TYPES OF ENVIRONMENTAL CHANGE & FACTORS AFFECTING ENVIRONMENTAL CHANGE

The change is the reality of every organization. To develop and progress, the firm
has to from time to time transform its ideology and strategy in an answer for the
environmental changes.

Change is inevitable in the life of an organisation. In today’s business world, most of

the organisations are facing a dynamic and changing business environment. They
should either change or die, there is no third alternative. Organizations that learn
and cope with change will thrive and flourish and others who fail to do so will be
wiped out. The major forces which make the changes not only desirable but
inevitable are technological, economic, political, social, legal, international and
labour market environments.

Most organizations have to change as part of keeping up with the competition or

adjusting to new market trends or technologies. Things such as mergers,
restructuring, technological advancements, process enhancements, changing
customer demands and new product lines are fairly common in today's business
environments.

There are many definitions of organizational change, out of which the following two
seem the most relevant: according to Grouard and Meston, organizational change is
“the process of radical or marginal transformation of the structures and
competences set up in the process of the development of the organizations
(Grouard and Meston, 1998); for Collerette, organizational change is "a relatively
sustainable change occurring in a subsystem of the organization, provided that this
change can be observed by its members or by those who are connected with that
system" (Collerette, Delis and Perro, 1997). "Organizational changes are answers to
some external forces such as changes in the market, different pressures in terms of
competitiveness, etc, or may be caused by some endogenous variables, such as
manager’s tendency to apply different methods / techniques (Burduș and
Androniceanu, 2000). Usually, institutions transform themselves in a rather
incremental way, and not discontinuously (North, 1990).

Types of Environmental Change

1. Individual Level Change

 Organizational change typically means that individual employees have to change

too. lndividuals may be required to change what they do or how they do it. It may
be required of them to change their attitudes towards their work or some
particular aspect of it.
 An organizational change if not well managed, may result in individuals feeling
demotivated and alienated and exhibiting defensive behavior.
 As organizational change involves individual and personal change, attention to
the individual in the context of the wider systemic change is critical for the
success of the change process.

 Individual level change may take place due to:

 changes in job assignment
 transfer of an employee to a different location
 changes in the maturity level of the person which occurs over a passage
of time

 As PINOY matures, he changes his personal outlook that will have a significant
impact on the organization.
 PINOY values and perception will affect group behavior that will influence the
whole organization.
 Managers of the organization must not treat PINOY in isolation but he must
understand that the working PINOY’S level of change has repercussions beyond
his individuality.

2. Group Level Change

 In implementing any change, management must consider the group of people in
the organization as the group influences the organizational climate.
 The group in the organization can be formal or informal.
 Formal group like labor unions can always resist change that will
affect the work performance of the organization.
 Informal groups like regional associations of ILOCANO, VISAYA,
TAGALOGS, PAMPANGOS and all others can pose a major barrier to
change because of their inherent strength.
 Changes in the group level can affect workflow, job design, influence and social
and communication system.

3. Organizational Level Change

 The organizational level is the level whereby the organization as a unified

corporate identity competes in a competitive socioeconomic environment to
provide a service and be profitable.
 Finally, the most complex of all is the unified effort of all participants in an
organization towards the goal of making that organization profitable, growth-
oriented and functional in its external socioeconomic environment.
 These levels of change are made by top management that affect both PINOY
and his groups.
 These are major programmed changes that occur over a long period of time and
require considerable time for planning for implementation.
 The different types of organizational change are:

a. Strategic Change

 Strategic change involves making changes to the overall goals, purpose, strategy
or mission of an organization. It is a major upheaval to how the organization
conducts business. Changes to things such as what products or services it offers,
 the target customer segments or markets it tries to reach, how the company
distributes its products or services, its position in the global economy and who it
will partner with for manufacturers, distributors and other logistical needs are
just some examples of strategic changes.
 As the business condition and environmental change brought about by
advancement in technology and the economy, organization changes its basic
objective to multiple objectives.
 Strategic change could lead the organization to vertical or horizontal expansion
or changes in business direction.
 Expansion in the market or global marketing could be an option for strategic
change.

b. Structural Change
 Organizations often find it necessary to redesign the structure of the company
due to influences from the external environment. It is concerned with the overall
goals and purpose of the business, and any changes in the vision and mission of
the organisation. Structural changes involve the hierarchy of authority, chain of
command, job structure, goals, structural characteristics, administrative
procedures, and management systems. Almost all change in how an organization
is managed falls under the category of structural change. Circumstances that
usually create the need for structural change include mergers and acquisitions,
job duplication, changes in the market and process or policy changes. 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.
 Organizational structure is the pattern of relationship among various position
holders.
 Structural Change involves changing the internal structure of the organization.
 The changes could be seen in authority structure, work assignments or inter-
departmental relationships.
 It is usually brought about by expansion or contraction of operation.

c. Process Oriented Change

 Organizations may need to reengineer processes to achieve optimum workflow

and productivity. Process-oriented change focuses on new technologies, new
skills and operating processes. It 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.
 The changes are brought about by technological advancement in automation,
information processing with the use of advance computer system, advancement
in communication that allows organization to hold conferences right at their
respective offices and use of robotics in the manufacturing operations.
 This means replacing or retraining personnel, heavy capital equipment
investment and operational changes.
 This would affect the organizational culture and hence changes in the behavior
patterns of members.

d. People Oriented Change

  People-oriented change relates to employee performance, skills, attitudes,
behaviors and relationships.
 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.
 Changes in people describe changes in employee’s expectations and
perceptions. Main purpose of these changes is to improve performance of the
employees, enhance their efficiency towards the company, their relationships
with managers and the group cooperation.
 People oriented change could be the most difficult change needed by the
organization.
 These changes are directed towards better work performance, group
coordination, work values, dedication and loyalty to the organization.
 It requires training and organizational interventions.
 It involves team building activities and behavior medications that will change
people perception about their organization and the work in general.

Change in the organization is necessary as it must move along with the business
environment. The first three types could easily be made by the organization but the
most crucial is the change in people’s behavior. People have different sense of values,
attitudes and perception.

Factors Affecting Environmental Change

 There are number of factors both internal and external which affect
organizational functioning in its business environment.
 The major forces which make change not only desirable but also inevitable are:
technological, economic, political, social, legal, international and the labor
market.
 The more important factors are:

1. External Factors

 External forces for change originate outside the organization.

 No organization is an island as it must interact with others the total environment.
 Each organization has its goals and responsibilities related to each other.
 The present day environment is dynamic of change and organization has to
adapt to these changing conditions. Such changes may result in major functions
of production process, labour-management relations, nature of competition,
economic constraints, and many others.

The change necessary may be seen in the following context:

 a. Technology

 Changes in technology required the modification of the techniques and

equipment, which are used in the process of evaluating the firm. Especially, the
alterations of the technology occur in one area of the organizations, where the
number of improvements is incorporated into technological devices in order to
support better quality operations.
 Changes in technology by introducing computers and industrial robots that allow
rapid resolution of complex problems in production and management, helping to
reduce costs and improve quality.
 Changes in technology makes work easier and increases production. It changes
work structure that needs new balance and equilibrium in the work environment.

b. Marketing conditions

 Since every organization exports its outputs to the environment, an organization

has to face competition in the market. There may be two types of forces which
may affect the competitive position of an organization –other organizations
supplying the same products and, buyers who are not buying the product. Any
changes in these forces may require suitable changes in the in the organization
 Technology improves products and services and customer wants and needs vary
as to quality and cost. Organizations exports its products to all sectors of the
environment and therefore competition in market conditions exist.

c. Social Change

 Social changes reflect in terms of people’s aspirations, the needs and wants, and
their ways of working. These changes occur due to several forces like level of
education, urbanization, feeling of autonomy, and international impact due to
internet, social network and other information sources. These social changes
affect the behavior of people in the organization. There, it is required to make
adjustment in its working so that it matches with people.

d. Political and Legal Changes

 Political and legal factors broadly define the activities which an organization can
undertake and the methods which will be followed by it in accomplishing those
activities. Any changes in these political and legal factors may affect the
organization operation.
 New laws and regulations are made by the government in terms of
environmental changes, taxes, and other mandated regulations on wages and
working conditions. Any change in political and legal factors may affect
organizational operation.

2. Internal Forces
 It is not only the changes in external factors, which may necessitate
organizational changes; any change in organization’s internal factors may also
necessitate changes.

a. Change in Managerial Personnel

 Besides environmental changes there is a change in managerial personnel. Old

managers are replaced by new mangers, which necessitated because of
retirement, promotion, termination, resignation, transfer or dismissal. Each new
manager brings his own ideas and way of working in the organization. These
need adjustment in human relationship among workers. The relationships, more
particularly informal ones, changes because of changes in managerial personnel.
Moreover, attitude of the personnel change even though there is no changes in
them. The result in that an organization has to change accordingly.

b. Deficiency in Existing Organizational System

 Sometimes, changes are necessary because of deficiency in the present

organizational arrangement and process. These deficiencies may be in the
form of unmanageable span of management, large number of managerial
levels, lack in co-ordination between various departments, obstacles in
communication, multiplicity of committees, lack of uniform policy
implementation, changes due to managerial re-engineering and re-
organization, lack of cooperation between the line and staff, and so on.
Beside these internal factors, there are two more internal factors that give
rise to organizational changes.

c. Nature of Work Force

 The nature of work force has changed over a passage of time. Different work
values have been expressed by different generations. Workers who are in the
age group of 50 plus value loyalty to their employers. Workers in their mid
thirties to forties are loyal to themselves only. The youngest generation of
workers is loyal to their career. The profile of the workforce is also changing fast.
The new generation of workers has better educational; they place greater
emphasis on human values and questions authority of managers. Their behavior
has also become very complex and leading them towards organizational goals is
a challenge for the managers. The employee turnover is also very high which
again put strain on the management.

d. Organization Avoids Developing Inertia

 In many cases, organizational changes take place just to avoid developing inertia
or inflexibility. Conscious manager take into account this view of organization
that organization should be dynamic because no single method is effective at
any single time. Thus, changes are made so that the personnel, with proper
planning and consultation, develop liking for change and there is no unnecessary
resistance when major change in the organization are brought about.