Managerial Challenges Caused by Organizational Change

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  • 0:05 Why Organizations Change
  • 2:09 Reasons for Challenges
  • 3:08 Pitfalls to…
  • 3:37 Overcoming Employee Opposition
  • 3:54 Lesson Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

External factors and internal environmental factors are responsible for many overall organizational changes. With change, managers must plan for challenges they may face when trying to implement new ways of doing things.

Why Organizations Change

Organizational change is the restructuring that takes place organization-wide, akin to a total transformation of the way things are currently done. There are many reasons a company makes radical change. It could be in response to external or internal environmental factors. Sometimes there is an interdependency between external factors and internal environmental factors that require radical change.

External factors are things that management has little control over - like political, social, technological and economic changes that management must respond to.

Internal environmental factors involve changes to things like policies or systems, procedures, or a change in the culture.

Radical change can be scary for employees, making change difficult for management to implement. Lucky Duck's Casino recently experienced a change to an external factor that led to change in the internal environment.

When the state regulations mandated that casino-goers must be 21 years of age (not 18 as it was in the past) to gamble, it changed everything for casino owner Chip Bucks. His gambling profits plummeted. The casino was barely half-full of senior citizens playing penny slots. As customers disappeared, he was no longer able to support the casino operations. Money was tight. Bucks thought long and hard.

Bucks teamed up with his brother, Tom 'Longhorn' Bucks, who owned a nearby casino. He believed that the partnership would bring new marketing and management ideas. Staff from Longhorn's casino would relocate to work with Lucky Duck's staff as they merged to become one big casino group. This is an example of change in the internal environment brought about by an external factor.

Bucks was worried about one thing - how would employees feel about the drastic change? His employees have been working with him for years. He knew how difficult the staff was when he changed the uniforms. This change may send them over the edge.

Reasons for Challenges

Managers know that the more planning they do to implement drastic change, the more willing employees will be to accept change. It also means that change in processes and systems will be quicker.

Lucky Duck's employees resisted the change for many reasons. The most common reasons employees resist change are:

  • Uncertainty about their future or the future of the organization
  • A natural reaction against change; status-quo mentality
  • Change threatens security
  • New people, processes and systems are not trusted
  • They don't understand the reason for the change

With a new staff of experienced casino workers, Lucky Duck's employees now had competition. It also meant learning new ways of performing their job.

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