Organizational change and firm growth

Table of contents: The Kazakh-American Free University Academic Journal №7 - 2015

Author: Kossenkova Darya, Kazakh-American Free University, Kazakhstan

In the modern literature on change management, there are different approaches to the definition of "organizational change". Some authors have focused on the process component of organizational change (Barnett, Carroll, 1995), others - focus on the content component (Van de Ven, Poole, 1995; 2005). The terms "organizational change", "change" and "transformation of the company" refers to those institutional reforms, during which achieved a change in values, aspirations and behavior while changing processes, methods, strategies and systems. Organizational change accompanies the learning process, because modern organizations is both extremely important processes of change and learning. Change strategies, structures and systems is not enough if they are not accompanied by a change in the thinking of generating these strategies, structures and systems. According to some authors, organizational change can not be separated from the organization's strategy, and vice versa (Burnes, 2004; Rieley and Clarkson, 2001; Todnem, 2005).

In this study, under the "organizational change" means any "development of new ideas or the introduction of new patterns of behavior in the company» (Daft, 2001). In our view, this definition described as Process and substantive aspects of the process of organizational change and covers almost all types of changes that can occur in an organization.

Analysis of studies on change management, shows that scientists have for quite a long period of time studying the typology of organizational changes and characteristics that underlie the differences in types of changes. Most of them, anyway, based on the distinction between incremental and radical (evolutionary and revolutionary, cumulative and discrete) changes. For the first time such a division was made in the early 1970's. When Vattslavik, Uikland and Firsh (Watzlawick, Weakland, Firsh, 1974) introduced the concept of change of the first and second order. Under the change of the first order were understood Changes- "variation around the main theme", and under the second-order change - crucial breakthrough that has no connection with the past. In our view, this classification is fairly general, allowing to interpret it as the content and the process of change, and both characteristics together. On the one hand, this is its advantage (high degree of generalization), and on the other, has brought some confusion in the work on changes since in each case, you need to understand what the author has in mind, using this classification.

Currently, most of the research literature on change management is a critique of the proposed approaches to the classification of organizational change and attempts to highlight an original approach to the classification of types of changes. As a rule, the proposed approaches are diametrically opposed continuum of types of changes, which are based on certain classification features, such as the duration of the changes, the rate of change, a strategic approach to change, and others. For example, the incremental (incremental) changes contrasted transformational (transformative) changes (Dunphy, Stace, 1993), episodic (episodic) changes - permanent (continuous) change (Huy, 2001), scheduled (planned) changes - sudden (Bamford, Forrester, 2003), evolution (evolutionary) change - revolutionary (revolutionary) (Pettigrew, 1985), changes the first order (first order change) - change of the second order (second order change) (Bartunek, Moch, 1987); Convergence (convergent) change - radical (radical) (Greenwood, Hinings, 1988, 1996; Miller, Friesen, 1982), etc.

The above described approach to the dichotomy of distinguishing different types of organizational changes, of course, has a certain research purposes, but at the same time does not provide a general understanding of this complex phenomenon. Moreover, the traditional use of the term "change", as a rule, is ambiguous and imprecise (Marshak, 2002). Overall, this is due to the fact that the basis for the classification of types of change is only one classification feature. For example, the main characteristic of the planned changes is the degree to which the change is subject to control by the management. However, another equally important characteristic of the planned changes may be planning style changes - a directive or participative (Maes, 2008). Some authors have attempted to overcome the limitations of using only one feature to highlight changes typologies. They use two or more classification feature, creating a matrix by which to distinguish between different types of change.

One of the most successful attempts to summarize the various typologies of organizational change is the work (Maes, 2008), which presents a systematic approach to organizational change, which is based on the seven attributes of the system. Generally, the attributes of the system are presented in Table 1.

It should be noted that in addition to the above classifications, organizational change, another, no less popular, is the classification of types of strategic organizational changes proposed R. Daftom: changes in the products and services, changes in strategy and structure, cultural change and changes in technology (Daft , 2001). Furthermore, according to RM Kanter, changes in the Company may occur at different levels and have different effects on the results of its operations. According to R.M. Kanter, change management takes place on three levels: the draft changes, program changes and changes in the organization-conductors (Kanter, 1999, p.20). It should be noted that in a recent study (Self et al., 2007) proposed a classification of organizational change, depending on the impact of these changes - whether they lead to the dismissal of the employee or not. The authors believe that such a classification allows to predict the reaction of the staff for the upcoming changes and, consequently, to develop a program to overcome resistance to change.

Thus, the organization can be implemented different types of organizational changes at different organizational levels. It appears that the different types will have different impacts on the operations of the company, in particular the growth of the firm. At the same time, such an effect may be either short-term or long-term exposure. We propose to consider the types of organizational change in terms of their impact on the performance of the company in the short-medium and long term. To do this we will use a two-dimensional matrix (see pic. 1).

It seems that all types of organizational change can be divided into two different approaches to change: adaptation / improvement and transformation. At the same time, the proposed approach can have different length (duration) of the time. Thus, we get four different cluster of organizational change depending on the scale and duration of these changes. Consider in more detail the clusters.

Pic. 1. Clusters of organizational change

Adaptation / improvement. This approach to change focused on the individual components of the organization in order to adapt or improve to better match the other components of the organization. Adaptation / improvement occurs within the existing organizational strategy and structure (Nadler, Tushman, 1989). This approach to change is the so-called incremental or minor changes, and is aimed at small improvements without radical changes in the organizational structure and hierarchical culture (Hope Hailey, Balogun, 2002). Unlike most types of organizational changes that are considered to be the responsibility of top management, adaptation / improvement is often associated with a key role performers (Choi, 1995). Depending on the duration of this change, we will allocate two clusters changes: rapid improvement and long-term improvement.

Rapid improvement occurs in a short time and usually has a local character, as executed in the form of draft amendments. According to R.M. Kanter, these actions can be successful in the short term, especially if they are focused, results-oriented and do not violate the traditions of the company.

Long-term improvements are known in the theory and practice of business a long time, and the cluster changes can be attributed to the third level of organizational change on the classification of R.M. Kanter - organization of change. This is the name of the company who are able continuously to innovate, improve and do it before it will require external circumstances. This organization, mobilizing many people to carry out the changes. Success depends on whether there are conditions necessary for the transformation of the organization capable of such changes that occur continuously and are perceived as natural.

Transformation / update. The term "transformation" is often used in the literature on change management interchangeably with the term "reorganization", "transformation", "update", "radical changes" and others. The total in these terms is that they are all aimed at changing the organization as a whole, rather than its individual parts. In this paper, this word refers to a radical organizational changes, i.e. changes that are relevant to the strategy and structure of the organization, i.e. changes "second order» (Bartunek, Moch, 1987). Transformation / update affects not only the changes in strategy and structure, but also a change in organizational culture (Hope Hailey, Balogun, 2002). According to some authors during the transformation / update requires a paradigm shift of thinking, mental models and organizational values.

Rapid transformation refers to the second level of organizational change - "change programs" classification R.M. Kanter. As a rule, - related projects designed to provide a set of organizational impact. Rapid transformation means that changes occur in a short time, and focused on changes in key elements of the organization. Examples of rapid transformation may be some changes in the program, as the development of outsourcing operations or launching of a series of operations that were previously outsourced, the company itself, the introduction / removal of the product line, etc.

Long-term transformation, as well as rapid transformation is a program of organizational change. However, in this case we are dealing with the duration of the program, which can be done within a few months, or even years, depending on the size of the company. Examples of long-term transformation of these programs are large-scale organizational changes, mergers and acquisitions, joint ventures, changes in strategy and structure of the company and others. All of these programs require not only a significant financial investment for their implementation, but also quite a serious investment of time. According to (Hannan, Freeman, 1984), large-scale changes reduce the reliability of results, due to the fact that fluctuations in the quality and timeliness of collective action are reduced in a period of fundamental change. Strategic changes rarely occur in a short time. Most often company spends some time for such changes in the program, and for a certain period of time burst existing communication with the external environment and to establish new, leading to slower growth firms.

When implementing change programs success often depends not so much on the quality of the program or the methods of its implementation, but on how each element of the program is linked with other activities of the company. According to R.M. Kanter, program changes often fail because they are isolated from continuing operations, contain too many states, cannot be combined with one another, or run an elite group that expects that everyone should drop everything and join the cult preached it.

The practice of the majority of large-scale transformations shows that such changes being made by top management in the first place in order to achieve an immediate effect that usually happens. If we consider the long-term impact on the growth of the transformation of the company, then, in our opinion, this effect will depend on the type of organizational transformation. We can assume that over time the impact of rapid transformation will decrease until it disappears completely as a result of organizational inertia. At the same time, in the case of long-term transformation, long-term impact on the operations of the company can be very significant, because the top management of the company will pay special attention to these programs for a long period of time.


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Table of contents: The Kazakh-American Free University Academic Journal №7 - 2015

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