In business, change is a constant, so organizations are always adapting to meet market demand. Whether internal or external, change in an organization has different causes. Knowing what these causes are is an essential part of business management. Employees must also be aware of what causes organizational change, because it inevitably affects them as well.
Causes of change in an organization include end-of-life products, a change in government and governmental priorities, mergers and acquisitions and strategy and structural changes.
After some time, market demand for a company's product may diminish. This will then cause the company's profits to drop, and ultimately force the company to abandon the product for a newer source of revenue. In other words, when a product reaches the end of its life, the company discontinues it and moves on to something new. When this happens, the company transfers labor and funding to the new product, which may impact the type of work the company performs – and how – going forward.
Government employees may find that when a change in government takes place – for example, when a new president is elected and consequently a new administration – the new administration may stop certain existing projects. A new government means a new political agenda. As a result, the biggest problem is that this can completely warp the way the governmental organization conducts affairs or even result in layoffs or redundancies, two departments doing the same thing.
Mergers and acquisitions are causes of organizational change that many people are familiar with from the news. When two companies come together, it re-creates their very structures. The acquiring organization may wish to cut its expenses and reallocate some resources to new products or services. Basically, this change can involve reducing the amount of workers or altering the nature of staff jobs.
Sometimes, a company may change its priorities. For example, an organization might decide to move from focusing on a product to focusing on a service. This will create a demand for new types of marketing and production, while at the same time requiring a shift in strategy. All of these factors combined can trigger massive change.
There will come a time when an organization overhauls its administrative strategies – in other words, the managers and human resources professionals change the way they organize the business. For example, they could introduce new methods of bookkeeping, such as going from paper files to digital files. This would require massive retraining for all employees involved. Even smaller-scale improvements, like updating software, will still cause some change.