In current conditions of a rapidly changing external environment, an accelerated pace of life, and various innovations in IT technologies, companies need to respond to these factors in time. Modern organizations operate in increasingly unpredictable environments, so they must quickly respond to unforeseen events. Maes and Van Hootegem (2019) affirm that organizational change refers to updating or transforming an organization based on the introduction of innovations in organizational processes. It is the development of adopting new ideas or forms of behavior. Modern companies need to constantly adapt to new situations if they want not only to maintain their business but also to thrive.
Reasons for Organizational Change
According to Van de Ven and Poole (2021), analysis of the causes of organizational changes allows us to classify them as follows:
- External reasons, including:
- Economic reasons (globalization of the market or its regional differentiation);
- Technological reasons (dissemination of advanced technologies);
- Strategic reasons (organization growth strategy);
- Political and legal reasons (legislative changes);
- Socio-cultural reasons (demographic changes, changes in the value system);
- Physical and environmental reasons (climate, environmental causes).
- Internal reasons, including:
- Areas of strategic management, corporate culture, organization of the production process, equipment used, property relations;
- The psychological specifics of the perception of social and production processes by organization members, their ambitions, opportunities for professional growth, and openness to cooperation.
Factors for Organizational Change
The impetus for organizational change can be a crisis situation, a phase of organizational development, and the influence of an individual on the development of processes. Firstly, Deszca et al. (2019) assert that changes are usually operational, allowing business liquidity to be restored and returning lost markets. Secondly, each phase of development is characterized by the accumulation of causes and factors that stimulate the transition to other management mechanisms, the formation of additional management levels and parallel structures, and the redistribution of duties and powers. Thirdly, the arrival of a new manager to a leadership position is always associated with organizational changes by subjective views.
Resistance to Organizational Change
Organizational change is accompanied by a breakdown of the values, norms, and patterns of action that are habitual and shared by employees and traditional ways of making decisions that become an obstacle in the organization’s adaptation to the pace and directions of market changes. Thus, when implementing organizational changes, resistance inevitably arises. According to Maes and Van Hootegem (2019), there are two types of resistance depending on their strength and intensity. Passive resistance is a hidden rejection of change, expressed in the lack of initiative, ignoring tasks, reduced productivity, and desire to move to another job. In turn, active resistance is expressed in the form of open speech against changes, for example, a clear avoidance of innovation, a strike, or a protest.
Van de Ven and Poole (2021) describe personal and structural barriers to organizational change. Personal barriers include fear of the unknown over the familiar, denial of the need for change and fear of loss, threats to established social relationships in the old workplace, and lack of resources and time due to operational work that inhibit change. In turn, the barriers at the organizational level are the inertia of complex organizational structures, the interdependence of subsystems, and past negative experience associated with change projects.
Overcoming and Dealing with Change
Maes and Van Hootegem (2019) offer the following elements in dealing with change: providing support for proposed changes, setting a common perspective, mapping the desired direction of change, establishing areas of individual responsibility in the change process, providing information and training to staff, constantly reviewing key organizational parameters, and securing incentives. First, the involvement of key and interested groups and individuals in the search for optimal solutions is of particular importance. Secondly, the perspective serves as a guideline for setting specific goals, developing a strategy, and choosing activities and is motivational in nature. Thirdly, it is necessary to assign its role and tasks to each member of the organization to avoid uncertainty and conflicts. Fourth, it is important to timely familiarize members of the organization with new responsibilities, procedures, techniques, and behaviors according to a carefully designed program. Fifth, organizational change needs regular evaluation. Sixth, in parallel with the changes, incentives must be provided to facilitate implementing and institutionalizing changes in the organization’s structure.
Mosca et al. (2021) note that Larry Greiner developed a six-step process model for successful organizational change management. The first step is for management to recognize the need for change. This pressure can be exerted by external factors, including increased competition and changes in the economy. The feeling of change is also caused by internal factors: excessively high costs and high staff turnover. The second stage is to involve intermediaries to carry out the changes properly. In the third stage, management collects relevant information to determine the true causes of problems that require a change in the existing situation. The fourth stage is connected with finding a new solution and a commitment to its implementation. In the fifth stage, the planned changes are tested, and the difficulties are revealed. By experimenting and identifying negative consequences, management will adjust actions and get the most out of the innovation. The last step is to motivate people to accept these changes.
Organizational Change in Lego
The reinvention of Lego was the greatest turning point in corporate history. Deszca et al. (2019) assert that in 2013, the company’s sales fell by 30% year on year, and the brand’s debt amounted to $800 million, which contributed to the beginning of the restructuring. To start, the business has implemented digital transformation. Instead of solely focusing on physical toy products, Lego has increasingly focused on bridging physical and virtual augmented reality (AR). In this way, Lego has been able to transform its brand and keep up with the demands of its target audience.
Deszca, G., Ingols, C., & Cawsey, T. F. (2019). Organizational change: An action-oriented toolkit. SAGE Publications.
Mosca, L., Gianecchini, M. & Campagnolo, D. (2021). Organizational life cycle models: A design perspective. Journal of Organization Design, 10(1), 3–18.
Maes, G. and Van Hootegem, G. (2019). A systems model of organizational change. Journal of Organizational Change Management, 32(7), 725-738.
Van de Ven, A., & Poole, M.S. (2021). The Oxford handbook of organizational change and innovation. OUP Oxford.