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EFFECT OF ORGANIZATIONAL CHANGE AND DEVELOPMENT ON EMPLOYEE PERFORMANCE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Today’s business environment produces change in the workplace more suddenly and frequently than ever before. Mergers, acquisitions, new technology, restructuring downsizing and economic meltdown are all factors that contribute to a growing climate of uncertainty. The ability to adapt to changing work conditions is key for individual and organizational survival. Change will be ever present and learning to manage and lead change includes not only understanding human factors, but also skill to manage and lead change effectively (Pettigrew and Whipp, 2011). Change is the inevitable. It is the only element of human phenomenal that is constant.
Organizational change occurs when a company makes a transition from its current state to some desired future state. Managing organizational change is the process of planning and implementing change in organizations in such a way as to minimize employee resistance and cost to the organization, while also maximizing the effectiveness of the change effort.Change is both inevitable and desirable for any progressive organization (Fajana, 2012). Today’s business environment requires companies to undergo changes almost constantly if they are to remain competitive. Factors such as globalization of markets and rapidly evolving technology force businesses to respond in order to survive. Such changes may be relatively minor as in the case of installing a new software programme or quite major as in the case of refocusing an overall marketing strategy.
Organizations must change because their environments change, according to Thomas S. Bateman and Carl P. Zeithaml in their book management: function and strategy. Today businesses are bombarded by incredibly high rates of change from a frustrating large number of sources. Inside pressures come from top managers and lower-level employees who push for change. Outside pressures come from changes in the legal, competitive, technological and economic environments By acceptance of organizational change, we mean the employees readiness and willingness, support and commitment to the organizational ideals during the periods of significant internal and external shifts in the organization’s structure. Managers must not rush in introducing a change. The process must be slow, steady and thorough (Fajana, 2012).
Acceptance of change signifies the willingness of the affected parties to embrace and function in a newly established order and their commitment to effect and implement the changes. As underlined by scholars such as Pettigrew and Whipp (1991), Fajana (2012) and Armstrong (2014), for planned change to bear its desired outcomes, it must be introduced, implemented and managed in such a way that attracts and gains the commitment from the affected parties to drive the changes to achieve the desired goals and the existence of a common vision that change for the organization is necessary and inevitable. Conceptually, the change process starts with an awareness of the need for change. An analysis of this situation and the factors that have created it leads to a diagnosis of their distinctive characteristics and an indication in which action needs to be taken. Change signifies the willingness of the affected parties to embrace and function in a newly established order and their commitment to effect and implement the changes (Armstrong, 2014).
Effecting change can also be painful. When planning change, there is a tendency for people to think that it will be an entirely logical and linear process of growing from point A to B, it is not like that at all. As described by Pettigrew and Whipp (1991), the implementation of change is an interactive, cumulative and reformulation in-use process. In order to manage change, it is first necessary to understand the types of change and why people resist change. It is important to bear in mind that while those wanting change need to be constant about ends, they have to be flexible about means. Bateman and Zeithaml (2010), who identified four major areas of organizational change: strategy, technology, structure and people. All the four areas are related and companies often must institute changes in the other areas, when they attempt to change one area. The first area, strategy changes can take place on a large scale-large for example, when a company shifts its resources to enter a new line of business or on a small scale for example, when a company makes productivity improvements in order to reduce costs. There are three basic stages for a company making a strategic change: realizing that the current strategy is no longer suitable for the company’s situation, establishing a vision for the company’s future direction and implementing the change and setting up new systems to support it.
Technological changes are often introduced as components of larger strategic changes, although they sometimes take place on their own. An important aspect of changing technology is determining who in the organization will be threatened by the change. To be successful, a technology change must be incorporated into the company’s overall systems and a management structure must be created to support it. Structural changes can also occur due to strategic changes as in the case where a company decides to acquire another business and must integrate it as well as due to operational changes or changes in managerial style. For example, a company that wished to implement more participative decision making might need to change its hierarchical structure. People changes can become necessary due to other changes, or sometimes companies simply seek to change workers’ attitudes and behaviours in order to increase their effectiveness.
Attempting a strategic change, introducing a new technology and other changes in the work environment may affect people’s attitudes (sometimes in a negative way) (Bateman and Zeithaml, 2010). But management frequently initiates programs with a conscious goal of directly and positively changing the people themselves. In any case, people changes can be the most difficult and important part of the overall change process. The science of organization development was created to deal with changing people on the job through techniques such as education and training, team building and career planning.
Resistance to change based on the existing theoretical and empirical study, the negative evaluation of and resistance to change may occur on account of a number of factors. Bateman and Zeithaml (2010) outlined a number of common reasons that people tend to resist change. These include: inertia, or the tendency of people to become comfortable with the status quo, timing, as when change efforts are introduced at a time when workers are busy or have a bad relationship with management, surprise, because people’s reflex is to resist when they must deal with a sudden, radical change or peer pressure, which may cause a group to resist due to anti-management feelings even if individual members do not oppose the change. Resistance can also grow out of people’s perceptions of how the change will affect them personally. They may resist because they fear that they will lose their jobs or their status, because they do not understand the purpose of the change, or simply because they have a different perspective on the change than management. Making a solid case for the change is critical for the change to have a lasting effect. The source of information about the change must be credible. Stroh’s (2011-2012) study indicates that the participation of employee leads to more positive relationships with the organization and thus greater willingness to change, therefore the research intends to proffer an evaluation of organizational change and its impact on employee performance.
1.2 STATEMENT OF THE PROBLEM
The business environment produces change in the workplace more suddenly and frequently than ever before. Mergers, acquisitions, new technology, restructuring downsizing and economic meltdown are all factors that contribute to a growing climate of uncertainty. Organizational ability to adapt to changing work conditions is key for individual and organizational survival. Change will be ever present and learning to manage and lead change includes not only understanding human factors, but also skill to manage and lead change effectively (Pettigrew and Whipp, 1991). However for change to produce its desired effect it must be accepted and embraced by the organizational employees; but this is not often the case. Most changes results in employee resistance of change in the organization thereby resulting in poor morale and productivity Therefore the problem confronting this research is to proffer an evaluation of organizational change and development and its effect on employee performance with a case appraisal of union bank plc.
1.3 RESEARCH QUESTIONS
1 What is the nature of organizational?
2 What is the process and methods of organizational change?
3 What constitute employee performance?
4 What is the impact of change on employee performance?
5 What is the effect of change on employee performance in union Bank Plc?
1.4 OBJECTIVES OF THE STUDY
1. To determine the nature of organizational change and development.
2. To determine the nature of employee performance.
3. To determine the effect of change on organizational performance.
4. To determine the effect of change on employee performance in union bank plc.
1.5 SIGNIFICANCE OF THE STUDY
The study shall proffer the essential factors necessary to effect of change and development in an organization. It shall determine the effect of organizational change and development on employees’ performance. The study shall provide significant information on managing change to managers and organizations.
1.6 STATEMENT OF THE HYPOTHESES
1. Ho: There is no significant effect of organizational change and development on employee performance.
Hi: There is a significant effect of organizational change and development on employee performance.
2. Ho: The impact of change on employee performance in Union Bank is negative.
Hi: The impact of change on employee performance in Union Bank is positive.
1.7 SCOPE OF THE STUDY
The study is on the effect of organizational change and development employee performance.
1.8 DEFINITION OF TERMS
ORGANISATIONAL CHANGE: Organizational change occurs when a company makes a transition from its current state to some desired future state.
MANAGING CHANGE: Managing organizational change is the process of planning and implementing change in organizations in such a way as to minimize employee resistance and cost to the organization, while also maximizing the effectiveness of the change effort. Change is both inevitable and desirable for any progressive organization (Fajana, 2012).
Lewin’s model: Considers that change involves a move from one static state via a state of activity to another static status quo. Lewin specifically considers a three stage process of managing change: unfreezing, changing and re-freezing. The first stage involves creating a level of dissatisfaction with the status quo, which creates conditions for change to be implemented. The second stage requires organizing and mobilizing the resources required to bring about the change. The third stage involves embedding the new ways of working into organization.
Beer and colleagues: Advocate a model that recognizes that change is more complex and therefore, requires a more complex, albeit still uniform set of responses to ensure its effectiveness. They prescribe a six-step process to achieve effective change. They concentrate on task alignment, whereby employees’ roles, responsibilities and relationships are seen as key to bring about situations that enforce changed ways of thinking, attitudes and behaving. The stages are Armstrong (2014):
• Mobilize commitment to change through joint diagnosis.
• Develop a shared vision of how to organize.
• Foster consensus, competence and commitment to shared vision.
• Spread the word about the change.
• Institutionalize the change through formal policies.
• Monitor and adjust as needed.
Shaw’s model: looks at change in a different form. Change is seen as both complex and also evolutionary. The starting point for their (and a number of other more recent models) model is that the environment of an organizations is not in equilibrium. As such the change mechanisms within organizations tend to be messy and to a certain extent operate in reverse to the way outlined by Lewin. It is not appropriate to consider the status quo as an appropriate starting point, given that organizations are not static entities. Rather the forces for change are already inherent in the system and emerge as the system adapts to its environment.
PRODUCTIVITY: Productivity is an overall measure of the ability to produce a good or service. More specifically, productivity is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity and quality. Productivity may also be defined as an index that measures output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the output). As such, it can be expressed as: Hence, there are two major ways to increase productivity: increase the numerator (output) or decrease the denominator (input). Of course, a similar effect would be seen if both input and output increased, but output increased faster than input; or if input and output decreased, but input decreased faster than output. Organizations have many options for use of this formula, labor productivity, machine productivity, capital productivity, energy productivity, and so on.
