Managing Organizational Culture and Change Chapter 5 Managing Organizational Culture and Change

Management Challenges After reading this chapter, you should be able to: Describe how organizational culture helps management achieve its objectives. Understand how cultural symbols, rites, ceremonies, heroes, and stories are used to sustain an organization’s culture. Recognize the differences between strong and weak organizational cultures, and identify situations in which each of these cultures may be advantageous. Adapt to organizational change and the forces that drive change. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Management Challenges (continued) Identify the four different types of organizational cultures and the characteristics of people who fit best with each. Direct and counsel employees who resist organizational change. Apply the tactics of change agents while taking into consideration potential sources of resistance. Use tools that enhance our understanding of the change process, such as Lewin’s three-step model of change and force field analysis. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Skills for managing organizational culture and change: Cultural diagnostic skills Cultural strategic skills Managing culture skills Change management skills Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Culture A system of shared values, assumptions, beliefs, and norms that unite the members of an organization. Reflects employees’ views about “the way things are done around here.” The culture specific to each firm affects how employees feel and act and the type of employee hired and retained by the company. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Core Values Levels of Corporate Culture Visible Culture Expressed Values Core Values Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Functions performed by organizational culture: Employee Self-Management Sense of shared identity Generation of commitment Stability Sense of continuity Satisfies need for predictability, security, and comfort Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Functions performed by organizational culture: (continued) Socialization Internalizing or taking organizational values as one’s own Implementation Support of the Organization’s Strategy If strategy and culture reinforce each other, employees find it natural to be committed to the strategy Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Stages of the Socialization Process Pre-arrival Encounter Metamorphosis Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Creating and Sustaining Organizational Culture Company Rituals and Ceremonies Cultural Symbols Company Heroes Stories Language Organizational Policies and Decision Making Leadership Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Aspects of organizational culture Cultural Uniformity versus Heterogeneity Strong versus Weak Cultures Culture versus Formalization National versus Organizational Culture Organizational Fit Baseball team culture Club culture Academy culture Fortress culture Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Managing Organizational Change Organization culture can facilitate or inhibit change in an organization. A firm attempts to change organizational culture because the current culture hinders the attainment of corporate goals. Environmental and internal forces can stimulate the need for organization change. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Forces for Change: Environmental Forces Put pressure on how a firm conducts its business and its relationships with customers, suppliers, and employees. Environmental forces include: Technology Market forces Political and regulatory forces Social trends Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Forces for Change: Internal Forces Come from decisions made within the company. May originate with top executives and managers and travel in a top-down direction. May originate with front-line employees or labor unions and travel in a bottom-up direction. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Resistance to Change Self-Interest Cultures that Value Tradition Lack of Trust and Understanding Different Perspectives and Goals Uncertainty Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 3

Models of Organizational Change Lewin’s three-step model Force-field analysis model Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Lewin’s Three-Step Model of Organizational Change Unfreezing Change Refreezing Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Force-field Model of Change Desired state Restraining forces Status quo Driving forces Time Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Implementing Organizational Change Top-down Change Change Agents Bottom-up Change Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Change agents should take the following steps to obtain a successful change outcome: Establish a sense of urgency. Form a powerful coalition of supporters of change. Create a vision of change. Communicate the vision of change. Empower others to act on the vision. Plan and create short-term wins. Consolidate improvements and produce still more change. Institutionalize new approaches. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Tactics for Introducing Change Communication and Education Employee Involvement Negotiation Coercion Top-Management Support Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives: For the Manager Certain types of changes routinely provoke strong employee resistance: Changes that affect skill requirements. Changes that represent economic or status loss. Changes that involve disruption of social relationships. By being aware of the sources of resistance, managers can better apply tactics to make the changes more palatable for employees. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives: For Managing Teams Teams can help test the waters for a proposed change. Various employee teams can serve as focus groups in order to find ways to make a change in policy more acceptable to employees. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives: For Individuals Learning the specifics about the company culture can help you determine your fit with the organization and the possibility of succeeding. Ask questions and gather information during the recruiting process to get a handle on the company culture and assess whether you will function comfortably in it. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.