Organisational Behaviour Lecture 12: Organizational Culture and Change

Learning Objectives Define organizational culture and describe its common characteristics. Compare the functional and dysfunctional effects of organizational culture on people and the organization. Identify the factors that create and sustain an organization’s culture. Show how culture is transmitted to employees. Describe a positive organizational culture. Identify forces that act as stimulants to change and contrast planned and unplanned change. List the forces for resistance to change. Compare the four main approaches to managing organizational change. Demonstrate two ways of creating a culture for change.

Organizational Culture A common perception held by the organization’s members; a system of shared meaning Seven primary characteristics Innovation and risk taking Attention to detail Outcome orientation People orientation Team orientation Aggressiveness Stability Organizational culture is an important concept in studying how organizations behave. Culture has significant impact on how individuals interpret the impact of their behavior and make decisions about their actions. Culture is defined as a common perception held by the members of the organization or a sense of shared meaning. Cultures have 7 primary characteristics that define the organization. They are: innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, and stability. (c) 2008 Prentice-Hall, All rights reserved.

Do Organizations Have Uniform Cultures? Culture is a descriptive term: it may act as a substitute for formalization Dominant Culture Expresses the core values that are shared by a majority of the organization’s members Subcultures Minicultures within an organization, typically defined by department designations and geographical separation Core Values The primary or dominant values that are accepted throughout the organization Strong Culture A culture in which the core values are intensely held and widely shared There are several different groupings that most cultures fit into. These groups describe the organization in an effort to help increase the understanding of how an organization works. There are different aspects of culture that need to be defined to help lay a foundation for understanding what culture is. Dominant culture is the core values that are shared by the majority of employees in the organization. Subcultures are when there are a variety of different cultures within the organization. These subcultures typically are divided by department and/or geographical separation. Core values are the primary values that most people in the organization accept. A strong culture is one in which the core values are intensely held and shared by most. These definitions are key components of a culture and will help you further understand organizational culture. (c) 2008 Prentice-Hall, All rights reserved.

What Do Cultures Do? Culture’s Functions Defines the boundary between one organization and others Conveys a sense of identity for its members Facilitates the generation of commitment to something larger than self-interest Enhances the stability of the social system Serves as a sense-making and control mechanism for fitting employees in the organization Cultures take on distinct functions. Some of the things that cultures do are defining the boundary between one organization and others. They also convey a sense of identity for the members of the organization. If the cultures are strong, they can facilitate a continuous commitment to something larger than self-interest over an extended period of time. Cultures also help people know what to expect in the organization and can thereby enhance the stability of the social system. Through doing this, it can also serve as a sense-making and control mechanism for fitting employees into the organization. (c) 2008 Prentice-Hall, All rights reserved.

Culture as a Liability Institutionalization Barrier to change A company can become institutionalized where it is valued for itself and not for the goods and services it provides Barrier to change Occurs when culture’s values are not aligned with the values necessary for rapid change Barrier to diversity Strong cultures put considerable pressure on employees to conform, which may lead to institutionalized bias Barrier to acquisitions and mergers Incompatible cultures can destroy an otherwise successful merger Culture can also be a hindrance to an organization. A company can become institutionalized when people value the organization more than what they provide. When cultures are strong, they can become a barrier to change as their values may not align with the values needed to embrace or facilitate the change. Cultures that may pressure employees to conform can be a barrier to hiring, developing, and promoting a diverse workforce. Finally, if a merger or acquisition occurs, one of the most difficult things to do is to merge the two cultures, causing many mergers to fail. (c) 2008 Prentice-Hall, All rights reserved.

How Culture Begins Stems from the actions of the founders: Founders hire and keep only employees who think and feel the same way they do. Founders indoctrinate and socialize these employees to their way of thinking and feeling. The founders’ own behavior acts as a role model that encourages employees to identify with them and thereby internalize their beliefs, values, and assumptions. Cultures start from the very beginning of the organization with the founders. Founders will tend to hire and keep employees who view things in a similar fashion. They will also try to get employees to think about things the way they do and socialize them to their point of view and ways of doing things. This is done so that the founders’ behavior will become the behavior to model after in order to succeed in the organization and to fit in. (c) 2008 Prentice-Hall, All rights reserved.

Stages in the Socialization Process Prearrival The period of learning prior to a new employee joining the organization Encounter When the new employee sees what the organization is really like and confronts the possibility that expectations and reality may diverge Metamorphosis When the new employee changes and adjusts to the work, work group, and organization The socialization process involves a few steps. The employee will learn about the organization through literature, interviews, and other people in the prearrival stage. Once the employee starts interacting with other employees, they enter the encounter stage where they see what the organization is really like. In this stage often their expectations are measured against the reality and sometimes they do not align. The third stage is called metamorphosis, when the new employee adjusts to the organization and their work. (c) 2008 Prentice-Hall, All rights reserved.

Socialization Program Options Choose the appropriate alternatives: Formal versus Informal Individual versus Collective Fixed versus Variable Serial versus Random Investiture versus Divestiture Socialization outcomes: Higher productivity Greater commitment Lower turnover There are a number of possible socialization programs. Each organization needs to select one that best fits their culture. When the socialization process matches an organization’s culture, they have positive outcomes including higher productivity, greater commitment, and lower turnover. Source: Based on J. Van Maanen, “People Processing: Strategies of Organizational Socialization,” Organizational Dynamics, Summer 1978, pp. 19–36; and E. H. Schein, Organizational Culture,” American Psychologist, February 1990, p. 116. (c) 2008 Prentice-Hall, All rights reserved.

Summary: How Organizational Cultures Form Organizational cultures are derived from the founder They are sustained through managerial action Organizational cultures begin with the founder of the organization, continue through the hiring of people who see things similarly, and are enforced through top management and socialization. (c) 2008 Prentice-Hall, All rights reserved.

How Employees Learn Culture Stories Anchor the present into the past and provide explanations and legitimacy for current practices Rituals Repetitive sequences of activities that express and reinforce the key values of the organization Material Symbols Acceptable attire, office size, opulence of the office furnishings, and executive perks that convey to employees who is important in the organization Language Jargon and special ways of expressing one’s self to indicate membership in the organization Employees learn the organizational culture through a number of avenues. They can gain an understanding of culture by hearing stories that present the past and provide explanations for current practices. Rituals, or repetitive sequences of activities, can reinforce the key values of the organization and provide insight into the culture. Material symbols such as dress codes, formal or informal, office size or style, and perks for key employees can denote who is important in an organization. Language is another way to learn about organizational culture as employees will express themselves in certain ways to indicate membership in the organization. (c) 2008 Prentice-Hall, All rights reserved.

Creating an Ethical Organizational Culture Characteristics of Organizations that Develop High Ethical Standards High tolerance for risk Low to moderate in aggressiveness Focus on means as well as outcomes Managerial Practices Promoting an Ethical Culture Being a visible role model Communicating ethical expectations Providing ethical training Rewarding ethical acts and punishing unethical ones Providing protective mechanisms As cultures are created, it is important to incorporate ethics into the cultural norms from the very beginning. Certain characteristics will help develop high ethical standards, such as a high tolerance for risk, so people are not afraid to make mistakes; low to moderate in aggressiveness so that unethical behaviors are avoided and a focusing on the means as well as the outcomes so that ethics is embedded in both. (c) 2008 Prentice-Hall, All rights reserved.

Creating a Positive Organizational Culture A culture that: Builds on employee strengths Focus is on discovering, sharing, and building on the strengths of individual employees Rewards more than it punishes Articulating praise and “catching employees doing something right” Emphasizes individual vitality and growth Helping employees learn and grow in their jobs and careers Limits of Positive Culture: May not work for all organizations or everyone within them A positive organizational culture is one that builds on employee strengths so that employees can develop and grow. It also rewards more than it punishes so employees are not afraid to try new things and feel good about what they are contributing. Finally, it emphasizes individual vitality and growth so that employees are operating at full potential. (c) 2008 Prentice-Hall, All rights reserved.

Spirituality and Organizational Culture Workplace Spirituality The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of the community NOT about organized religious practices People seek to find meaning and purpose in their work. Spirituality also impacts organizational culture. Spirituality in the workplace is the recognition that people have an inner life that will help them be better workers and by doing meaningful work they will have a fuller life. It is not about organized religious practices. (c) 2008 Prentice-Hall, All rights reserved.

Why Spirituality Now? As a counterbalance to the pressures and stress of a turbulent pace of life and the lack of community many people feel and their increased need for involvement and connection. Job demands have made the workplace dominant in many people’s lives, yet they continue to question the meaning of work. The desire to integrate personal life values with one’s professional life. An increasing number of people are finding that the pursuit of more material acquisitions leaves them unfulfilled. Spirituality is especially important now as people need a counterbalance to the pressures and stress of the busyness of life. Often spirituality allows the employee to fulfill all aspects of their lives – body, mind, and spirit. Although the workplace is the dominant influence in people’s lives, they are not willing to accept purposeless work. They want to be able to incorporate their values into their work. More and more people realize that material possessions do not fulfill their needs. Therefore, a holistic approach to life – body, mind, and spirit – is essential and organizations will help their employees have fuller lives if they recognize this approach. (c) 2008 Prentice-Hall, All rights reserved.

Characteristics of a Spiritual Organization Concerned with helping people develop and reach their full potential Directly addresses problems created by work/life conflicts Four characteristics of spiritual organizations: Strong sense of purpose Trust and respect Humanistic work practices Toleration of employee expression A spiritual organization will have a number of characteristics that help their employees reach their full potential and help them deal with work/life conflicts. These include: 1. Strong sense of purpose Trust and respect Humanistic work practices Toleration of employee expression (c) 2008 Prentice-Hall, All rights reserved.

Criticisms of Spirituality What is the scientific foundation? It is still pending: needs more research Are spiritual organizations legitimate – do they have the right to impose values on employees? Spirituality is not about God or any religious values It is an attempt to help employees find meaning and value in their work Are spirituality and profits compatible? Initial evidence suggests that they are Spirituality may result in greater productivity and dramatically lower turnover There are a number of criticisms of incorporating spirituality in the workplace. The critics are calling for the research that supports the assertion that organizations are more successful when they allow for or promote spirituality. Also, people are asking if the organizations hold the right to impose values on their employees. Although spirituality is not about God or religious values and is more about helping employees find meaning and value in their work, the two may be confused or intertwined at times. Finally, critics wonder if spirituality and profits are compatible. Initial research shows that spirituality allows for greater productivity and dramatically lower turnover, indicating that spirituality helps to increase profits. (c) 2008 Prentice-Hall, All rights reserved.

Global Implications Organization cultures, while strong, can’t ignore local culture Managers should be more culturally sensitive by: Adjusting speech to cultural norms Listening more Avoiding discussions of controversial topics All global firms (not just U.S. firms) need to be more culturally sensitive Organizational culture still exists within a local culture and that can’t be ignored. It is important that managers increase their ability to become more culturally sensitive through active listening, adjusting communication to the culture in which they are operating, and avoiding controversial topics in their discussions. (c) 2008 Prentice-Hall, All rights reserved.

Culture as an Intervening Variable Employees form an overall subjective perception of the organization based on these objective factors: The opinions formed affect employee performance and satisfaction. It is important to keep in mind that employees will form a perception of the organization based on things they observe. These opinions will affect their performance and job satisfaction so it is important to pay attention to organizational culture and its impact on employee outcomes. (c) 2008 Prentice-Hall, All rights reserved.

Forces for Change Nature of the Workforce Technology Economic Shocks Greater diversity Technology Faster, cheaper, more mobile Economic Shocks Mortgage meltdown Competition Global marketplace Social Trends Baby boom retirements World Politics Iraq War and the opening of China There are many things that force change in an organization such as the nature of the workforce, technology, competition, economic forces, social trends, and world politics. (c) 2008 Prentice-Hall, All rights reserved.

Planned Change Change Planned Change Change Agents Making things different Planned Change Activities that are proactive and purposeful: an intentional, goal- oriented activity Goals of planned change Improving the ability of the organization to adapt to changes in its environment Changing employee behavior Change Agents Persons who act as catalysts and assume the responsibility for managing change activities Organizations often face change that is unexpected and sudden but it can also be a purposeful decision that organizations undertake. There are ways to foster an environment that is able to adapt and change with the demands of the marketplace. Planned change is engaging in activities that are proactive and purposeful to improve the ability of the organization to handle change and to change employee behavior. Through this process change agents, those acting as leaders in the change process, are essential for successfully achieving the desired change. (c) 2008 Prentice-Hall, All rights reserved.

Resistance to Change Resistance to change appears to be a natural and positive state Forms of Resistance to Change: Overt and Immediate Voicing complaints, engaging in job actions Implicit and Deferred Loss of employee loyalty and motivation, increased errors or mistakes, increased absenteeism Deferred resistance clouds the link between source and reaction Whenever change is present, there is resistance to change. Individuals and groups become comfortable with things that are familiar, and change threatens the status quo. There are different ways that change is resisted by employees. It can be overt and immediate where complaints are voiced and people will fail to engage in job actions or perform negative actions that hinder productivity. It can also be implicit and deferred when employees lose their loyalty and their motivation. As the resistance is deferred, it becomes more difficult to find the link between the source and the reaction. (c) 2008 Prentice-Hall, All rights reserved.

Sources of Resistance to Change There are many sources of resistance to change, as seen in the visual in this slide. It can take the form of individual resistance, such as fear of the unknown or security issues or organizational resistance such as threat to expertise, structural inertia, or limited focus of change. (c) 2008 Prentice-Hall, All rights reserved.

Tactics for Overcoming Resistance to Change Education and Communication Show those effected the logic behind the change Participation Participation in the decision process lessens resistance Building Support and Commitment Counseling, therapy, or new-skills training Implementing Change Fairly Be consistent and procedurally fair Manipulation and Cooptation “Spinning” the message to gain cooperation Selecting people who accept change Hire people who enjoy change in the first place Coercion Direct threats and force When managers face resistance to change there are some useful tactics they can utilize to help people overcome it. These tactics include education and communication, getting people to participate in the process, and building support and commitment. It can also include being sure to implement the change fairly by applying a consistent and fair process, using manipulation and cooptation to spin the message to gain cooperation or selecting people from the beginning who are more willing to accept change. Finally, a manager can resort to coercion, using direct threats and force to make people change. This is not often a good option. (c) 2008 Prentice-Hall, All rights reserved.

The Politics of Change Impetus for change is likely to come from outside change agents, new employees, or managers outside the main power structure. Internal change agents are most threatened by their loss of status in the organization. Long-time power holders tend to implement incremental but not radical change. The outcomes of power struggles in the organization will determine the speed and quality of change. Change includes many political factors as the impetus for change is likely to come from outside those who are responsible for making the change happen. This can threaten those change agents within the organization and force them to implement incremental but not radical change. Embedded in the change dynamics will be the issue of power. Power struggles will have results that determine the speed and quality of change. (c) 2008 Prentice-Hall, All rights reserved.

Lewin’s Three-Step Change Model Unfreezing Change efforts to overcome the pressures of both individual resistance and group conformity Refreezing Stabilizing a change intervention by balancing driving and restraining forces Unfreeze Move Refreeze Lewin offers a three-step model to help facilitate the change process. He sets forth that change efforts need to “unfreeze” individual resistance and group conformity to help them move forward and then you need to refreeze the changes by balancing driving and restraining forces. This will help to move people through the change process and solidify the desired behaviors/outcomes moving forward. (c) 2008 Prentice-Hall, All rights reserved.

Lewin: Unfreezing the Status Quo Driving Forces Forces that direct behavior away from the status quo Restraining Forces Forces that hinder movement from the existing equilibrium In the unfreezing stage Lewin identifies driving and restraining forces. Driving forces are those that direct behavior away from the status quo. Restraining forces are those that hinder movement from the existing equilibrium. (c) 2008 Prentice-Hall, All rights reserved.

Kotter’s Eight-Step Plan Builds from Lewin’s Model To implement change: Establish a sense of urgency Form a coalition Create a new vision Communicate the vision Empower others by removing barriers Create and reward short-term “wins” Consolidate, reassess, and adjust Reinforce the changes Unfreezing Kotter also offers a model to look at change that builds on the initial ideas of Lewin. He sets forth the following eight steps: Establish a sense of urgency Form a coalition Create a new vision Communicate the vision Empower others by removing barriers Create and reward short-term “wins” Consolidate, reassess, and adjust Reinforce the changes Movement Refreezing (c) 2008 Prentice-Hall, All rights reserved.

Action Research Process steps: Action research benefits: A change process based on systematic collection of data and then selection of a change action based on what the analyzed data indicates Process steps: Diagnosis Analysis Feedback Action Evaluation Action research benefits: Problem-focused rather than solution-centered Heavy employee involvement reduces resistance to change Action research is another theory about change that says that the change process is based on a systematic collection of data and then selection of a change action based on what the data tells you. The process would be to diagnose the situation, analyze the data, obtain feedback from the data, take action, and then evaluate. The benefits of this approach is that it focuses on the problem instead of jumping to the solution and it also gets employees involved, thereby reducing their resistance to change. (c) 2008 Prentice-Hall, All rights reserved.

Organizational Development Organizational Development (OD) A collection of planned interventions, built on humanistic- democratic values, that seeks to improve organizational effectiveness and employee well-being OD Values Respect for people Trust and support Power equalization Confrontation Participation Organizational development is an area of study that is set up to determine what an organization needs to improve their effectiveness and employee well being. Some organizational development values include respect for people, trust and support, power equalization, confrontation, and participation. (c) 2008 Prentice-Hall, All rights reserved.

Six OD Techniques Sensitivity Training Survey Feedback Approach Training groups (T-groups) that seek to change behavior through unstructured group interaction Provides increased awareness of others and self Increases empathy with others, listening skills, openness, and tolerance for others Survey Feedback Approach The use of questionnaires to identify discrepancies among member perceptions; discussion follows and remedies are suggested Process Consultation (PC) A consultant gives a client insights into what is going on around the client, within the client, and between the client and other people; identifies processes that need improvement. There are six commonly used organizational development techniques. The first is sensitivity training that sets up groups that seek to change behavior through unstructured group interaction by providing an environment of increased awareness of others and of themselves. This increases their empathy, listening skills, openness, and tolerance for others. The second technique is the survey feedback approach where the organization will use a questionnaire to identify discrepancies among member perceptions and then follow up with discussions and plans for improvement. Process consultation is the third technique. In this technique there is a consultant involved who gives the clients some insights into what is happening in the organization and helps to identify a process for improvement. (c) 2008 Prentice-Hall, All rights reserved.

Six OD Techniques (Continued) Team Building High interaction among team members to increase trust and openness Intergroup Development OD efforts to change the attitudes, stereotypes, and perceptions that groups have of each other Appreciative Inquiry Seeks to identify the unique qualities and special strengths of an organization, which can then be built on to improve performance Discovery: Recalling the strengths of the organization Dreaming: Speculation on the future of the organization Design: Finding a common vision Destiny: Deciding how to fulfill the dream The fourth technique is engaging in team building tools to increase trust and openness through increased interactions. Intergroup development is an organizational development tool that attempts to change the attitudes, stereotypes, and perceptions that groups may have of each other. Finally, the sixth commonly used technique is appreciative inquiry. This process seeks to identify the unique qualities and special strengths of an organization which they then use to build on to improve performance through a process. This process includes discovery (identifying the strengths of the organization), dreaming (speculating on the future of the organization), designing (finding a common vision), and destiny (deciding how to fulfill the dream). (c) 2008 Prentice-Hall, All rights reserved.

Creating a Culture for Change: Innovation Stimulating a Culture of Innovation Innovation: a new idea applied to initiating or improving a product, process, or service Sources of Innovation: Structural variables: organic structures Long-tenured management Slack resources Interunit communication Idea Champions: Individuals who actively promote the innovation Many organizations attempt to create a culture for change through encouraging innovation. There are many sources of innovation or the process of coming up with a new idea that helps to improve a current process, product or service. Innovation can occur through structural variables, long-tenured management, limitation in resources, or increased communication between units. For innovation to occur, there needs to be an idea champion who actively promotes the innovation. (c) 2008 Prentice-Hall, All rights reserved.

Creating a Culture for Change: Learning Learning Organization An organization that has developed the continuous capacity to adapt and change Characteristics Holds a shared vision Discards old ways of thinking Views organization as system of relationships Communicates openly Works together to achieve shared vision Learning is another key component of creating a culture for change. A learning organization is one that has developed the continuous capacity to adapt and change. Learning organizations share some common characteristics such as sharing the same vision, getting rid of old ways of thinking, viewing the organization as a system of relationships, open communication, and working together to achieve a shared vision. (c) 2008 Prentice-Hall, All rights reserved.

Creating a Learning Organization Overcomes traditional organization problems: Fragmentation Competition Reactiveness Manage Learning by: Establishing a strategy Redesigning the organization’s structure Flatten structure and increase cross-functional activities Reshaping the organization’s culture Reward risk-taking and intelligent mistakes To create a learning organization, managers must overcome some traditional organizational problems such as fragmentation, competition, and reactiveness. Learning can be managed by establishing a strategy that everybody understands and can buy into. Redesigning the organization’s structure to increase communication and interactions and reshaping the organization’s culture to reward risk-taking and good mistakes will help to increase the effectiveness of the learning initiatives. (c) 2008 Prentice-Hall, All rights reserved.