forecast (voorspellen) the future with confidence.
(3) Level 3: Predictable threats and opportunities
Complexity increases further when the organization’s ability to responds become more
problematic. But, the future can still be predicted with some degree of confidence.
(4) Level 4: Partially predictable opportunities.
Turbulence increases with the addition of global and socio-political changes. The future is
only partly predictable.
(5) Level 5: Unpredictable surprises
Turbulence increases further with unexpected events/situations. It occurring more quickly
that the organizations can respond.
Chapter 1 Organizations and their changing environments
Organizational change is influences by: Internal system, history and external environment.
(1) Internal system
The view of organizations draws on the concept of an organization as a system of interacting
subsystems and components set within wider systems and environment that provide inputs to the
system and receive its outputs.
- Two mains subsystems:
1. Formal subsystem
Management
Strategy
Structure
Technology
Operations
Goals
2. Informal subsystem
Culture
Politics
Leadership
The subsystems and elements interact with each other in some kind of transformation process.
- Taking inputs such as materials & knowledge and transforming them into product or service
outputs.
- Not only end products/services are the primary reason for the organization’s existence.
Outputs that are particularly relevant to the informal subsystem are employee commitment
and satisfactions. This affects employee behavior.
Stacey’s sees the organizations as complex systems
- Unpredictability by emphasizing the multitude of interactions in and between the individual,
social, organizational and environmental domains.
(2) History
, (3) External environment
Different environmental factors – PESTLE:
- Political factors
Government legislation & ideology
International law
Universal rights
Wars
Local regulations
Taxations
Trades union activities
- Economic factors
Competitors
Suppliers
Employment rates
Wage rates
Exchange rates
- Socio-cultural factors
Demographic trends
Lifestyle changes
Skills availability
Attitude to work/employments
Gender issues
- Technological factors
Information technology (internet)
New production processes
Waste management/recycling
- Legal factors
Frequently categorized as political factors
- Ecological factors
Frequently categorized as economic factors
Al the factors influenced one another. Often, the factors are connected with each other. The factors
influence the way organizations are set up, run and managed.
Political triggers
- Not only do changes in the political environment influence organizations directly, they also
interact with changes in the economic environment.
- Working practices have changed in response to legislation (wetten) addressing
discrimination, equal pay and flexibly hours.
Economic triggers
- Political and economic environments are closely related since political decisions shape
economic outcomes and economic changes influence political decisions.
- Four key economic indicators have to keep in balance
Economic growth
A healthy balance of payments
Low inflation
Low unemployment
Socio-cultural triggers
,Examples of how changed in the socio-cultural environment influence attitudes to work and trigger
changes:
- Expectations for continuous increases in the standard of living
- Demographic changes such as as the age composition (samenstelling) of the workforce and
the mobility of labour.
- Changes in family structures and the roles of men and women which influence preferences
for working hours and provision of child care
- Heightened awareness of equality and intolerance of unfair and unethical practices
- Heightened awareness of and sensitivity to cultural and religious differences.
Organization cultures can tolerate, even promote, sexist or racist banter (plagen, dollen). Where this
happens, managers have to act to eliminate it.
Managers need to take care, when negotiating overseas contracts or working on projects in other
countries, to study the business conventions and ways of operating before they go.
Technological triggers
Organizational level: Investment in technology is sees as a driver of productivity
National level: Investment in technology is sees as aggregating (verzamelen) organizational output.
Technology:
Creates new and different jobs requiring new skills (The need of new skills increases).
Enables new products to be marketed (communication technologies/biotechnology).
In terms of technology, organizational can be seen in two ways:
1. Most just adopt/use technology to help in production and delivery of goods/services.
2. Some exist through the creation of technology itself. (Microsoft, telecoms companies). Their
business is technology-driven and invest heavily in R&D
Influence of technology:
- It affect how organizations choose to structure for efficiency
- It affect the knowledge/skills that employers want and which employees need to retraining.
- It shrinks time and space, because it enables employees to communicate in new/better ways.
- ICT enables employers to monitor how employees spend their time
Triggers for change come not only form outside, but also from inside.
Internal triggers for change:
Another triggers for change is the power of big ideas.
Internal/indicative triggers for change (Hucynski and Buchanan….)
- A new chief executive or other senior managers
- Falling organizational performance
- A new vision and mission statement
- High employee turnover, low employee morale
- Recognition (erkenning) or de-recognition of a union.
- Relocation/redesign of a factory or office layout
- The adaption of new technology
- Takeover, divestment, or merger/acquisition
- Labour shortages or surpluses (overtollige…).
Thus, organizational operate in at least three types of environment.
, 1. The historical developments bringing changes over time
- Range from those activities that are mainly sector-focuses to those which rely more on
knowledge and human capital (focused intelligence, Handy (1994)).
- The temporal environment = An environment that influences organizational in at least two
ways: (1) In a general way, through the cycles of industry-bases innovation. (2) In a specific
way, through the life cycle of the organization itself (its history built up from its founder
through periods of expansion and decline).
2. The PEST framework (external environment)
3. Internal environment
These changes are the first-line responses to changes in the external and temporal
environment
Environment turbulence
Five levels:
(1) Level 1: predictable
A environment characterized by stability of markets. Change is slower than the organization’s
ability to respond; the future is expect to be the same as the past.
(2) Level 2: Forecastable by extrapolation.
Complexity increases but managers can still extrapolate (verwachtingen uitspreken) form the
past and forecast (voorspellen) the future with confidence.
(3) Level 3: Predictable threats and opportunities
Complexity increases further when the organization’s ability to responds become more
problematic. But, the future can still be predicted with some degree of confidence.
(4) Level 4: Partially predictable opportunities.
Turbulence increases with the addition of global and socio-political changes. The future is
only partly predictable.
(5) Level 5: Unpredictable surprises
Turbulence increases further with unexpected events/situations. It occurring more quickly
that the organizations can respond.
