Most Common Reasons Behind Organizational Change.

Changes in workplace demographics:

Inside most of the US workplaces, employee demographics have undergone a significant change in less than a decade. The baby boomers have retired in vast numbers, and millennials have joined the workforce. Changing workforce demographics is a considerable factor affecting the workflow as well as business processes and policies. The millennials are a tech-savvy generation with a very different set of preferences as compared to the previous generations in the US workforce. While they are tech-savvier compared to baby boomers, they also prefer other work arrangements and benefits. As baby boomers were ready to retire in large numbers, it led to a significant gap which organizations tried to fill by implementing retention plans. However, the demographic composition of the US workforce has changed a lot, and it has a significant meaning for US-based companies. To better cater to the expectations of the millennials, companies have adopted policies like flexible work hours, various types of non-financial benefits as well as modified their cultures to suit the composition of their workforce better.

Technology:

Technology has become the largest source of change in the twenty-first century. From the rise of the Google search engine to social media, AI, virtual reality, and several other small and large technologies, all of them have accelerated the pace at which the industry was growing. Technology has played a significant role in changing our world, and it was also the key factor behind the rise of tech giants like Amazon, Google, Facebook, Microsoft, and Apple. Technological evolution brought faster growth to the business industry, but it also brought higher competition to the business world. Since any new technological breakthrough introduced by a competing organization could help it gain a significant edge in terms of customer base and revenue. Technology also gave birth to a race that required businesses to always remain ready for one or the other kind of change.

Globalization:

Globalization brought both opportunities and threats for businesses, depending on their capability to adapt to the changes. GDPs of the various nations, their annual output as well as standards of living and costs of production differ from country to country. As a result, several companies in the developed nations found it cheaper to have their supply chains and production networks established in the developing or underdeveloped countries where both labor and raw materials were more affordable and available in plenty. Several of the large companies in the Western nations outsourced production to the Asian nations. While China rose as a single large source of raw materials and labor, it also grew to become a significant market where the companies from the Western nations could successfully find a large customer base for their products and services. India emerged as a central IT hub, and a large number of American companies outsourced their IT related work to the Indian companies. Several Western companies outsourced their software development to Indian companies like Wipro and Infosys.

Changing market conditions:

Market conditions can change due to various factors and apart from economic and technological, political, and social factors can also drive these changes. For example, digital technology has brought significant changes to the lifestyles of consumers worldwide. Other more significant changes have again happened worldwide, most of which relate to economic or technological factors. Changes in consumer demographics worldwide have also driven internal changes across organizations. Other types of changes in the social or business environments like the 9/11 attacks or the spread of the Coronavirus have also forced businesses to bring sweeping internal changes to be able to adjust. While a vast number of people have lost their jobs in the United States, several companies asked their employees to take unpaid leaves since their businesses shut down as a part of the lockdown. The spread of COVID-19 worldwide has caused massive to the global economy and resulted in losses worth trillions for businesses globally. Stock markets worldwide have taken a hit, and companies are forced to seek government aid. In this way, you can see the impact of market conditions on businesses and how they may require an organizational change to happen overnight. The current situation globally has made a very large number of businesses rethink their business models and react in a number of ways that they had previously never imagined.

Business Growth:

Business growth brings both opportunities and challenges. A startup will not always remain a startup and as it becomes successful or finds heavy growth, it has to bring internal changes to suit its new status. Moreover, as these organizations find more success over time they grow into more complex structures. The growth and evolution of Netflix is an example. Many times, the organizational processes and culture that were in place at the time of the foundation do not suit the same organization any longer. To avoid being caught in silos, organizations have to bring major organizational changes. With faster growth, new needs arise and businesses also need to restructure themselves to adjust to the new demands. For example, while Google was founded in 1998 as it achieved higher growth, the need for a parent company arose to hold several businesses owned by Google which led to the creation of Alphabet in 2015.

Poor Performance:

Poor performance can also require an organization to change since without a change growth might become impossible. A perceived threat in the immediate environment can also require an organization to change because if the company is unable to respond fast that will lead to failure and at last a complete shutdown. Several such startups have failed because they were unable to change according to the changing environment and the market situation. However, there is another key fact which is that the companies performing poorly generally find it easier to bring about an internal change than the successful companies which are in a competitively more robust position. In many cases, higher success also gives rise to overconfidence and inertia. What happens afterward is that successful companies start relying on the same strategy that made them successful. They keep doing the same thing again and again. It is also why younger organizations find it easier to bring about a change compared to the older ones. Take the example of Microsoft which remained caught in a void for several years and unable to emerge stuck with its core businesses. The situation changed with Satya Nadella as its CEO who helped the company emerge from that void by introducing a cultural change that helped Microsoft change its market image and build higher momentum.

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