What are the Causes of Organizational Change?

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Organization and Change > Best Practices > What are the Causes of Organizational Change?

What are the Causes of Organizational Change?
dineshbabu, Student (MBA), Member
We all know that organizations change. They have to. But exactly why do organizations change? In other words, what are the reasons for change to occur in organizations?
How can these reasons be categorized in a logical way? Is there some kind of model of causes for organizational change?

Why do Organizations Change? Causes
Jaap de Jonge, Editor, Netherlands
Thanks for your excellent question... A first breakdown of such reasons or causes for companies or public organizations to change could be:
A. FACTORS IN EXTERNAL ENVIRONMENT OF THE ORGANIZATION. Factors outside the firm, generally beyond its control:
A1. Political
A2. Economic
A3. Social
A4. Technological
A5. Competition
A6. Customer Demands
A model for external factors: PEST Analysis

B. FACTORS IN INTERNAL ENVIRONMENT OF THE ORGANIZATION. Factors inside the firm, generally under its control:
B1. Leadership
B2. Vision
B3. Mission (Statement)
B4. Strategy
B5. Culture, values
B6. Policies, procedures, systems
B7. Merger
A model of internal factors: McKinsey's 7S Framework

Any of these main causes could be further split up into a large number of sub-factors. For example A2. Economical can be further split up into: economic growth, recession, interst rates, government spending, unemployment rates, taxation, infaltion, consumer confidence, globalization, etc.

Note that several of these main causes can be viewed as external or internal.
Note also that most sub-factors can be viewed as being part of multiple main causes. But that is not very important (as long as we do account for them).

Triggers for Organizational Change
Emilio Ferrero, Management Consultant, Curacao, Member
Mr. de Jonge's list is quite thorough and is usually part of strategic planning. In my experience, however, what really causes organizational change to occur is some form/degree of crisis.
For example, sadly enough, few organizations monitor their external environment regularly. Late reactions to changes in that external environments can even make changes no longer useful (Polaroid).
Likewise late awareness of culture clashes after mergers can also make business very difficult (HP/COMPAQ).
In summary, the root causes are those in Mr. de Jonge's list. A crisis in those causes is what (in most cases) triggers change.

Change Factors in Small Organizations
Dilip Khanal, CEO, Nepal, Member
Further to Mr de Jonge's list, I would like to add that organizational changes also occur when some influential member of the organization has a different thought. In small organizations, where vision, mission, strategy and policies are not spelled out, In such situation, thinking of a key person brings many organizational changes.
Editor: thanks for your contribution. Though we might consider it part of B1: Leadership.

Change Factors and the Resistance to Change
Robert Gerth, Project Manager, Sweden, Member
This is an interesting question but I think it could be complemented with another one. When there is awareness that a specific firm must change: why are organization still resisting change?
Numerous times I have met top managers and employees fully aware of the need for change, but they are doing nothing….

What are Causes for Organizations NOT to Change?
Jaap de Jonge, Editor, Netherlands
@Robert: Thanks for your excellent contribution. Indeed that is the opposite, equally interesting subject. For more info and to discuss that topic, you can go to: List of Motives to Resist Change elsewhere on 12manage.

Organizations Keep on Changing, But we don't Notice it
Dilip Khanal, CEO, Nepal, Member
@Dilip Khanal, Editor: I am talking of small changes that go unnoticed. For example changing the placement of staff - a very regular activity in any organization - which is also resisted sometimes. Or a new employee joins. Some behavioral aspects in the organization might change because of that, even if nobody notices it or considers it a change. People mostly talk about organizational reengineering after a merger/acquisition, changes in business strategy, a tactical response to a competitor's move and the like.

Why Organizations Change? It is Just a Reaction to Survive
FREDDY VILLAVICENCIO, Business Consultant, Venezuela, Premium Member
The theory of a change can illustrate why some organitations were forced to change themselves. The learnings serves as fundamentals to others who make the decision to improve performance or to strength a market share. Normally the change readiness comes up when numbers shows trouble and the risk to miss the required business pace is too high.
Only at that point some organizations try to leave behind some practices and look for management tools or talent to refresh the organization´s structure and results.

What are the Causes of Organizational Change?
Jaap de Jonge, Editor, Netherlands
@FREDDY VILLAVICENCIO: Thanks for your excellent build for this topic. Indeed the first phase of Kotter's Change Phases Model is: a Sense of Urgency.
Without that it's unlikely any organization is ever going to change.

What are the Cause of Organizational Change?
Francis, Manager, Thailand, Member
I think the main causes of the organizational change are somehow related to the human [organization] 7 levels of needs...
I have done some simple case study on some organization that change, be it because of internal or external factors, somehow the needs of that organization changed and the expected change followed…
This what I know of the Organizational 7 level of needs…
Food = Survial [where organization will look for selling product, method that works, effective man etc... = resulting in expected but unpredictable change]
Shelter? Sorry I can't even remember, some better person please develop this, I think this is the cause for organizational change.

7 Needs of Organizations | 7 Levels of Consciousness
Jaap de Jonge, Editor, Netherlands
@Francis: I think you are referring to Barrett’s 7 Levels of Consciousness:
Level 7. SERVICE. Motivation: Social responsibility: Working with other organisations and the stakeholders of the organisation in pursuit of societal objectives that enhance the sustainability of humanity and the planet, while deepening the level of internal connectivity inside the organisation by fostering compassion, humility and forgiveness.
Level 6. MAKING A DIFFERENCE. Motivation: Strategic alliances and partnerships: Building mutually beneficial alliances with other organisations and the local community to protect the environment, while deepening the level of internal connectivity inside the organisation by fostering internal cooperation between business units and departments.
Level 5. INTERNAL COHESION. Motivation: Strong cohesive culture: Enhancing the organisation’s capacity for collective action by aligning employee motivations around a singular mission, an inspiring vision and a shared set of values that create commitment and integrity, and unleash enthusiasm, creativity and passion.
Level 4. TRANSFORMATION. Motivation: Adaptability and continuous learning: Giving employees a voice in decision‐making and making them accountable and responsible for their own futures in an environment that supports innovation, continuous improvement, knowledge sharing, and the personal growth and development of all employees.
Level 3. SELF‐ESTEEM. Motivation: High performance systems and processes: Creating a sense of employee pride by establishing policies, procedures, systems, processes and structures that create order and enhance the performance of the organisation through the use of best practices. Focus on the reduction of bureaucracy, hierarchy, silo‐mentality, power and status seeking, confusion, complacency, and arrogance.
Level 2. RELATIONSHIP. Motivation: Relationships that support the organisation: Building harmonious relationships that create a sense of belonging and loyalty among employees and caring and connection between the organisation and its customers. Focus on the reduction of Internal competition, manipulation, blame, internal politics, gender and ethnic discrimination.
Level 1. SURVIVAL. Motivation: Pursuit of profit and shareholder value: Creating an environment of financial stability, and focusing on the health, safety and welfare of all employees. Focus on the reduction of excessive control and caution, short‐term focus, corruption, greed and exploitation.
Source: Barrett, R., The Seven Levels of Organisational Consciousness

7 Levels of Consciousness - Change Agility
Frik Reynecke, Management Consultant, Saudi Arabia, Member
Agile organizations will preempt change and keep working on the 7 levels of consciousness by anticipating, responding and reacting to various change catalysts to move their organization forward and be in the best position to succeed.
Many (leading organizations) are now beginning to make the shift from applying change management in a project-by-project fashion toward institutionalizing and embedding change management and to build a true organizational capability.

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