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5 Types of Organizational Change

1. Organization-Wide Change

Organization-wide change is a large-scale transformation that affects the overall structure of the
company. This typically tends to entail resizing of any form, restructuring or collaboration
basically, a step towards changing the nature of the company.

For example, changing from a highly reactive entrepreneurial organization to one that more has a
more stable, corporate development.

It should be noted that irrespective of the type of change undertaken, these changes do affect the
organizational culture and as an end result, affects the behavior patterns of employees and
individuals.

Changes in this category are long term and if not planned well can be highly disruptive.

2. Transformational Change

It is important for companies to constantly examine the organizations underlying strategies. A


company must be in touch with the environment around them. This includes knowing cultural trends,
understanding the social climate and generally be clued up on technological advances.

According to a recent MIT study, maturing digital businesses are focused on integrating digital
technologies, such as social, mobile, analytics and cloud, in the service of transforming how their
businesses work.

Less-mature digital businesses are focused on solving discrete business problems with individual
digital technologies.

In an increasingly digitally motivated world, more tech based companies are taking risks to the point
where it has become a cultural norm.

3. Personnel Change

Personnel change is when a company undergoes mass hiring or layoffs. This necessitates a shift in
company culture and processes.

When a company rapidly expands by hiring en masse, the organization will have to absorb the initial
shock of onboarding new employees as it also fits each employee into their new role, where each
new role may yet to be defined. This transition, if not managed well, can cause chaos and
inefficiency.

Layoffs can stem from a number of reasons (government regulations, financial restraints) it still
greatly affects the remaining employees of the organization. These changes tend to negatively affect
employee morale.

This is something that should be considered. It is important to efficiently and fairly manage how to
disperse the workload. Employees who take on more tasks than originally given can be inefficient
and even if it is a temporary solution to filling gaps, can also result in a shaky transitioning period.

4. Unplanned Change

Amidst the endless data analysis and planned strategies, an organization can undergo a number of
unplanned changes, sometimes even more drastic than planned ones. Changes like these may be
introduced in an unplanned manner in response to a change in the demographic composition of an
organization- i.e.: Lack of diversity or social equality. These changes are typically internal unplanned
changes.

External factors that include economic uncertainties and changes in government regulations, play a
crucial role in compelling organizations to change. Another surprise occurrence could be any kind
natural disaster. With instances like these being completely wild and unforeseeable, a companys
response to such an event is a true testament to its resiliency.

That being said, these changes are often chaotic and expensive and prompt companies to act within
limited time. It is because of this that solutions tend to be short term fix to a current problem.

5. Remedial Change

Remedial changes are brought about when responding to a general sense of deficiency or poor
company performance. Performance levels tend to drop when suffering from financial distress.

These remedial changes or corrective actions are thus made with the intention of increasing
functionality and reviewing certain strategies that may have previously been considered as profitable,
but now, only seem to be detrimental to the organizational structure.

An example if the environment a business works in becomes polluted as the result of the activities
of that business, this pollution must be cleaned for reasons of safety and welfare. A business would
then invest in financing the remedial action or applying for the finances to do so.

Another example when a product is deemed redundant, either by the company itself or by public,
a recall plan of action must be implemented.

10 Types of Organizational Change

1. Mission & Strategy

In theory, all changes in an organization are aligned to the organization's mission and strategy. In reality,
changes may be difficult to map to strategy or may even contradict it.

When mission & strategy change the impact may reverberate throughout the organization.

2. Organizational Structure

Organizational structure refers to the objectives, roles and responsibilities of departments, teams and
individuals.

Major changes such as mergers & acquisitions are considered structural changes. However, structural
changes may also be relatively minor (e.g. establishment of a small new team).

3. People

Hiring, turnover, roles & responsibilities, training and other individual changes.

People changes may seem minor but taken as a whole they represent a critical focus for change
management. For example, training is critical to the acceptance of change.

4. Culture
Changes to the principles, expectations, norms, working habits and symbols of an organization.

Culture is important to strategic objectives such as productivity, innovation and compliance.

5. Knowledge

Changes to the knowledge assets of an organization.

Knowledge supports every program, project, initiative, process and product. Organizations increasingly
identify knowledge as a important asset and target for change.

6. Policies & Legal Agreements

A change as minor as a new rule or policy can have a big impact on an organization. New rules (or changes
to legal agreements) aren't always popular with employees and customers implementation and acceptance
can be a change management challenge.

7. Processes

Changes to business process and tasks represent amongst the most common type of change. Many
organizations have implemented continuous improvement programs that change processes on a regular
basis. Processes also need to change to support new strategies or to leverage new technologies.

8. Technology

Changes to technology infrastructure, systems, automations and tools. Some firms focus on technology
change letting it drive other change within the organization. It's common for change management to be
highly focused on technology changes.

9. Products, Marketing & Customer Relationships

Changes to products, marketing and sales are a critical focus for many organizations. For example, new
product development is often key to strategy execution.

10. Integration

Processes need to work with technology. People need to work with processes. Rules apply to processes.
Rules align with cultures.

Most changes require integration. Integration is aligning things so that they support, compliment and add
value to each other. It's often the most complex type of change.

Types of Organizational Change

The major areas of changes in a company's internal environment include:

Strategic: Sometimes in the course of normal business operation it is necessary for management to adjust
the firm's strategy to achieve the goals of the company, or even to change the mission statement of the
organization in response to demands of the external environments. Adjusting a company's strategy may
involve changing its fundamental approach to doing business: the markets it will target, the kinds of
products it will sell, how they will be sold, its overall strategic orientation, the level of global activity, and
its various partnerships and other jointbusiness arrangements.

Structural: Organizations often find it necessary to redesign the structure of the company due to
influences from the external environment. Structural changes involve the hierarchy of authority,
goals, structural characteristics, administrative procedures, and management systems. Almost all
change in how an organization is managed falls under the category of structural change. A structural
change may be as simple as implementing a nosmoking policy, or as involved as restructuring the
company to meet the customer needs more effectively.

Processoriented: Organizations may need to reengineer processes to achieve optimum workflow


and productivity. Processoriented change 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 laserscanning checkout systems at supermarkets are examples of process
oriented changes.

Peoplecentered: This type of change alters the attitudes, behaviors, skills, or performance of
employees in the company. Changing peoplecentered 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 peoplecentered 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.

Remember that strategic, structural, processoriented, and peoplecentered changes occur continuously in
dynamic businesses. Often, changes in one of these areas impact changes in the other areas.

Many employees believe that a change is often reactive and nothing more than a quick fix; then they brace
themselves for more changes in the future. Management needs to realize that serious underlying problems in
organizations must be addressed with longterm consequences in mind. Thus, when management
implements changes, careful thought must be given to ensure that the new processes are for the longterm
good of the company.

How are types of Organizational Change Different?

There are three fundamental types of organizational change. The most frequent and least disruptive is a
developmental change (Marshak, 1993, p. 8). This process occurs in organizations all the time and may go
unnoticed by the majority of people. It is experienced as business optimization, changes to improve
efficiency, responding to varying customer preferences, and corrections to problems uncovered by regular
business operations. Developmental change can be thought of in terms of people doing their daily job
functions while seeking opportunities for incremental improvement. Additionally, it arises from organized
efforts that seek improvements in existing processes or products as a response to changing market dynamics,
customer preferences, or business conditions.

Transitional change is significant and disruptive to the organization (Allen, et al., 2007, p. 192). For
example, mergers, acquisitions, and the introduction of entirely different business processes will impact
teams in very meaningful ways that disrupt current methods being used. This may be the goal of the
transitional change as the company seeks new opportunities or addresses fundamental challenges in the
market. In response, productivity and effectiveness will improve or fall because of these types of changes.
Transitional change does not occur as often as developmental changes, but it happens frequently enough that
leadership must be competent and capable of leading the organization through the process. This is not the
level of change that most managers will have success in bringing through their organization. These are
significant shifts in the firm, and a dangerous degree of resistance and obstacles should be expected.

The last form of change is transformational and does not occur frequently. A company is fundamentally
reborn and pursues a new path through transformational change. New or different markets, products, and
services are combined with a different mission, vision, values, and probably leadership to produce the
transformational event. Companies do not resemble the former organization after this change is
complete. Expert leadership is needed to plan and guide the organization and corporate culture through this
level of change.

Resistance to Change

Each of these levels of changes brings about challenges for the leadership team. Employee resistance to
developmental changes is usually minor, and a consensus is not difficult to achieve. Employees are often
willing to accept this level of change as it may make their lives easier. Transitional change is met with
greater levels of employee resistance. This level of change can bring about significant shifts in job
responsibilities, processes, and organizational structure. These changes can make some employees feel that
their expertise, resources, and status are threatened (Allen, et al., 2007, p. 192). Additionally, there are trust
issues, resentment, and fear that will surface and need to be addressed throughout the process.
Transformational changes bring the most significant internal resistance, and leadership must be prepared to
deal with these challenges or their initiative will fail. Obviously, extensive expertise is needed to navigate
the tactical elements of this type of change, in addition to, the psychological issues that the team will
experience.

Types of change
There are many issues to consider in managing business change - whether the changes you're planning are
minor or major. The first step in managing your people through change is identifying the type of changes
you are making to your business. This step will help you decide how to plan your change process and
support your people effectively. There are 3 major types of change.

Developmental change

Developmental changes are those you make to improve current business procedures. As long as you keep
your staff well informed of changes, and give them the training they need to implement process
improvements, they should experience little stress from development change.

Examples of developmental change include: improving existing billing and reporting methods updating
payroll procedures refocusing marketing strategies and advertising processes.

Developmental change may be your first step to making further changes to your business that will help you
meet the demands of your market. Managing these small steps well demonstrates to your team that you are
taking a sensible, measured approach to change. When making developmental changes, it's important for
you to: explain to staff your rationale for the changes skill your staff to use new processes and technology
show your staff your commitment to minimising the impacts of change on your business.

Transitional change

Transitional changes are those you make to replace existing processes with new processes. Transitional
change is more challenging to implement and can increase your employees' discomfort.

Examples of transitional change include: experiencing corporate restructures, mergers or acquisitions


creating new products or services implementing new technology.

The 'transitional' phase of dismantling old systems and processes and implementing new ones can be
unsettling for staff. When making transitional changes, you need to:clearly communicate the impacts and
benefits you foresee as a result of your changes reinforce to staff that their jobs are secure capture the views
and contributions of your staff in making your changes regularly update your staff on the steps you are
taking to support them through the change and train them in new systems.

Transformational change

Transformational changes are those you make to completely reshape your business strategy and processes,
often resulting in a shift in work culture. These changes may be a response to extreme or unexpected market
changes. Transformational change can produce fear, doubt and insecurity in staff, and needs to be very well
managed.

Examples of transformational change include: implementing major strategic and cultural changes adopting
radically different technologies making significant operating changes to meet new supply and demand
reforming product and service offerings to meet unexpected competition and dramatic reductions in revenue.

Transformational changes will usually involve both transitional and developmental change - where
businesses recognise that they need to overhaul the way they do business. When making transformational
changes, it's crucial that you: develop and communicate a well-defined strategy that explains the approaches
you are taking to change and the goals you are setting continually reinforce your rationale for the changes
plan and methodically implement new business systems and approaches involve your staff in all phases of
change discussions and planning and communicate regularly throughout the process.

What is Business Process Reengineering?

Business process reengineering is the act of recreating a core business process with the goal of improving
product output, quality, or reducing costs.

Typically, it involves the analysis of company workflows, finding processes that are sub-par or inefficient,
and figuring out ways to get rid of them or change them.

Business process reengineering became popular in the business world in the 1990s, inspired by an article
called Reengineering Work: Dont Automate, Obliterate which was published in the Harvard Business
review by Michael Hammer.

His position was that too many businesses were using new technologies to automate fundamentally
ineffective processes, as opposed to creating something different, something that is built on new
technologies.

Think, using technology to upgrade a horse with lighter horseshoes which make them faster, as opposed
to just building a car.

In the decades since, BPR has continued to be used by businesses as an alternative to business process
management (automating or reusing existing processes), which has largely superseded it in popularity.

And with the pace of technological change faster than ever before, BPR is a lot more relevant than ever
before.

Business Process Reengineering Steps

Step #1: Identity and Communicating the Need for Change


If youre a small startup, this can be a piece of cake. You realize that your product has a high user drop-off
rate, send off a text to your co-founder, and suggest a direction to pivot.

For a corporation, however, it can be a lot harder. There will always be individuals who are happy with
things as they are, both from the side of management and employees. The first might be afraid that it might
be a sunk investment, the later for their job security.

So, youll need to convince them why making the change is essential for the company. If the company is not
doing well, this shouldnt be too hard.

In some cases, however, the issue is with the company not doing as well as it could be. Meaning, you should
do your research. Which processes might not be working? Is your competition doing better than you in
some regards? Worse?

Once you have all the information, youll need to come up with a very comprehensive plan, involving
leaders from different departments. The management will have to play the role of salespeople: conveying the
grand vision of change, showing how itll affect even the lowest-ranked employee positively.

Risk of Failure: Not Getting Buy-In Across The Company

If you fail to do this, however, your business process reengineering efforts might be destined to fail long
before they even start.

Business Process Re-Engineering can seriously impact on everyone in the company, and sometimes this can
appear to be a negative change for some. Some employees might, for example, think youll let them all go if
you find a better way to function (which is a real possibility).

In such cases, even if the management is on board, the initiative might fail because the employees arent
engaged.

Usually, its possible to get the employees engaged by motivating them or showing them different views
they werent aware of. Sometimes, however, the lack of employee engagement might be because of a bad
workplace culture something that might need to be dealt with before starting any BPR initiatives.

Step #2: Put Together a Team of Experts

As with any other project, business process reengineering needs a team of highly skilled, motivated people
who will carry out the needed steps.

In most cases, the team consists of:

Senior Manager. When it comes to making a major change, you need the supervision of someone
who can call the shots. If a BPR team doesnt have someone from the senior management, theyll
have to get in touch with them for every minor change.
Operational Manager. As a given, youll need someone who knows the ins-and-outs of the process
and thats where the operational manager comes in. Theyve worked with the process(es) and can
contribute with their vast knowledge.
Reengineering Experts. Finally, youll need the right engineers. Reengineering processes might
need expertise from a number of different fields, anything from IT to manufacturing. While it usually
varies case by case, the right change might be anything hardware, software, workflows, etc

Risk of Failure: Not Putting The Right Team Together

There are a lot of different ways to mess this one up.


If the team consists of individuals with a similar viewpoint and agenda, for example, they might not be able
to properly diagnose the problems/solutions.

Or, the team might involve too many or too few people. In the first case, the decision making might be
slowed down due to conflicting viewpoints. In the later, there might not be enough experts on certain fields
to create adequate solutions.

Its hard to put all that down as a framework, as it depends on the project itself. There is one thing, however,
that benefits every BPR team: having a team full of people who are enthusiastic (and yet unbiased), positive
and passionate about making a difference.

Step #3: Find the Inefficient Processes and Define Key Performance Indicators (KPI)

Once you have the team ready and about to kick-off the initiative, youll need to define the right KPIs. You
dont want to adapt to a new process and THEN realize that you didnt keep some expenses in mind the
idea of BPR is to optimize, not the other way around.

While KPIs usually vary depending on what process youre optimizing, the following can be very typical:

Manufacturing
o Cycle Time The time spent from the beginning to the end of a process
o Changeover Time Time needed to switch the line from making one product to the next
o Defect Rate Percentage of products manufactured defective
o Inventory Turnover How long it takes for the manufacturing line to turn inventory into
products
o Planned VS Emergency Maintenance The ratio of the times planned maintenance and
emergency maintenance happen
IT
o Mean Time to Repair Average time needed to repair the system / software / app after an
emergency
o Support Ticket Closure rate Number of support tickets closed by the support team
divided by the number opened
o Application Dev. The time needed to fully develop a new application from scratch
o Cycle Time The time needed to get the network back up after a security breach

Once you have the exact KPIs defined, youll need to go after the individual processes. The easiest way to
do this is to graph them down. While it can be hard to analyze processes as a concept, its a lot easier if you
have everything written down step by step.

This is where the operational manager comes in handy they make it marginally easier to define and
analyze the processes.

Usually, there are 2 ways to map out processes:

Flowcharts the most basic way to work with processes is through flowcharts. Grab a pen and
paper and write down the processes step by step.
Workflow Software if youre more tech-savvy, using software for process analysis can make
everything a lot easier. You can use Tallyfy, for example, to map out your processes, include user
responsibilities, etc. Simply using such software might end up optimizing the said processes as it
allows for easier collaboration between the employees.

Risk of Failure: Inability to Properly Analyze Processes

Or, to put it more succinctly impatience. Its uncommon for someone to try business process
reengineering if they profits are soaring and the projections are looking great.
BPR is usually called for when things arent going all that well and businesses need drastic changes. So, it
can be very tempting to hurry things up and skip through the analysis process and start carrying out the
changes.

The thing is, though, the business needs analysis needs to be done properly, not rushed through to get to the
more exciting parts.

There are always time and money pressures in the business world, and its the responsibility of the senior
management to resist the temptation and make sure the proper procedure is carried out. Problem areas need
to be identified, key goals need to be set and business objectives need to be defined and this takes time.

Ideally, each stage requires input from groups from around the business to ensure that a full picture is being
formed, with feedback and ideas being taken into consideration from a diverse range of sources. The next
step is to identify and prioritize the improvements that are needed and those areas and processes that need
to be scrapped. Any business that doesnt take this analysis seriously will be going into those next steps
blind and will find that their BPR efforts will fail.

Any business that doesnt take this analysis seriously will be going into those next steps blind and will find
that their BPR efforts will fail.

Step #4: Reengineer the processes and Compare KPIs

Finally, once youre done with all the analysis and planning, you can start implementing the solutions and
changes on a small scale.

Once you get to this point, theres not much to add what you have to do now is keep putting your theories
into practice and seeing how the KPIs hold up.

If the KPIs show that the new solution works better, you can start slowly scaling the solution, putting it
into action within more and more company processes.If not, you go back to the drawing board and start
chalking up new potential solutions.