Introduction
Due to the increasing transformation and change in the economy, society, technology, ecology and even human health, open systems like organisations and companies are â or at least should be â continuously changing in order to survive. These environmental changes include the shifting nature of the workforce (e.g., multicultural environment, demographic changes, immigration), the creation of new technologies (artificial intelligence), economic shocks, changing competition (new companies, products and industries), new social trends, changes in world politics, environmental pollution and, more recently, the growing threat of viruses and pandemics. Any combination of these external changes can be affecting organisations simultaneously to one degree or another.
In turn, organisations are affected by each individual working in them or related to them, which implies that changes are also generated internally: not only CEOs or top managers, but any employee might change or stimulate changes in an organisation. Organisations are affected by individualsâ mindsets, behaviours and emotions, but also by their decisions on organisational structure, strategies, culture and so on. All of them are likely to be related to and affect one another. For instance, an employeeâs behaviours, actions or decisions can change if they are afraid of losing their job: they may act recklessly to obtain impressive results, or conversely, they may behave too cautiously and conservatively; both these forms of behaviour could affect other aspects like culture, performance, customer satisfaction or climate.
Organisations must therefore understand and face up to change because it is ubiquitous both inside and outside the organisation. Ulrich (1997) considers organisational change to be one of the main activities a human resources manager, department or anyone responsible for people in organisations should manage. Organisational change is therefore essential for all members of the organisation because it affects them, but change also happens because individuals themselves make or accept changes.
In sum, although changes happen within and outside organisations, the way they face change differs. Some organisations are more open to changes than others, and will adapt, change or accept changes more readily. Some organisations make top-down decisions about what to change and when; others allow changes to happen continuously and across the whole organisation. This chapter looks at how organisations understand, face, accept and implement changes.
Organisational Change
Tsoukas and Chia (2002) consider that change should not be thought of as a property of an organisation, which implies seeing change as something that happens from time to time. This traditional understanding views organisations as stable places where routines and order are essential and where change is regarded as exceptional. Rather, these authors argue, change must be understood as the normal condition of organisational life; organisations should not assume they are stable and make changes only occasionally when the need arises. They should understand that ontologically they are always changing, which is closely linked to Heraclitusâs thoughts on change: âYou cannot step twice into the same riverâ (Heraclitus, 500 bc). You, the river, the environment, everything is changing; the universe is in constant state of flux.
The obvious implication of the above is that there are two approaches to change: one that considers change as something organisations face when the need arises, to be managed in that particular moment, but otherwise there is no change; and another that sees change as inherent to organisations, so organisations are always changing, as are people, teams and the environment. This latter approach understands and is open to change from all parts and all members of the organisation. These two approaches will have implications on the theories of change, as we will see below, because the first approach tends to understand organisational change as top down, or determined by companiesâ CEOs or general managers, meaning that top managers decide what, how and when to change. The second approach, in contrast, is related to theories that change comes from the bottom of the organisation: anyone or anything can initiate or create changes in the organisation, not only senior managers. This implies that any individual or team can suggest or implement changes if they feel they are required. The Johnsonville Foods case study (Stayer, 1990) is a prominent example of the two approaches. Stayer, the CEO of Johnsonville Foods, initially followed a top-down approach to introduce changes in the company, by changing managers, strategies and so on. However, when he realised the importance of letting his employees decide what changes were needed and implementing them, the company was transformed into one that fostered changes from the bottom upwards, a changing organisation. This kind of company considers change as something that happens everywhere, at any time and in any way.
Van de Ven and Poole (1995) define organisational change as âa difference in form, quality or state over time in an organizational entityâ, which may be an individual, work group, organisational subunit, the overall organisation or its relationships with other organisations. In a similar but simpler way, Cacioppe and Edwards (2005) define organisational change as a variation in some important variable of interest. Organisational change is therefore considered as any significant behavioural alteration in the organisation that might or might not imply a cognitive alteration (Fiol & Lyles, 1985). These authors understand that two dimensions or alterations play a part in change: cognitive alteration or learning level, and behavioural alteration or change level.
Based on these two dimensions, organisations can take one of four options: (1) A lot of learning and not much change; learning takes place but in a climate of fear, which leads to inaction: these are careful organisations. (2) A lot of learning and a lot of change; learning and action both take place, so organisations are fairly proactive: these are dynamic organisations. (3) No learning and no change; there is inaction: these are bureaucratic organisations. (4) No learning but a lot of change; there is reaction to situations but without learning, which is typical in crisis organisations. These organisations change by reacting to problems such as an economic crisis or a new competitor without analysing the real sources of the problem. They aim to reduce the symptoms or consequences. This is closely related to the distinction between linear and systems thinking explained in Chapter 4: the former is short-sighted and only focuses on the symptoms, and the latter is holistic and focuses on the reasons behind a situation. An illustrative example would be a company with falling sales or income that decides to reduce costs by making some employees redundant, or by reducing the quality of the product. The outcome for the company is a further decrease in income. If, on the other hand, the company analyses the reasons behind the falling sales and income and concludes that its after-sales service is deficient, it can take steps to improve the situation.
Therefore, changes may or may not involve cognitive alteration. In the first case, organisations are dynamic and proactive; in the second, they are reactive and short-sighted.
Theories of Organisational Change
Van de Ven and Poole (1995) proposed four theories of organisational change that may serve as building blocks for explaining processes of change in organisations: life cycle, teleology, dialectics and evolution. These four theories represent different sequences of change events that are driven by different conceptual motors and operate at different organisational levels.
Life-Cycle Theory: Stages
The life-cycle theory follows the metaphor of organic growth, in which a start-up is born, then grows in adolescence, followed by maturity and finally decline or death. According to this theory, change is imminent. Van de Ven and Poole (1995) describe it as follows:
Life-cycle theory suggests that organisations, or any other entity within the organisation, will change because there is an internal tendency to move from one stage to another. This theory is used to explain changes in organisationsâ teams or groups, or in some family business stages. For instance, Tuckman (1965) describes how teams go through several stages: initial situation testing, conflict, cohesion, and functional role relatedness or simultaneous autonomy, where all the goals are accomplished and performance is high. From this point, members either move to other teams or their performance declines.
Teleological Theory: Goal
According to Ven and Poole (1995), teleology is âthe philosophical doctrine that purpose or goal is the final cause for guiding movement of an entityâ. The entity is assumed to be purposeful and adaptive; on its own or interacting with others, it envisions an end state, takes action to achieve it and monitors its progress. Change is traditionally regarded as the formulation, implementation, evaluation and modification of goals. This theory generally holds that change is top down, that is, determined by CEOs or general managers, and enacted at the bottom, and clearly has substantial links with strategic management. Outstanding examples of this theory are Lewinâs three-step model (Lewin, 1951) or Kotterâs eight-step model (Kotter, 1995).
Lewin defined three steps necessary ...
