A Perspective on the Need for Change in Organisations
“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success nor more dangerous to handle than to initiate a new order of things”. Machiavelli in The Prince.
The compulsions for change are manifold in today’s world; these could be external or internal to an organization. The main external factors are the impact of liberalization, increasing global / national competition; changing customer needs, diversification of the core businesses, amalgamations / mergers etc. The main internal factors driving change are mostly a lack of role clarity within organizations, poor employee morale and brand equity of the organization, inter divisional frictions, an excessive internal focus of an organization, prolonged losses, inability to sell the existing products optimally, not aligning the organization structure with the evolving market conditions etc.
The main drivers for initiating the change process are nurturing ongoing relationships with clients, listening closely to the customers and employees, motivating and developing employees by sharing knowledge and profits, empowering employees so that they exceed customer expectations, encouraging team building and team spirit and developing a keen antenna for changes and developments in the external environment. The CEO and his core team have to be specially vigilant about employee sensitivities and apprehensions while planning the process of change. The core strength that an organization needs is the strength to assess what has to change and the capability to materialize that change. The smoother the process, the more effective it is.
The scenario which exists when the process of change is initiated can be extremely varying; with the CEO stating ‘we have got to change’, the Heads of Divisions discussing “do we really need change’ to “maybe we do need change” at the middle management level and finally ‘can we have change” at the front line level. The reactions can be radically different from the just discussed scenario as driven by ideology, perceptions of lay offs, lack of promotional avenues, fear of displacement and lack of understanding, employees can undergo a wide range of emotions and stress. An example could be employees at various hierarchical levels opposing the public issue of shares in PSUs on grounds of its amounting to privatization or preferring only seniority in promotions as per tradition. Moreover, organizations at times make the cardinal error of routing communication through Unions / Associations while a vital issue such as initiating the process of change should be communicated by a direct mode through informal / formal media by the senior management.
Continuous change is a reality in today’s world and if an organization adapts to this as an integral part of its DNA, the stress levels remain minimized. However, the best of organizations have at times slipped in adapting to change and brought about radical organizational and employee stress while creating a revamped organization. There are six main areas of concern which mostly lead to the need to initiate the process of change in a short period of time rather than by a gradual effortless process.
Amongst the six areas of concern, firstly, the CEOs and Senior Management may have a limited understanding of what their organisation is all about, strange though it may seem. They may also lack a holistic knowledge about the company’s strengths and weaknesses. There is a tendency to manage by fads and individual drives, such as a new transfer policy every year. There could also be a neglect of the core expertise of the organization and the creation of measurable objectives. Finally, un-researched projects maybe taken up in the drive for diversification.
Secondly, there could be a failure of vision. The organization may not set itself clear goals or work out a strategy to achieve them. The vision may not stretch employees and may neglect the onset of competition and adoption of better technology or products by rivals. Not preparing a strategy for tackling roadblocks and shortsightedness in the choice of technology and work processes for the future is another crucial gray area.
The third aspect is financial, the organization may get overburdened in debt in a concern to scale up rapidly (remember Subhiksha and Vishal Retail), may be unable to generate cash and the assets on which credit worthiness was based lose their value under difficult / changes circumstances (the pager industry losing to the mobile industry or the cable industry being challenged by the satellite receiver industry).
Fourthly, we can classify it as a prolonged continuation of a comfort zone in an organization. It could also be labeled as smugness. A tradition of success convinces the organization that the existing model would continue to deliver positive outcomes in the future, maybe with minor tinkering (Hindustan Motors is an example). It is also factual to acknowledge that human nature finds it difficult to reject or disown old techniques and strategies that have worked, (specially the case with managers who put in a longish tenure in an assignment and may become complacent). Organization bureaucracies also attempt to stifle new ideas as it is perceived to threaten the status quo or their existence. There is also a scenario that the management continues to rely on old models hoping that the operating environment is only undergoing temporary blips and would restore itself to their comfort zone. Complacency or smugness also tends to blunt competitive edges. Even organisations with a monopolistic market should never take their intellectual / knowledge assets as consistently superior to that of emerging rivals as the operating environment can change radically rendering the organization floundering for a viable model (note that IDBI the DFI had to change over to IDBI Bank).
The fifth aspect is crucial, that is being out of sync or in touch with the real market. The organization loses its touch with customers and concentrates on products whose markets are in terminal decline (note office automation companies of yesteryears in cyclostyling / typewriters etc). Feedback generated from the field may not be distilled and interpreted correctly for course corrections to be adopted. This leads to an inability to track shifting customer needs at the top management level. At times cultivation of specialized or bulk customers is ignored or recovery of lost customers is delayed. For example, some bank branches of PSU Banks / Cooperative banks in rural areas ignored their main customers only to lose them to nimble footed competitor’s private sector banks looking for an opening.
The sixth but equally crucial aspect is motivational or internal. Discontent at middle or supervisory level becomes a roadblock in improving performance. Lack of empathy with employees and a focus on self interest at senior management levels rather than employee welfare impacts employee morale adversely. Rewards and assessment processes if not transparent and as per the precepts as preached by top management also contribute to low morale and low productivity. Companies unable to offer long term stability or clear career paths and prospects witness diminished employee loyalty and effectiveness. The brand equity of an organization also carries weightage in employee motivation, in case the brand equity diminishes, attrition or low productivity is almost certain.
The factors as detailed above, in combination or by in isolation, ultimately impart a momentum to events which makes a change process inevitable in case the organization is to survive as a vibrant and profitable entity. The art lies in identifying changes in the operating environment in time or tracking employee morale by effective HR policies. This would impart an overall smoothness to the process of imparting changes to the organizational processes and systems. This should be akin to the sailing of a supertanker and its docking, it has to be smooth, planned in advance and each degree of turn required mapped out in detail. Neglect of the issues as described above either results in an organization’s downfall or crystallizes in the need for cataclysmic changes, with an adverse fallout in terms of stress, organizationally or for employees.
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Dinesh K Kapila is Assistant General Manager in NABARD. The views expressed in this article are his personal views and do not represent the views of his employer.
===============================================================
“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success nor more dangerous to handle than to initiate a new order of things”. Machiavelli in The Prince.
The compulsions for change are manifold in today’s world; these could be external or internal to an organization. The main external factors are the impact of liberalization, increasing global / national competition; changing customer needs, diversification of the core businesses, amalgamations / mergers etc. The main internal factors driving change are mostly a lack of role clarity within organizations, poor employee morale and brand equity of the organization, inter divisional frictions, an excessive internal focus of an organization, prolonged losses, inability to sell the existing products optimally, not aligning the organization structure with the evolving market conditions etc.
The main drivers for initiating the change process are nurturing ongoing relationships with clients, listening closely to the customers and employees, motivating and developing employees by sharing knowledge and profits, empowering employees so that they exceed customer expectations, encouraging team building and team spirit and developing a keen antenna for changes and developments in the external environment. The CEO and his core team have to be specially vigilant about employee sensitivities and apprehensions while planning the process of change. The core strength that an organization needs is the strength to assess what has to change and the capability to materialize that change. The smoother the process, the more effective it is.
The scenario which exists when the process of change is initiated can be extremely varying; with the CEO stating ‘we have got to change’, the Heads of Divisions discussing “do we really need change’ to “maybe we do need change” at the middle management level and finally ‘can we have change” at the front line level. The reactions can be radically different from the just discussed scenario as driven by ideology, perceptions of lay offs, lack of promotional avenues, fear of displacement and lack of understanding, employees can undergo a wide range of emotions and stress. An example could be employees at various hierarchical levels opposing the public issue of shares in PSUs on grounds of its amounting to privatization or preferring only seniority in promotions as per tradition. Moreover, organizations at times make the cardinal error of routing communication through Unions / Associations while a vital issue such as initiating the process of change should be communicated by a direct mode through informal / formal media by the senior management.
Continuous change is a reality in today’s world and if an organization adapts to this as an integral part of its DNA, the stress levels remain minimized. However, the best of organizations have at times slipped in adapting to change and brought about radical organizational and employee stress while creating a revamped organization. There are six main areas of concern which mostly lead to the need to initiate the process of change in a short period of time rather than by a gradual effortless process.
Amongst the six areas of concern, firstly, the CEOs and Senior Management may have a limited understanding of what their organisation is all about, strange though it may seem. They may also lack a holistic knowledge about the company’s strengths and weaknesses. There is a tendency to manage by fads and individual drives, such as a new transfer policy every year. There could also be a neglect of the core expertise of the organization and the creation of measurable objectives. Finally, un-researched projects maybe taken up in the drive for diversification.
Secondly, there could be a failure of vision. The organization may not set itself clear goals or work out a strategy to achieve them. The vision may not stretch employees and may neglect the onset of competition and adoption of better technology or products by rivals. Not preparing a strategy for tackling roadblocks and shortsightedness in the choice of technology and work processes for the future is another crucial gray area.
The third aspect is financial, the organization may get overburdened in debt in a concern to scale up rapidly (remember Subhiksha and Vishal Retail), may be unable to generate cash and the assets on which credit worthiness was based lose their value under difficult / changes circumstances (the pager industry losing to the mobile industry or the cable industry being challenged by the satellite receiver industry).
Fourthly, we can classify it as a prolonged continuation of a comfort zone in an organization. It could also be labeled as smugness. A tradition of success convinces the organization that the existing model would continue to deliver positive outcomes in the future, maybe with minor tinkering (Hindustan Motors is an example). It is also factual to acknowledge that human nature finds it difficult to reject or disown old techniques and strategies that have worked, (specially the case with managers who put in a longish tenure in an assignment and may become complacent). Organization bureaucracies also attempt to stifle new ideas as it is perceived to threaten the status quo or their existence. There is also a scenario that the management continues to rely on old models hoping that the operating environment is only undergoing temporary blips and would restore itself to their comfort zone. Complacency or smugness also tends to blunt competitive edges. Even organisations with a monopolistic market should never take their intellectual / knowledge assets as consistently superior to that of emerging rivals as the operating environment can change radically rendering the organization floundering for a viable model (note that IDBI the DFI had to change over to IDBI Bank).
The fifth aspect is crucial, that is being out of sync or in touch with the real market. The organization loses its touch with customers and concentrates on products whose markets are in terminal decline (note office automation companies of yesteryears in cyclostyling / typewriters etc). Feedback generated from the field may not be distilled and interpreted correctly for course corrections to be adopted. This leads to an inability to track shifting customer needs at the top management level. At times cultivation of specialized or bulk customers is ignored or recovery of lost customers is delayed. For example, some bank branches of PSU Banks / Cooperative banks in rural areas ignored their main customers only to lose them to nimble footed competitor’s private sector banks looking for an opening.
The sixth but equally crucial aspect is motivational or internal. Discontent at middle or supervisory level becomes a roadblock in improving performance. Lack of empathy with employees and a focus on self interest at senior management levels rather than employee welfare impacts employee morale adversely. Rewards and assessment processes if not transparent and as per the precepts as preached by top management also contribute to low morale and low productivity. Companies unable to offer long term stability or clear career paths and prospects witness diminished employee loyalty and effectiveness. The brand equity of an organization also carries weightage in employee motivation, in case the brand equity diminishes, attrition or low productivity is almost certain.
The factors as detailed above, in combination or by in isolation, ultimately impart a momentum to events which makes a change process inevitable in case the organization is to survive as a vibrant and profitable entity. The art lies in identifying changes in the operating environment in time or tracking employee morale by effective HR policies. This would impart an overall smoothness to the process of imparting changes to the organizational processes and systems. This should be akin to the sailing of a supertanker and its docking, it has to be smooth, planned in advance and each degree of turn required mapped out in detail. Neglect of the issues as described above either results in an organization’s downfall or crystallizes in the need for cataclysmic changes, with an adverse fallout in terms of stress, organizationally or for employees.
---------------------------------------------------------------------------
Dinesh K Kapila is Assistant General Manager in NABARD. The views expressed in this article are his personal views and do not represent the views of his employer.
===============================================================
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