Why Organizations need to change

Why organizations need to change?

An organization is more inclined to change over which the law of negative entropy is necessarily applicable.

Law of EntropyAll systems “run down” and disintegrate unless they import more energy than they use.

Law of Negative EntropyFor its survival, a system is required to produce more output for certain enough inputs in order to continue the state of self-maintenance and keep the system from “running down”.

For the law of negative entropy to be true for an organization the organizations are required to be acting as an open system.

Open systems require two kinds of feedback, External Feedback and Internal Feedback.

Open System Theory of Organization

Environment and

Environmental

Trends

InputThrough

-putOutpu

t

Organization

Users

The CruxThe open system organizations amidst the dynamic environment have no other option but to respond to the environmental needs and adapt accordingly.

External interface feedback mechanismWhat does it specify?

Internal interface feedback mechanism.What does it specify?

Environment and Environmental Trends

Environment includes people, customers, suppliers, competitors, social and economic forces, government and regulatory bodies, technological conditions, financial institutions, other organizations, and special interest groups.

Environment affects organizations in three ways:It introduces demands

Environmental demands include, customer requirements and preferences determine the quantity, price, and quality of the offerings the organization can successfully provide.

It imposes constraintsEnvironmental constraints include input limitations like insufficient capital, technology, raw materials and HR, economic and political disorders, legal prohibitions rooted in government regulations, and market competitions.

It provides opportunitiesSuch as new market possibilities resulting from technological innovation, government deregulation etc.

Input

Input of an organization includes the elements that, in any point in time, constitute the set of “givens” with which it has to work with.

Inputs include capital, technology, raw materials, equipment and HR etc.

Throughput Throughput refers to the transformation process in the organization wherein the inputs are changed into outputs. It includes following elements:

The Work this general term is used to describe the

basic and inherent activity engaged in by the organization, its units, and its people in furthering the company’s strategy.

Understanding the work requires analysis of the nature of the tasks to be performed, anticipated workflow patterns, knowledge and skill it requires, the rewards it offers, and the stress and uncertainty it involves.

The Formal Organization

This is made up of the structures, systems, and processes each organization creates to group people and the work they do and to coordinate their activity in ways to achieve the strategic objectives.

The People

People’s importance in the organization is identified in terms of what knowledge and skills do they bring to their work? What are their needs and preferences, what rewards they expect to flow from their work?

The Informal OrganizationIt refers to unwritten guidelines that exert a powerful influence on people's individual and collective behaviour – encompassing a pattern of unwritten processes, practices, and political relationships that embody the values, beliefs, and accepted behavioural norms.

Output

It refers to the pattern of activities, behaviour, and performance of the system that is ultimate purpose of the system to produce.

Output of the system must align with the purpose and needs of the environment. If the environment does not need these outputs, the organization shall cease to exist.

Nadler’s Congruence Model of Organizational Change

Input

Environment

Resources

History

Strategy Work

Formal Organizati

on

Informal Organizati

on

People

Output

According to the Nadler’s congruence model of organizational change:

1.most of the organizations are open systems; rather than being closed, with permeable boundaries, in that they permit exchange of information, resources, and energy between system and environment. 2.Issues, events, forces, and incidents outside the organization are not viewed as isolated phenomenon, but seen as affecting the issues, events, and forces within the organization.

3. Within the organization, changing one part of the system influences other parts as well, so:

interaction between each set of organizational components is more important than the components themselves.

in result of a change in one set of organizational components, a new congruence among all components is to be achieved.

When organizations can afford status quo?

Organizations can afford status quo:1. When they act as a close system i.e.

Law of negative entropy is not necessarily applicable to them and they can survive without exchanging output for the input. They reside in protected environment and resources intake by them is converted into low-grade-energy/waste.

They are insulated from fluctuations of demand and supply. Though there seems no perfectly closed system organization, organization theories presented by Max Weber present organizations that are closer to this concept.

2. When organisations reside in a relatively static environment In static environment organizations soon attain the state of static homeostasis.

3. When organizations have monopoly in the marketwhen they are not required to compete with other organizations