Planned and unplanned are the two types of changes that can occur with an organization. External and internal factors can cause both of these types of changes within a company.
Types of Change
Every day for the past 30 years, Robert went to work at Cheapo Toys in the marketing department. He loved his job and was proud of all of his accomplishments. One day, on his way into work, he was greeted by a human resource manager. The manager took Robert aside and informed him that the company was having a corporate-wide layoff. Robert was laid off immediately and given a severance package. He was in total disbelief! Cheapo Toys' layoff was a huge change for the organization, and it occurred due to a number of factors.
Planned and unplanned are the two types of changes that can occur with an organization. Planned change occurs when deliberate decisions are made in an organization, while unplanned change is a result of unforeseen occurrences. Ironically, the layoff was a planned change for Cheapo Toys, but an unplanned change for Robert. External factors and internal factors can cause both of these types of changes within a company. Let's take a look at specific examples of each with Cheapo Toys as our backdrop.
External Forces of Change
An external force of change occurs from an outside influence on the organization. There are four main external forces of change:
- Workforce Diversity
- Ethical Behavior
Cheapo Toys' original employees consisted of American employees who operated at two East Coast locations. Due to the globalization of the economy, the company was forced into many changes over the last 20 years. Cheapo Toys' competitors did not just consist of American companies but foreign as well. The kid population was declining in the U.S., so Cheapo Toys had to look elsewhere for sales. A big change for Cheapo Toys was building factories and selling overseas. The company now operates in over 10 different countries, ranging from France, London, Japan and India.
A diverse workforce has also created a huge change for the company. When Cheapo Toys began years ago, most of their workforce consisted of men. Now, females are represented equally and all ethnicities exist within their various international locations.
The third external force of change is society's expectation of ethical behavior. Companies are now held to a higher standard of ethics. For example, companies have a social responsibility to ensure that their products do not damage the environment during the production process. Companies also have to conduct themselves ethically when it comes to their finances. Cheapo Toys has had to make huge changes in how they design, manufacture and sell their toys. All of their toys now have to be made with plastics made of safe chemicals for kids. In addition, the company has had to hire additional quality engineers to make sure that the products are designed for all of the changed safety standards.
The last external force that creates change in organizations is technology. Companies constantly have to change every aspect of their work life to ensure that they remain competitive. For example, Cheapo Toys just completed a three-day sales training session. All of their sales reps' laptops were traded for tablets. The tablets allow for easy presentations, traceability and sales order processing. Companies need to stay ahead of the technological curve or they will be left behind. Only 15 years ago, Cheapo Toys relied on just voicemail and emails for their sales reps' daily workload.
There are also numerous internal forces of change that companies must monitor.
Internal Forces of Change
An internal force of change occurs from internal sources, such as employees or company performance. These types include:
- Poor Financial Performance
- Internal Crisis (such as a strike)
- Changes in Employee Expectations
Most companies, at one time or another, are faced with poor financial performance. This, in turn, causes significant changes that need to be made in order to help the company. Changes can consist of selling products, moving locations, hiring new management or even laying off employees. Cheapo Toys relies on producing the hot toy for the holiday season. If their toys are not popular with the kids, then drastic changes usually have to occur to save finances. Last year, for example, Cheapo Toys moved their headquarters from New York to Ashville, North Carolina, to save money. Many of the employees did not make the move and had to find work elsewhere.
Sometimes internal crises occur within the company that are unforeseen. For example, Cheapo's factory workers went on strike a few months ago to protest an expired contract and to request higher wages. This crisis caused a huge drop in toy production, which resulted in Cheapo having to sell their stuffed toy division for additional money to stay afloat during the strike.
Changes in employee expectations is the third internal force of change. Employees today want flexible work time, the ability to work from home and excellent working conditions. This change in expectations has led many companies to offer an all-in-one corporate office to keep employees happy on site. Companies have free gyms, doctor's offices and even daycare available on site.
Planned and unplanned are the two types of changes that can occur with an organization. Planned changes occur when deliberate decisions are made in an organization, while unplanned change is a result of unforeseen occurrences. External factors and internal factors can cause both of these types of changes within a company. External forces of change are globalization, workforce diversity, ethical behavior and technology. Internal forces of change consist of poor financial performance, internal crises or a change in worker expectations.
After finishing this lesson, you should be able to:
- Know that organizational change is either planned or unplanned
- Recognize the external factors on change
- Detail the different forms of internal influence
Changes in Organizations: Thought Exercises
1. Find a recent merger between two companies. Read articles about how both companies were supposed to change as a result of the merger and how the companies actually changed after the merger. Did things go as well as expected? Why or why not?
2. In 1990 the Americans with Disabilities Act became law. Research the law and how businesses had to change as a result of this law. Are there certain types of businesses that had to change more than others? What types of businesses do you think were hardest hit by this law?
3. Pick a major company that is well-known. Find information about the company before the current CEO took office and information about the company during the current CEO's tenure. What changes took place in the company during the previous and current CEOs' tenures? Were these changes planned or unplanned? If the changes were planned, why do you think these changes were made? Write a short report summarizing your findings.
Weeblewit Company has a growing customer base. However, in June the company's main office building caught fire and burned to the ground. Everything in the building was ruined. Explain how you think this company would have to change in the short-term right after the fire? How would the company change for the long-term, even after a new building had been built?
Interview at least ten people who have a job. Ask them the following questions:
1. Name a major change that's taken place in your organization while you have worked there.
2. Was this a planned or an unplanned change?
3. If it was a planned change, did the change go well?
4. Did the change succeed or fail?
Summarize your findings in a short report.