Organizational change is a term businesses use to describe a change in the operation of the company. Businesses undergo an organizational change in response to factors such as increased competition, new technology and decreased revenue. Organizations may experience small changes aimed at continuous improvement or dramatic changes that transform the company’s internal culture.
A business usually plans a developmental change to improve or correct a process in the organization. Examples of a developmental organizational change include improving the efficiency of the company’s billing procedures or updating payroll processes. Developmental changes are small, incremental improvements or corrections in the way an organization conducts business.
Some developmental changes are planned while others occur because of outside influences. For example, an increase in business may necessitate an improvement in billing procedures to handle the extra work.
A transitional change is one in which an organization replaces an existing process or procedure with a new one. For example, a manufacturing business may replace a manual production procedure with an automated process. The change requires the organization to phase out the old method and implement the new procedure. Other types of transitional change include building new products or offering new services to customers. Businesses implement a transitional change to achieve a goal such as increasing revenue or eliminating waste.
Transformational change is a profound shift in the way a business operates and typically involves developmental and transitional changes. An organization implements a transformational change over time across all areas of the business. The change results in a transformation in the culture of the organization.
Examples of transformational change include an overhaul of the businesses products or services and restructuring the company’s business strategy. Transformational change may be result of significant decreases in revenue or increases in competition.
Whichever type of organizational change a business is undergoing, change management is necessary to ensure a smooth transition. Effective change management requires the business to identify the desired result of the change and a means to measure success. Communicating the need for the change and including those affected by organizational change in the planning can help to reduce resistance from workers.
Allowing employees to participate in the organizational change can help to reduce fear and anxiety. Organizations also communicate with employees frequently throughout the process. Change management also includes identifying employees who will participate in various areas of the organizational change.