What is Organizational Change and Why is it Important?

by | Sep 28, 2021 | Knowledge Base, Knowledge Management, Project Management

Organizational change is something most businesses go through when something isn’t working quite correctly. In essence, organizational change involves altering a major component of a business’s organization to remain viable in the future. 

The process for organizational change isn’t easy, and some employees and managers may have a hard time adapting to these changes, especially when the changes affect these people directly. Still, organizational change is vital to keep a business working efficiently in the future.

In this article, we’re going to provide you with a quick overview of what organizational change is, and why it’s so important for everyone to understand it. The article is also going to show some specifics regarding what the different types of organizational change are, how a business can benefit from these changes, and how to prepare for these events.

What is Organizational Change?

To put it simply, organizational change is the process where a company or organization changes vital components in its operational methods, structure, strategies, or technologies. 

In essence, the company reviews the current structure it’s working with and determines whether it’s working efficiently or not. If there’s something in the management structures that aren’t going in favor of the company’s mission or vision, the team may have to undergo organizational change.

Organizational change is more common in small commercial enterprises since they have to continually adapt to larger competitors. Additionally, small businesses must learn how to adapt to current market environments. While big companies tend to adapt quickly to any sudden events, smaller ones may not have the same luck.

The business environment, in general, has changed at an incredible pace due to the internet. Today, businesses are changing every year to adapt to new trends, technologies, and requirements to keep operating efficiently. Overall, a business may have to go through organizational change at least once if it wants to thrive and survive in the future.

Many people fear organizational change due to the potential effect of these changes in their jobs. Here are some of the most common reasons why people resist organizational change:

1. Disrupted Habits

Most employees tend to fall into habits at the time of working. If you’re used to working a certain way, there’s going to come a time where you don’t think about how you organize your work schedule since you’re used to it. However, if you suddenly have to reconfigure your schedule to fit an entirely new schedule, you’re likely to resist the change.

In the case of organizational change, many employees may resist it since it could potentially change how they’re used to work. These employees are going to figure out how the new business structure works eventually, but it may still be uncomfortable for them.

2. Uncertainty

Depending on the changes, employees may feel uncertain. In cases of company merges, some job positions are likely to change or get eliminated. On the other hand, some positions may change.

Regardless of what happens, it’s common for people to feel uncertain and uncomfortable regarding change since they don’t know what’s going to happen to them.

3. Fear of Failure

Some employees may feel their performance on the job can change drastically once a change in the work structure comes. Overall, if these people are used to delivering good work continually, they may feel they aren’t going to be able to do it anymore under the new system.

4. Personal Impact

It’s important to note that not everyone resists organizational changes. If the changes impact a person’s job positively, they’re more likely to welcome these changes. 

5. Loss of Power

While it’s uncommon, some employees feel organizational change can affect their influence within the team. Even if the changes are positive for the company in general, some people may resist the change since it doesn’t benefit them directly. 

Organizational change is vital for companies to succeed, and it allows employees and managers to keep learning about what can make the company much better than the competition. These processes tend to be complicated for everyone, but as long as the company uses the right organizational change management, it’s likely to have an easier time with everything.

On the other hand, a lack of organizational change within a business can lead to failure. According to Robert Half in his report “Where Change Management Fails,” organizational change tends to fail in the execution phase due to improper communication.

What Triggers Organizational Change?

As mentioned before, there are many reasons why a company may have to undergo organizational change. Managers need to understand what factors can drive change within a business so that they can make the right decisions.

Here’s an overview of the most common reasons for organizational change:

Market Demand

In recent times, people have become less loyal to particular brands since there are dozens of options for the same product on the market. Companies must adapt to new market trends and offer a product or service that complies with these trends if they want to stay relevant.

A great example of changes in market demand is online shopping. Today, people prefer to shop online rather than going into a physical store since it’s much more comfortable. Many businesses that didn’t have online shopping alternatives before had to rush and create one to stay relevant.

On the other hand, people are currently looking for environmentally friendly products. This has made several businesses change their entire production process so that they could create an appropriate product for their customers.

Different Governmental Policies

In case the government makes any changes regarding what a company can produce or not, it must quickly adapt to these changes so that it doesn’t go through any legal problems. Some time ago, the Indian government banned the use of particular plastic types within the territory, making several companies adapt to these new policies.

New Technologies

Technology is one of the biggest factors that decide when a company must go through organizational change. Thanks to computers, portable devices, and the internet, people have automated many processes to make their jobs faster.

Some of the most vital changes in technologies include virtual collaborations and outsourcing. Several years ago, companies had to go through several processes manually, which was time-consuming and exhausting for clients.

Today, businesses have to adapt to any major technology changes so that they can make themselves more relevant to the general public. Otherwise, people may go for other, more modern alternatives.

Social Changes

It’s important to note that the demand for a product or service may change depending on the clients’ social environment. Depending on what the company’s goals are, it may need to go through some changes to adapt to its target audience’s needs. 


In cases of companies with several competitors, there may come a time in which the competitor may choose to innovate its product. While that isn’t a problem by itself, it may pose a danger to the other company. 

Companies must work fast to change their current strategies and work toward a product that is equal or better than the competitors’ new products. In essence, the company must try and give the product something that the competitor isn’t currently offering.

Some popular cases of innovation come from smartphone companies. Companies such as Samsung, Apple, and Google, are always changing strategies to offer better products to the market. 

Cost Cutting

There may be many reasons why a company may choose to cut down on costs. Regardless of the case, the company must do its best to change strategies correctly.


Some innovative ideas may not work for a company. In essence, innovating is a risk that all companies take every once in a while. When an idea fails, the company must work hard to learn from what happened and change the failure into success.

When it comes to turning failure into success, the company needs to have vision, strength, and patience. There are many companies, such as Apple, that made huge comebacks after failing with a product.

Mergers or Acquisitions

In case of a merger, both companies must change their strategies so that the work environment works equally for everyone. On the other hand, acquisitions may require the team to cut down some costs and change how some operations are made to adapt.

Mergers and acquisitions tend to cause staff changes, which is why some people may resist this type of organizational change.

Business Structure

Changes in a business structure are inevitable. If the business wants to thrive, it must go through organizational change at least once to meet the customer demand.


The need for certain products can change over time. Some products were designed to work the same for decades, but others not as much. Smartphones evolve each year, for example, and companies are required to adapt to newer trends to produce phones that cover people’s necessities.

Types of Organizational Change

There are five types of organizational change, and we’re covering all of them below:

Organizational Change

Organization-wide changes are considered the biggest ones on the list since they involve changing the company’s structure in general. These changes tend to affect the company’s organizational culture too, meaning it may also affect how employees react to these changes.

Transformational Change

Transformational changes involve reviewing the company’s underlying strategies and adapting them to new trends so that it stays relevant. These changes are more common in cases of major technological advances worldwide.

Unplanned Change

As the name suggests, these changes come whenever an unforeseen event comes up. Unplanned changes can be highly expensive and time-consuming since they require short-term solutions to the problem.

Personnel Change

Whether the company needs to hire more people or fire existing employees, these changes require an adjustment in the company’s general processes. In these cases, the company must do its best to disperse the workload equally among everyone.

Remedial Change

In essence, a remedial change is required whenever a problem is noticed in the company’s structure and needs a solution. These changes often come up due to poor company performance.

Benefits of Undertaking Organizational Change

While organizational change may seem scary for many businesses, it can bring several positive outcomes for everyone. In essence, it can make the company remain relevant among the competition for years to come.

It’s important to note that organizational change encourages motivation, adaptation, and it also helps to motivate staff members and employees to work harder and better. With proper organizational change management, a company can reach much better business opportunities in the future.

Other benefits of undertaking organizational change include the following:

  • Reduced employee stress or anxiety
  • Better control of change management costs
  • Coherence between the company’s values and operations

Key Stakeholders for a Successful Organizational Change

All members of a company are responsible for helping with organizational change. However, some high-level positions, such as executives, leaders, and managers, have the goal of driving the organizational change to the right place and ensuring everyone completes their task.

Leaders and executives are responsible for looking at the problem in general and developing a plan to make the transition as smooth as possible. Additionally, they must motivate everyone involved to support the process and put the right people in charge of the operation.

On the other hand, the project managers are responsible for implementing the executives’ plan as carefully as possible. Overall, the manager must be able to direct and shape the entire transition process.

Regardless of the role, both managers and leaders must know how to communicate efficiently and organize everything in the best way possible.

How to Prepare for Organizational Change

As mentioned before, organizational change may seem like a scary process for some people. However, as long as everyone prepares for it, the transition process is likely to be smooth.

Some of the most vital steps to prepare for organizational change include the following:

Share the Focus

Define the organizational change, why the company needs it, and how every employee can support the transition correctly.

Create a Detailed Plan

The plan must outline how the transition is going to go and how it’s going to affect everyone involved with the company. 

Follow the Plan and Measure Data

Managers must continually assess outcomes and measure data to ensure everything is going accordingly. In these cases, using knowledge management software is the best way to store, adjust, and distribute a company’s knowledge pool and data analytics.

Execute the Transition and Readjust Goals

The manager may need to readjust some goals depending on how the company’s knowledge base transforms during the transition process. It’s vital to note that the organizational change doesn’t stop until the transition is completed since there may be some unforeseen factors that affect how it goes.


Learning how to act in cases of organizational change is the key to ensure everyone adapts to the transition phase efficiently. If you know how to address every challenge that comes with a transition of this kind, you’re more likely to be successful with the process.

One of the best ways to optimize organizational change is through using knowledge management software since it assists with the creation and organization of your company’s data analytics. 

Making a company’s knowledge base easier to access makes it better for everyone involved with the transition, so keep it in consideration.

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