Change is inevitable in the modern world. Every organization changes at some point in its lifecycle. Usually, this process is crucial to stay relevant and maintain viability.
Change is also critical to help organizations grow and scale beyond their current levels. This change can come in many forms. However, these usually come with similar objectives and goals.
However, change doesn’t always come with a positive impact. Sometimes, it can also cause issues within the organization to change.
On top of that, adopting changes may not go as smoothly as expected for every organization. The participants in this process may see it as intimidating. However, organizations can tackle these issues through proper change management.
There are various types of organizational change. These changes represent the most prevalent transitions that companies or organizations undertake. However, they are also significantly different.
Essentially, the sources and areas impacted within these types dictate its classification. Before discussing those types, it is crucial to know what organizational change is. On top of that, one must also study other aspects of that change.
What is Organizational Change?
Organizational change is a broad term that can encompass various activities. Generally, it refers to any transactions that an organization goes through during a specific period.
It involves moving from one state of affairs to another. Organizational change can come in various forms. These may consist of structure, strategy, processes, culture, rules, regulations, etc.
Essentially, organizational change refers to a company going into a different state. It begins when a company decides to undertake a transaction to when it completes.
As stated above, most companies have a specific purpose or objective that they want to achieve through this process. Usually, it involves evolving to a better state, growing operations, or increasing productivity.
Organizational change also involves the process where companies transition their structures. It may also include methods, cultures, technologies, procedures, etc.
Usually, organizational change only occurs when management believes the company needs to improve. It can happen due to internal or external factors.
Companies may also go through an organizational change when involved in acquisitions and mergers.
Overall, organizational change is a transition process between two states. Companies go through this change to ensure longevity and improve their operations.
This change can happen in various areas and can involve several aspects. Usually, organizational change is crucial to growth. While it can have several positive outcomes, it can also cause some issues.
What are the most common reasons for Organizational Change?
Companies must undertake organizational change for various reasons. In most cases, it involves trying to achieve better results.
However, organizational change may be more specific for some companies. In most cases, companies must define the objective for the organizational change beforehand. Once they do so, they can work toward achieving it.
Some of the most common reasons for organizational change include the following.
Improving methods and procedures
Companies often change to improve their methods and procedures. Over time, companies become more efficient in these areas.
However, they may also identify weaknesses that exist there. Therefore, they undertake organizational change to try and improve those areas.
Adapting to business conditions
The environment in which a company operates plays a crucial role in operations. As this environment changes, the company must adapt to stay relevant. Consequently, it must undertake organizational change to keep up with the changing business conditions.
Keeping up with technologies
The changes in technology can cause positive changes in any industry. However, if companies fail to keep up with them, they face obsolescence. Therefore, companies undertake organizational change to ensure they stay relevant in technology.
Introducing structural changes
Companies have formal and informal structures that dictate the flow of power within them. Sometimes, companies may modify these structures to increase efficiency and effectiveness in those areas. This process entails personnel changes and moving positions.
Undergoing acquisitions and mergers
When companies undergo acquisitions and mergers, they may need to undertake organizational change. This process is crucial to adapting to the new business environment. It also helps the new companies added to the group with a smooth transition.
What are the four types of Organizational Change?
As stated above, organizational change can come in various types. Usually, these types may fall into four or five areas. These areas depend on the source or transitions occurring throughout the organization. In most cases, the following four types of organizational change are the most common.
Transformational organizational change
A transformational change comes from within a company. It occurs due to a change in the strategies that companies follow.
Usually, it impacts some aspects of a company. However, it may not always involve transformational changes. Strategic transformational changes can occur in many ways. However, the most common reason behind it involves a strategic transition to achieve better results.
In a transformational change, companies undertake more work than other types. It is more challenging as it involves transitioning to an unknown state in the future.
Usually, it includes radical changes in various areas. However, it can cover a broad range of transitions. Some of the common examples of how companies undertake strategic transformational changes are below.
- Updating objectives with growth in the market.
- Introducing new technology into existing or new processes.
- Hiring personnel for new processes.
An organization-wide change occurs when it impacts a company as a whole. This change involves anything that affects all departments or functions within a company. Usually, organization-wide changes occur at the highest level.
These involve more work than the transformation of organizational change. Usually, every member of a company gets impacted by this change.
Usually, companies undertake an organization-wide change in desperate situations. This change requires significant work and planning.
Similarly, it can cause significant disruptions to operations and processes. Companies must define their objectives before undertaking organization-wide changes. Some of the common examples of these changes are below.
- Focusing on new markets.
- Changing target customers.
Employee centric change
Employees in an organization play a significant role in its success. Sometimes, companies may decide to undertake a transition to a new state.
However, they will consider the needs of their employees. Usually, these are the people who get impacted the most by changes. In an employee-centric change, the objective is to provide a better working environment for these people.
Employee-centric changes can cause positive outcomes. These changes require lesser work but can have a significant impact. In some cases, employee-centric changes may also involve restructuring a company around specific employees.
Although these changes occur in some industries more often, they are still prevalent. Some of the examples of this change include the following.
- Changes in roles and responsibilities of existing employees.
- Hiring new employees.
- Introducing training and development programs for employees.
Remedial changes occur when companies identify a shift in the business environment. As the name suggests, these changes take a reactive approach rather than proactive.
Companies use remedial changes to solve issues once they have occurred. This approach can allow companies to reduce the costs associated with transitions. However, it is also riskier.
In some cases, remedial changes may be the only way companies can transition to a better state. It does not always imply that companies have suffered from poor performance.
In some cases, companies may also identify issues that may occur. As a remedy, they will introduce change to ensure those issues don’t materialize. Some of the common examples of remedial changes include the following.
- Dealing with a higher turnover rate.
- Providing training to new recruitments.
- Addressing issues with products.
Change is an inevitable part of the business. Most organizations go through a transition from one period to another. However, not all change classifies as organizational change.
There are various reasons companies may undergo these changes. On top of that, there are several types of organizational change. These differ based on the areas impacted and how significant they are.