Organisational Change

1. Organisational Change Chapter 4 Organisational Cultures for Change

2. Objectives (1) • recognise the importance of the informal organisation and its role in relation to organisations and change; • explain the meaning of culture in the context of a range of perspectives offered by researchers in the field; • compare and contrast different cultural models and typologies; • diagnose organisational culture as the first step in the process of culture change;

3. Objectives (2) • identify the sources, including those of the wider society, from which an organisation derives its culture in order to understand how culture pervades all aspects of organisational life; • examine different cultures in terms of their capacity to help or hinder organisational change; • investigate degrees of strategy-culture compatibility and their implications for large-scale strategic change.

4. Organisational culture • An iceberg • the surface is based on a much deeper (and bigger) reality, yet this reality is usually unexamined.

5. The Organisational Iceberg Goals Strategy Structure Systems & procedures Products & services Financial resources Management Values, attitudes & beliefs Leadership style & behaviour Org. Culture & norms of behaviour Power, politics & conflict Informal groupings Formal Organisation Informal Organisation

6. Organisational Culture & Change • Organisational life is not as neat, tidy or predictable as formal elements of organisation such as structure, strategy & technology may imply. • The culture and politics of many organisations constrain the degree of change and transformation in which they can successfully engage, even though such change may be highly desirable for meeting the challenges and demands of the wider environment. Source: Morgan, G. (1989) Creative Organization Theory. A Resource Book, London, Sage.

7. Meaning of Culture (Societal) • Culture consists in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values. (Kroeber, A.L. and Kluckhohn, F. (1952) Culture: A Critical Review of Concepts and Definitions, New York, Vintage Books, p.181)

8. Meaning of Culture (Organisational) • ...the deeper level of basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic “taken for granted” fashion an organisation's view of its self and its environment. (Schein, E.H. (1992) Organizational Culture and Leadership, San Francisco, CA, Jossey-Bass, p.2.).

9. Perspectives on Culture Change 1. Culture can be managed 2. Culture may be manipulated 3. Culture cannot be consciously changed 1 and 2 are still possible even if 3. Is true!

10. Descriptions of Culture (1) Handy, C. (1993) Understanding Organizations, London, Penguin, p. 180. • differing ways of doing things. • differing atmospheres. • different ways of doing things. • differing levels of energy. • differing levels of individual freedom. • different kinds of personality.

11. Descriptions of Culture (2) • Differing cultures, differing… • norms • values • beliefs about • authority • control • rewards, incentives, • jobs • rules, expenses • obedience • initiative • hours of work • dress • committees

12. Descriptions of Culture (3) Culture manifests itself in symbols, e.g. • type of environment (buildings, layout etc.) • dress • form of address • type of person employed • the way work gets done.

13. Organisational Onion • The core is shielded by many layers. To change an organisation in any significant or lasting way, you need to change the: VALUES and BELIEFS that lie at the CORE

14. Hofstede’s ‘Onion’ Model Symbols Heroes, stories Practices Rituals VALUES Visible Shallow Deep Invisible Shallow Visible

15. Schein’s Levels of Culture Model Artefacts Espoused values Basic underlying assumptions mission statement ethical code Visible Shallow Invisible Deep Shallow Visible

16. Outer Layer of Culture - Artefacts Things that can be directly observed • Annual reports • Cleanliness of the facilities • Design and ambience of the premises and facilities • Punctuality or lateness • Other things that are observable and are produced by the culture

17. Inner Layers of Culture • Values • often written down • statements about purpose, mission, objectives • usually general/vague (e.g. Service to the Community) • Beliefs • more specific • usually overt/talked about (e.g. thecompany should not trade with Iraq) • Taken-for-granted assumptions • this is the real “core” of culture • difficult to identify and explain • often linked to the raison d’etre of the organisation (e.g. police forces are needed to catch criminals)

18. Characteristics of organisational culture -1 1. Member identity: The degree to which employees identify with the organisation as a whole rather than with their type of job or field of professional expertise. 2Group emphasis: The degree to which work activities are organised around groups rather than individuals. 3 People focus: The degree to which management decisions take into consideration the effect of outcomes on people within the organisation. Source: Robbins, S.P (1993), Organisational Behaviour, Englewood Cliffs, NJ, Prentice-Hall International, p.602.

19. Characteristics of organisational culture - 2 4 Unit integration: The degree to which units within the organisation are encouraged to operate in a co-ordinated or interdependent manner. 5 Control: The degree to which rules, regulations and direct supervision are used to oversee and control employee behaviour. 6 Risk tolerance: The degree to which employees are encouraged to be aggressive, innovative and risk seeking. Source: Robbins, S.P (1993), Organisational Behaviour, Englewood Cliffs, NJ, Prentice-Hall International, p.602.

20. Characteristics of organisational culture - 3 7 Reward criteria: The degree to which rewards such as salary increases and promotions are allocated according to employee performance rather than seniority, favouritism, or other non performance factors. 8 Conflict tolerance: The degree to which employees are encouraged to air conflicts and criticisms openly. 9 Means-ends or orientation: The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve these outcomes. 10 Open-system focus: The degree to which the organisation monitors and responds to changes in the external environment. Source: Robbins, S.P (1993), Organisational Behaviour, Englewood Cliffs, NJ, Prentice-Hall International, p.602.

21. ‘Measuring’ an Organisation’s Culture - 1 1 Member identity Job.....................................................................…....Organisation 2 Group emphasis Individual....................................................................Group 3 People focus Task....................................................................................People 4 Unit integration Independent..........................................................Interdependent 5 Control Tight......................................................................................Loose Derived from: Robbins, (1993) Organizational Behavior: Concepts, Controversies, Applications (6th edition) Englewood Cliffs, NJ, Prentice Hall.

22. ‘Measuring’ an Organisation’s Culture - 2 6 Risk tolerance Low..................................…….......................................................High 7 Reward criteria other..................................................................................Performance 8 Conflict tolerance Low.......................…….................................................................High 9 Mean-ends orientation Means..........................................................................................Ends 10 Open-system focus Internal......................................................................................External Derived from: Robbins, (1993) Organizational Behavior: Concepts, Controversies, Applications (6th edition) Englewood Cliffs, NJ, Prentice Hall.

23. More ‘characteristics’ of organisational culture 1 degree ofInnovation & risk taking. 2degree of Attention to detail. 3 degree of Outcome orientation. 4 degree of People orientation. 5 degree of Team orientation. 6 degree of Aggression. 7 degree of Stability Source: Robbins, S.P (1993), Organisational Behaviour, Englewood Cliffs, NJ, Prentice-Hall International, p.602.

24. Objectivist versus Interpretative views of organisational culture • Attempts to ‘measure’ organisational cultures assume that these are objective entities. • But some theorists believe that organisational culture is so deep-seated that it is what the organisation essentially is - something unique and self-created, and that cannot be measured. Source: Robbins, S.P (1993), Organisational Behaviour, Englewood Cliffs, NJ, Prentice-Hall International, p.602.

25. Cultural Web STORIES SYMBOLS • About important events, personalities, and deviants • Logos, officers, perks, titles, jargon POWER ROUTINES & RITUALS • Generally about the most powerful group (top managers) and their core values which are presented as those of the organisation PARADIGM • Core values • Taken for granted ways of how we do things around here • How people get trained, how they get promoted ORG. STRUCTURES • Performance measurements & reward systems and what they focus on • Chain of command, hierarchy of posts, rules, formal functions CONTROLS

26. A Cultural Web of the UK National Health Service STORIES SYMBOLS • Cures • Villians (politicians) • Heroes and heroism • Change agents are fools • Abuse of managers • The golden age • Terminology • White coats/uniforms • Retinues • Mobile phones • Doctors’ dining room • Big institutions • “Royal” ROUTINES & RITUALS PARADIGM POWER • Clinical rituals • Consultation ceremonies • Patient infantalising • - waiting rooms • - putting to bed • - waking up • Ward rounds • Blaming next tier • NHS is a ”Good Thing” • Public service • Free at point of delivery • Clinicians values • Providers know best • Acute sector superior • “Ours” • Fragmented: • - professional bodies • - doctors • - senior clinicians • “Old Boy” network • Politicians ORGANISATION • Hierarchical • Mechanistic • Pecking order of services • Tribal/Functional • Financial reporting • Waiting lists • Consultant episodes • Professional responsibility CONTROLS

27. Cultural Web of the Department of the Social Security in the 1980s STORIES SYMBOLS • Characters (public) • Characters (staff) • Coping • Seniority • Formal direction ROUTINES & RITUALS PARADIGM POWER • Public service • Generalist • Christmas Parties • Strong social clubs • Industrial conflict • Based on grade ORGANISATION • Hierarchical • Mechanistic • Resistant to change • Comprehensive • instructions • Staffing limits CONTROLS

28. Cultural Web of the Department of the Social Security in the mid 1990s STORIES SYMBOLS • New developments • Working hard • Golden age • Competition • Corporate image • Core values • National ideas scheme • HR strategy ROUTINES & RITUALS PARADIGM POWER • Consultants • Awaydays • Focus groups • Customer Service • Professional managers • Goal orientated • Empowered staff • and middle • managers • Devolved budgets • Targets • Objectives linked to • organisational goals • Freedom to manage • Threat of competition ORGANISATION • Clear accountability • Functional approach • Responsive to customers • Accepting change CONTROLS

29. Typologies of Culture (Overview) Handy (1993) Power Role Task Person Pheysey (1993) Power Role Achievement Support Scholz (1987) Evolution-induced Dimension Internal-induced Dimension External-induced Dimension * Stable * Production * Tough-guy macho * Reactive * Bureaucratic * Work-hard/Play-hard * Anticipating * Professional * Bet-your-company * Exploring * Process * Creative Deal & Kennedy (1982) * Tough-guy macho * Work-hard/Play-hard * Bet-your-company * Process Hall (1995) Compass model of dimension * Low v High Assertiveness * Low v High Responsiveness

30. Assertive & Responsive Cultures Assertive individualistic demanding pushy challenging driving hardworking fast movers Responsiveness sensitive loyal trusting compromising team players harmony Cultures can be high on both high on one, low on the other low on both

31. How structure impacts cultural expression WEB Power culture GREEK TEMPLE Role culture Task culture NET . Person culture CLUSTER

32. Deal & Kennedy - How Cultures Adapt to Their Marketplace • Tough guy/macho • high risk, high return, sink or swim • Work hard/play hard • based on endeavour, persistence, mutual encouragement • Bet your company • large systems business with long time horizons and based on co-operation, research and hierarchical order • Process • procedure and mistake-avoidance oriented Cultures change as the marketplace changes

33. Scholz (1987) - Multidimensional Culture Evolution-inducedInternal-inducedExternal-induced from strategyfrom structurefrom marketplace * Stable * Production * Tough-guy macho * Reactive * Bureaucratic * Work-hard/Play-hard * Anticipating * Professional * Bet-your-company * Exploring * Process * Creative

34. Can Organisational Culture be ‘Measured’? • Some say NOT, although measuring ‘tools’ are popular with US academics and with consultants. • Qualitative researchers suggest that the researcher can only try to infer the core values and basic underlying assumptions by interviewing individuals or conducting focus groups, or by observing the practices and artefacts which serve as indicators.

35. Influences on Culture National culture Professional subculture Organisationalsubculture Organisation’s History

36. National Culture & Company Culture National Culture at Headquarter Location National Culture at Subsidiary Location Company Culture via HQ Culture within the subsidiary

37. Kluckhohn & Strodtbeck’s Dimensions of National Culture • People are seen as basically good …. or bad! • Domination of the environment …. or harmony with it. • Individualism .… or collectivism. • Doing (results) …. or being (enjoyment) oriented. • Tradition-oriented …. or future/change oriented. • Closed/private space…or common/public space.

38. Hofstede’s Dimensions of National Culture • High/Low Power Distance • degree of acceptability of inequity of wealth & privilege • Individualism/Collectivism • relative weakness/strength of relationships between individuals and the in-group • Masculinity/Femininity • extent of clarity and distinctiveness of gender roles • High/Low Uncertainty Avoidance • how upset people get about ambiguity and future doubt

39. Laurent’s Dimensions of Organisation Culture • As political systems • As authority systems • As role-formalisation systems • As hierarchical relationship systems

40. Organisational Culture & Change - Variables That Support/impair Frame-breaking Change Attitudes to criticism Attitudes to sharing information Degree of management’s openness to new ideas - especially from below Attitudes to experimentation in processes and products ORGANISATION’S CAPACITY TO CHANGE Attitudes to conflict Degree of willingness to discuss sensitive issues openly Degree of willingness to give people autonomy and support them in their actions Degree to which the organisation’s structure facilitates change

41. Cultures That Block Innovation (Kanter) • Being suspicious of new ideas from subordinates • Approvals up through are required • Peer criticism/elimination tournament • Insecurity/lack of praise • Problems = failure • Control and tight surveillance • Secret policies, sudden announcements • Information hoarding • Delegate dirty work only • Arrogance at the top

42. Climates That May Support Change • Encouragement to voice sensitive issues • Test differences of viewpoint with evidence • Collate and clarify information • Constructive controversy • ‘We are in the same boat’ • Joint control

43. Single Loop and Double-loop Learning (1) • Single-loop learning = detecting errors in organisational processes (e.g. students falling asleep in lectures) and correcting them (waking them up). • Double-loop learning = building new conceptions of what organisational processes should be (e.g. co-operative learning) by challenging existing values, procedures, knowledge and cultural values (e.g. constructive controversy).

44. Single Loop and Double-loopLearning (2) ACTIONS ACTIONS OUTCOMES OUTCOMES Single Loop Single Loop RETHINK ACTIONS RETHINK ACTIONS EVALUATE OUTCOMES EVALUATE OUTCOMES GOALS GOALS Double Loop Double Loop Rethink assumptions Behind the goals Rethink assumptions Behind the goals

45. Organisational Culture and Performance Strong organisational cultures may improve corporate performance through: • Social control • cultural values guide behaviour • Social glue • they bond people together, provide social identity • Sense-making • shared mental models, common interpretation and understanding of expectations

46. Problems With Strong Cultures Strong cultures may be a problem when: • The strong culture focuses attention on only one mental model. • The strong culture suppresses dissenting values from subcultures.

47. Assessing how Open the Culture is to Change The following characteristics of a culture indicate that it is open to change: • Innovation & creativity are encouraged. • There is collective decision making within strategic bounds. • There is easy, informal and friendly communication. • People are used to organising on the basis of skills and professionalism. • People accept monitoring of performance. • People accept performance based appraisal and reward. Source: Morgan, G. (1989) Creative Organization Theory. A Resource Book, London, Sage, p.158.

48. Deciding what to do about the Culture • Organisational cultures can be assessed according to the items on the previous slide. • The ‘riskiness’ of particular change efforts can be assessed in the light of the culture. • Change agents can then decide whether: • to ignore the culture (dangerous). • manage around the culture (set up countervailing role/processes, like the Japanese have done). • try to change the culture to fit the strategy (very difficult - see next slide). • to change the strategy to fit the culture. Source: Morgan, G. (1989) Creative Organization Theory. A Resource Book, London, Sage, p.158.

49. Trying to Change the Culture • Involve people in problem diagnosis. • Develop shared vision. • Build consensus. • Don’t push for top-down. • Formalise new policies, systems & procedures. • Monitor and adjust the change process. Also possible to do (but take care!): • select promote & reward capable people who also support the changes. • layoff those who are not capable and who do not support the changes.

50. Major Point about Changing the Culture • Changing corporate culture is not like changing a suit of clothes. • One can change surface appearances, e.g. by giving the corporation a new image/logo, introducing staff picnics, and by espousing new philosophies and beliefs. • But to have a significant and lasting impact, basic values also have to change. • This is harder to do, and is built up over a long period of time. Source: Morgan, G. (1989) Creative Organization Theory. A Resource Book, London, Sage, p.158.