Types of Organizational Change

For organizations, the last decade has been fraught with restructurings, process enhancements, mergers, acquisitions, and layoffs—all in hopes of achieving revenue growth and increased profitability.

While the external environment (competitive, regulatory, and so on) will continue to play a role in an organization's ability to deliver goods and services, the internal environment within the organization will increasingly inhibit it from delivering products required to meet the demands of the marketplace unless it is able to adapt quickly. The major areas of changes in a company's internal environment include:

Strategic: Sometimes in the course of normal business operation it is necessary for management to adjust the firm's strategy to achieve the goals of the company, or even to change the mission statement of the organization in response to demands of the external environments. Adjusting a company's strategy may involve changing its fundamental approach to doing business: the markets it will target, the kinds of products it will sell, how they will be sold, its overall strategic orientation, the level of global activity, and its various partnerships and other joint‐business arrangements.

  • Structural: Organizations often find it necessary to redesign the structure of the company due to influences from the external environment. Structural changes involve the hierarchy of authority, goals, structural characteristics, administrative procedures, and management systems. Almost all change in how an organization is managed falls under the category of structural change. A structural change may be as simple as implementing a no‐smoking policy, or as involved as restructuring the company to meet the customer needs more effectively.
  • Process‐oriented: Organizations may need to reengineer processes to achieve optimum workflow and productivity. Process‐oriented change is often related to an organization's production process or how the organization assembles products or delivers services. The adoption of robotics in a manufacturing plant or of laser‐scanning checkout systems at supermarkets are examples of process‐oriented changes.
  • People‐centered: This type of change alters the attitudes, behaviors, skills, or performance of employees in the company. Changing people‐centered processes involves communicating, motivating, leading, and interacting within groups. This focus may entail changing how problems are solved, the way employees learn new skills, and even the very nature of how employees perceive themselves, their jobs, and the organization.

Some people‐centered changes may involve only incremental changes or small improvements in a process. For example, many organizations undergo leadership training that teaches managers how to communicate more openly with employees. Other programs may concentrate on team processes by teaching both managers and employees to work together more effectively to solve problems.

Remember that strategic, structural, process‐oriented, and people‐centered changes occur continuously in dynamic businesses. Often, changes in one of these areas impact changes in the other areas.

Many employees believe that a change is often reactive and nothing more than a quick fix; then they brace themselves for more changes in the future. Management needs to realize that serious underlying problems in organizations must be addressed with long‐term consequences in mind. Thus, when management implements changes, careful thought must be given to ensure that the new processes are for the long‐term good of the company.