Role of leadership in organisational change

Introduction:

Globalisation is shrinking the gap and increasing the competition between organisations. The constantly changing environment modifies the dynamics of standard business practices. Internationalisation has increased global competition, which brings both positive and negative impacts on an organisation’s performance. In addition, external factors as an increase in consumers’ buying power, changes in customer demands, and fluctuations in profit margins have caused organisations to undergo rapid change. Moreover, increasing advancements in technology, high consumer demands, and changing market conditions present organisations with constant challenges to continuously reassess and re-evaluate how they operate and to understand, adopt, and implement changes to their business model to cope with these changes. Thus, organisations that are not persistent in change may find it difficult to survive. Hence, effective leadership is a must to adapt in the process of organisational change in the most appropriate ways that can also help to cope with current and future trends and gain sustainable growth. Additionally, a successful organisational change can result in innovation, which is critical for long-term success. Therefore, developing effective strategies and planning to implement a successful organisational change is imperative.

In primary terms, leadership is a process by which individual influences a group of individuals to achieve a common goal (Northouse, 2004). The five elements of leadership within organisational change include motivating change, setting a vision, building political support, managing transition, and maintaining momentum (Cummings and Worley, 2003). Leading effectively encourages internal stakeholders and minimises the risk of change in the organisation. In the face of change, leadership extends support to internal and external stakeholders and structures a plan that improves performance during the necessary transition. An organisational change requires leadership that identifies the issues and opportunities that lead to innovation, progress, and sustainability. This paper will discuss the characteristics of organisational change and its importance. Further, it will debate the role of leadership during the phase of the changes.

Organisational change and its importance: 

Generally, a business organisation is a group of people who work together to achieve common goals that benefit the organisation and provide goods and services to their customers. Organisations fall into two major sectors, namely, private and public, in which senior management and owners are the controlling parties. Firms can also operate in the profit or the non-profit sector (Robin & Langton, 2010). The term organisational change refers to the transformation of operations in the business that is encouraged by failure or success. Organisational change is the set of actions that result in shifting directions or processes that affect how organisations work before (Hage, 1999). Specifically, the organisation’s change process consists of three phases. These are unfreezing, moving and refreezing (Senior & Fleming, 2006). The change process usually consists of three aspects. These are unfreezing, moving and refreezing (Senior & Fleming, 2006). Thus, the most vital element of any change is to create a need for change among the participants. In the first unfreezing phase, the change within an organisation can be small or large, resulting in a change in the attitude of employees and the working environment. Hence, appropriate leadership will provide guidance and increase the commitment of stakeholders towards the change. Secondly, the moving phase is an integral part of the decision making during the change process. At this stage, it requires identifying the problem or opportunity and planning the strategy accordingly. Thirdly, during the last refreezing phase, the leadership and management initiate implementing strategies. Therefore, to achieve adequate results, all participants must be monitored and controlled. These measures will enhance the performance and prevent future drawbacks.

An organisation may be motivated to adapt to change due to various internal or external factors, such as market pressure, technological advances, and economic factors. An organisational change helps improve the effectiveness of a company’s operation by keeping up with market trends. Moreover, a change in an organisation can provide different significant benefits, such as enhancing competitiveness, increasing financial performance, improving employee satisfaction, and leading to continuous improvement and sustainability. Hence, such change will extend benefits to both the organisation and stakeholders. Additionally, the change process might be challenging and complex, but it is essential to deal with market competitiveness and diversity. Further, the organisation’s new vision, goal and objectives will help manage internal and external stakeholders’ expectations and demands, which is also essential for the business to survive in the market.

A role of effective leadership in organisational change: 

An organisational change can be pre-planned or unexpected. Hence, effective leadership is crucial to handle the change process with a positive and long-term vision. In addition, to be successful in organisational change, leaders must possess the capability of dealing with challenges such as resistance, confusion, exploration, and commitment. The stages of change are associated with some predictable behaviours, and an effective leader will always perceive and respond to changes appropriately to get the team’s commitment. Leadership involves several competencies that can assist in managing others’ skills, knowledge, and capabilities in an effective manner.

Figure 1 Adapted from (Pagon, Banutai and Bizjak, 2008).

The above table mentions prime competencies that are necessary for the process of organisational change. Further, leadership competencies have a significant impact at each stage of a change which strongly contributes to positive outcomes in organisations. Moreover, leadership skills are required to overcome the resistance and manage the implementation. Therefore, a leader needs to adopt a constructive leadership approach according to the level of change. There are four kinds of leadership styles: commanding leadership style, logical leadership style, inspirational leadership style, and supportive leadership style. These all-leadership styles have strong relationships with the development of change. Hence, leadership styles can make a significant difference in handling change in organisations. Leadership focuses on radical changes and innovations, and leaders have a broader vision. This vision involves actions that help leaders implement change.

Furthermore, leadership plays an integral role in setting up an appropriate environment within the organisation before implementing the strategy since it can help stakeholders become familiar with the changes ahead.  Likewise, leaders can also assist in identifying elements of organisational change as the need for technological advancement and upskilling of the workforce. Similarly, leadership can also motivate employees using different strategies. However, a leader’s approach can be limited to organisations internal changes, though external factors such as political, economic, environmental and social can also have a significant effect on organisations performance that can be challenging for a leader while implementing an organisational change.

Conclusion: 

To conclude, the prime intention of organisational change is to drive the business towards betterment. In today’s competitive environment, change for organisations is necessary to deal with the diversities and the complex market situations (Ulrich, 1998). Additionally, when organisational changes are well planned and carried out in a structured manner that leads to continuous improvement and innovation (Boston.MA, 2000). The change process can be challenging and demanding at the same time. Hence, a leader’s ability to understand the need for change in an organisation is vital. Leadership is also essential to understanding the gap in an organisation and identifying opportunities that arise from change. A leadership style plays an active part in the change process by exploring outcomes from various factors such as employee satisfaction, organisations performance, and current strategies outcomes. Likewise, leadership involves creating awareness about the need for change, finding ways to improve and exploring growth and development opportunities for the firm and stakeholders. Overall, leadership involves creating awareness about the need for a change in the company for the improvements and the opportunities it offers the company and stakeholders. Leadership is also a process of delivering change to an organisation. Hence, leadership’s capability to motivate and influence internal stakeholders in an organisation leads to a change that produces better commitment and outcomes.

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