Why Do Organizational Change Fail - Essay Example

Managing сhаngе For the past decade or so organizational change has been inevitable for small and large, public, private and non-profit making organizations. Such organizational change trends are increasing in turbulence, complexity, pace and frequency, and no sign of decline seems to appear. The real purpose of change in organizations vary per organization but the philosophy of change is the same, making it more efficient and effective for organizations to respond to the raging changes in the environment (Dawson, 2003). By comparing the trends of organizational change in both Australia’s public and private sector, there are common traits that can be drawn like restricting, rapid advancement of technology, decentralization, focusing on value for money and quality, among others. Despite this effort of organizations towards change only a few organization succeed in implementing change while many fail. The issue at hand is ‘Why do organizational change fail?’ and ‘What are can managers do to increase the success of this change?’ Organizational change is an important and a crucial issue in many organizations. It is the process in which performance of an organization is optimized as it heads towards its desirable state. Organizational change takes place as a response to something that has been triggered by a leader, current crisis situation or the environment that is constantly changing. Many organizations have developed and implemented organizational change strategies such as downsizing, change of corporate culture, restructuring, and new technology (Song, 2009). Even though it is crucial for private and public sectors to have an organizational change, the concern is the number of successful changes that have taken place in terms of increased profitability and competitiveness and achievement of objectives. Change failures have been reported in the strategy of formulation and implementation involving organizational development and change (Hamlin, Keep & Ken, 2001). Schaffer and Thompson (1992) reported that 63 percent of 300 electronics companies in the USA surveyed on TQM programs failed to achieve increase in quality, and the successful one were only 10 percent. There is a constant evolution in organizations and the change is increasing in speed. The outcome is the capability to introduce organizational change as domineering strategy. Despite this the failure rate continues to increase. The burning question is, why is that? What practices should be undertaken by organizations to reverse the trend? There are many internal and external factors that contributes to organizational change failure. There are about four key observations that are relevant to the organizational change failure. The first observation is leadership transformation failure. Under change management situations leaders are expected to harness capabilities and skills of others in the organization to adapt to new situations in a collaborative manner. According to Song (2009), the ‘one best way’ approach asserts that there is one best way that leadership is exercised and there are certain characteristics that should be possessed by good leadership. Many theorists have developed characteristics which they presume make leadership successful including leadership motivation, initiative, energy, tenacity, achievement, honesty, ambition, confidence, integrity, business knowledge and cognitive ability. Other leadership traits include emotional intelligence, intuition, interpersonal skills. There are four main leadership behavioural styles; participative leadership, directive leadership, concern for people and concern for task. There is no best style that can be applied in all situations. The argument is that there must be a leadership behavior that is best in leading change. An effective leadership is one that is both production centered and employee-centered. However, the best leadership style appropriate in any situation is assumed to be ‘Team Management’ style. As situations change leadership should also change, otherwise it will result in failure of change management strategies and death of organizations. HP was undergoing reorganization in 2002 which involved merging eighty business units into four global business units. The company was also facing a weakened economy and a larger-scale layoff as a result of the dot-com downfall. Another challenge was that HP was completing the implementation of its merger with Compaq. The main concern identified under this situation were that there was slow decision making, slow changes in process, behavior, rewards and metrics to support the strategy to shift to customer-centered business, lack of support from line managers for actions that needed high priority, weak cooperation across boundary, and low measureable results for accountability. HP had to quickly introduce a leadership training and developing program to train all managers to ensure that they have all the tools needed to accelerate contribution and collaboration. Three months after training ninety four percent of managers said they had measurable benefits from the training they received which enabled them gain alignment and reach decisions more quickly saving money and time (Song, 2009). The second observation of why organization change fail is failure to appreciate fully the implication of the culture issues. Culture is a concept that is complex with many different definitions from backgrounds and literatures. However, all definitions collectively agree that culture is an objective entity which identifies and describes one group from another (Dawson, 2003). Organizational culture is also defined from different perspectives. It is usually placed alongside environment, technology and structure as part of the variables that influence performance and life of the organization. Culture in organization is viewed as something that an organization is and not what it has. Organization culture is believed and values norms, symbols, habits, system, vision and working language that organization’s members share. The major types of organizational culture are clan, adhocracy, market and hierarchy. Hierarchy oriented culture is controlled and structured focusing on ‘doing things right’, stability and efficiency. Market oriented culture focus on achievement, competition and getting the job done (results oriented). Adhocracy oriented cultures focus on risk taking, doing things first and innovation as they are more entrepreneurial and dynamic. Clan oriented cultures on the other hand are focused on ‘doing things together’, nurturing, and mentoring (Schein, 1990). There is no correct culture for an organization as all cultures inhibit others while promoting some kind of behavior. Some cultures are best for accelerate change while others slow down the development of the organization. The role and influence of organizational culture in organizational change is very crucial and should be given high emphasis. The failure to measure an organization culture by using matrix to assess it which could be of help for management to identify where they are likely to meet change resistance is a factor that leads to failure of organization change. By using matrix to assess organizational culture the management can decide to manage things around the culture, change the culture to fit the strategy or ignore the culture. Schroder and Salomon Smith Barney (SSB) merged to form Citygroup’s Investment Bank. It was apparent that both Schroder and SSB had very different organization cultures with Schroder’s organization culture as client oriented while SSB organization culture as product driven. The culture clashes threaten the merger of the two organizations. Schroders employers were feeling that they were no longer part of the family they felt before and were filled with a great sense of insecurity. Rival bankers were taking advantage of culture clash of the City bank to stir fears among its top corporate financiers. These threats could have led to top staff of Schroder leaving the company or force the organization to decrease the merger value or it could have resulted in the failure of change management. In a bit to retain top staff City Investment bank introduced two hundred and fifty million dollars as bonuses to award those employees for their loyalty to match their own culture. Though this was not enough the bank was looking for other means to solve the culture clash issue (Song, 2009). Culture is a big issue in merging two organizations and is an influence in the process of change management. The third observation is failure of management to pay attention to people’s issues in the organization. People management is important for the success of change management today. To fail to attend to the people’s concerns is one of the biggest mistakes in the change management process (Hamlin, Keep & Ken, 2001). Strategy, organizational culture, technology and structure are elements of formal organizations. Through this elements employees are recruited, trained, assigned duties, appraised in their performance, motivation, paid and rewarded. People resist change in the organization because they feel that their self-valued interests are threatened and that the change will break their working environment that is familiar and well established. Technological change may be perceived by employees as devaluing their skills and abilities, and the new technology will result into jobs that are monotonous or boring. Redistribution of power and resources like flatter structure may place top managers into middle managers positions resulting into resistance to organizational change. Informal organization involves social relations and individual networks that are naturally formed based on common characteristics and interests like nature of jobs, social status, and hobbies and are not constrained by regulations of formal organization. The informal organization has its own rules, norms, structure, culture and core leader. Managers should not ignore informal organization as this would be a big mistake. They need to know how they work, who the leader is and their culture in order to fit out if the informal organization goals are harmonious with those of the informal organization (Gai, 2003). During organizational change process members of the informal organization would perceive it as big threat to break their interpersonal relationship that provides with a sense of security and self-identity, leading to organizational change resistance. The significance of people issues to the success of organizational change cannot be ignored. Managers must therefore manage the human side effectively, but pay close attention to experiences people go through when dealing with change. Amnesty International workers in London went on strike in 2012 something that was embarrassing for the organization’s image as it has been considered as one of the leading organizations advocating for human rights. Workers complained of Amnesty International’s plans to reorganize. Changes to be implemented included plans to transfer 500 jobs from a centralized base in London to 10 world regional hubs. This was a strategy to help the organization move closer to human rights violations hotspots (Kirka, 2012). However, this has ignited anger amongst its workers who fear that they may loose their jobs. The fourth observation is that many organizations fail when to adopt an existing plan of organization change from another organization or develop a new one. Some organizations may decide to use an already packaged approach that may not fit their change needs. On the other hand some organizations may insist on reinventing the wheel when it is not necessary. This can be costly to the organizations leading to unsuccessful change (Hughes, 2011). There were two manufacturing plants who were fierce rivals that they could not learn from each other despite the fact that what change was successful in one organization could have been successful in another. The final observation is failure of organizations to adapt quickly to the changing external environment. Economic, political, legal, social and cultural and technological factors are among the factors that compose the external environment of an organization (Dawson, 2003). Political and legal factors includes the policy and legal framework including legal regulations, policies and laws (environmental law, labor law, regime framework taxes etc.). A climate of legal and political stability may affect the organization change strategy. Economic factors consist of exchange rate, price fluctuations, fiscal policy, inflation and interest rates among others may affect organizations directly. Technological factors exert pressure on organizations to adapt to technological change including creating new products and increase productivity among others. Failure for an organization to adapt quickly to external environment changes results to failure in organizational change (Haveman, Russo & Meyer, 2001). There is a unique specific environment that affects each organization and for organization change to take place successfully the organization must quickly and properly adapt to the environmental characteristics. The environment in which organizations are operating in is becoming more unstable and turbulent sometimes. Failure of managers to adapt too changes in external environment will lead to strategies of organizational change. Some companies dominating their markets have an inability to adapt quickly to change in tastes and preferences of consumers or new technology. Business for suit companies began falling down in 1960s due to change in external environment. More casual clothing for men began fragmenting the market and competition increased as well as imports from continental Europe and far East increased. New technology also emerged such as manufacturing that was both technology intensive and high skilled. Gender equity was also rising up and female workers were being heard more (Owen, 2000). Suit companies in Leeds were insensitive and unprepared for the new situations. The tailors were slow to respond to the new situations as as a few of them decided to move up-market many of them decided to abandon manufacturing and become pure retailers. The industry still relied on labor-intensive and low skill manufacturing strategy which was a major obstacle to adapting the changes (Leeds, 200). As the organizational external environment changes old strategies must be abandoned and new ones adapted. This essay has not fully covered all the possible contributing factors to the failure of organizational change. Based on what organization change refers to and why it is significant to the organization I extracted key observation that are relevant to organizational change failure; leadership, organizational culture, people’s issues and external environment. For successful implementation of organizational management managers must pay attention to the interests of the people and what they are experiencing with the change. By doing this they may identify major issues the employees have towards the change and develop strategies to handle them. Organizational culture should be measured and assessed throughout every stage of organization change to ensure that they conform to the new strategy and incorporate everybody in the organization. Managers should be trained and provided with tools on how to manage people and resources in order to accelerate the change. The organization should also be quick to identify the changes in the external environment and adapt appropriately. I also think there is a strong relationship between successful organizational change and awareness of challenges involved. If organizations are fully aware potential challenges that may affect the change implementation then they will be able to develop strategies to counter those challenges, thereby increasing their chances of success. Organizations should also have procedures to facilitate organizational change. This is because a change approach that is well structured and consistent can be highly successful in its implementation’. A two way communication is a combination that is powerful, and together with employee engagement through involvement can also lead to successful organizational change. The goals of organizational change must be realistic to ensure that the outcome is easily measured. A bank that has been in existence for only ten years cannot match the goals that a bank in existence for over 50 years has. The risk orientation that take place in a life insurance company cannot be adopted by Starbucks Corporation. The desired results has to be attainable and reasonable for the organization. For change management to be highly effective the idea of change must be embraced first by the top management. They must demonstrate their full support by their behaviours to show that they sincerely care about the change. When the managers are committed to the initiative then the rest of the organization members can easily be influenced to embrace the change. Organizations must also understand that change is not a quick fix kind of thing that they will be in it and get out as soon as possible. It is not easy to have strong cultural change in an organization if culture is not deeply rooted. The aligned should closed done at all management levels. Organization change is deemed successful and here to stay when it flows into the organization’s bloodstream and the talk of the organization is ‘this is how we do things in this company’. This is when new behaviours are rooted in shared values and social norms Reference List Dawson P 2003, Understanding Organizational Change – The Contemporary Experience of People at Work. SAGE Publications. Gai, H 2003, Informal organization and culture construction in organization, Chinese version, Luncong of North, Beijing. Government Accountability Official. Hamlin, B, Jane, K & Ash, K, 2001, Organizational Change and Development – A Reflective Guide for Managers, Trainers and Developers. Prentice Hall. Haveman, HA, Russo, MV& Meyer, AD, 2001, Organizational environments in Flux: the impact for regulatory punctuations on organizational domains, CEO succession, and performance. Organization Science, 12, 253-273. Hughes, M 2011, Do 70 Per Cent of All Organizational Change Initiatives Really Fail? Journal of Change Management, Vol.11, No.4, pp. 451-464, Kirka, D 2012, Amnesty International Workers Start Strike. Associated Press. Retrieved from http://bigstory.ap.org/article/amnesty-international-workers-set-strike Owen Geoffrey. 2000. Sources: Well Suited, a History of the Leeds Clothing industry. Oxford, OUP. Schaffer, R & Thompson, H 1992, Successful change programs begin with results. Harvard Business Review, Vol.70, No. 1, pp. 80-89. Schein, EH 1990, Organizational Culture. American Psychologist. Vol. 45, No. 2, 1 pp. 109-119. Read More