Topics: Types of Environmental Change

Factors Affecting Environmental Change

The change is the reality of every organization. To develop and progress, the firm
has to from time to time transform its ideology and strategy in an answer for the
environmental changes.

Change is inevitable in the life of an organisation. In today’s business world, most of

the organisations are facing a dynamic and changing business environment. They
should either change or die, there is no third alternative. Organizations that learn
and cope with change will thrive and flourish and others who fail to do so will be
wiped out. The major forces which make the changes not only desirable but
inevitable are technological, economic, political, social, legal, international and
labour market environments.

Most organizations have to change as part of keeping up with the competition or

adjusting to new market trends or technologies. Things such as mergers,
restructuring, technological advancements, process enhancements, changing
customer demands and new product lines are fairly common in today's business
environments.

There are many definitions of organizational change, out of which the following two
seem the most relevant: according to Grouard and Meston, organizational change is
“the process of radical or marginal transformation of the structures and
competences set up in the process of the development of the organizations
(Grouard and Meston, 1998); for Collerette, organizational change is "a relatively
sustainable change occurring in a subsystem of the organization, provided that this
change can be observed by its members or by those who are connected with that
system" (Collerette, Delis and Perro, 1997). "Organizational changes are answers to
some external forces such as changes in the market, different pressures in terms of
competitiveness, etc, or may be caused by some endogenous variables, such as
manager’s tendency to apply different methods / techniques (Burduș and
Androniceanu, 2000). Usually, institutions transform themselves in a rather
incremental way, and not discontinuously (North, 1990).

TYPES OF ENVIRONMENTAL CHANGE

1. INDIVIDUAL LEVEL CHANGE

 individual - eg change in job assignment, transfer, change in job maturity

level, etc
o Many change methods are directed at individuals. Of course, if enough
individuals change, a unit and the organization itself could change. If
the individuals targeted for change are important in the organization,
then only a few may need to be changed to improve an entire unit of
organization.

Organizational change typically means that individual employees have to change

too. lndividuals may be required to change what they do or how they do it. It may
be required of them to change their attitudes towards their work or some particular
aspect of it. A consequence of this may be that an individual's sense of bonding to
the changed or changing organization may be altered, either positively or
negatively. An organizational change if not well managed, may result in individuals
feeling demotivated and alienated and exhibiting defensive behavior. Person-
centered practitioners may work with individuals' negative perception of the
change, so that individuals may recognize the substantive issues at stake and their
 own feelings in their regards in order than they may choose their own response,
rather than reacting to how the change in being managed (Coghlan, 1993a).

As organizational change involves individual and personal change, attention to the

individual in the context of the wider systemic change is critical for the success of
the change process.

2. Group Level Change

 team or group - eg changes due to inefficiencies, lack of communication,

etc
The team level is a more complex level than the individual because of the
increased number of participants and interactions. Teams are parts of a wider
system in organizations and some of the dysfunctional issues that arise within
the team may originate beyond the team in its technological and political
interface with other teams.

From the managerial perspective, any individual's task within the face-to-face
team is to contribute to the collective ventures of the team. Management
requires the team to be efficient and cooperative in its output toward the overall
organizational task. Effective team functioning requires the team to be
successful in accomplishing its tasks and skilled in learning from its experience
in building and maintaining working relationships.

 In implementing any change, management must consider the group of

people in the organization as the group influences the organizational
climate.
 The group in the organization can be formal or informal.
 Formal group like labor unions can always resist change that will
affect the work performance of the organization.
 Informal groups like regional associations of ILOCANO, VISAYA,
TAGALOGS, PAMPANGOS and all others can pose a major barrier
to change because of their inherent strength.
 Changes in the group level can affect workflow, job design, influence and
social and communication system.

3. Organizational Level Change

 organisational - eg changes due to relocation, restructuring, mergers,

acquisitions, etc
 The organizational level is the level whereby the organization as a unified
corporate identity competes in a competitive socioeconomic environment to
provide a service and be profitable. Finally, the most complex of all is the
unified effort of all participants in an organization towards the goal of making
that organization profitable, growth-oriented and functional in its external
socioeconomic environment. Consequently, an organization needs to be
capable of reflecting on its own strengths and weaknesses, as well as
engaging in proactive relationships to determine and deal with the
opportunities and threats from the external environment. The assessment of
strengths, weaknesses, opportunities and threats results in an identification
and selection process, which leads to the establishment of programs, services
and products. These procedures aim at accomplishing the goals of the
organization and adapting to external environmental demands.
 Organization development consultants may need to facilitate an
organization's top management in the design of the planning process itself, in
the development and choice of realistic strategic options, and in the
implementation of the selected options. They work with senior managers as
 to who should be involved in the processes of planning, developing options
and implementation, how the process could work most effectively, and what
additional expefi external help could be utilized. They can help the
organization clarify its core mission, and map the internal and external
constituencies, which make demands on the organization and its strategic
choices. A methodology such as open systems planning can be usefully
utilized by person-centered practitioners. Open systems planning facilitate
the (i) identification of key stakeholders, (ii) the analysis of the demands
these stakeholders are currently making on the organization, (iii) the
projected demands they will make in the future , (iv) the current responses to
those demands, (v) the creation of a desired future and (vi) action planning
(Beckhard & Harris, 1987). Person-centered practitioners are ideally equipped
to carry out this task, as in our experience, gentle facilitation, the process of
clarification, staying closely linked to clients' efforts to elucidate clearly and
empathizing with resultant strong feelings yield more positive and longer
lasting outcomes than directive and imposed solutions.

These levels of change are made by top management that affect both PINOY and
his groups.
These are major programmed changes that occur over a long period of time and
require considerable time for planning for implementation.
The different types of organizational change are:

a. Strategic Change:

Strategic change involves making changes to the overall goals, purpose, strategy or
mission of an organization. It is a major upheaval to how the organization conducts
business. Changes to things such as what products or services it offers, the target
customer segments or markets it tries to reach, how the company distributes its
products or services, its position in the global economy and who it will partner with
for manufacturers, distributors and other logistical needs are just some examples of
strategic changes.

 As the business condition and environmental change brought about by

advancement in technology and the economy, organization changes its basic
objective to multiple objectives.
 Strategic change could lead the organization to vertical or horizontal
expansion or changes in business direction.
 Expansion in the market or global marketing could be an option for strategic
change.

b. Structural Change

 Organizations often find it necessary to redesign the structure of the

company due to influences from the external environment. It is concerned
with the overall goals and purpose of the business, and any changes in the
vision and mission of the organisation. Structural changes involve the
hierarchy of authority, chain of command, job structure, goals, structural
characteristics, administrative procedures, and management systems. Almost
all change in how an organization is managed falls under the category of
structural change. Circumstances that usually create the need for structural
change include mergers and acquisitions, job duplication, changes in the
market and process or policy changes. A structural change may be as simple
as implementing a no‐smoking policy, or as involved as restructuring the
company to meet the customer needs more effectively.

 Organizational structure is the pattern of relationship among various position holders.

 Structural Change involves changing the internal structure of the organization.
  The changes could be seen in authority structure, work assignments or inter-departmental
relationships.
 It is usually brought about by expansion or contraction of operation.

c. Process Oriented Change

 Organizations may need to reengineer processes to achieve optimum

workflow and productivity. Process-oriented change focuses on new
technologies, new skills and operating processes. It is often related to an
organization's production process or how the organization assembles
products or delivers services. The adoption of robotics in a manufacturing
plant or of laser‐scanning checkout systems at supermarkets are examples of
process‐oriented changes.
 The changes are brought about by technological advancement in automation,
information processing with the use of advance computer system,
advancement in communication that allows organization to hold conferences
right at their respective offices and use of robotics in the manufacturing
operations.
 This means replacing or retraining personnel, heavy capital equipment
investment and operational changes.
 This would affect the organizational culture and hence changes in the
behavior patterns of members.

d. People Oriented Change

 People-oriented change relates to employee performance, skills, attitudes, behaviours and

relationships.
 This type of change alters the attitudes, behaviors, skills, or performance of employees in the
company. Changing people‐centered processes involves communicating, motivating, leading,
and interacting within groups. This focus may entail changing how problems are solved, the way
employees learn new skills, and even the very nature of how employees perceive themselves,
their jobs, and the organization.
 Some people‐centered changes may involve only incremental changes or small improvements in
a process. For example, many organizations undergo leadership training that teaches managers
how to communicate more openly with employees. Other programs may concentrate on team
processes by teaching both managers and employees to work together more effectively to solve
problems.
 Changes in people describe changes in employee’s attitudes, behaviour, expectations and
perceptions. Main purpose of these changes is to improve performance of the employees,
enhance their efficiency towards the company, their relationships with managers and the group
cooperation.
 People oriented change could be the most difficult change needed by the
organization.
 These changes are directed towards better work performance, group
coordination, work values, dedication and loyalty to the organization.
 It requires training and organizational interventions.
 It involves team building activities and behavior medications that will change
people perception about their organization and the work in general.

Change in the organization is necessary as it must move along with the business
environment.
 The first three types could easily be made by the organization but the most crucial
is the change in people’s behavior. People have different sense of values, attitudes
and perception.

OTHER FACTORS AFFECTING ENVIRONMENTAL CHANGE

 There are number of factors both internal and external which affect
organizational functioning in its business environment.
 The major forces which make change not only desirable but also inevitable
are: technological, economic, political, social, legal, international and the
labor market.
 The more important factors are:

1. External Factors

 External forces for change originate outside the organization.

 No organization is an island as it must interact with others the total environment.
 Each organization has its goals and responsibilities related to each other.
 The present day environment is dynamic of change and organization has to adapt to these
changing conditions. Such changes may result in major functions of production process, labour-
management relations, nature of competition, economic constraints, and many others.

The change necessary may be seen in the following context:

a. Technology-

 Changes in technology required the modification of the techniques and

equipment, which are used in the process of evaluating the firm. Especially,
the alterations of the technology occur in one area of the organizations,
where the number of improvements is incorporated into technological
devices in order to support better quality operations.
 Changes in technology by introducing computers and industrial robots that
allow rapid resolution of complex problems in production and management,
helping to reduce costs and improve quality.

 Changes in technology makes work easier and increases production. It

changes work structure that needs new balance and equilibrium in the work
environment.

b. Marketing conditions

 Since every organization exports its outputs to the environment, an

organization has to face competition in the market. There may be two types of
forces which may affect the competitive position of an organization –other
organizations supplying the same products and, buyers who are not buying the
product. Any changes in these forces may require suitable changes in the in the
organization
 Technology improves products and services and customer wants and needs
vary as to quality and cost. Organizations exports its products to all sectors of the
environment and therefore competition in market conditions exist.
c. Social Change
 Social changes reflect in terms of people’s aspirations, the needs and wants,
and their ways of working. These changes occur due to several forces like
level of education, urbanization, feeling of autonomy, and international
impact due to internet, social network and other information sources. These
social changes affect the behavior of people in the organization. There, it is
required to make adjustment in its working so that it matches with people.
 d. Political and Legal Changes
 Political and legal factors broadly define the activities which an organization
can undertake and the methods which will be followed by it in accomplishing those
activities. Any changes in these political and legal factors may affect the
organization operation.
 New laws and regulations are made by the government in terms of
environmental changes, taxes, and other mandated regulations on wages and
working conditions. Any change in political and legal factors may affect
organizational operation.
2. Internal Forces

It is not only the changes in external factors, which may necessitate organizational
changes; any change in organization’s internal factors may also necessitate
changes.

a. Change in Managerial Personnel

 Besides environmental changes there is a change in managerial personnel.

Old managers are replaced by new mangers, which necessitated because of
retirement, promotion, termination, resignation, transfer or dismissal. Each new
manager brings his own ideas and way of working in the organization. These need
adjustment in human relationship among workers. The relationships, more
particularly informal ones, changes because of changes in managerial personnel.
Moreover, attitude of the personnel change even though there is no changes in
them. The result in that an organization has to change accordingly.

b. Deficiency in Existing Organizational System

Sometimes, changes are necessary because of deficiency in the present
organizational arrangement and process. These deficiencies may be in the form of
unmanageable span of management, large number of managerial levels, lack in co-
ordination between various departments, obstacles in communication, multiplicity
of committees, lack of uniform policy implementation, changes due to managerial
re-engineering and re-organization, lack of cooperation between the line and staff,
and so on. Beside these internal factors, there are two more internal factors that
give rise to organizational changes.

c. Nature of Work Force

 The nature of work force has changed over a passage of time. Different work
values have been expressed by different generations. Workers who are in the
age group of 50 plus value loyalty to their employers. Workers in their mid
thirties to forties are loyal to themselves only. The youngest generation of
workers is loyal to their career. The profile of the workforce is also changing
fast. The new generation of workers has better educational; they place
greater emphasis on human values and questions authority of managers.
Their behavior has also become very complex and leading them towards
organizational goals is a challenge for the managers. The employee turnover
is also very high which again put strain on the management.

e. Organization Avoids Developing Inertia

In many cases, organizational changes take place just to avoid developing
inertia or inflexibility. Conscious manager take into account this view of
organization that organization should be dynamic because no single method
is effective at any single time. Thus, changes are made so that the personnel,
with proper planning and consultation, develop liking for change and there is
no unnecessary resistance when major change in the organization are
brought about.