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Importance of Change in an Organization
About 70 percent of significant changes implemented by firms, such as mergers and quality improvement initiatives, fail, according to Rick Maurer of Maurer Associates. Resistance from employees is one of the major reasons that change initiatives in most businesses fail. Reasons behind this resistance include fears of job lay-offs, increased workload, contentment with the status quo and poor understanding of the need for change. Business owners should effectively manage the change process to counter this resistance.
Change is important in coping with emerging technological advancements in the society. Transforming the business in line with new technologies helps it to edge out its competitors, thanks to increased productivity. The introduction of CDs in the 1980s is a prime example of the significance of change in technological developments. Record firms that adopted this technology realized profits because producing CDs was cheaper than LPs. Incorporating change in line with technology helps the development of new procedures for carrying out various needed tasks.
Change becomes a necessity when an organization finds itself in a crisis. It helps it rectify some of its processes or activities that may have become ineffective. Initiating changes to discard these processes assists the organization to withstand the turbulent times. Furthermore, the changes spare the firm from extra expenses of sustaining the ineffectual processes. The understanding of that change is important in combating challenges such as fears of lay-offs, incompatible corporate cultures and increased turnover – which often arise from acquisitions and mergers.
Change helps the organization cope with globalization, which can be a threat or opportunity. Globalization has made it possible for companies to produce goods and services at lower costs in some areas than in others. In coping with globalization, businesses need to understand the cultural and regional differences in various markets. Such an understanding equips them with the knowledge to develop strategies for these markets. Other external factors that warrant the need for change include decreased or increased market opportunities, legislation and competition.
Many companies initiate change to improve their organizational culture. Changing the organizational culture, which could include basic beliefs, values, feelings, and internal and external relationships, can improve its efficiency and productivity. Effective organizational culture also attracts new customers, increases customer satisfaction, reduces costs of operations and increases worker retention. The top management of the organization is responsible for driving the culture change and needs to incorporate the workers in implementing these changes. Business owners need to retain the commitment of their employees during the process.