Factors affecting Organizational Change; Change is inevitable in the life of an organization. In today’s business world, most of the organizations are facing a dynamic and changing business environment. Also Learn, What are the Participation and Organizational Change? Factors affecting Organizational Change, External, and Internal. They should either change or die, there is no third alternative. Organizations that learn and cope with change will thrive and flourish and others who fail to do so will be wiped out. The major forces which make the changes not only desirable but inevitable are technological, economic, political, social, legal, international, and labor market environments.

Explain are Factors affecting Organizational Change, Difference between External and Internal Factors. 

In very simple words, we can say that change means the alteration of the status quo or making things different. “The term change refers to any alterations which occur in the overall work environment of an organization.”

“When an organizational system is disturbed by some internal or external force, change frequently occurs. Change, as a process, is simply the modification of the structure or process of a system. It may be good or bad, the concept is descriptive only.”

Organizational changes are required to maintain equilibrium between various external and internal forces to achieve organizational goals. Therefore various factors that may be important for necessitating organizational changes may group into two categories: external and internal.


Every organization exists in some context: no organization is an island in itself. Each must continually interact with other organizations and individuals – the consumers, suppliers, unions, shareholders, government – and many more. Each organization has goals and responsibilities related to others in its environment. Thus not only an organization must deal with its environment in conducting its affairs, but it must also give considerations to the goals of others as it establishes its foals and conducts its operations.

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The present-day environment is dynamic and will continue to be dynamic. Changes in social, political, economic technological, and legal environments force organizations to change themselves. Such change may result in organizational changes like major functions, production process, labor-management relations, nature of competition, economic constraints, organization methods, etc. to survive in the changing environment, an organization must change.

How the change in various environmental factors necessitate the change in the organization may see in the following context:

1. Technological Changes:

when there is a change in technology in the organization’s environment and other organizations adopt the new technology, the organization under focus becomes less cost-effective and its competitive position weakens. Therefore, it has to adopt new technology. When the organizations adopt new technology, its work structure is affecting and a new equilibrium has to establish. For example computers and automation have made a significant impact on organizational functioning. Also read, Explain Organizational Culture.

2. Changes in Marketing Conditions:

Since every organization exports its outputs to the environment, an organization has to face competition in the market. There may be two types of forces that may affect the competitive position of an organization – other organizations supplying the same products and buyers who are buying the product. Any change in these forces may require suitable changes in the organization. For example, when the Indian economy was liberalized (the process continues), many foreign organizations entered the Indian market.

This forced many Indian organizations to realign themselves with the new situation. The result is that there have been many cases of divesting the businesses and concentrating on the core businesses, acquiring core businesses, and developing competitive competence to face competitive threats. Similarly, there may be changes in buyers in terms of their needs, liking – disliking, and income disposal for a product. These changes force the organizations to bring those products which meet the buyer’s requirements.

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3. Social changes:

The social changes reflect in terms of people’s aspirations, their needs, and their way of working. The social change has taken place because of the several forces like the level of education, urbanization, feeling of autonomy, and international impact due to new information sources. These social changes affect the behavior of people in the organization. Therefore it is required to adjust its working so that it matches people.

4. Political and Legal Changes:

Political and legal factors broadly define the activities which an organization can undertake and the methods which will follow it in accomplishing those activities. Any change in these political and legal factors may affect the organizational operation. Don’t forget for learning, Dimensions of Organizational Climate.


It is not only the change in external factors that may necessitate organizational change, but any change in an organization’s internal factors may also necessitate change. Such a change is required because of two reasons: a change in managerial personnel and deficiency in existing organizational practices.

1. Change in Managerial Personnel:

Besides environmental; changes, there is a change in managerial personnel. Old managers are replaced by new managers who are necessitating because of retirement, promotion, transfer, or dismissal. Each new manager brings his ideas and way of working in the organization. The manager brings his ideas and way of working in the organization. The relationships more particularly informal ones, change because of changes in managerial personnel. Moreover, attitudes of the personnel change even though there is no change in them. The result is that an organization has to change accordingly.

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2. Deficiency in Existing Organization:

Sometimes, changes are necessary because of deficiencies in the present organizational arrangement and process. These deficiencies may be in the form of an unmanageable span of management, the large number of managerial levels, lacks in coordination between various departments, obstacles in communication, the multiplicity of committees, lack of uniformity in policy decisions, lack of cooperation between line and staff and so on.

3. Nature of the workforce:

The nature of the workforce has changed with time. Different work values have expressed by different generations. Workers who are in the age group of 50 plus value loyalty to their employers. Workers in their mid-thirties to forties are loyal to themselves only. The youngest generation of workers is loyal to their career. The profile of the workforce is also changing fast. The new generation of workers has better education; they place greater emphasis on human values and questions the authority of managers. Their behavior has also become very complex and leading them towards organizational goals is a challenge for the managers. The employee turnover is also very high which again puts the strain on the management.

4. To avoid developing inertia:

In many cases, organizational changes take place just to avoid developing inertia or inflexibility. The conscious manager takes into account this view of the organization that the organization should be dynamic because any single method is not the best tool for management every time. Thus, changes are incorporated so that the personnel develops liking for change and there is no unnecessary resistance when the major change in the organization is brought about.

What are Factors affecting Organizational Change External and Internal
What are Factors affecting Organizational Change? External and Internal.


1. Organizational Changes – //livinfo.blogspot.in/2012/10/participation-and-organisational-climate.html
2. Factors Affecting Organizational Change – //www.mbaknol.com/management-concepts/factors-affecting-organizational-change/
3. Photo Credit URL – //bookboonglobal.com/wp-content/uploads/sites/8/2013/09/How-demographic-changes-will-impact-organizations-and-managers.png

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