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Workplace Re-Organization and Its Effects

Last reviewed: June 7, 2010 ~14 min read

Workplace Re-Organization and Its Effects on the Welfare of Employees

Organizational change has gained incremental momentum within the specialized literature of the past recent years. The dimensions of organizational change are numerous, including elements such as the necessity for change, the actual plan of change implementation or the management of change and its impacts. The academic community generally agrees with the incremental role played by organizational change within the contemporaneous business society. Offering a definition of organizational change is a highly challenging task and this difficulty is pegged to the complexity of the process on the one hand, and the perception that the term of organizational change is clear and does not require a formal definition, on the other hand. Some authors will simply commence their discussions of the desired dimensions of organizational change, whereas others will strive to offer a definition. In this light of events, some notable definitions or organizational change include the following:

1. "Organizational change involves, by definition, a transformation of an organization between two points in time" (Barnett and Carroll, 1995).

2. "There are several types of changes in ones organization. They are changing nature of the workforce, technology, economic shocks, competition, social trends and world politics" (Eric, 2008).

3. "Change initiatives […] range from corporate restructuring and the replacement of key personnel through to the minor modification of basic operating procedures" (Dawson, 2003).

4. "Organizations are not the same all the time. They do adapt to circumstances. This process of becoming different in order to adapt to new assumptions can be defined as a process of organizational change" (Langer, Alfirevic and Pavicic, 2005).

Once the meaning of organizational change is offered -- or implied -- the authors move on to the discussion of the change dimensions of interest. One such dimension refers to the time frame in which change occurs. While some organizational leaders still implement change as a sporadic event, others argue that the change process is an integrant party of the business model and that change is an ongoing process. From this latter standpoint, change is no longer perceived as a temporary event, but as an ongoing business model by which the company managers strive to improve and consolidate their competitive positions.

Authors Karl. E. Weick and Robert E. Quinn (1999) reveal the growing concern over the increasing pace of organizational change. They argue that a discrepancy occurs in the nature of change, which is now perceived in a dual mode. On the one hand, organizational change is perceived as a sporadic event, which occurs every now and then. On the other hand, it is perceived and implemented as a continuous process. In order to settle the debate, the two authors analyze change from different standpoints, such as conducting an analysis of the organization through the lenses of change implementation, or the identification of the nature of organizations implementing sporadic and ongoing change.

A noteworthy element in their article Organizational Change and Development is constituted by the comparison of sporadic and ongoing change through four distinct lenses -- metaphor of organization, analytic framework, ideal organization, intervention theory and the role of the change agent. This analysis is briefly revealed in the table below:

Sporadic change

Ongoing change

Metaphor of organization

Organizations are inertial and change is infrequent, planned and discontinuous

Organizations are emergent, change is seen as evolution

Analytic framework

Change is driven from the external environment; it is dramatic and disrupts equilibrium

Continuous small and large responses to emergent features, organized under continuous change and adaptation

Ideal organization

The ideal organization is able to continually adapt

Intervention theory

Three levels

1. Unfreeze -- preparation for change

2. Transition -- implementation of new knowledge, values and other change components

3. Refreeze -- solidification of change

Three levels:

1. Unfreeze -- identify the need for change

2. Rebalance -- implement change

3. Refreeze -- solidification of change and the search for new change opportunities

Role of the change agent

The change agent creates the change

The change agent redirects the change process

At the end of their analysis, Weick and Quinn conclude that episodic and continuous changes are both present within the business community and that they are implemented by organizations with distinctive features. Additionally, they find that both types of change are generated by an internal failure to adapt to a specific phenomenon and that, in spite of a theoretic separation of the two types of change, the process of change is in fact ongoing. "Our review suggests both that change starts with failures to adapt and that change never starts because it never stops" (Weick and Quinn).

In response to the statement that the reactions of the organization to change differ in relationship to the nature of the firm, this conclusion seems to be enforced by Bob Hamlin, Jane Keep and Ken Ash (2001) in their Organizational Change and Development: A Reflective Guide for Managers. The three authors reveal that the employees in public institutions are more reticent to change than the employees in private institutions. The table below reveals the various degrees of change acceptance and its impacts across different types of organizations:

Table 1: The impact of change on loyalty, morale, motivation and sense of job security by type of business:

All

Charity / non-profit

Family owned businesses

Partnerships

Private limited companies

Pic's

Public sector

Effect on loyalty

Increased

Unchanged

Decreased

Effect on morale

Increased

Unchanged

Decreased

Effect on motivation

Increased

Unchanged

Decreased

Effect on perceived job security

Increased

Unchanged

Decreased

Hamlin, Keep and Ash

Aside the nature of change, another important dimension in the analysis of the process is represented by its impacts on the various categories of organizational stakeholders. In terms of customers, organizational change processes have the ability to increase the levels of client satisfaction through an increase in the quality of the products and services offered. After conducting a study on the means in which organizational change in the banking sector impacts customers, Gagandeep Kaur at the Panjab University concluded that "banks can create customer satisfaction by exhibiting trustworthy behavior, showing genuine commitment to service, communicating information to customers efficiently and accurately, delivering services competently, handling potential and manifest conflicts skillfully, and improving overall customer relationship quality" (Kaur). The academician also argues that organizational change can have a positive impact on the levels of employees' on the job satisfaction.

In terms of the staff members however, these will often reveal a reticence to change, which will delay the successful implementation of the process. The most commonly forwarded reason for the reticence employees reveal relative to change is that of their fear of the unknown. Yet, this constitutes a mere section of the reticence rationale. At a general level, the reticence to change is generated by the realization of a change in the job processes; by a reduction in the economic security of the job; by a psychological threat (be it real or perceived); by the disruption of social arrangements or by the lowering of the employee's status within the organizational context (Dawson).

At a more specific level, Patrick Dawson identified a total of 13 reasons which create reticence to organizational change. They are revealed below:

1. The inability of the employees to comprehend the problem

2. The dismissal of the solution in favor of another alternative

3. The employees' sentiment that the proposed solution would not lead to the established objectives

4. The personal costs in accepting the change are unacceptable

5. The rewards in embracing the change are insufficient

6. The employees are afraid that they would not be able to cope with the new situation

7. The change reveals the risk of disrupting the current social arrangements

8. The sources of control and influence would be eroded

9. The change would integrate new values and practices

10. The employees reveal a reduced willingness to change

11. The employees feel that the managerial rationale for change is suspicious

12. The new change proposal is undervalued in comparison to other interests, and last

13. The change would reduce the professional power and opportunities for the employees (Dawson).

Most of these change resistance roots are addressed through the practice called organizational change management. Through this practice, organizational leaders strive to decrease the reticence to change and create an environment in which the impacts of the change are positive on all categories of stakeholders, including the staff members. Yet, in spite of these efforts, negative impacts can still occur. The specialized literature offers various instances in which the change process (including organizational or department restructuring) impacts the organizational employees.

In the incipient stages, change causes reticence and this reticence is mostly obvious in the case of the more mature group of employees. While the younger staff members are more opened to change and will embrace it as a new career opportunity, the older population is simply looking to perform its current tasks into retirement. When reticence occurs among the younger population, it can be reduced through change management programs. The reticence of the more mature population cannot however be reduced as it a deep rooted within the individuals.

A second impact, obvious at the level of all employee groups, is that of strain creation. Fedir and Herold argue that organizational change creates two sets of strains. The first set is given by the possibility for the change to modify the job specifics. In other words, the employee is worried that modifications would be incurred in the way in which he/she conducts his daily work responsibilities. The second set of strains is created by the poor management of the change. In other words, employees accept the fact the organizational change would materialize in several impacts on their jobs. Yet, they need to feel a certain degree of security and this is given by an adequate managerial act. When the managerial team is unable to adequately manage the modifications brought about by the implemented change, the employees' emotional well-being would be negatively affected.

At the third level, the study by Donald B. Fedor and David M. Herold assesses the impact of change from the standpoint of the multitude of modifications it would imply. The two authors find that employees are more accepting of a minimal change which improves their working conditions. In such an instance, their loyalty to the firm increases. Vice versa, when a major modification occurs, the loyalty of the employees towards the employer decreases, even if the employees ultimately accept the change. "Somewhat ironically, while the participating employees reported reasonable acceptance of the change being implemented, they also seemed to become less committed to the organization. Moreover, the highest commitment occurred when the change was seen as good for the work unit, there as a lot of change at the work unit level, but little direct job impact. Ergo, employees like lots of beneficial change that also leaves them relatively untouched. In contrast, the greatest decrease in organizational commitment was reported when a somewhat minor change was seen as good for the work unit, but the personal job impact was high" (Fedor and Herold).

Wilfred J. Zerbe, Charmine E.J. Hartel and Lea M. Ashkanasy (2008) strongly believe that organizational change has a significantly strong negative impact of the emotional welfare of the employees. This belief is constructed on the fact that change is a primer generator of stress for both managers as well as employees. They base their conclusions on several previous studies which detailed on particular aspects of specific organizational changes, such as downsizing (Brockner, 1998 and Torkelson and Muhonen, 2003), job redesign (Mak and Muller, 2001) or mergers (Buono and Bowditch, 1989). All these studies indicated that organizational change has a negative connotation among employees, whose emotional well-being is affected to a deep level. The stress associated with the change would then take a negative toll on the employee's family life and on his mental and physical health. In the very words of the authors: "collectively, this research demonstrates that organizational change causes chronic occupational stress hat has carry-over effects on family functioning, psychological health, physical health, job satisfaction, organizational commitment, and loyalty. There are several social, cognitive and psychological consequences of organizational change that have a negative impact upon employees' affective well-being" (Zerbe, Hartel and Ashkanasy).

In spite of these findings, the three authors mention that the negative impact would only be felt in the short-term. In the long-term however, the company manages to integrate the modifications and become more competitive. This in turn leads to beneficial impacts for the staff members, such as reduced workloads, increased salaries or an increased job security.

In terms of the specific change of organizational restructuring, the three authors mention that the process follows in the same footsteps as any change process and generates a series of negative implications upon the emotional well-being of the staff members. "Organizational restructuring is associated with decreased job security, role conflict, ambiguity and uncertainty and decreased social support as work teams are redistributed" (Zerbe, Hartel and Ashkanasy, 2008).

The specific aspect of organizational change as organizational restructuring is less discussed than the actual change process, meaning as such that the specialized literature on the impact of organizational restructuring on employee well-being is limited. Yet, there are some sources which discuss the topic. Grace Lee and Albert Teo (2010) for instance look at the impacts from two standpoints -- the trust of the staff members on the job satisfaction. The findings indicate that organizational restructuring generally impacts these two elements in a negative manner as the employees' on the job satisfaction and their trust in the employer decreases with the implementation of change. Still, the authors conclude that these negative impacts can be counteracted with an adequate change management program.

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