Change management in times of economic uncertainty.

Abstract

Using online survey, this study assesses the success of local businesses and how these organisations effectively cope with change. An analysis of 197 responses showed that adaptability, flexibility, and optimism were consistently correlated with the organisations' ability to cope with changes and their reported success. Adaptability is a critical factor for success and it is conceptualised as the ability to respond strategically to the external environment. Almost all local businesses surveyed had engaged in organisational change or planned to engage in change in the next three years. Organisations which are successful are more optimistic and place greater importance on planning when making organisational changes. Furthermore, an organisation introducing changes, such as that of incorporating new technologies into the workplace, should not overlook the importance of rallying the full support of the employees in executing the change for a more positive outcome.

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In times of economic uncertainty, stress is inevitable. The ways in which organisations respond to such stress often define their level of adaptability. In critical times it may even determine the extent to which an organisation is able to weather the economic storms and to remain viable in the face of great challenges.

The economic downturn of 1997 bad been exacerbated by the 11 September 2001 incident and other terrorist threats. Following that, the outbreak of the SARS virus in 2003 further aggravated the economic situation in Singapore, affecting many local companies. The first quarter of 2004 brought some signs of recovery. However, with the recent incidences of avian flu in the surrounding regions, market conditions remained challenging in Singapore.

In times of uncertainties and troubled economy, how are local small and medium enterprises (SMEs) coping and how are businesses staying competitive? The focus of this paper is to identify the factors associated with organisations that cope effectively in the face of changes and economic challenges, and those that remain successful in times of uncertainties. To address these aims, an online survey was conducted where representatives from local SMEs were invited to respond to questions aimed at gauging how these organisations respond to the adverse economic conditions and whether these organisations are making profits and remaining optimistic over the future.

Factors Influencing Change in Organisations

Organisational change, as defined by Bharmbri (1992), Jones (2003) and Paton and McCalman (2000), refers to the process by which organisations move from their present state to some desired future state in order to increase their effectiveness. According to Kanter (1991), change may be viewed in terms of the alteration in activities and tasks of the organisation. These may range from minor alterations in procedures and operations to transformational changes such as rapid expansion into international markets, mergers or major restructuring in an organisation. Several factors may be linked to an organisation's transition from status quo to that of successful adaptation to change. These factors, discussed in the ensuing sections, include openness to change, level of staff support, ease of change implementation, flexibility and adaptability, optimism, coping, planning for change, and characteristics of change.

Openness to Change

It has been well documented that organisations that embrace change with an open, positive and welcoming attitude will be more apt to survive in the face of competition and changing market conditions (for example, Argyris, Putman and Smith, 1985; Price Waterhouse, 1995; Eccles, 1996; McConnell, 2002). However, openness to change is not a common phenomenon. Ludeman and Erlandson (2003) observed that resistance to change often resides within the individual. Resistance to change may also occur at the organisational (group) level, among the managers and staff of the organisation. Often, the key to overcoming resistance is to encourage a culture of openness to change. This is accomplished by having adequate communication channels to educate and provide pertinent information about the change, to encourage staff participation and commitment. Along with this, ensuring sufficient planning to support the change, such as training staff in the use of new technology (Abbasi and Hollman, 1993) is also an important component.

It is therefore believed that openness to change is a crucial factor that may influence the level of coping and success of organisations. It is speculated that business organisations that are more open, less resistant to change and more willing to implement change will also cope better than organisations that are less receptive to change.

Level of Staff Support

Successful adaptation to change in the workplace requires the involvement of many people. Abbasi and Hollman (1993) made the point that participation involving representatives from the different segments or echelons of the organisation bring commitment and makes it easier for change to be accepted. Eventually this could be converted to constructive effort that could turn resistance to action plans leading to effective change. Some organisations do not give full information to their staff regarding an upcoming change. According to Gray and Starke (1988), when employees are not fully informed of changes before implementation, especially when these involve substantial revision in the nature of work and the skills required, distrust and resistance may be engendered among the employees. Hence, the level of potential staff support that the organisation may obtain should change be implemented is likely to be a factor that may affect the degree of coping and ultimately the success of the organisation. It is believed that the more support the staff of local SMEs gives to its top management for change implementation, the better will the organisation cope with change and possibly the more successful will the subsequent change implementation be.

Ease of Change Implementation

The ease with which change is implemented in an organisation can potentially influence the degree of organisational coping and success. Even if the organisation and its staff are open to a particular change (for example, a merger), this change may still not take place smoothly or easily if there are many barriers: technical, legal or otherwise, that make implementation of the change difficult. Hence, it is logical to assume that the easier it is to implement a particular change, the more likely it is to take place and the organisation would subsequently cope better with the change.

Flexibility and Adaptability

In addition, two other factors that may lead to organisations having differences in the level of coping and successful outcome are flexibility and adaptability. McConnell (2002) theorised that resistance to change is developed from a sense of helplessness in the presence of circumstances beyond one's control. Hence change is resisted, because firstly, many people feel secure in constancy, and secondly, the human tendency is to be in a state of equilibrium with the surroundings or to stay in the "comfort zone". However, contrary to human tendency, McConnell argues that in today's context, security is found in flexibility and adaptability. To illustrate, he added that if a tennis player stands only at one spot, he or she will miss many balls. However, when the player moves where the ball is going, he or she will hit many more balls. Similarly, the organisation that is unchanging will become obsolete but the firm which changes with the times and the market conditions will reap much more financial returns.

Pegels (1995) defined flexibility and adaptability as the measure of a firm's ability to respond to market demands by changing over from one product to another through rapid production line changeover, with the ability to bring out new or redesigned products quickly in response to changes in customer tastes and demands. Hence, organisations that can more readily respond to changes in the market through adjustments made to its internal structure (for example, mission, HR framework) are deemed more flexible and adaptive.

For this paper, a distinction is made between adaptability and flexibility. Adaptability is defined as the ability of the organisation to respond to external changes in the market. For example, in the face of changing market conditions, an adaptable company will be one that can react by changing its mission or even target markets. On the other hand, flexibility is defined as the ability of the organisation to make changes to the internal structure of the organisation in response to changes. As an illustration, a flexible organisation will be one that is able to make adjustments to its establishment through modification of its HR framework. Clearly, adaptability and flexibility are relevant factors of organisational change.

Englehardt and Simmons (2002) maintained that the organisational structure of a firm can support both the flexibility for change and control for execution, by having a two-level structure. At one level, the operational structure provides control for execution while at the more dynamic and experimental, organisational layer, flexibility can be enhanced by building dynamic capabilities, maintaining multiple options, and supporting lateral communication and teamwork among employees. Hence the challenge is for the organisation to offer both structure and flexibility in a constantly changing world, (Englehardt and Simmons, 2002).

Optimism

Other than flexibility and adaptability, optimism is an attitude which is an important determinant of good coping and successful organisational change. McConnell (2002) asserts that organisations cope better with change when a positive culture of making change work is created, by acknowledging what cannot be controlled and taking ownership for what is controllable. Hence, management staff are important as positive role models amid changes when they present a positive mindset, and provide support and encouragement to raise employees' morale and maintain their productivity.

Optimism is also a positive coping strategy in the context of uncertainties and stress during change. According to Mallak (1998), there are general principles drawn from various studies which organisations can apply to ensure greater resilience and to better coping with change. One of these principles is to perceive experiences constructively. When inevitable changes have to be undertaken in an organisation, it often creates stress or discomfort for the individuals within the organisation. However, if individuals can perceive their experiences positively, they are more likely to find solutions to these challenges and experience less stress or other negative emotions. This provides support for the importance of optimism in helping organisations cope well and be resilient amid changes.

Coping

In the context of organisational change, coping may be conceptualised as the ability to respond to changes in a positive and adaptive manner. Such adaptive responses may entail an appraisal of the nature of the change, the organisation's available resources and the behaviour required. Coping is evident when an organisation is able to adjust to the demands of the environment and respond effectively in the given situation.

Planning for Change

In summary, the main factors associated with change in organisations are, as discussed earlier, openness to change, ease of change implementation, level of staff support, flexibility, and adaptability, as well as, optimism. Finally, the success of an organisation in coping with, and implementing, change depends on the adaptability of the management and employees within the firm to the changes. Along with this, research has shown that about 90 per cent of the time, attempts to implement change fail due to a failure to consider the impact of change on individuals (Doe, 1994). Hence, human factors become important grounds for consideration when planning for organisational change. The importance of gauging and eliciting staff support for the change needs to be addressed. Along this line, Doe (1994) emphasised the importance of planning and suggested that planning should include the following: communication, employee involvement, transition plan, support and training, and supportive human resource policies. This paper will attempt the gauge the relevance of these factors in contributing to the local SMEs' adaptation to recent economic challenges and changes in Singapore.

Characteristics of Change

From a survey of the Association of Small and Medium Enterprises of Singapore (Asme) Web site, seven changes were identified as having possible impact on the SMEs in Singapore. These are:

1. Change of mission;

2. Major collaborations or mergers;

3. Change of target markets/products;

4. Engaging of professional consultants;

5. Restructuring of operations;

6. Expanding/decreasing the workforce;

7. Incorporating new technologies.

The first three items on the list of changes describe changes implemented in response to external market conditions whereas the last three items refer to changes an organisation undertakes to change its internal structure. Hence, according to this paper's definition, the first three items are related to the adaptability of an organisation while the last three items reflect the flexibility of the organisation. As for the fourth item, the 'engagement of professional consultants', depending on the function of the professional consultants in the organisation, this item could be classified as a change geared towards either internal structural needs or external market changes.

Method

Respondents 

As defined on the Web site for Singapore SMEs, www.Singapore.SME.com, local SMEs are enterprises that have at least 30 per cent local equity, fixed productive assets (defined by net book value of factory building, machinery and equipment) not exceeding $15 million, and an employment size not exceeding 200 workers for non-manufacturing companies.

Letters via E-mall were sent to local SMEs and members of the Singapore Institute of Management to invite them to participate voluntarily in an online survey on attitudes to change. Data were collected from two online surveys. The first survey was a shorter version exploring the key variables of interest, and based on the findings from the first survey, more questions were added to the second survey to investigate some issues in greater depth.

One hundred respondents participated in the first survey whereas 97 people responded to the second survey. In total, 197 responses were received for the two surveys.

Slightly more than half (55.7 per cent) of the respondents are the CEOs, Directors/Senior Managers and Managers of their organisations, while the remaining respondents identified themselves as the staff/executives within their organisations, representing various departments ranging from IT to marketing to administration.

Figure 1 presents the distribution of industries represented by the respondents. Most of the respondents are from the manufacturing (14.1 per cent), service (13 per cent), education/training (11.5 per cent) and electronics/communications/IT business (10.4 per cent). Most of these organisations are either based locally (42.1 per cent) or both overseas and locally (47.7 per cent). The majority of the respondents (61.7 per cent) reported being in business for more than 11 years. Among the 197 responses, most of the organisations either had a workforce of less than 100 (41.4 per cent) or a somewhat larger workforce of more than 300 employees (39.3 per cent). The rest of the organisations (19.3 per cent) had a workforce of between 101 and 299 employees.

[FIGURE 1 OMITTED]

In addition, about half of the responding organisations (50.8 per cent) are currently employing foreign managers or professionals. A further breakdown of the data revealed that among the employers of foreign managers or professionals, most of these are organisations which have been in business for more than 11 years. About half of all the organisations (51.8 per cent) do not receive governmental funding.

Findings and Discussion

Key Factors of Successful Organisational Change

The online survey included items that addressed various factors that play a role in organisational change, as discussed earlier. These factors included the characteristics of change, planning for change, openness, ease of implementation, staff support and involvement, coping, flexibility, adaptability, and optimism. The following sections present findings for each of these factors in turn.

Characteristics of Organisational Change

Various factors contributed to the need to implement organisational change. Respondents were asked to state the degree to which various factors contributed to the change, with 1 being "Not a significant factor" and 7 being "Very significant factor". The top three identified factors that spurred change in this context were 1) the economic situation in Asia or Singapore (Mean = 4.98, SD = 1.55); 2) knowledge or information regarding economy (Mean = 4.95, SD = 1.45) and 3) technology (Mean = 4.66, SD = 1.68).

As for the extent to which organisations had changed over the past three to five years, with 1 being "Changed very little" to 7 being "Changed a great deal", respondents reported experiencing moderate levels of change (Mean = 4.85, SD = 1.34). Upon further investigation, results of the online survey revealed that in the last three years, a predominance of organisations (94.8 per cent) reported having undergone at least one of the seven listed changes presented in Table 1. Furthermore, a comparable percentage (95.3 per cent) of the respondents indicated that their organisations would be engaging in at least one of the seven listed changes in the forthcoming three years.

Table 1 depicts the seven types of changes and the extent to which organisations engaged in these changes either in the preceding or the forthcoming three years. As illustrated in the table, the most commonly quoted change that had occurred in the respondents' organisations during the past three years was Restructuring of operations (57.7 per cent). This was followed by Expanding/decreasing workforce, Incorporating new technologies and Change of mission, all of which occurred at 51.8 per cent. Change of markets or products (49 per cent) was the least commonly cited change that had occurred among the local organisations.

Among the seven listed changes, the most commonly quoted change that the respondents' organisations were likely to adopt in the forthcoming three years included Restructuring of operations (57.4 per cent) and Major collaboration or merger (54.4 per cent). The least likely change in the forthcoming three years was that of a Change in mission (44.3 per cent).

The majority (34.8 per cent) of the respondents identified Restructuring of the operations as the biggest change, followed by Expanding or decreasing workforce (20.7 per cent) and Change of target markets/products (14.1 per cent).

Restructuring of operations was prompted by the need to stay competitive in the rapidly changing market, where market conditions and consumer expectations are constantly changing. Hence, there is a need to continuously keep in touch with the needs of the customers or to restructure operations so as to increase productivity or attempt to re-capture or enlarge market share. In addition, companies also benefit from greater synergies through restructuring the existing work functions.

Workforce expansion or reduction was one change that was employed as a result of the poor economic situation in Singapore and Asia. In order to remain competitive, companies had to cut costs. As manpower accounts for a large percentage of the overall costs, some companies replaced their non-performing staff while others chose to reduce the number of employees by employing more effective technology management to achieve better results.

On the other hand, a change of target markets or products was implemented as there are less business opportunities in the local market and also as a cost reduction strategy. New markets were identified to be more profitable and stable as compared to the old markets. In addition, diversifying the market also helped to spread out the risks in the event that one geographical region does poorly, losses can be balanced out by profits in other countries.

Planning for Organisational Change

Generally, companies had to change fast. The survey showed that majority of the organisations (94.4 per cent) took two years or less to plan for changes. Most of the respondents (36 per cent) reported that that their companies took between six to 11 months to plan for changes within the organisation. Of those surveyed, 29.2 per cent reported that planning for change took less than six months while a similar proportion reported that planning took between one to two years. When asked to rate the importance of planning to the

success of the organisation in coping with change (1 = "Not important" and 7 = "Very important"), respondents generally agreed that planning was important to the success of the organisation in coping with change (Mean = 5.67, SD = 1.15).

An open-ended question was used to elicit responses on the key consideration in planning for organisational change. Analyses of the responses showed three main areas of consideration which included the impact on staff and staff development, cost management and profitability, and finally impact on customers. Firstly, staff are often very much affected by changes within the organisation. Hence, when planning for change, issues to consider include manpower distribution, employee morale and welfare, mindset of senior staff, ways to minimise impact on staff, and adequate training of staff. In addition, there must be effective communication of information to all staff and shareholders to ensure that everyone would be convinced that changes are made in order for the organisation to remain competitive.

Secondly, there must be good cost management to ensure business sustainability or growth, and maximising profit. These include balancing the cost of implementing change with the increase in efficiency derived from the change, weighing the organisation's capacity for change, stability of new markets and long- term business viability.

Finally, organisations also deliberate on the impact changes have on the customers. Changes should be implemented and resources utilised to best meet the needs of the customers and to minimise disruption to existing customer relationships.

Openness to Change, Ease of Change Implementation and Level of Support from Management Staff

Earlier, it has been noted that the extent and manner with which organisations embrace change are important indicators of its adaptability. This study assessed these indicators among the responding organisations. Table 2 depicts the organisations' scores on these indicators as the scale for change, namely, openness to change, ease of change implementation and the level of support from management staff.

The items for the scale of change for Openness to Change, Ease of Change Implementation, and Level of Support from Management Staff have rather high face validity and reliability analyses of the measurements indicate good internal consistency ranging from .81 to a high of .90. The respective mean scores of 4.73, 4.16 and 3.99 for the scales of Openness to Change, Ease of Change Implementation and Level of Support from Management Staff, hover slightly above and below the mid point of four on a seven-point scale.

Staff Involvement and Support during Organisational Change

Staff involvement and support are critical elements for successful organisational change. Respondents were asked to rate on a scale of I to 7, 1 being "No involvement" and 7 being "Involved to a large extent", on the extent of staff involvement in the planning process as well as in the execution of the change. From the survey, it is clear that staff are moderately involved in both the planning process (Mean = 4.21, SD = 1.55) and the execution of the change (Mean = 4.73, SD = 1.48). However, staff are more involved in the execution of the change rather than the planning, probably because planning are usually carried out by the directors, CEOs and the more senior staff.

In addition, on items regarding the importance of the support of staff in the planning and implementation process, (1 = "Not important" and 7 = "Very important"), support of staff is deemed as moderately important in the planning process (Mean = 4.71, SD = 1.60) and relatively more important during the implementation process (Mean = 5.31, SD = 1.51). Again, this could be due to the fact that planning is done at the more senior levels of management, so staff support in the planning process becomes relatively less important than during the implementation process.

Coping, Flexibility, Adaptability and Optimism

The respondents were asked to rate their organisation's overall ability to cope with change and the extent to which they believed their organisation is flexible and adaptable to change. They were also asked to rate how optimistic they feel about their organisation. The mean ratings and standard deviations obtained for these four indicators on a seven-point scale are summarised in Table 3.

Notably, the local businesses are still relatively optimistic over the future market conditions despite current difficulties. Their reasons for optimism include confidence in the strong management and financial status of the company, a belief in their product and services, and realistic expectations and positive mindsets.

The respondents from many local organisations believe that the sound financial standing and strong management of the company makes them feel optimistic about their company's future. Many organisations are extremely careful with their budget to ensure their financial viability. Others have trimmed their staff strength to reduce overheads. In addition, there are lots of growth opportunities in successful overseas markets, which help to bring in profits. Respondents also reported that management is flexible and able to change or adapt quickly in response to the dynamic environment. Others have confidence in the management's decision to change and a few key management staff are able to share the company's goal and vision together with the CEO. With a clear mission and vision for the organisation, core fundamental values aid in decision making thus promoting strong team spirit.

Moreover, some local organisations are optimistic because they believe in their products and their company's good reputation and brand name as being among the strongest and most well-known brands in the market. With newer and better products to be pushed into the market, the future seemed bright for some local organisations.

Finally, having realistic expectations and maintaining a positive mindset also helped to keep organisations optimistic, for the focus was on improvements within the organisations and not solely on the problems as changes are being implemented and staff are receiving required training. Some even see the poor economic condition as providing windows of opportunities for doing business, resulting in faster promotions.

Organisational Change and Overall Success of Organisation

How did the variables of planning for change, openness, ease of change implementation, staff support, flexibility, adaptability and optimism relate with success in implementing organisational change as well as the overall success of the organisation? The relationship of these factors was explored using bivariate correlation analyses. The results of these analyses are summarised in Table 4.

As expected, many of the factors correlated positively with each other. The correlation between staff support in planning and staff support in implementation yields the highest Pearson correlation coefficient of 0.77, (p < .01) suggesting that organisations which deemed staff support as important in the implementation process also tended to view staff support as important in the planning process. In these organisations, staff are therefore also involved to a large extent in the planning and execution of change.

Factors Associated with Organisational Coping

Organisations that are successful tended to cope better with changes. The respondents were asked to rate, on a seven-point scale, their perceived level of the organisation's coping with change. A higher score indicated better perceived coping. Results from the correlational analyses showed that organisations with higher scores on coping tended to place greater emphasis on staff involvement and support during both the planning process and execution of change within the organisation. They also tended to be more adaptable and flexible. The organisation's level of optimism is also associated with how well they coped. The more optimistic an organisation, the greater was the likelihood that the organisation would cope well with changes.

Factors Associated with Organisational Success

For this study, success was measured in three ways: the organisations' success in implementing change, the perceived level of overall success and lastly, the financial state of the company, in terms of either making a profit, breaking even or incurring loss. For the first two measures of success, respondents were asked to rate on a seven-point scale their perception of the success of implementing change in their organisations and their perceived current level of organisational success. A correlation of these measures of success with other measures showed that the respondents' reported levels of organisational coping, adaptability, flexibility and optimism were all significantly correlated with their organisation's success in implementing change and overall success. The analyses showed that organisations that are more successful tended to cope better with changes and to be more adaptable and flexible. They also tended be more optimistic over the future. Finally, more successful organisations also tended to view planning as important to the success of the organisation in coping with change.

One-way analyses of variance (ANOVA) also revealed that compared to those that were reporting loss (Mean = 1.63, SD = 1.06), organisations that were making profits (Mean = 4.14, SD = 1.55) were more likely to implement changes that involved regionalisation of the industry, F (2, 96) = 10.16, p<0.001.

Secondly, organisations that were making profits (Mean = 3.48, SD = 1.53) were less likely to receive support from the management staff when decreasing the workforce. In contrast, organisations which were reporting loss (Mean = 4.13, SD = 1.68), were more likely to receive support from management staff when decreasing the workforce, F (2, 192) = 6.23, p< 0.01. This suggests that only when organisations are in the red will the situation be severe enough for the management staff to be supportive of downsizing.

Finally, results also showed that the organisation's reported financial status reflected their differential ratings of perceived organisational success F (2,191) = 18.75, p< 0.001. Organisations that were making profits had higher ratings of perceived success (Mean = 4.92, SD = 1.26) whereas organisations that were making losses or just breaking even had lower ratings of their organisation's success (Mean = 3.67, SD = 1.60).

Stepwise regression analysis was employed to determine the extent to which optimism, adaptation, flexibility and coping predicted organisational success. Prior to this analysis, the variables optimism, adaptation, flexibility, coping and organisational success were screened for multicollinearity using SPSS through the Statistics Collin instruction. According to Belsley, Kuh, and Welsch (1980), multicollinearity is present when the output shows a conditioning index of >30 for a given dimension, coupled with at least two variance proportions for an individual variable at >0.50. Evaluation of the results found no evidence of multicollinearity.

The results as depicted in Table 5 show the unstandardised regression coefficients (B) and intercept, the standardised regression coefficients (2), R, [R.sup.2] and adjusted [R.sup.2] after entry of all the four variables. Correlations between the variables are depicted in Table 4. R was significantly different from zero at the end of each step. After step three, with all the variables in the equation, R = 0.71, F (3,189) = 65.52, p <0.001. After step one, with Optimism in the equation, [R.sup.2] = 0.42, F (1,191) = 140.84, p <0.001. After step two, with Adaptability in the equation [R.sup.2] = 0.50, F (2,190) = 93.11, p < 0.001.

Addition of Coping to the equation resulted in a significant increment in [R.sup.2]. After step three, with Coping in the equation, [R.sup.2] = 0.51, adjusted [R.sup.2] = 0.50, F (3,189) = 65.52., p <0.001, addition of Flexibility did not reliably improve [R.sup.2]. The results showed that these three variables, Optimism, Adaptability and Coping accounted for 50 per cent of the variance in the respondents' perception of organisational success.

From these findings, we may conclude that the factors that played a substantial role in organisational success included an optimistic outlook about the future, the ability to adapt to change as well as to cope with adverse conditions.

Limitations of the Study

In interpreting the findings of this study, several limitations have to be considered. The first limitation lies with the sampling. The respondents participated in this study by self-selection. Participation in this study was based on access to the survey posted online. Researchers had no control over the number and the profile of the respondents who chose to volunteer for the study. That is, the respondents are the ones who chose to participate in this study amongst those who received invitations via emails. Any respondent who visited the website could participate in the online survey. An issue in particular was that many of the respondents indicated that their organisations had a workforce of over 300, which does not fall within the official definition for staff size of a Small and Medium Enterprise. However, the survey could not ascertain to what extent the workforce of these organisations exceeded the limit of 300 as this information was not captured. As the number of respondents was rather large, their responses were included for analyses, thus limiting the generalisability of this study for SMEs.

Another limitation lies with the measurement of the factors of interest in this study: openness to change, level of staff support, ease of change implementation, adaptability, flexibility, level of optimism, degree of coping and level of success. Due to the consideration that a long and elaborate questionnaire will not be welcomed, no more than two items were used to tap each of the factors. This may be an inadequate coverage of the domain.

Finally, as the results of the online survey relied on the self-report of the respondents, we cannot rule out the possibility of 'social desirability' in the responses especially when responding to sections such as optimism and perceived level of organisational coping.

Conclusion

Almost all local businesses surveyed reported that they had made changes or planned to engage in change in the next three years. This study provided a clearer conceptualisation and measures of organisational change. In particular, several factors, namely staff involvement and support in planning and implementing change, the organisation's adaptability and flexibility and the level of optimism were identified to be related to the organisation's success in coping with change. These factors were also related to the successful implementation of change in the organisation and the overall perceived success of the organisation.

This study presented a critical factor, adaptability, defined as the organisations' ability to respond strategically to the external environment. In particular, change of mission and mergers or collaborations remained the most prevalent of such responses to the external environment for local business organisations. The findings of this study also showed that adaptability and flexibility were highly and significantly correlated (r = .72, p = .01) as both these factors played important roles in an organisation's success.

Optimism came up consistently as an important variable that could be related to an organisation's level of coping and success. The more optimistic an organisation was with regards to the future, the more likely it was that the organisation would cope well with change and remained profitable. These organisations also tended to be more adaptable and flexible.

Among all the nine factors considered, planning and the involvement and support of the staff in planning as well as in the execution of change were key variables related to successful coping and the perceived success of the organisation. An organisation that is thinking of introducing changes (such as that of incorporating new technologies into the organisation or undertaking a change in mission) would not want to overlook the importance of rallying the full support of the employees before executing the change so as to secure a more positive outcome. The findings of this study echoes the bid for teambuilding by researchers such as Woodcock and Francis (1994) and Armstrong (1999), to ensure effective coping of an organisation in these economically turbulent times. Without a doubt, organisations, in order to be relevant and successful, need to constantly change and adapt in the new economy.

Table 1: Organisations and the Type of Changes Adopted (per cent)

Types of Change            Organisations that     Organisations that
                            implemented this       will engage this
                           change in the past     change in the next
                              three years           three years

1. Restructuring of               57.7                   57.4
     operations
2. Expanding/decreasing           51.8                   53.8
     workforce
3. Incorporating new              51.8                   51.8
     technologies                 51.8                   44.3
4. Change of mission              50.0                   54.4
5. Major collaboration
6. Engaging professional          49.7                   46.9
     consultants
7. Change of markets/             49.0                   51.3
     products
                                                        (N = 197)

Table 2: Factors Associated with Organisations' Response to Change

Types of Change            Mean    SD    Mean    SD    Mean    SD

External

Change of mission          4.34   1.62   4.12   1.45   4.03   1.61
Major collaborations/      4.30   1.70   3.76   1.38   3.97   1.44
  mergers
Change of target market    4.80   1.45   4.13   1.38   4.03   1.58
Engaging professional      4.39   1.52   4.31   1.30   4.07   1.45
  consultants

Internal

Restructuring of           5.02   1.37   4.05   1.42   4.02   1.62
  operations
Expanding/decreasing       5.01   1.34   4.33   1.36   3.84   1.59
  workforce
Incorporating new          5.26   1.35   4.45   1.49   4.02   1.84
  technologies

Global score for above     4.73   1.02   4.16   0.97   3.99   1.26
  items
Reliability co-efficient   0.81     -    0.81     -    0.90     -
  (Alpha)

Note: Rating is based on a 7-point scale (e.g. for Openness to Change
Scale, 1 denotes not at all open to the change; 4, neutral to the
change and 7, totally open to the change), N = 196.

Table 3: Respondents' Scores on Coping, Flexibility, Adaptability, and
Optimism

               Mean   Standard Deviation

Coping         4.96          1.28
Adaptability   4.92          1.40
Flexibility    4.83          1.39
Optimism       5.09          1.35

Table 4: Correlation between Successful Organisational Change and
Overall Success with Various Elements of Change

                    Successful                            Staff
                    Organisational   Overall              Involvement
                    Change           Success   Planning   in Planning

Successful
  Organisational
  Change            1.000
Overall Success     0.58 **          1.000
Planning            0.40 **          0.28 **   1.000
Staff Involvement
  in Planning       0.18             0.16      0.18       1.000
Staff Involvement
  in Execution      0.20             0.11      0.28 **    0.63 **
Staff Support
  in Planning       0.16             0.15      0.23 *     0.63 **
Staff Support in
  Implementation    0.25 *           0.13      0.25 *     0.44 **
Coping              0.50 **          0.61 **   0.16       0.32 **
Adaptability        0.44 **          0.63 **   0.13       0.30 **
Flexibility         0.36 **          0.48 **   0.14       0.35 **
Optimism            0.47 **          0.65 **   0.18       0.32 **

                    Staff         Staff        Staff
                    Involvement   Support in   Support in
                    in Execution  Planning     Implementation   Coping

Successful
  Organisational
  Change
Overall Success
Planning
Staff Involvement
  in Planning
Staff Involvement
  in Execution      1.000
Staff Support
  in Planning       0.43 **       1.000
Staff Support in
  Implementation    0.63 **       0.77 **      1.000
Coping              0.31 **       0.25 *       0.26 *           1.000
Adaptability        0.23 *        0.23 *       0.24 *           0.74 **
Flexibility         0.20          0.17         0.14             0.66 **
Optimism            0.27 **       0.28 **      0.29 **          0.65 **

                    Adaptability   Flexibility   Optimism

Successful
  Organisational
  Change
Overall Success
Planning
Staff Involvement
  in Planning
Staff Involvement
  in Execution
Staff Support
  in Planning
Staff Support in
  Implementation
Coping
Adaptability        1.000
Flexibility         0.72 **        1.000
Optimism            0.65 **        0.50 **       1.000

** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).

N = 192

Table 5: Stepwise Regression of Optimism, Adaptability, Coping, and
Flexibility on Organisational Success

                                                s[r.sup.2]
Variables      Means   SD     B      [beta]     (incremental)

Optimism       5.09    1.36   0.34   0.37 ***   0.42 ***
Adaptability   4.92    1.40   0.23   0.25 **    0.07 ***
Coping         4.95    1.29   0.20   0.20 *     0.02 *
Flexibility    4.83    1.39

               Intercept = 0.694
               [R.sup.2] = 0.51
               Adjusted [R.sup.2] = 0.50
               R = 0.71 ***

* p<.05; ** p<.01; *** p<.001

The assistance of Ms Soh Jo Chih in data analysis and preliminary write-up is acknowledged.

The research was funded by the Singapore Institute of Management.

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