Organizational Change and Readiness to It

Abstract

Ever since the beginning of its history, the business has been an extremely changeable environment. All the organizations involved in the field have always been forced to become extremely flexible to survive to the growing competition, the emerging innovation, the expansions, and the increase in excellence. Today, the business environment is still very chaotic and known for its rapid development.

That is why there are numerous ways for the companies’ leaders and managers to cope with the change being able to adjust their organizations fully and partly whenever they faced development needs and issues. To change successfully and harmoniously, an organization (its assets as well as its people) has to be ready for change. Readiness for change may not exist in an organization initially, but it can be developed over time with the help of assessments and preparations. Without readiness, that change would be resisted and disrupted. This is why readiness for change is a necessary step in the processes of planning and implementing organizational transformations.

Organizational development and change are crucial topics for any organization. Due to the change in the environments and settings, the organizations are forced to function in a multitude of versatile scenarios and face multiple different situations. As a result, to remain at the top of the competition and fulfill their missions successfully, the organizations are to stay flexible and be able to introduce the necessary changes as soon as the need arises.

The process of organizational change is complex and consists of several stages. Before the change occurs there are the stages of diagnostics, planning, and preparation; they are followed by the implementation, assessment, and maintenance of change. To ensure the positive change that would result in benefits for the organization, the change managers are to take into consideration all the variety of its aspects, possible outcomes and the factors that impact it.

This paper focuses on the concept of readiness for change and explores its theoretical and practical aspects. The initial part of the paper elaborates on the organizational change in general along with its features, types, and aspects. Further, the focus will move to the concept of readiness and its different dimensions such as the assets of an organization, and its personnel. Moreover, the next part of the paper will use the case study of Honda (A) as a source of examples to demonstrate how readiness to change was achieved in the situation of Honda.

Organizational Change as a Concept

The implementation of change is usually aimed at the facilitation of organizational improvement and, if implemented inappropriately, may lead to a disruption of operations, a decrease in the performance, and the confusion of the staff. The introduction of new practices requires several preparations targeting various domains of an organization.

Organizational change may be compared to a person’s development at various stages of their life due to the changing environments and experiences (McNamara, n. d.).

Types of Change

The organizations introduce change relying on two different approaches. The first approach is revolutionary; its primary characteristics are radical alterations in policies, structures, and operations; such change occurs rapidly and, in most cases, is encouraged by the outside factors such as growth in competition, or certain alterations in the market (Jones, 2012). The second type of change is recognized as evolutionary; it is much more gradual by nature and tends to happen at a slower and less radical speed (Jones, 2012). Besides, the two types of change have different coverage – while the revolutionary change affects all dimensions of an organization, the evolutionary type may occur in only one area (Jones, 2012).

The Importance of Change

As specified by Chen, Suen, Lin, and Shieh (2010), a five-year survey facilitated by the well-known McKinsey consulting firm showed that out of over one and a half thousand companies that experienced organizational change, less than 40% reported that the process resulted in the growth in work performance. That way, the organizational objective that was outlined by over 50% of the participants as one of the most desired outcomes was the minimization of costs (Chen et al., 2010). Therefore, the organizational change should not be seen as just a process of adjustment; in reality, it requires sufficient managing capabilities and preparations.

Meaning of Change in an Organization

Organizational change may appear as a result of a constantly changing industry and environment or as a reaction to a critical condition or a crisis (Cabrey & Haughey, 2014).

There are three theories according to which the organizational change may happen – teleological theory, dialectical theory, and life-cycle theory. The first perspective views organizational change as an attempt to reach an ideal state of an organization; this goal is achieved through a lengthy process of task-setting, execution, assessment, and restructuring. Further, dialectical theory comes from the perspective that the organization resembles a multi-cultural society with diverse, and sometimes opposing values. That way, as soon as one force begins to dominate the others, a new goal is established in an organization, leading to change. The life-cycle theory hypothesizes that the organization similar to an entity that moves through stages of birth, growth and development, maturation, and decline; these stages and their nature depend on the external environment (Chen et al., 2010; Blackman, O’Flynn, & Ugyel, 2013).

What and How to Change?

Cawsey, Deszca, and Ingols (2011) notice that the what and how of the change process and implementation are the most significant aspects that determine the success of the change, its quality, and outcomes. Cawsey et al. (2011) note that two important questions need to be asked before the change is created and put into practice; they are “a leadership question: “What would be right?” and a management question: “How do we do it right?” (p. 55). The basis for the leaders’ and managers’ understanding of what needs to be changed within an organization is the complex of ideas and beliefs about the organization and the way it operates.

Readiness to Change

Definition

LenCD (2015) defines change readiness as comprised of such elements as the preparedness of resources necessary to support the planned change, the presence of clearly outlined path of the change, its objectives, and steps, and the provision of the required level of motivation that would allow engaging the staff members in the process of transformation and maintaining their participation throughout the stages of change.

Weiner (2009) points out that an organization needs to be ready for the implementation of change for it to go successfully and result in the expected outcomes. Readiness for change may not exist initially but can be created (Prosci, 2016).

Also, Weiner (2009) mentions that the organizational readiness for change mainly comes from the individual readiness of the employees. This is the case because any transformation in the organizational strategies, policies, plans, or structures is accomplished using the alteration of the behaviors of the staff members (Prosci, 2016). That way, if the workers are not prepared, not willing, or unable to change their behavioral patterns, the anticipated organizational change would not occur or would fail. The ways of preparing the organization for the change are multiples, and most of them are closely connected with the psychology of the staff (Weiner, 2009).

Getting ready to implement new development strategies, the change managers are to create a stable and close contact with the employees for a purpose to ensure the necessary communication and explanation of their intentions as to change, main and secondary objectives, desired outcomes, and the advantages the change would bring to the organization and the staff. Evaluating the level of readiness, it is important to assess it by studying small groups of workers, separate units, and departments because change has collective nature and is facilitated through the connections of the individuals involved.

At this stage, the leaders need to encourage the employees to embrace the change and to make sure that their shared ideas agree with the upcoming and their ability to put it into practice successfully (Weiner, 2009). In addition to confidence, the staff members need to be committed to change. Therefore, motivation is another crucial element of the successful facilitation of organizational readiness to change. The level of preparation may be impacted due to the help different theories of needs and motivation (Weiner, 2009).

Besides, the academics still argue as to the approaches to the evaluation of the change readiness because the indicators of the levels of the organizational preparedness for change can be very subjective. Since change is always connected to a certain degree of risk, its level is also estimated based on the perceived readiness stage. Due to the complexity of this concept, as well as its multiple dimensions, change readiness is often assesses at various levels such as individual, group (or work unit) department, organization, local, global, and the readiness of partners. Finally, the adequacy of a determined readiness level is evaluated based on the subjective point of view of the planners and leaders in charge of the monitoring process.

Drivers of Readiness

According to Combe (2014), there exist three main drivers that influence change readiness:

  1. Cultural readiness is based on the level of the compatibility between the organizational culture and the aspects of the anticipated change
  2. Commitment readiness involves the estimated level of the organization’s ability to embrace change, launch it, and maintain the process successfully from its beginning to the end.
  3. Capacity readiness is the organizational theoretical and practical background as to the planning, maintenance, and implementation of change, aligned with its resources, abilities, and skills.

The Nature of Readiness

Combe (2014) refers to change readiness as an extremely subjective term: “subjective in scope, subjective in degree, and subjective in the eye of the beholder” (p. 5). The author informs that there are two main approaches to the research of the change readiness in terms of its components – the first perspective assumes that readiness is evaluated based on the resources possessed by an organization that can be used to plan and implement the change; and the second perspective maintains that the psychological willingness of the employees is the key determinant of the change readiness and its likeliness to succeed (Combe, 2014).

Barriers to Change

When it comes to the identification of the barriers to change, the aspects that can produce a negative influence on the successful implementation of the organizational change are the lack of acceptance of the transformations by the employees, the low or absent motivation, or insufficient preparedness (NSH, 2007). Apart from the psychological obstacles, there are practical ones that involve the lack of knowledge, abilities, and skills necessary for the change process to go well (NHS, 2007).

The barriers of this type usually appear in organizations that facilitate change through the adoption of new software and technologies. Having to handle the new and unfamiliar equipment and programs, the staff tends to experience difficulties proceeding with the change. In such circumstances, the leaders of an organization often face the need to invest in the coaching sessions for the employees for a purpose to develop and train new skills. One more type of practical barriers to change involved the resources an organization needs for the successful implementation of change; these may be financing, equipment, premises, and people (NHS, 2007).

Psychological Aspects of the Change Readiness

When the change is achieved through the perspective that the leadership is to alter or transform the mindsets of the employees, the change can be recognized and perceived as imposed by the leadership on the workers (Change Management, 2014).

Automatically, such a situation is likely to result in the workers’ resistance to change due to its forced nature (Change Management, 2014). The leaders need to keep in mind that the organization should never attempt to impose change on their workers or see the process of change as directed on their ways of thinking. The behaviors, practices, and traditions within an organization are to be viewed as the aspects of its culture that may be the targets of the future change, whereas the people are not to be accused of having “wrong” mindsets that pull down the organizational success (Change Management, 2014).

For the change not to be forced and sudden, the planners are to adhered to ensure that the communication with the employees is started at the earliest stages of the transformation preparation, that the interaction is honest, open, and discloses all the necessary information. The provision of such communication may be combined with the collection of the necessary information from the employees as to the change readiness, perceptions, and understanding. To be more precise, the planners may conduct internal research in a form of a survey or a questionnaire asking the workers to share their views and answer some questions (or maybe even ask some) about the change and its character (Change Management, 2014). This approach could be rather helpful in terms of the initiation of the two-sided communication where both the planners and the employees get to speak and to listen.

The Empowerment

The empowerment of the employees is a vital aspect of the facilitation of readiness to change within an organization. The change mustn’t be forced on the staff members, but the people are encouraged to move towards it independently driven by their initiative, enthusiasm, and the understanding of the need for change (Change Management, 2014).

For the change to occur smoothly, the staff members need to have a high level of support towards the organization and work along with its plans. In turn, the trust is created with the help of the constant interaction and an ongoing dialogue between the workers and the planners. Also, the empowerment works and helps to enforce readiness when there are visible results of an organization following the requirements of the workers and attending to their needs. That way, it is crucial that the managers collect the recommendations for change before confirming the final plan; it is also vital that some primary smaller steps and transformations are introduced at the initial stages for the workers to trust the leaders and the change.

Diagnosing and Solutions

Many organizational development and change strategies have been worked out to improve the effectiveness and productivity of the organizations. One of these strategies is recognized as an organizational diagnosis (Burke, Lake, & Paine, 2008). It refers to the assessment of an organization’s level of performance at a given period; and it is conducted for the change managers to be able to design suitable change interventions (Falletta, 2005).

The use of the concept of diagnosis in the change management can be likened to that in medicine. For instance, assessing a patient’s state of health, the physician runs tests, conducts examinations, collects important data on the body functions, and then evaluates this information to be able to prescribe an appropriate course of treatment (Falletta, 2005).

The diagnosis, (both medical and organizational) serves to confirm the existence of a problem of some sort. In an organizational setting, the process of diagnosing usually facilitates an agreement of the top management that the organization has issues and needs change (Falletta, 2005). In other words, diagnosis is a crucial aspect that helps the change managers to convince the leaders about the necessity of change. Several data collection strategies are often applied to determine which problems are the most significant and to identify the underlying challenges. Also, while the organizational diagnostic process is in progress, the freshly received results of the data collection are directed back to the organizational leaders and change managers for a purpose to launch the process of organizational change (Falletta, 2005).

When it comes to the change readiness, it can be diagnosed and evaluated with the help of the tool called the organizational readiness to change assessment (ORCA) tool. It is comprised of multiple components (namely, seventy-seven items) that are grouped into domains with individual subscales. This tool was developed specifically for the clinical practices and is used in health care; however, it is quite universal and can be applied in a variety of settings as it is focused on the current organizational environments, performances, and the approaches and operations that could be improved, changed or removed (NCCMT, 2016).

The tool is focused on the evaluation of the present challenges within an organization and the selection of areas for improvement based on the best and evidence-based practices (NCCMT, 2016). The assessment requires a trained team of planners to administer it and then to interpret the results. ORCA has been tested, and its reliability and validity match the required standards (NCCMT, 2016).

The Case Study: Honda A

This case study presents a historical scenario of the Japanese motorcycle manufacturing company called Honda. This organization was founded before the Second World War. It produced and sold motorcycles and parts for them. The business of Honda had to be urgently downsized due to the ruination caused by the war. Heavily affected by the post-war ruination, Japan began to face serious economic problems (Honda (A)).

That is why many businesses lost customers and revenues. However, Honda managed to adjust to the changing environment and soon became the leader of the industry in Japan. The company’s success was caused by its timely and careful evaluation of the target customer base. Based on this analysis, Honda adjusted the product and developed new models of motorcycles that matched the needs of the consumers – was light and price-competitive (Honda (A)).

Having produced the successful and popular model, Honda quickly reached the top of the industry as a competitor because the other manufacturers tended to work with cheaper materials known for low quality, limited resources, and reduced capacities. At the same time, Honda had a research institute involved particularly in the development of more powerful and effective engines for its products.

Having outperformed and outgrown the local competition, the leadership of Honda decided to go through with the first radical and quite risky change – the expansion to a foreign market; namely, to the United States. The change was highly unsafe for the organization because it required multiple adjustments and, most importantly, massive and repetitive investment for the company to stay flexible and responsive to all the new or different aspects of the industry.

Change Readiness in the Case Study

The case study of Honda can provide an excellent illustration of the need for readiness as one of the key components and determinants of successful change implementation. Judging from the drivers of change readiness as outlined by Combe (2014), Honda had to go through all of them. First of all, expanding to a new country with a completely different cultural background and perceptions, the company took a huge risk as it needed to adjust its operations and interactions to match the new environment and market. Also, the change impacted the organization at multiple levels – its philosophy, its orientation, its key consumers, the way the operations functioned, how the results were delivered.

For such a massive transformation, the organization was to ensure that its workers are prepared for the change and willing to embrace it. In this aspect, one may notice how the assets and the psychological element of the change readiness work in a combination. Namely, the organizational strategy was to accumulate sufficient financial assets that could cover the long-term investment in the expansion plan in the United States, the increased production of motorcycles, and the higher salaries of the employees who were required to work more intensely. That way, the organization ensured the cultural, capacity, and commitment readiness using motivation supported financially and psychologically.

The analyses of the success of Honda’s risky expansion had a version that the success of the change was based on the high level of the employees’ readiness due to their cultural background as the Japanese workers are expected to be very dedicated to their work and willingly accept all of its changes. Such an extended degree of devotion is, of course, a massive positive contribution to the implementation of change.

However, the mere dedication of the workers would not be enough for the organization for Honda to go through with the change and maintain its operations at the required level. The fact that the whole enterprise was sufficiently and generously funded served as the main source of the organizational confidence and the ability to move forwards investing in the long-term outcomes and without getting as many immediate returns on investment.

The graph below demonstrates that Honda was prepared to spend a lot of money and effort to accomplish and maintain change. The results are shown in the same graph – the market share and sales revenue of the company exceed those of the competitors significantly. That way, apart from investing heavily in the promotion of their motorcycles, the company also spend major capitals increasing the production, covering the shipping, and raising the salaries of the employees who were demanded to perform at a higher level.

The market share and sales revenue of the company.
The market share and sales revenue of the company.

As to the stabilization and maintenance of change, Honda’s strategy relied on the returns on investment anticipated in the future as the resources that would allow the company to move on with the change and remain at the top of the market competition.

OCM Report

Synopsis of the OCM Situation

Company overview

PT Kereta Api Indonesia is a railway company in Indonesia which has undergone a massive change after the change of management in 2009. Before 2009, the company was an example of bad management, as it suffered from the multitude of problems, ranging from major ones, like the omnipresent infrastructural issues, to the relatively minor ones, such as the lack of determination and devotion displayed by the staff (Anggadwita & Dhewanto, 2013).

The list also included the decline in equipment on every level, from the locomotives and carriages to the electrical appliances, the total absence of assurance for the passengers coupled with the lack of security due to aging of the trains, the unreliable and erratic schedule, the low quality of service, and the lack of discipline among the employees. This resulted in a financial disaster, with the reported loss of more than IRD 38 billion in 2007 and more than 82 billion in 2008.

The company needed change, and it came in 2009 with the introduction of the new manager, Ignatius Jonan. By introducing innovation on every level, Jonan has achieved a sharp turn in the company’s performance, to the point wherein three years the company was awarded a State-Owned Enterprise Award 2012 and was assigned category A (healthy) instead of BBB (less healthy) (Anggadwita & Dhewanto, 2013).

Number of tickets sold throughout 2012.

The innovations by Jonan were implemented in several directions, targeting primarily the ones that depended on the employees’ output the most, such as the quality of service, the reliability of schedules, and the convenience. This was achieved in two strolls: firstly, change the faulty mindset that restricted the possible output, and secondly, improve the discipline inside the company.

Number of passengers per year.

Diagnosis of the Situation

Judging from the layout as of 2009, there is a clear need for change. However, it is insufficient for the implementation of the change itself. First, the assessment of the readiness of change of the organization needs to be done. This can be achieved by researching the employees. However, before that certain steps of the assessment can be performed in advance based on the available information. For instance, the company has not had any positive experience with a change before 2009, as is known from its history. Likewise, the mood of the organization can be assumed as reluctant and possibly cynical based on the known factor of the decline in corporate governance and discipline. Nevertheless, such assumptions should be affirmed by the research.

Methodology

The research, which would most likely be in a form of the survey, should target the individual aspirations and vision of the staff members, tackling such questions as the expectations of the degree of support and reward for all levels of employees, the monitoring mechanisms and the reaction of the workers on their efficiency, and the methods of conflict resolution if it appears in the process of change introduction.

The recommended methodology of the survey is a qualitative study that will focus on the interpretation of the responses and code them into several groups. The groups are as follows: first, it should assess the change readiness directly, by outlining the directions taken by the Jonan and the perspectives opened by them, then inquiring about the employee’s aspirations regarding the said perspectives. Next, the question of life experience should be brought into consideration, involving education, social prospects, and family perspectives, or philosophical and spiritual concerns. By prioritizing the said experiences, change readiness can be further improved.

Furthermore, the preferable type of leadership needs to be extrapolated from the responses. For example, the responses characterized by the lack of vision and the desire to move forward, coupled with the susceptibility to the influence of the charismatic leader might serve as a clue for the possible need for a transformational leader. This type of leader is characterized by enabling his surroundings to act by an inspiring example of challenging the processor sharing a mutually appealing vision. On the other hand, the more common and direct transactional leadership can be preferred in case the respondents show a lack of motivation based on the scarcity of incentives.

Transactional leadership is often characterized by ascribing clear and direct rewards for the achievements of the employees, and by setting a clear and defined set of goals. Moreover, the situation in the company at the time was already implying the need for the transactional leadership model, because, as already mentioned above, the discipline in Kereta Api Indonesia was exceptionally low. Thus, assessment of the predisposition to it among the staff members is especially important in this case. Finally, determining the values of the leader as well as those of the employees is important to form a proposed model for change.

The latter helps isolate the beneficial values which could be utilized by incorporation into the existing framework for the maximum output. The former, on the other hand, will be of help in analyzing the expectations of the staff which, in turn, will effectively take care of the dis-satisfaction level prompted by the change.

Limitations

The possible limitations for the study are the relatively small demographic (limited by the company’s size) and the lack of sample diversification (initial predispositions will likely be similar throughout the staff because they interact on the daily basis and inevitably exchange ideas).

Proposed Solution

Resistance to change

The results obtained from the survey will allow the conceiving of the model for the proposed change, as well as outlining and addressing the resistance to change. For example, in case the responses will exhibit the concern with the future of the employees’ families, the emphasis should be made on the transformational leadership strategy and such traits of the leader as reliability and the ability to share a vision. This will effectively battle the resistance to change, characteristic for the early to medium stage of the change process, especially in the case of API, which had highly unmotivated staff (Anggadwita & Dhewanto, 2013).

If on the other hand, the personal gain will show up as a defining factor, the model should emphasize the transactional leadership strategy, with a clear emphasis on reward and the possibility of the company’s growth.

The framework of implementation

Once the resistance to change is overcome, the information obtained from the life experience and the values of the workers will come into play, providing the background for the establishment of the corporate identity and contributing to the realization of concepts of change. Thus, the process of managing change will include the appropriate leadership strategies applied to the experiences and values of the employees to form a change readiness. Once the combination of the leader’s characteristics overcomes the resistance to change by addressing the employees’ needs and aspirations, the readiness for change is reached. After this, the organizational change process can be commenced.

The framework of implementation

Conclusion

The business has always been associated with rapid change. That is why the companies that are willing to defeat their competitors and remain effective are to adjust to the changing environments and unpredictable situations. This process is similar to the evolution of a company, but it can be controlled by the managers so that the anticipated results are achieved. The historical case study of Honda is an illustration of a company undergoing multiple risky and radical changes that are carefully monitored from the inside and adjusted as soon as the new issues are identified.

The model of change implementation applied by Honda was made extremely sensitive to all the shifts in the market that would be immediately assessed and addressed. The success of Honda was achieved with the help of a combination of the appropriate organizational culture ensuring the employees’ readiness to change, plentiful resources, and very careful and ongoing market research.

References

Anggadwita, G., & Dhewanto, W. (2013). Service Innovation in Public Sector: A Case Study on PT. Kereta Api Indonesia. Journal of Social and Development Sciences, 4(7), 308-315. Web.

Blackman, D., O’Flynn, J., & Ugyel, L. (2013). A Diagnostic Tool for Assessing Organisational Readiness for Complex Change. Web.

Burke, W. W., Lake, D. G., & Paine, J. W. (2008). Organization Change: A Comprehensive Reader. Hoboken, NJ: Wiley & Sons. Web.

Cabrey, T. S. & Haughey, A. (2014). Enabling Organizational Change through Strategic Initiatives. Web.

Cawsey, T., Deszca, G., & Ingols, C. (2011). Organizational change. Thousand Oaks, CA: SAGE Publications. Web.

Change Management. (2014). Web.

Chen, J., Suen, M., Lin, M., & Shieh F. (2010). Organizational Change and Development. Web.

Combe, M. (2014). Change readiness: Focusing change management where it counts. Newtown Square, PA: PMI. Web.

Falletta, S. V. (2005). Organizational Diagnostic Models: A Review & Synthesis. Web

Honda (A). Case Study. Jones, S. (2012). Change management: A classic theory revisited. Web.

LenCD. (2015). How to assess change readiness. Web.

McNamara, C. (n. d.). Organizational Change and Development (Managing Change and Change Management). Web.

NCCMT. (2016). Organizational readiness to change assessment (ORCA) toolWeb.

NHS. (2007). How to change practice. Web.

Prosci. (2016). Integrating change management and project management. Web.

Weiner, B. J. (2009). A theory of organizational readiness for change. Implementation Science, 4(67). Web.