Leading Change in Dynamic Organizations

Introduction

The modern environment is characterized by a high level of complexity and dynamism, which forces organizations to adapt constantly. Change management requires the leader to constantly analyze the needs of the company and their compliance with external conditions. However, this process includes many important parts that need to be considered in order to develop an effective strategy. In particular, choosing a leadership style and a change management model is a key to the success of the transformation.

Discussion

Changes occur constantly and rapidly in the modern world under the influence of external factors. Companies need to respond to them in order to adapt to a transforming environment. The importance of the change process is especially acute in a complex and dynamic environment, as it regularly presents unforeseen threats to the competitive advantage of organizations. Resistance to change, in turn, is “the biggest barrier that can make change difficult, if not impossible” (Errida & Lotfi, 2021, p. 6). Thus, identifying the reasons for resistance is part of the change process and a key factor in the success of the transformation.

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Due to the fact that the process of change involves the interaction of many people to implement the transformation of the organization, the emergence of conflicts is inevitable. The complexity and diversity of human life and perception lead to disagreements that also need management (Rossi, 2019). Conflicts within the organization arise on a daily basis, so leading change also involves taking advantage of this phenomenon, which, without control and management, is destructive in nature (Rossi, 2019). Leaders and managers in the process of dealing with a conflict situation should strive not to resolve and stabilize the situation but to extract useful information from the situation. Thus, conflicts are productive in nature, allowing you to identify difficulties arising in the process of change management.

Since working on successful implementation of change involves interaction, such a skill as emotional intelligence (EI) is extremely important for a leader. The relationship of the participants in the organization at the emotional level is a significant aspect that allows creating a comfortable atmosphere for business activities. However, “change disrupts this comfort creating a situation filled with anxiety and uncertainty among change recipients” (Issah, 2018, p. 1). EI, in this case, helps the leader communicate the vision and the need for change to subordinates, as well as to adapt the strategy that would generate the least tension. Additionally, this skill allows you to build strong relationships and trust in the team, which is necessary for the effective implementation of change.

In this respect, soft aspects of change management are of particular importance. While hard skills such as planning, goal setting, and target performance are available to many managers, the soft side “often wrecks change management efforts” (Farkas, 2016, p. 18). Thus, leaders need to work with the organizational culture and emotions of subordinates. Ignoring such aspects or insufficient EI can lead to resistance and disagreement, which can become an additional obstacle. The change process is based on the development of a common vision and strategy, as well as setting goals and ways to achieve them. Leading changes also involve working with the expectations and desires of stakeholders and mobilizing positive influence. Thus, this process is also complex and must take into account multiple factors both inside and outside the organization.

The concept of power in this case also plays an important role since it allows the leader to establish the right position and direct subordinates. In addition to the need to develop a strategy, change management also includes the implementation of the intended plan. It is not enough for a leader to simply articulate his role and delegate tasks; it is also necessary to institutionalize and reinforce the necessary procedures (Farkas, 2016). Changes cannot come into force; existing solely as ideas and desires, they must be agreed with the shareholders and interested people. Power, in this case, implies the ability to influence people to consider decisions, as well as to promote initiatives at a structural level.

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Modern organizations need to adapt to the constantly changing conditions that the environment offers them. In this process, effective management and leadership play a special role, which is aimed at using complex skills to overcome the difficulties that arise (Zainol et al., 2020). McKillop (2018) underlines that “leadership should be understood as a set of changing and situated discursive practices” (p. 218). Thus, the leader’s behavior depends on a specific situation and has an adaptive character, transforming strategies depending on conditions. The term change, in this case, is conceptualized as a “rational, strategic process where the organization chooses a new course of action and adapts to change” (Teczke et al., 2017, p. 196). In an environment where an organization cannot adapt to changes in the environment through strategic processes, it is replaced.

The skills and actions of a manager in a complex environment play a key role in the development of the company. In particular, the task of the leader is to align the business strategy in accordance with the emerging changes in order to mature the competitive advantage of the organization (Teczke et al., 2017). Under these conditions, the manager must play the role of initiator and leader of the change process within the company. The strategic response includes a variety of changes, including organizational, technological, and resource ones. Interaction with subordinates and directing their activities in accordance with new needs is also a key element.

While change is considered the interaction of many elements within the system, there is also growing attention to this phenomenon as dependent on positioned individuals. The process of change can be based on external and internal factors of a social, technological, or economic nature, which are the catalyst for transformation. However, the vision and ideas of the leader of the organization can also become a driver for the change process (Hirlak & Kara, 2018). Specifically, leaders identify and articulate the goal of transformation and ensure blue-blue involvement in decision-making and implementation. Leaders are also responsible for finding resources and providing support for the change process, and managing strategic planning. Thus, the initiative of the individual in the position of a leader can facilitate the response to changes in the external environment and ensure effective work on the transformation of the organization.

However, the role of the individual leader can also be exaggerated due to the presence of outstanding examples that lead researchers away from the essence of the change process. For example, Steve Jobs or Elon Musk have influenced the transformation of several industries with their innovative vision. However, Shvindina (2017) notes that the individual leader’s abilities are limited within large-scale changes. The change process is a partnership where functions are distributed among many people and teams. Thus, the role of an individual leader in the context of a complex and dynamic environment is both vertical and horizontal cooperation.

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The change process can be initiated by both the leader and the manager. However, there are a number of fundamental characteristics that distinguish leadership and management in an organization. In particular, one can say that “a leader has soul, the passion and the creativity while a manager has the mind, the rational and the persistence” (Liphadzi et al., 2017, p. 481). Leadership focuses on working with people, innovation, motivation, and inspiration, while management is directed on structuring, stabilizing, consulting, and analytics. Thus, one can view the activities of the manager as ensuring order and safety and leadership as promoting flexibility and change (Liphadzi et al., 2017). The leader can exert personal influence over subordinates “to achieve the specified goals, leading the organization to become more consistent and harmonious” (Hirlak & Kara, 2018, p. 260). Thus, the leader plays a key role in recognizing and articulating the need for change, as well as in initiating its implementation.

Organizations today are characterized by several key dimensions that drive their development. The VUCA framework offers a description of “complex and challenging leadership contexts” (Kangas et al., 2019, p. 12). This model includes four terms that explain the essence of the modern business environment: volatility, uncertainty, complexity, and ambiguity. Volatility refers to the constant likelihood of unexpected changes that cannot be predicted. Uncertainty describes events that are key to the future of the company but also cannot be foreseen. Complexity describes the interrelation of many parameters and actors, the outcomes of the interaction of which cannot be predicted. Ambiguity refers to the problem that arises when understanding the logic of the mechanisms in a new environment. Thus, modern leaders and managers have to operate in a constantly changing and unpredictable environment, which requires complex decision-making.

The existing theories describing leadership in organizations emphasize transformational leadership as the primary management model for achieving change objectives. This type of leadership is presented as a combination of “idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration” (as cited in Shvindina, 2017, p. 77). In this way, the transformational leader articulates an innovative vision to his subordinates, as well as stimulates their thinking, and encourages decision-making. Moreover, the leader becomes a catalyst for change that transforms ideas into action. Faupel & Süß (2018) underline that employees are more willing to support organizational changes if they are involved in their implementation and see direct positive consequences. This leadership theory focuses on shaping an innovative vision and interacting with subordinates to create an environment for change. Thus, transformational leadership is more about the soft side of the change process and encourages the use of EI.

Within the framework of this theory, the leader acts as an agent of change, motivating employees and creating shared values. In dealing with complex and dynamic situations, transformational leadership allows one to effectively identify the difficulties that arise and articulate the desire to overcome them. Moreover, Bligh (2018) reports that this theory promotes learning from mistakes, which is important for change and conflict management. However, from a hard side point of view, this theory can present a number of disadvantages. Transformational leadership is based on innovative vision and employee inspiration, which can result in a lack of focus on planning and strategy. Moreover, transformational change is described as “fundamental change in culture, practices and underlying assumptions of the organization” (Brandt et al., 2019, p. 627). The focus of this process is directly a strong leader who is a catalyst for change. Such a radical model of naming requires a meaningful goal, as well as clear planning, and how the results are extremely difficult to predict (Brandt et al., 2019). Thus, this strategy is used to make changes that would significantly move the organization forward but carries a high risk.

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The process of transformational change is lengthy, as it involves sense-making to create transformational value. Brandt et al. (2019) provide an analysis of the empirical evidence of the effectiveness of this approach in the long term. The authors consider the decade-long transformation of the pharmaceutical plant, in which it has significantly improved productivity, employee satisfaction, and performance. The main factors for the success of this process are attention to external needs, a visionary attitude to the necessary measures, as well as effective internal communication and involvement of employees in the change (Brandt et al., 2019). The most significant aspects are readiness to change and attention to the prospects for the implementation of transformation. Thus, transformational change and leadership can help an organization cope with critical external changes that, without adaptation, would lead to business failure. This approach allows you to completely change the organizational culture and structure of the company, which requires a long-term effort.

In contrast to the transformational approach, the transactional approach offers a more structural view of the change process. This type of leadership is also referred to as managerial (Akinbode & Shuhumi, 2018). The focus here is on strategic planning and performance improvement. Transactional leaders are concerned with optimizing the day-to-day tasks of the organization, as well as meeting the needs of employees in exchange for desired behavior (Akinbode & Shuhumi, 2018). In contrast to transactional leadership, the transformational style is more effective as it enables all-around changes in the company. Transactional leaders pay attention to the most basic organizational needs that need to be adapted. Thus, such managers focus on implementing changes that would be consistent with existing conditions, while transformational leaders focus on predicting future changes. However, transactional leadership can be applied to a faster and more structured process of change than transformational leadership.

There are also many models that are used for a change management organization. However, after examining the five most popular practices, Galli (2018) concludes that they only offer options for action, while “people are the changes, not the models, and people will only change if they see and feel the need to do so” (p. 131). The author emphasizes that without the work of involving workers in the process of change, success is impossible. Thus, transformational leaders who address concerns in a timely manner to their team members have the advantage of operating in complex and dynamic environments. The choice of a leadership style and the practice of implementing change is primary for successful transformation and adaptation of the company.

A number of concerns arise with the approaches described, including how the leader needs to balance innovation and strategic planning. Transformational leaders can set overly ambitious goals that can become too risky. Thus, existing practices and models must be supplemented with a soft side. Contribution to practice means that a leader can use elements of both transformational and transactional leadership to implement changes in both the long and short term. In this case, you can use an innovative and inspiring approach to building communication and a more structured approach to planning and implementation. Applying the two style elements allows the manager to better manage risk and urgency by adapting the change strategy to the needs of the organization and external factors (Baškarada et al., 2017). This aspect is especially important when decision-making can have long-term consequences and a critical effect on the future of the company.

Conclusion

Change management is a key process for adapting a company to external changes and maintaining a competitive advantage. Leadership, in this case, plays a significant role, as it allows identifying and articulating the need for transformation, as well as involving subordinates in this process. Effective communication is no less important aspect than correct strategic planning, as it helps to overcome conflicts and resistance, which often cause management failure. The manager can choose from a variety of models and styles, but the most successful one is the one that inspires employees to introduce change and increase productivity. In this respect, the leader should consider the balance between risk and urgency in order to make the best decisions. These findings are relevant for modern organizations since adaptation occurs almost constantly, and changes must occur daily. At the same time, management must consider the long-term impact of decisions made that enable the organization to function effectively and mitigate threats.

References

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