Advance topics in Change Management

1. Advance topics in Change Management Lecture 24: Organizational Cultures and their Change

2. Objectives • To examine the ways in which organizational cultures vary. • To assess their links to firms’ competitiveness. • To think about the ways in which organizational cultures are created and changed.

3. Culture: Two Definitions Drennan (1992: 3): Culture is ‘how things are done around here’. It is what is typical of the organization, the habits, the prevailing attitudes, the [established] pattern of accepted and expected behaviour. Daft (2007: 239): Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and is taught to new members.

4. Describing Organizational Culture Brown (1995: 8): • Artefacts • Symbols and symbolic action • Language in the form of jokes, metaphors, stories, myths and legends – and advertising • Behaviour patterns in the form of rites, rituals, ceremonies and celebrations • Norms of behaviour • Heroes • Beliefs, values, attitudes • Ethical codes • Basic assumptions • History

5. STRENGTH OF ORGANISATIONAL CULTURES

6. Types of Organisational Cultures

7. The Google culture • Though Google has grown a lot since it opened in 1998, we still maintain a small company feel. At lunchtime, almost everyone eats in the office café, sitting at whatever table has an opening and enjoying conversations with Googlers from different teams. Our commitment to innovation depends on everyone being comfortable sharing ideas and opinions. Every employee is a hands-on contributor, and everyone wears several hats. Because we believe that each Googler is an equally important part of our success, no one hesitates to pose questions directly to Larry or Sergey in our weekly all-hands (“TGIF”) meetings. • We are aggressively inclusive in our hiring, and we favor ability over experience.

8. About Google’s Offices • Our corporate headquarters, fondly nicknamed the Googleplex, is located in Mountain View, California. Today it’s one of our many offices around the globe. Here are a few things you might see in a Google workspace: • Bicycles or scooters for efficient travel between meetings; dogs; lava lamps; massage chairs; large inflatable balls. • Googlers sharing cubes, yurts and huddle rooms – and very few solo offices. • Laptops everywhere – standard issue for mobile coding, email on the go and note-taking. • Foosball, pool tables, volleyball courts, assorted video games, pianos, ping pong tables, and gyms that offer yoga and dance classes. • Break rooms packed with a variety of snacks and drinks to keep Googlers going.

9. Google • http://www.youtube.com/watch?v=eFeLKXbnxxg&feature=player_embedded

10. Life at Google • Google is not a conventional company, and we don’t intend to become one. True, we share attributes with the world’s most successful organizations – a focus on innovation and smart business practices comes to mind – but even as we continue to grow, we’re committed to retaining a small-company feel. At Google, we know that every employee has something important to say, and that every employee is integral to our success. We provide individually-tailored compensation packages that can be comprised of competitive salary, bonus, and equity components, along with the opportunity to earn further financial bonuses and rewards.

11. Google – Employee Benefits • “The goal is to strip away everything that gets in our employees’ way. We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses – just about anything a hardworking employee might want. Let’s face it: programmers want to program, they don’t want to do their laundry. So we make it easy for them to do both.” Eric Schmidt, CEO Google • Google’s culture is unlike any in corporate America, and it’s not because of the whimsical lava lamps and large rubber balls, or the fact that one of the company’s chefs used to cook for the Grateful Dead. In the same way Google puts users first when it comes to online services, Google puts employees first when it comes to daily life in its offices. • Benefits Philosophy: We strive to be innovative and unique in all services we provide both to customers and employees, including our benefits and perks offerings. We realize and celebrate that our employees have diverse needs, and that this diversity requires flexible and individually directed support. Our priority is to offer a customizable program that can be tailored to the specific needs of each individual.

12. US tech leaders raise the stakes on pay • Some of the world’s biggest technology companies are lifting pay rates and taking other measures to retain and encourage employees, reflecting both improved performance in their businesses and heightened competition for workers with the right experience. • Hewlett-Packard said this week on an internal blog for employees that it would reverse across-the-board cuts to base salaries that had been ordered by former chief executive Mark Hurd in February 2009. • That followed Google’s decision earlier in the month to grant its workforce a 10 per cent rise, and Intel’s message to employees that bonuses early in 2011 would be the highest in a decade. • http://www.ft.com/cms/s/2/fa40fed6-f8c4-11df-b550-00144feab49a,dwp_uuid=9a36c1aa-3016-11da-ba9f-00000e2511c8,print=yes.html

13. ARM Culture • ARM strives to foster a culture of honesty and accountability. The ARM culture is open and relaxed and we believe that collaboration and contribution are central to progress. As a result, ARM regularly brings together people from around the world and from different business groups through internal conferences. In addition, movement through temporary assignments, rotation programs, and transfers is encouraged. This promotes cross-team and cross-divisional learning, resulting in the development of new and innovative approaches and solutions. • The ARM working environment is relaxed but ambitious and we believe that what drives intellectual capital is social capital. Social capital is the bringing together of people in a community, sub communities and teams. The fabric of social capital is trusting and open relationships between people and teams built on formal and informal, internal and external networks, as well as a common language, culture and set of goals. • ARM employs intelligent, leading-edge thinkers. This, combined with the collaborative and dynamic culture, ensures that ARM is a great place for employees to learn.

14. Sony – Management Policies I • a) We shall eliminate any unfair profit-seeking practices, constantly emphasize activities of real substance and seek expansion not only for the sake of size; • b) We shall maintain our business operations small, advance technologically and grow in areas where large enterprises cannot enter due to their size; • c) We shall be as selective as possible in our products and will even welcome technological challenges. We shall focus on highly sophisticated technical products that have great usefulness in society, regardless of the quantity involved. Moreover, we shall avoid any formal demarcation between electronics and mechanics, and shall create our own unique products uniting the two fields, with a determination that other companies cannot overtake;

15. Sony – Management Policies II • d) We shall fully utilize our firm's unique characteristics, which are well known and relied upon among acquaintances in both business and technical worlds, and we shall develop production and sales channels and acquire supplies through mutual cooperation; • e) We shall guide and foster sub-contracting factories in ways that will help them become independent, and we shall strive to expand and strengthen mutual cooperation with such factories; • f) We shall carefully select employees, and our firm shall be comprised of minimal number of employees. We shall avoid to have formal positions for the mere sake of having them, and shall place emphasis on a person's ability, performance and character, so that each individual can fully exercise his or her abilities and skills; • g) We shall distribute the company's surplus earnings to all employees in an appropriate manner, and we shall assist them in a practical manner to secure a stable life. In return, all employees shall exert their utmost effort into their job.

16. Questions • Is there anything that is different between Sony’s management practices (a basis for culture) and Google’s culture? • If there are differences, why might these arise?

17. Walmart’s Culture I • Mr. Sam’s values: We’re known around the world as the company that helps our customers save money so they can live better. We’re also well known for our unique corporate culture. Sam Walton built our business on values and morals. Those rules and customs have helped us become one of the world’s most admired companies. • Respect • At the core of every one of our rules and customs is the basic value of respect – for the customer, associates, and suppliers. It’s our focus for building relationships. It helps us serve the communities in which we live, and build a business committed to excellence. • Open DoorOur management believes open communication is critical to understanding and meeting our associates’ and our customers’ needs. Associates can trust and rely on the open door; it's one of the most important parts of our culture. • Sundown RuleObserving the Sundown Rule means we do our best to answer requests by the close of business on the day we receive them. • Grass Roots ProcessSam’s philosophy lives on today in Walmart’s Grass Roots Process, our formal way of capturing associates’ ideas, suggestions and concerns.

18. Walmart’s Culture II • 3 Basic Beliefs & ValuesOur unique culture has helped make Walmart one of the world’s most admired companies. Our culture rests on three basic beliefs. • 1. Respect for the Individual • 2. Service to our Customers • 3. Striving for Excellence • Servant LeadershipSam Walton believed that effective leaders do not lead from behind their desks. "It's more important than ever that we develop leaders who are servants, who listen to their partners – their associates – in a way that creates wonderful morale to help the whole team accomplish an overall goal.” • TeamworkSam Walton believed in the power of teamwork. As our stores grow and the pace of modern life quickens, that philosophy of teamwork has only become more important over the years. • Walmart CheerDon't be surprised if you hear our associates shouting this enthusiastically at your local Walmart store. It's our cheer, and while it might not sound serious, we take it seriously. It's one way we show pride in our company

19. Questions on Walmart • How would you categorize Walmart’s culture (personal, task, role or professional) based upon what they have written about themselves? • Is Walmart’s depiction of its own culture accurate? • What are your reasons behind your answer to the preceding question?

20. Types of Organisational Cultures

21. Life at Ernst & Young • As an experienced professional you’ll find life here challenging and rewarding, but most of all, inspiring. • You know that when you choose to join us, you are choosing an organization committed to helping you achieve your unique potential and making a difference – with your colleagues, your clients and your community. • We’re proud to have a culture that brings out the best in individuals, encourages them to pursue excellence and to support and encourage excellence in others. Our different backgrounds, cultures and points of view are vital to our success. They enrich the insights and recommendations we make to our clients and help us develop as individuals. • At Ernst & Young, you’ll be able to be yourself, seize opportunities and build lasting relationships while building a great career.

22. Ernst and Young • People • We strive to provide an environment where talented people can develop, flourish and make a difference. • You’ll be part of a culture where respect, integrity and teaming define the way we work together. You’ll build strong relationships that embrace different points of view – helping us harness the diversity of our people to create the best results for our clients. You’ll also find support for your continuous growth and success. • You’ll discover that we have a genuinely open approach to teaming and account management, built on the trust we have for our fellow professionals. This means that you’ll add value to a wide range of clients and team with a diverse range of colleagues. You’ll work across geographical and cultural boundaries, meeting challenges, addressing opportunities and helping our clients succeed. As a result, you’ll forge lifelong relationships that will serve you throughout your career.

23. Ernst and Young • Values – We hold our people to the highest level of personal and professional standards. • It’s a promise we make to clients, regulators, the financial markets — and to ourselves. • Who we arePeople who demonstrate integrity, respect and teamingPeople with energy, enthusiasm and the courage to leadPeople who build relationships based on doing the right thing • We put our values into action by following the practical guidance in our Global Code of Conduct. This is more than just words. It provides the ethical framework we expect our people to use to make decisions. Our values are so important to the way we think and act that every person in the firm signs an annual affirmation of our code of conduct. • Some organizations may view an uncompromising commitment to values as a barrier to growth, but at Ernst & Young, it’s just the reverse. We know that we’ll achieve our business goals because of the high standards we set for ourselves. • So if ever your moral compass suggests something is off course, don’t be afraid to speak up. You may be just starting out, but your opinions and concerns count. No client, colleague or business objective is more important than your integrity — or the quality standards and reputation of our organization.

24. Ernst and Young’s Global Code of Conduct I • We acknowledge that breaches of the Global Code of Conduct may result in our practices taking disciplinary action, up to and including termination of employment. • We affirm in writing our understanding of the principles contained in the Global Code of Conduct and our commitment to abide by them.

25. Ernst and Young’s Global Code of Conduct II • 2. Working with clients and others • No client or external relationship is more important than the ethics, integrity and reputation of Ernst & Young.

26. Questions • How important is Ernst and Young’s Global Code of Conduct? • Are there any routines associated with this document? • How do they help or hinder the company’s competitiveness?

27. Contrasting Organisational Practices I

28. Contrasting Organisational Practices II d) Open system vs. Closed system Extent to which organisation is internally focused and separate from environment e) Loose control vs. Tight control Extent to which staff are expected to conform to organisational norms of behaviour f) Normative vs. Pragmatic Extent of commitment to meeting customer needs

29. An Example of Open vs Closed Systems? • Sanofi chief lays out distinctive strategy • http://www.ft.com/cms/s/0/1b23c578-d7d0-11de-b578-00144feabdc0.html 03 December 2009 • In a swipe at Gerard Le Fur, his predecessor and former head of research and development, who was appointed chief executive and ousted within months, he said: "We had really a scientific organisation that really lived within its own walls; not a lot of external partnerships, virtually no contact with our commercial organisations." • … • Mr Viehbacher also criticised the "ridiculous" Sanofi-Aventis name in China, where he said most company names have just three syllables. It would be shortened to Sanofi, he said. "We have to be much more adapted to our markets and customers and fight globalisation," he said.

30. Question • How are organizational cultures created?

31. Distinctive Organisational Cultures Depend on: • Selection • Training • Rituals, Symbols and Legends • Reward Systems • Promotion and Career Structures • Top Management Behaviour

32. Questions • If you wish to change an organization’s culture, how would you do this? • When is it likely, in broad terms, to be easier to change an organization’s culture?

33. Changing Organisational Cultures Involves: • Creating New Symbols and Values • Implementing New Reward Systems • Changing Career Structures • Restructuring Authority Relations • Rotating Staff • Changing Top Managers’ Skills and Priorities

34. Changing Organisational Cultures Is easier when: • External stakeholders seek change • Powerful internal groups support change • Widespread perception of crisis • Internal procedures and systems no longer suit external conditions

35. Conclusions • There are strong links between a company’s competitiveness and its culture. • A company’s proclaimed culture may not be the culture experienced by employees. • Corporate cultures are created in many ways. • The extent to which corporate cultures can be changed will depend on a range of factors – not just leadership.