Levels of Planned Organizational Change

A planned change is a change planned by the organisation, it does not  happen by itself. It is affected by the organisation with the purpose of achieving  something that might otherwise by unattainable or attainable with great  difficulty. Through planned change, an organisation can achieve its goals  rapidly. The basic reasons for planned change are:

  • To improve the means for satisfying economic needs of members.
  • To increase profitability.
  • To promote human work for human beings.
  • To contribute to individual satisfaction and social well being.

Levels of Planned Organizational Change

Levels of Planned Organizational Change

Planned organizational change is normally targeted at improving  effectiveness at one or more of four different levels : human resources,  functional resources, technological capabilities, and organizational capabilities.

1. Human Resources

Human resources are an organization’s most important  asset. Ultimately, an organization’s distinctive competencies lie in the skills and  abilities of its employees. Because these skills and abilities give an organization  a competitive advantage, organizations must continually monitor their structures  to find the most effective way of motivating and organizing human resources to  acquire and use their skills. Typical kinds of change efforts directed at human  resources include : (i) new investment in training and development activities so  that employees acquire new skills and abilities; (ii) socializing employees into  the organizational culture so that they learn the new routines on which  organizational performance depends; (iii) changing organizational norms and  values to motivate a multi-cultural and diverse work force; (iv) ongoing  examination of the way in which promotion and reward systems operate in a  diverse work force; and (v) changing the composition of the top-management  team to improve organizational learning and decision making.

2. Functional Resources

Each organizational function needs to develop  procedures that allow it to manage the particular environment it faces. As the  environment changes, organizations often transfer resources to the functions  where the most value can be created. Critical functions grow in importance,  while those whose usefulness is declining shrink. An organization can improve  the value that its functions create by changing its structure, culture, and  technology. The change from a functional to a product team structure, for  example, may speed the new product development process. Alterations in  functional structure can help provide a setting in which people are motivated to  perform. The change from traditional mass production to a manufacturing  operation based on self-managed work teams often allows companies to increase  product quality and productivity if employees can share in the gains from the  new work system.

3. Technological Capabilities

Technological capabilities give an organization an  enormous capacity to change itself in order to exploit market opportunities. The  ability to develop a constant stream of new products or to modify existing  products so that they continue to attract customers is one of an organization’s  core competencies. Similarly, the ability to improve the way goods and services  are produced in order to increase their quality and reliability is a crucial  organizational capability. At the organizational level, an organization has to  provide the context that allows it to translate its technological competencies into  value for its stakeholders. This task often involves the redesign of organizational  activities. IBM, for example, has recently moved to change its organizational  structure to better capitalize on its strengths in providing IT consulting.  Previously, it was unable to translate its technical capabilities into commercial  opportunities because its structure was not focused on consulting, but on making  and selling computer hardware and software rather than providing advice.

4. Organizational Capabilities

Through the design of organizational structure  and culture an organization can harness its human and functional resources to  take advantage of technological opportunities. Organizational change often  involves changing the relationship between people and functions to increase  their ability to create value. Changes in structure and culture take place at all  levels of the organization and include changing the routines an individual uses to  greet customers, changing work group relationships, improving integration  between divisions, and changing corporate culture by changing the top management  team.

These four levels at which organizational change can take place are obviously  interdependent, it is often impossible to change one without changing another.  Suppose an organization invests resources and recruits a team of scientists who  are experts in a new technology — for example, biotechnology. If successful, this  human resource change will lead to the emergence of a new functional resource  and a new technological capability. Top management will be forced to reevaluate  its organizational structure and the way it integrates and coordinates its  other functions, to ensure that they support its new functional resources.  Effectively utilizing the new resources may require a move to a product team  structure. It may even require downsizing and the elimination of functions that  are no longer central to the organization’s mission.

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