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Change Management and Organisational Performance: A Review of Literature

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DOI: 10.35629/5252-03056779

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 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

Change Management and Organisational

Performance: A Review of Literature
Asikhia, Olalekan U 1, Nneji, Ngozi E 2, Olafenwa, Abiodun T3,
Owoeye, Oladipo A 4.
Professor, Department of Business Administration and Marketing, Babcock University, Ilishan Remo Ogun
State, Nigeria
Ph.D. Student, Department of Business Administration, Babcock University, Ilishan Remo Ogun State, Nigeria
Ph.D. Student, Department of Business Administration, Babcock University, Ilishan Remo Ogun State, Nigeria
MPhil. Student, Department of Business Administration, Babcock University, Ilishan Remo Ogun State, Nigeria

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Submitted: 01-05-2021 Revised: 09-05-2021 Accepted: 10-05-2021
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ABSTRACT: The business landscape of the 21st pressures, e-business and
century is characterized by rapid change brought globalization,deregulation, a growing knowledge
about due to technological, economic, political and workforce, shifting social and demographic trends,
social changes. How organisations react, operate which create a stiff competitive environment.
and adapt to any changes determine the How organisations react, operate and
survivability of the company. Change is an adapt to any changes determine the survivability of
inevitable process whether at a personal level or in the company.The differentiating factor is widely
organization. It is also interwoven with risks, and considered to be how such organisations manage
therefore has to be effectively managed in order to change in light of what Hayes (2014) refers to as a
be successful. The study was conducted using data world of new technology, blurred organisational
from a singular source. Information was sourced boundaries, and an increasingly globalised
from journals, magazines, articles, periodicals, workforce. Change is interwoven with risks, and
textbooks, internet, and other unpublished materials therefore it has to be effectively managed in order
applicable to the work written by different authors to be successful. Research has shown that the
on the current topical issue. It was concluded that management of organisational change most times
by improving the readiness for change, tends to be reactive, discontinuous and ad hoc with
organizations can strengthen their adaptability a reported failure rate of around 70 per cent of all
mechanisms and build their internal competencies change programmes initiated (Burnes and Jackson,
for facing future uncertainties or many such 2011).Hence to survive, organisations tend towards
multiple change auguring situations. being more innovative, creative and competitive.
Organizational performance can be judged
I. INTRODUCTION by many different constituencies, resulting in many
In today‘s business evolvement, change is different interpretations of successful performance.
constant and organisational leaders who anticipate Each of these perspectives of organizational
change and react rapidly and responsibly are performance can be argued to be unique. Further,
successful (Pryor, Taneja, Humphreys, Anderson & each organization has a unique set of
Singleton, 2008). In fact, the pace of change is so circumstances, making performance measurement
rapid and the degree of obsolescence if inherently situational (Cameron & Whetton, 1983).
organisations resist change is so brutal that the only Three specific areas of firm outcomes have been
way out for many firms is to change or perish. In employed in the measurement of organisational
this context, it becomes critical that organisations performance. These include (a) financial
develop the capabilities to adapt and steer change performance (profits, return on assets, return on
in their advantage.Change is often a complex and investment, etc.); (b) product market performance
difficult process but at the same time, it is (sales, market share, etc.); and (c) shareholder
inevitable. No organisation today - large or small, return (total shareholder return, economic value
local or global - is immune to change (Kotter, added, etc.). This paper examines organizational
1998). This is particularly due to the rapid change performance from a single constituency perspective
in technological innovation, advances in of the relationship between change, change
information technologies, internal and external management and the general performance (all

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 67
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

indices of good organisational performance) of an the scope of the project in such a way that it can
organization. From this perspective, successful meet changing requirements and objectives
organizational performance can be equated to (Belyh,2019). Some researchers have also
successful value creation for common stockholders. described change management as an attitude and
style with which the leaders of an organisation
II. AIMS AND METHODOLOGY pursue the people to adopt the change in the
The study was conducted using data from strategic or operational direction of the organisation
a singular source. Information was sourced from so that the strategic changes could be implemented
journals, magazines, articles, periodicals, successfully to meet the changing needs of the
textbooks, internet, and other unpublished materials organisation as well as the market.In practical
applicable to the work written by different authors terms, change management can also be defined as
on the current topical issue. Secondary source of the process, tools and techniques tomanage the
data collection was therefore adopted with the data people side of change to achieve the required
examined using the content analysis approach due business outcome (Creasey, 2009).
to its dependence on the secondary source data. Passenheim(2011) proposes that change
management is the correct understanding of the
III. OVERVIEW OF CHANGE organizations that want or need to be changed;
MANAGEMENT correct understanding of the people who are willing
Change management is a broad term, or forced to change; the effective realization of
which encompasses any approach to aiding an change and understanding the dynamics of change.
organisations ability to manage the change process Processes of change management include
in either a steady or transformational the need to plan for change, manage change and
manner.Competition and globalisation are then reinforce change and such processes are
constantly increasing in today‘s world hence supported by a wide range of tools including
change management has become increasingly communication, coaching, training and the
important. Managers viewed today‘s business identification of prescriptive change models
environment and marketplace demands as chaotic, including that of Kotter‘s eight-step change model
uncertain, constantly changing, disruptive, and (1996).It involves the application of structured
complex. The leap in complexity, connectivity, methods and a pre-planned framework so as to
interdependency, and speed, compared to 20 or 30 steer business from its current state to a desired
years ago, has created an environment that is state. Successful change management is an on-
radically different and requires new approaches to going process that takes time, expertise, dedication
change (Worley &Mohrman, 2014). Change and efforts to implement and run. It requires the
management (CM) signifies both the theory and the involvement of people or staff of the company and
practice of transforming organisations in order to may also result in these people being affected by
adapt and thrive in a dynamic environment, as well the changes too.
as the study of how individuals within changing Before adopting one of the many effective
organisations cope. and popular change management approaches and
Change management has been defined as models, an organisation must first figure out why it
the process of continually renewing an needs the changes and how the changes will benefit
organisation‘s direction, structure, and capabilities it. Driving successful change in individuals and
to serve the ever-changing needs of external and organisations requires new thinking, new models
internal customers (Moran and Brightman, 2001). for change, and new tools.
Kotter (2011) refers to change management as a set
of basic tools or structures intended to keep any 3.1 Need for Change
change effort under control. The goal is often to Green (2007) posits that the need for
minimize the distractions and impacts of the change can come from within the organisation or
change. Change management is the process of from without. It can be imposed by regulatory
continually reinventing the organisation's direction, bodies or made necessary by the actions of
structure, and capacities to assist in the changing competitors. It can emerge from a perceived need
needs of outer and insider clients and environment within the organisation as a result of a planned
(Siddiqui (2017). It is the term used to refer to the process of strategic review, as a result of a crisis or
change or transitioning people, groups, companies a change in leadership. Usually, what needs to
and projects undergo from one state to another. change often emerges from organisation‘s internal
When this term is applied to businesses and and externalanalysis. Organisational internal
projects, it may refer to a process of transitioning environment often includes its structure, its

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 68
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

systems, its processes, its people, its financial within the organizational are then informed of the
resources, and its culture. A change agent may wish new strategy and its implementation process. It is
to take a hard look at anorganization and ask what the responsibility of the team to monitor the
shape it is in and what it is capable of doing and progress and issue corrective measures to align
then look at the environment it finds itself in. with the progress of the set goals.
Alternatively you may want to scan Green (2007) posits that each organisation
theexternal environment to assess what is has stakeholders with enough power to thwart any
happening out there and then look to see what change (be it the local authority, the government,
needs to change in here. By scanning the current the shareholders, the tenants, or the staff) but if
and future environment looking at political, positively engaged, could become forces for
economic,social, technological, legal and driving the change forward rather than restraining
environmental (PESTLE) forces you will be able to it.Hence,the key focus in entering the change
see what possible future scenarios might be facing process is to ensure that you have a power base and
your organisation, and which of the scenarios you that a careful analysis has been made of the
can plan for or exploit as well as what trends might positions of the key stakeholders, their views and
impact on the strategic decision-making process their willingness to be advocates or blockers of the
(Green, 2007). Questions that may arise include change. Getting close to the customers, the
what are the key policy directions of the current suppliers and the staff can help organisations
government(Federal, state and local) as it relates to without thoroughly worked out plan to accomplish
our operating environment? What are the current a set of possible changes.Understanding
trends in the economy and how might they motivations and who are the likely winners and
impact(favourably or adversely) on your losers as a result of the change will help assess the
organisation, market and industry? What are the feasibility of the change and where energies should
social trends that will affect our customers and be channeled.
markets? How will new technologies help us get Dealing with the change is the most
our products and services to market? Given current challenging part since people are generally
and emerging trends in national and international resistance and comfortable with the existing
legislation, what do we see as the most significant methodologies especially as the general views are
factors? What environmental factors or economic constantly changing necessitating the adoption of
crises are likely to influence or require us to newer systems which leads to a better realization of
adjustour strategy and what opportunities do they the set objectives and goals of the organisation.
present? Hiatt and Creasey (2003) highlighted some findings
Cameron and Green (2004) posit that while looking at change management in more than
McKinsey‘s 7S model is a rounded starting point 400 companies worldwide and found that the
for those facing organisational change as it offers greatest contributors to successful change
ways of assessing the infrastructure of the management were:effective sponsorship from
organisation as it is now and what it needs to be senior management in terms of active visible
like in the future in order to maintain or attain a support; ongoing support throughout the life of the
competitive advantage or sustained effective initiative;communicating and being ambassadors
performance. The interconnectedness of the for change;buy-in from front-line managers and
components of Mckinsey‘s model and their employees, which got the change moving and kept
interaction with the external environment makes momentum going;continuous and targeted
this model a unique one. communication throughout the project,tailored in
depth and breadth to the different interested
3.2Change Process and Management communities;an exceptional change management
As opined by Burnes (2009), the change team taking the form of an experiencecredible team
process can be viewed as a triangle with people, who maintained good internal working relations
objectives/outcomes and planning forming the and also networkedinto the organization; anda well-
edges. The process involves the implementation of planned and organized approach that is best fitted
change through systematic planning, organizing to the type ofchange being managed.
and implementation of change to reach the Hiatt and Creasey (2003) also highlighted
desirable future state without affecting the the major factors that contributed to change failure
continuity of business during the process of as:poor executive sponsorship;employee and staff
change. It begins with establishing a team that will resistance;middle management resistance;corporate
be involved in planning the change and setting the inertia and politics; andlimited budget, time and
objectives and the intended outcomes. The people resources.It has been noted that for people to be

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 69
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

more accepting, the end results should be in their Adaptation isa non-paradigmatic change
favour. Over the last century, there has been implemented slowly through staged
varying approaches that companies have used in initiatives.Reconstruction also is a non-
the executions of their change objectives. However, paradigmatic change to realign the way the
it has been pointed out that there has always been a organisation operates, but in a more dramatic and
rift between the approaches used by the different faster manner.Evolution is a transformational
parties involved. It becomes crucial that those in change implemented gradually through different
power have the know-how on how to deal with the stages and interrelated initiatives and finally,
system / individuals as they go through the Revolution is fundamental, transformative
transition stage and employ the new set code of change… but it occurs via simultaneous initiatives
action. If this is not taken into account, rift and on many fronts, and often in a relative short space
strife will be prominent which will further hinder of time.
the process of changes. Understanding change and (Todnem, 2005) also identified four types
change management becomes crucial in order to be of changes that occur in organisations:
in a position to fit in into the new system. Discontinuous change, Incremental change, Bumpy
incremental change, Continuous change and
3.3 Types of Change Bumpy continuous change.
Organizational change has been studied
extensively in literature (Dunphy & Stace, 1988; 3.4 Drivers of Change
Burke & Litwin, 1992; Boonstra, 2004; Jashapara, The driving force behind the change of
2004; de Wit and Meyer, 2010) as referenced in S. organizations has been a central and enduring quest
Karnouskos, (2017). There are several types of by scholars and practitioners in the field of
change, e.g., incremental change, where small management. It has proved to be hard to find the
adjustments are required, discontinuous change sequence of events that lead to the unfolding of the
where a major transformation is due, anticipatory events of change. There are several reasons why an
change where a change is initiated but without an organization can choose to adopt a new system or
immediate need to respond, reactive change, which structure of doing business. Be it for corrective
is a direct response by an organization to a change measures, matching up with the prevailing market
in the environment, radical change when change trends or even for steering the company ahead, the
has an impact on the whole system of an management at one time will have to make some
organisation and redefines the basic framework of decisions that alter the normal approach of doing
an organisation including the strategy, structure, business (Porras and Silver, 1991).
people, processes and core values. Incremental Several theories such as the evolutionary
change is change that happens all the time in and teleology (Van Den Ven& Poole, 1995) have
organisations such as, changes in organisation been developed in attempt to explain the cycles and
structure, introduction of new technology and motor of change. Firm characteristics, such as size,
significant modifications of personnel practices sector, ownership, and location, R&D investment
(Nagresh, et al, 2019). Change can be either and engaging with external knowledge sources
Reactive or Proactive (Nagresh, et al, 2019). have all been identified as influential drivers of
Reactive change is characterized as that change innovation activity (Mansury and Love 2008;
implemented in response to some external event Gordon and McCann 2005; Love, Roper, and Du
and or serious internal operational and managerial 2009; Roper, Hewitt-Dundas, and Love 2004).
problems. Proactive change is change that occurs Both the internal and external environments
when the company is not experiencing any serious significantly influence how businesses operate and
problems however, managers anticipate the need the changes that they can make. Organizational
for change to put the company in a better position politics, power and culture have significant
(Aninkan, 2018). influence on the process of change since they are
When approaching change it is also useful key factors to the final decision and
to be able to understand the extent of the changes implementation process (Burnes, 2009, 250).
that you are facing or are going to initiate (Green, Anderson and Anderson (2001) identify 7
2007). Balogun and Hailey (2004) have segregated primary drivers of change, starting with external
the nature of the change (incremental and ‗big forces and moving to internal forces.He described
bang‘) from the end result (transformation and external forces as ones that leaders are more
realignment), which results in four fundamental familiar with and will often think of first when
types of change namely Adaptation, determining the underlying cause of the change and
Reconstruction, Evolution and Revolution. the extent of the impact of the change. External

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 70
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

drivers can include a need to change to meet the As is expected, this new form of
changing needs/demands of stakeholders, or conducting business and transacting commerce has
perhaps to align internal systems to reduce put organizations everywhere on their toes
overhead costs and allow for a more internal flow scrambling to get on the digital bandwagon or be
of information. These include the business left out completely.Thus, we see media reports
environment, marketplace requirements for about how corporations are embracing responsive
success, business imperatives and organizational methodologies, discarding their hierarchical
imperatives. Internal drivers are harder to identify organizational structures for flexible as well as self-
and articulate, but if not attended to, they could organising models.In addition, more organizations
lead to an unsuccessful project. These include but are moving away from top down methods of
not limited to cultural imperatives, leader and working to an open systems and symbiotic models
employee behaviour and leader and employee where each unit is self-contained and is in a
mindset. position to take feedback and act on same in real
Attending to both internal and external time.Considering the shift in emphasis away from
drivers is paramount to success as too much focus manufacturing towards services and application
on one can lead to challenges.Most changes usually development as opposed to basic product
will have an external driver that initiates the need development world over, it is time for companies to
for change, but frequently, that external driver will realize that the need for innovation and the speed at
trigger an internal driver as well. which they innovate remain the critical success
factors to succeed in the marketplace of the 21st
3.5Change in the 21st Century century.
It is the responsibility of the management In other words, the defining terms of the Digital
to steer the organisation in achieving the desired Age are Speed, Connectivity, Network, and Real
change. One of the key problems that the Time modes of working. While some
management are facing today is the effects of organizations are succeeding, some others are still
globalization. The unified market has brought a struggling to find their feet.
new edge in sustainability, workforce diversity and
business ethics (Hage, 2006). Firms can introduce 3.6 Resistance to change
and/or change management structures to facilitate It goes without saying that ―he who rejects
inter-departmental and external collaborations change is the architect of decay and the only human
which have been shown to positively influence institution that rejects progress is the cemetery‖
innovation performance (Cuijpers, Guenter, and (Juneja, 2015). With this axiom in mind, it is critical
Hussinger 2011; He and Wong 2012). to understand that unless change is actively
The Digital Age is well and truly upon us. embraced, organizations in the 21st century risk
There is technological acceleration everywhere obsolescence.Changes are often treated with
with such speed and connectivity which is resistance (Gravenhorst &Veld, 2004), however
upending the old methods of doing things. As a (Gravenhorst et al., 2003) conclude that ―resistance
result, some long standing and reputed businesses to change only occurred in combination with badly
that failed to make the necessary adjustments and designed and managed change processes‖. It can
transition to survive and prosper in the digital age take a great range of forms including reduction in
are destroyed.Indeed, so far the digital age has output, increased turnover, arguments, strikes and
meant that start-ups such as Uber have managed to vocal expressions as to why the change will not
create an entirely new model of how businesses work.As such, any change has to be carefully
work and in the process, engaging and driving a planned and put into consideration the multi-angled
Creative Destruction Frenzy that has seen the likes interactions among the various stakeholders within
of the traditional medallion taxis firms being the change process.
rendered obsolete.In addition, what the Digital Age According to Teffo (2017) organisational
has also done is to Empower Billions of Consumers changes often met with resistance due to fears such
into a new form of Free Market Capitalism where as disturbed habits and security, destruction of
they have plentiful choices and the ease and existing networks which creates uncertainty and
convenience of transactions on their computers or insecurity, distraction from professional focus,
Smart phones has become so pervasive that an worry that skills are not valued, changes happens
entire layer of middlemen have been made too frequent, similar projects failed, insufficient
redundant and in turn, a direct exchange between chance to influence things oneself. Often it is fear
the businesses and the consumers has taken root. of the unknown or perhaps how the change will
impact them that makes people to resist change.

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 71
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

Again, when people do not know all the answers, 3.7 Change Formula
they feel like they have lost control and that makes Beckhard and Harris (1987) developed a change
them feel hopeless.Fear of change to a certain formula which identified the factors that need to be
extent should be expected and it is up to managers in place for change to occur:
to try and manage this process effectively to C = [D x V x FS] > R
minimize concern. Following Kotter‘s eight steps is Where:
important here with the creation of a vision and C is the change that will occur;
coalition important to guide the change. D is the level of dissatisfaction with the status quo;
Here are some of the reasons individuals V is the desirability of the proposed change, the
may resist change within an organisation. First is end state or vision;
the element of surprise/fear of the unknown. FS is the first practical steps of the change; and
Organisations have a tendency to revert back to the R is the resistance to change.
status quo and as a result, change can be scary for Although very simple, the formula does
some. This type of resistance can occur when capture the essence of many a change project.
transformational/radical change takes place due to Indeed if ever your change initiative is stalling, a
the inability to give sufficient time to the change quick check of the status of the factors will reveal
process, which often results in a lack of employee where the potential problems lie. As in any such
involvement. If employees perceive the new equation the basic premise is that factors D, V and
change to be negative or see it resulting in job FS must be greater than the resistance or cost of the
losses, they may resist the change as a way of change for progress to occur. The multiplication
pushing back. signs imply that if any one factor is not present (i.e.
Secondly, not trusting in those in charge zero) then the change effort itself will definitely be
of the change or believing in them may also lead to faltering as the product of the equation will also be
change resistance. For change to be successfully zero. So if there is very little dissatisfaction with
implemented there is often a need for employees to the status quo, or if there is no compelling vision,
highly respect those involved and as such it may be or if there is no clearly understandable plan then
difficult for a new change manager to build trust in momentum is unlikely to build. Beckhard and
their followers. This lack of trust can in itself result Pritchard (1992) later added a further factor of
in increased resistance to change. The third reason believability (credibility that there is something
is loss of control. Coupled with any discussions of wrong with the status quo, that the new vision is
change initiatives is often the word control. Any realistic and there are cogent plans in place) and De
form of efficiencies including downsizing or Woot (1996) added the concept of capability (the
restructuring may cause fear and this could cause organization has the means to make the change)
employees to resist by looking for employment while Green (2007) in his study of organisations
elsewhere. The fourth reason is timing. There are going through rapid change, added capacity (the
two main dominant forms of change: resources available).
transformational/radical and incremental change. If
an organisation has to undertake a radical change, 3.8Importance of change management
there may be a difficulty in their ability to involve The field of change management has been
employees, which can lead to resistance.Lastly is widely trying to make sense of the value of change
an individual‘s tolerance to change. Change is often and as a result, an effective and sustainable
a very personal thing and this tie into the approach to change management has been linked in
complexity and at times messiness of change. the literature to a number of outcomes including
A key process in dealing with resistance to organisational excellence (Goetsch & Davis, 2014),
change is to identify where the resistance is coming sustainability (Zuber-skerritt & Louw, 2014) and
from and pay attention to what the opposing views competitive advantage (Ram, Wu & Tagg, 2014). If
are. This would form the basisof your choices and change is ill managed then this can have a
your designs in restraining these forces or finetune detrimental impact on the success of an
the change plan itself (Green, 2007). Several organisation and thus there is a need to focus upon
change management strategies aiming at making how the benefits of change management can be
change a success, have been developed and are realised.
used in modern enterprises today such as the To standstill is not an option in a dynamic
McKinsey 7S model, (Waterman et al., 1980), business environment and therefore the importance
ADKAR (Hiatt, 2006), and Kotter‘s 8-step Model of change management is arguably more important
(Kotter, 1996) to name a few. than ever. There are plentiful examples of
companies who have failed to change and have

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 72
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

suffered as a result. One such example is the case stakeholder theory assesses organisation
of the once phone giant Nokia. performance against the expectation of a variety of
stakeholder groups that have particular interest in
3.9Organisational Performance the effects of the organisation‘s activities. Its
To perform is to take a complex series of perspective of organisational performance
actions that integrate skills and knowledge to incorporates stakeholder value, but recognises that
produce a valuable result. Performance shareholders are just one group of stakeholder and
measurement has great significance in effective only relevant to those organisations that issue
management of an organisation and in the shares (Hubbard, 2009).This theory agrees with the
enhancement of the processes since only belief of Prof Milton Friedman who stated that ‗the
measurable things is manageable. Hence, the business of firms is to make profit‘ (Porter, 1980;
enhancement of the organisational performance Owen, 2006; Brown & Fraser, 2006). Owen
requires some measurements to determine the (2006), in agreeing with the shareholders‘ theory
impact of the level of change management upon believes that organisational performance
business performance. In theory, the concept of encompasses three specific areas of firm outcome:
performance forms the core of strategic financial performance (profits, return on assets, and
management and empirically, most strategy studies return on investment), product market performance
make use of the construct of business performance (sales and market share) and shareholders returns
in their attempt to examine various strategy content (total shareholders return and economic value
and process issues. In management, the added).
significance of performance is clear through the Enactment theory contends that an
many prescriptions provided for performance organisation can, at least in part, create an
enhancement. Hence, organisational performance environment for itself that is beneficial to the
requires measures to identify the effect of organisation through outstanding strategies that
organisational recourses upon business reshape competitive conditions in a favourable way
performance. Performance measurement is very (Al-Matari et al., 2014). This puts a firm in control
crucial for the organisation‘s effective management of its destiny. Microsoft and Apple are two firms
and enhancement of the process is impossible that seemed to have enacted their environments. By
without outcome measurement. the 1990s, Microsoft had been so successful at
reshaping the software industry to its benefit that
3.9.1 Theories of Firm Performance the firm was the subject of a lengthy antitrust
Resource-based theory (RBV) may be the investigation by the federal government. More
most popular way of explaining why some firms recently, Apple has been able to reshape its
succeed and others fail (Al-Matari, Al-Swidi & environment by introducing innovative products
BtFadzil, 2014). One important advantage that such as the iPhone and the iPad that transcend the
resource-based theory offers over the alternatives is traditional boundaries between the cell phone,
that only resource-based theory does a good job of digital camera, music player, and computer
explaining firm performance across a wide variety businesses. No airline has ever been able to enact
of contexts. Thus RBV offers the business point of the environment, however, perhaps because the
view that has the strongest value for most airline industry is so fragmented(Al-Matari et al.,
executives(Al-Matari et al., 2014). But RBV is far 2014).
from the only explanation; other prominent theories Environmental determinism theory
which explain firm performance include contends that external factors drive a firm‘s
stakeholders‘ theory, enactment theory, theory of fate(Al-Matari et al., 2014). The theory offers a
environmental determinism, institutional completely opposite view from enactment on why
theory,and transaction cost economics theory. some firms succeed and others fail. Environmental
The 1990s saw the emergence of the determinism views organisations much like
stakeholders‘ theory (Hubbard, 2009). This theory biological theories view animals—organisations
sees the firm as responsible not only to (and animals) are very limited in their ability to
shareholders, but also to a wider group which adapt to the conditions around them. Thus just as
includes employees, representatives, customers, harsh environmental changes are believed to have
suppliers, government, industries, bodies, local made dinosaurs extinct, changes in the business
communities etc. As such, its performance must be environment can destroy organisations regardless
measured by how much it is able to satisfy these of how clever and insightful executives are. In the
stakeholders (Freeman, 1984; Reich, 1998; Post et early days, the US federal government controlled
al, 2002; Brown & Fraser, 2006; Steuer, 2006). The airlines‘ routes and prices. After the U.S. airline

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 International Journal of Advances in Engineering and Management (IJAEM)
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industry was deregulated in the late 1970s, a series Tobin-Q, Profit Margin (PM), Earnings Per Share
of large airlines fell prey to poor environmental (EPS), Abnormal returns; annual stock return,
conditions such as recession, overcapacity in the Operating Cash Flow (OCF), Return on Capital
industry, and fuel shortages. Many industry experts Employed (ROCE), Labour productivity (LP),
claim that the demise of Braniff Airlines, Eastern Critical business Return on Asset (CROA), Market
Airlines, and others was inevitable (Al-Matari et Value Added (MVA), Operation Profit (OP),
al., 2014). Return on Investment (ROI), Market-to-book value
Institutional theory is interested in the (MTBV), Log of market capitalization, LOSS,
extent to which firms copy each other‘s Growth in Sales (GRO), Stock Repurchases, Sales
strategies(Al-Matari et al., 2014). Consider, for Per Employee(SPE), Return on revenue (ROR),
example, fast-food hamburger restaurants. Output per staff (OPS), Cost Per Service Provided
Innovations such as dollar menus and drive-through (CPSP) and Cost per Client Served (CCS), Superior
windows tend to be introduced by one firm and to cumulative abnormal returns (CARs), Profit Per
then duplicated by the others.After American Employee (PPE) and Return on Fixed Assets
Airlines became the first major airline to create a (ROFA) (Al-Matari, Al-Swidi & BtFadzil, 2014).
frequent-flyer program in 1981, its competitors In theory, researchers revealed that the accounting
quickly developed their own frequent-flyer based measurements like ROA, ROE, profit margin
programs. In the late 2000s, a new idea of charging and others are used for the short-term performance
passengers to check their luggage was copied by of the firm while the market-based performance of
one airline after another (Al-Matari et al., 2014). the firm is gauged through Tobin‘s Q as a
Transaction cost economics theory centres representation of future long-term performance.
on whether it is cheaper for a firm to make or to Therefore, the integration between the two provides
buy the products that it needs (Al-Matari et al., a clear picture of the firm (Al-Matari, et al., 2014).
2014). This is an important element, however, Tobin‘s Q refers to a traditional measure
because choosing the more efficient option can of expected long-run firm performance (Bozec, Dia
enhance a firm‘s profits. Automakers such as Ford & Bozec, 2010). A high Q ratio shows success in a
and General Motors face a wide variety of make- way that the firm has leveraged its investment to
or-buy decisions because so many different parts develop the company that is valued more in terms
are needed to build cars and trucks. Sometimes of its market-value compared to its book-value
Ford and GM make these products, and other times (Kapopoulos & Lazaretou, 2007). Market-based
they purchase them from outside suppliers. These expectations for firm performance may result in
firms‘ financial situations are improved when management incentive to modify their holdings on
such decisions are made wisely and harmed when the basis of their expectations of the future
they are made poorly. No airline has ever chosen performance of the firm (Sánchez-Ballesta &
―make‖ when needing new airplanes. Buying García-Meca, 2007). As a result, when the
airplanes from Boeing or Airbus is much more company‘s market-based performance is higher
efficient than trying to backwardly integrate into than the results of Tobin‘s Q, this indicates that the
the airplane manufacturing business would be(Al- company has succeeded in achieving its planned
Matari et al., 2014). high performance (Nuryanah & Islam, 2011) but if
Another concept of organisational it is less than Tobin‘s Q, then the company needs to
performance based on the stakeholders‘ perspective revise its plans to enhance its short-term
is the Balanced Score Card (BSC). This performance. The negative performance leads to
incorporates financial, customer/market, short term investor‘s loss (local and foreign) and hence, it is
efficiency and long-term learning and development important for the company to update its objectives
factors into the measurement of organisational from time to time if it is desirous of competing in
performance (Kaplan & Norton, 1992). According the market place (Al-Matari, et al., 2014).
to Kaplan and Norton, the BSC should have a total
of 14 to 16 performance measures with no more 3.10 Impacts of Change on Organisational
than 6 in each quadrant. Performance
It is a generally accepted view that the
3.9.2 Determinants of Firm Performance only thing that is ever constant is change and any
In practice, change management organization that intends to remain relevant in its
relationship with firm performance was highly area of operations must be able to respond to
dependent on accounting-based indicators or change appropriately even as the world is changing
market-based measurements namely the level of in all facet. Westentolz (2013) states that change
Return on Assets (ROA), Return on Equity (ROE), remain a necessity despite several difficulties and

DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 74
 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

challenges. It is the only way for an organization to an environment conducive to learning through a
consistently adapt to the new trend, react to creation of psychological safety of workers while
competition and the need of the customers. This simultaneously pushing for greater workforce
does not mean that change will smoothly go productivity. However, most companies prefer to
through as there is bound to be resistance. March increase survival anxiety because that‘s the easier
(2002) suggest that when change is intended in an way to go. And this is where organisations have it
organization, the effect is that there will be forces absolutely wrong (Green, 2007).
acting to facilitate the change and forces acting to
resist the change. Udeh and Igwe (2013) state that IV. THEORIES AND MODELS OF
while change can cause confusion and fear, there CHANGE
are several positive effects it can have on the Theories and models of change encompass
organization if handled properly.The positive effect the assumptions and beliefs which when combined
or impact of the change will only reflect by together in a systematic manner, result in bringing
constantlymonitoring the progress in developing a about change in an organisation (Tichy 1999).
change management model or policies within the Thus, it can be said that the models of change lay
organisation.The positive impact of change on the framework for formulation and implementation
organization performance includes employee of strategies. Many theories of change management
confidence, organisational growth, competitive exist and a great array of change management
advantage, dynamism etc. When change is theories can be used to guide the very process of
implemented successfully without any negativity change. Whilst some theories act as a diagnostic
on the employee, it boosted their confidence and tool, others offer a more prescriptive approach to
creates a smooth change process with the change which draws on guidelines and steps to be
organization in the future. The result is that taken. Many of the challenges being faced by
appropriate action and decision will be taken and organisations differ greatly to the times of stability
this will ultimately translate to increase experienced some 20/30 years ago. In particular,
organization performance. one such dominant change relates to technological
Furthermore, positive organisational change and the power of the Internet.
change results in organisation growth. You cannot There are so many change management
continue to think the same way and expect growth. models. What this implies is that no single model is
There isan accommodation of new technology universally valid. Their applicability depends on
innovation, acquisition of new infrastructure,new the contexts, contexts being ‗what is changed‘,
marketing/sales concepts etc. These will produce ‗how it is changed‘ and ‗who is doing the change‘.
expected organizational growth. Again, the Most of the models have many similarities with
capacity for an organization to effect change assist each other, with some variations; about three
in maintaininga competitive advantage in the models will be examined to establish what those
marketplace. To remains dynamic and forceful, the similarities are.
organization must as matter of urgency embraces a
corporate culture that will make the organization Kurt Lewin’s Theory of Change Management
remain relevant in the marketplace.An organization Kurt Lewin‘s Three Stages model or the
culture that embraces change tends to remain Planned Approach to Organizational is one of the
dynamic in the marketplace. As stated by Marshak cornerstone models which is relevant in the present
(2004) a dynamic atmosphere with an openness to scenario even. Kurt Lewin‘s three phase theory of
change is a productive and forward-thinking change management was based on his research on
workplace. The negative impact of change if not group dynamics and changing group life. He was
well articulated and implemented can lead concerned with the actual process of change or the
toemployee‘s resistance,increase cost, lack of lack of it, and resistance to change. He also
support and failure and low employee morale. postulates that social habits create a ‗force field‘
Productivity is a measure of performance. that pulls everyone back to previous habits, after
Organisational performance is measured among conditions forcing change has passed (Lewin,
several others including customer satisfaction, 1947). Lewin‘s model involves three (3) steps: The
employee satisfaction, operational efficiency, cost first one isUnfreeze which entails dissolving the
effectiveness, productivity, service quality, market status quo by establishing a need for change. The
share, and profitability (Poister 2003). According to second isChange or Move. This step borders on
Schein (2002) for change to occur, survival anxiety installing the changes and dealing with the ensuing
has to outweigh the learning anxiety; it‘s best to confusion. The third and last step isFreeze which
reduce the learning anxiety by ensuring that there‘s stabilizes the new mindset as normal. Lewin

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 International Journal of Advances in Engineering and Management (IJAEM)
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recognized the significance of change resistance in an ice block changes its shape to transform into a
socio-technical systems, and formulated his model cone of ice through the process of unfreezing.
on how to circumvent that problem.
For explaining the process of
organizational change, he used the analogy of how

Source: www.strategies-for-managing-change.com

Kotter’s Eight-Stage Process change. Step 3 is Knowledge on how to change by

In his 1996 book Leading Change, John training. Step 4 is Ability which is the skills
Kotter outlined an eight-step model on change required to implement the change by training. Step
leadership. In his view, the most important lesson 5 is Reinforcement which entails approaches to
was that even though these Lewin‘s steps – make change stickthat can be achieved through
Unfreeze, Change and Freeze can take a communicatingthe success emanating from the
considerable time, skipping them will usually lead change.
to a failure on implementing change(Kotter, 2007). The business side of ADKAR model in
Kotter‘s came up with an eight-step model which steps as follows: Step 1 is the business need by
includes firstly establishing a sense of urgency. identifying opportunities. Step 2 is Concept and
There is need to communicate evidence that change design. Step 3 is Implementation of the solutions
is necessary; Create the guiding team by from the design. Step 4 involves Post-
assembling a team with enough power to lead the implementation feedback and corrective actions.
change; Develop a vision and strategy to direct the By understanding the needs of an individual,
change; Communicate the change vision and teach correct support can be directed to ameliorate the
new behaviours by example; Empower employees changing situation. This model notes the need for
for broad-based action by getting rid of or change some iteration, in contrast to previous models.
systems or structures that undermine the vision;
Generate short-term wins by creating visible Anderson & Anderson’s Change Model
results; Consolidate gains and produce more Anderson & Anderson‘s model of change
change and lastlyanchoring new approaches in the provides a comprehensive coverage of the entire
culture. This shows the connection between change process of change and equally explains the whole
and organizational success. Like Lewin‘s model, process of change as a cyclical process (Anderson
this is a linear top-down method of creating change and Anderson, 2001). This model briefly views
where people are directed to a new state without change from three perspectives – Content, People
much true participation. and Process. Content analyzes the technical as well
as the organizational factors which require change;
ADKAR Change Management Model People analyzes the subjective factors such as the
ADKAR change management model was mindset, changes in the behavioural patterns of
developed by Jeff Hiatt of Prosci in 1998 (Hiatt, people as well as the cultural changes while
2016). ADKAR model focuses on individual Process is the stage that is related with the possible
change and on how to create conditions for action plans or strategies that can be crafted and
individuals to adopt new behaviours. It presumes implemented for driving the change initiative
that change usually happens first on individual successfully across the organization.
level, and from there comes the successful All the three processes are integrated and
organizational outcomes. The model itself revolves interdependent on each other. The model is
around five outcomes that individual must achieve illustrated through nine phases which arePhase 1 -
for change to be successful, while at the same time Preparing to Lead the Change Initiative; Phase 2 -
taking business side of change into account. (Hiatt, Defining the Organizational Vision, Commitment
2016). People side of ADKAR model comes in and strengthening the Capabilities; Phase 3 -
steps also.Step 1 is Awareness. Creating awareness Determine the Design Requirements by Assessing
on why change is needed by communication. Step the Situation; Phase-4 - Enabling achievement of
2 is Desire. Stir up the desire for change by the Vision by Creating the Desired Design State;
managing resistance and having sponsors for Phase 5 - Analysis of the Impact; Phase

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 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

6: Masterminding the implementation plans, Plansdemonstrated in the; Phase 8 - Celebrating as

integrating various actions for achieving well as Integrating the New StateandPhase 9 -
efficiencies and optimizing resource utilization; Learning and Correct Course. The model is
Phase 7 - Implementing the Change illustratedbelow.

management models in the regard of making the

Source: Adapted from Anderson and change ‗stick‘ tends to be hard to verify.
Anderson (2001, p. 15) as cited in by Prachi Juneja
and Reviewed By Management Study Guide Content V. THEORIES OF ORGANISATIONAL
Team. PERFORMANCE
https://www.managementstudyguide.com/change- Modern enterprises strive towards
management.htm optimizing all of their available resources in order
Anderson & Anderson‘s model of change to be stay competitive and capitalize on new market
management is a much more comprehensive model opportunities. In order to stay agile, they adjust and
and is very useful for addressing various kinds of therefore undergo changes. Best (2008) brings it to
change in the organization. Apart from this, it the point noting that ―companies that survive and
equally describes the change in nine cyclical phases grow will be the ones that understand change and
and gives due importance to all the strategic are leading, and often creating, change‖. Hence it is
decisions which should be considered by the common in enterprise environments, that changes
champions of change. The model provides strategic are announced by the management, with the aim to
alternatives for addressing various challenges increase the performance of the enterprise.
which may arise during different phases of the Organisational performance encompasses
change. three specific areas of firm outcomes. These
The common theme in the different include (a) financial performance (profits, return on
models lies in the essence of change which is about assets, return on investment, etc.); (b) product
managing people in changing contexts. As such, market performance (sales, market share, etc.); and
most models seem to concentrate on (c) shareholder return (total shareholder return,
communication and motivation. Processes and economic value added, etc.).
outcomes change, but the mental states of
employees should stay constant; change should be VI. CONCLUSION
accepted. Dissolution of status quo, making the In conclusion, change is the only constant
actual change and making the change ‗stick‘ seem in business and the landscape of the 21st century is
to be found in each model. Viability of change
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 International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

littered with companies that have not adapted to the [3]. Balogun, J. and Hope Hailey, V. (2004)
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DOI: 10.35629/5252-03056779 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 78
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Volume 3, Issue 5 May 2021, pp: 67-79 www.ijaem.net ISSN: 2395-5252

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