Today I will continue with the theme of organizational change that I started on in my last post by providing a brief overview of the key forces that drive companies to consider changes to their human resources, functional skills, technology, and organizational structure. The need to undertake some form of organizational change can arise from any of the same forces that define the environment in which companies must compete: competitive forces, economic forces, political forces, global forces, demographic forces, social forces and ethical forces. Examples of how each of these forces can impact organizational design include the following:
- Competitive forces generally require actions that will allow the company to keep up with and surpass the skills of competitors with respect to efficiency (e.g., cost of production), innovation and product quality and reliability.
- Economic and political forces continuously impact the market conditions and rules under which companies produce and sell their goods and services and will cause them to reconsider how and where they engage in production and sales activities. The rise of economic and political unions (e.g. European Union) and increasing use of free trade agreements has changed traditional notions of market entry strategies and provided foreign competitors with new advantages.
- Global forces are clearly important as companies expand into new foreign markets with different languages, cultures and business practices. Changes in the organizational structure will be required in order to allow companies continue to achieve the economies of scale and other advantages associated with global strategies while simultaneously acting like a local firm in foreign markets and satisfying the specific requirements of customers in each country.
- Demographic forces are important internal and external factors for companies. In the workplace companies must address the rising levels of diversity among personnel and must create and effectively administer managerial and reward systems that take into account the needs and expectations of employees drawn from a wide demographic spectrum. In the marketplace companies must be prepared to tailor their products and services to the unique demands of specific demographically defined customer groups.
- Social forces have a substantial impact on what employees expect and want out of their careers and the companies they select for employment. Employees have a keener interest in lifestyle balance that employers must consider accommodating and firms must also be prepared to offer employees more opportunities for professional development through training and job rotation.
- Ethical forces are continuously pushing companies to embrace socially responsible business practices and act in an honest and ethical manner. Laws and regulations pertaining to ethical behavior have proliferated in the United States and in many foreign countries and companies must establish and follow internal rules and procedures to ensure that laws are obeyed and ethical problems are brought to light, independently reviewed and positively resolved. Ethical forces are also at work when companies develop strategies to carry out their activities in ways that preserve the environment and respect the human rights of others (e.g., ensuring the foreign suppliers refrain from operating “sweatshops” and otherwise mistreating their workers).
The content in this post has been adapted from material that will appear in Business Transactions Solutions (2008) and is presented with permission of Thomson/West. Copyright 2008 Thomson/West. For more information or to order call 1-800-762-5272.