For each organizational change, there is a force, cause, or source of those organizational changes. Whether it is the pressure from the environment, or whether it is internal pressure, each organizational change has its cause, a cause that is the source of these changes. What is it that make small businesses and entrepreneurs real successful? This is flexibility. Flexibility means that entrepreneurs quickly change themselves and the business. Each entrepreneur must establish a system through which they would follow possible sources of change and without delay will make the adjustment in their work.
Organizational changes do not appear from themselves. For any process of performing something, there exist a reason, and the process is the result of that reasons. If the reason does not exist for some process or action, then logically there will not be the need for that process or action. Because of the continuity of the organizational changes in the life cycle of business, there will always be reasons for these organizational changes. This cause (forces) is calling sources of organizational changes.
External Sources of Organizational Change
On the basis of how we classify environment, we can determine the areas that are external sources of change.
The environment has following areas that are external sources of organizational changes:
- Economic. These are competitors, suppliers, interest rates, unemployment, income settlement, credit policy, gross domestic product, inflation, the level of international trade … All these factors affect on the need for changes in the organization. You need to track them in order to make the right decisions for change.
- Technology. Technology is the use of knowledge, methods, techniques and means that transform inputs into the output in one organization. The rate of technology effects as external sources of organizational change varies from industry to industry. Each entrepreneur must follow the development of technology in its industrial branch and to use the latest achievements in the development of their own business. It will ask for organizational changes.
- Socio-cultural. The external environment as a source of organizational change present peoples values, habits, norms, attitudes and demographic characteristics. Every society has different sociocultural characteristics based on the region, ethnic basis, settlement, etc. All these different factors affect the business.
- Political. This area as an external source of organizational change deal with the laws and bylaws retrieved by the parliament as well as regulations issued by the government. Political area contains elements such as legislation, the stability of government, strikes, political situation in neighbouring countries, taxation… These sources of change must be respected by entrepreneurs and must be incorporated in the work of their companies.
- International. Country where exist company is a narrower environmental of that company, but the wider environment as internationally, recently had an increased impact on the business because of the increasing globalization of markets. What happens on the global market affects every business. The global crisis presents an example, which currently holds the whole world.
Internal Sources of Organizational Changes
Internal sources of organizational changes are forces which appear in the interior of the organization. Controlling these organizational changes is easier for entrepreneurs and managers because they are from inside the organization, something that according to the function, management control.
As well as in external resources, we can use the same way in defining internal sources of change based on the internal environment of the organization. What is the internal environment of the organization? Most simply, the internal environment of the organization is all that is within the organization. Organization as a system, consists:
Peoples are that who carry out all activities in the organization. We can have the best structure and the best process, but without people in the process of transformation of the input to the output, we will not be able to perform anything. People in the organization can be managers or employees, but all they represent a source of organizational change. Employees are they which must take the initiative to change their work places, or changes in work tasks for more efficient and effective performance.
The structure of the organization does not allow the appearance of chaos in the work. It gives the mutual relations of all components of the organization. Organizational structure defines the place of employees in the organization according to the hierarchy and the role of them through the rules, norms and procedures. Over time, organizational structure can not answer to the needs for efficient and effective work of the organization and become internal source of organizational change.
Processes in an organization represent all the activities in order to transform input to output, and that will have a value for consumers. Processes in the organization can be different, and now we’ll show some of them that are most relevant to business:
- Technological process is a process that transform raw materials into the products or services.
- The decision-making process is a choice of direction of the people.
- Communication process is the dissemination of information between people in the organization.
- Management process – management as a process-managing people in the direction of fulfilling the organizational goals.
These processes are the sources of internal organizational changes, because any problem will seek a solution, which is a new way of functioning of the process or organizational changes.