Factors Affecting Change

Change is the essence of life. Organization that does not anticipate or respond to change will not be successful in the long-rum. The factors that necessitate change fall into two categories:

1. Internal Factors:

Factors internal to organization that cause change are as follows:

(a)    Efficiency:

Organizations want to perform better than competitors, earn more profits for themselves
(in the form of retained earnings), employees (increase in salary and bonus) and shareholders (increase in dividends). This is possible if they consistently review their policies and reorganize their present structure. Change is, therefore desirable to achieve higher level of efficiency.

(b)    Control :

People at high managerial posts want retain control over organizational activities. They have their own philosophies and ways of working. They introduce new organization designs and control system which is followed by everyone in the organization.

(c)    Leadership:

Dynamic managers introduce change because they want to lead the market. Change in one business forces others to adopt the changes.

(d)    Internal pressures:

Attitudes of employees also enforce change. Workers’ dissatisfaction with the working conditions, pay structures and inter-personal relationships reflect negative behavior towards managers which may force them to change their policies, procedures and strategies. Change is, therefore enforced to develop cordial relationships in the organization.

(e)    Change in work force;

Changes in managerial persons (when new managers join in place of retiring managers) also require the organization to change its values and philosophies. Changes in operative persons (new workers who are more educated, skilled and competent) also require the organization to change its values and beliefs to match those who join the organization. There may be changes in leadership styles and motivation systems.

(f)    Internal inefficiencies:

Organizations may change their structures because of internal inefficiencies like imbalance between narrow and wide span for management, centralization and decentralization, line and staff relationship, internal and external environment etc. Improvement in these areas requires changes in organization structure.

2. External factors:

Survival of organization depends on its active interaction with the environment. Some of the external factors which affect change are as follows:

(a)    Market factors:

Various market force soft demand and supply, changes in consumer tastes and preferences. Policies of competitors, better products and suppliers force organizations to change their policies.

(b)    Economic factors:

Changes in economic conditions; exchange rate and interest rate fluctuations, changes into the fiscal and monetary policies, inflation and cost of living necessitate changes in the organizational policies also.

(C) Social factors;

The norms for pollution, workers’ safety and working conditions, health consciousness, geographical movement of worker, changes in their age composition are the social factors that necessitate changes in the organizational policies.

(d)    Technological factors:

 The modern world has constantly changing technology, information systems, and computerization and decision support systems. If organizational fails to update its technology and management information system, it will not be able to survive in the market.

(e)    Political factors:

Business enterprises and Government actively interact with each other. Changes in government policies with respect to taxation and corporate governance, new laws and court decisions require the organizations to change their policies according to these regulations.

(f)    Natural factors:

Natural calamities like floods and earthquakes also require changes in the policies of the organization.

(g)    Educational factors:

Educated employees, shareholders, lab our unions, customers and suppliers tenure organizations to change their structures to come up to their expectations.

(h)    Global factors:

Globalization and liberalization require changes in the policies of organizations to compete with multinational corporations operating in their home country and also enter the international markets.

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