Organizational Culture

Organizational Culture Organizational culture is a system of shared values and beliefs that influence worker behavior. The Determinants of Organizational Culture • The values, administrative practices, and personality of the firm’s founder • The conscious and unconscious choices, behavior patterns, and prejudices of top-level managers • The culture of the society (its norms, values, and beliefs) in which the firm functions • The industry in which the firm competes • The firm’s code of conduct

Organizational Culture Dimensions of Organizational Culture • Values • Organizational stories that have underlying meaning • Myths • Degree of stability • Resource allocation and rewards • Traditions, rites, and rituals • Ownership culture • Corporate spiritualism and organizational spirituality

Organizational Culture • Culture is learned through: • Socialization Process • A process of coming to understand the values, norms, and customs of the organization. • Perpetuates the organization by indoctrinating new workers into the ways of the organization. • Observation of Leaders • Learning from leaders provides vital guidance to new workers through what leaders pay attention to, measure, and control.

EXHIBIT 13-1 Consequences and Implications ofOrganizational Culture Competitive Advantage and Financial Success Productivity, Quality, and Morale Innovation Organizational Culture Compatibility of Mergers and Acquisitions Person-Organization Fit Direction of Leadership Activity

Types of Change in Organizations • Changes in technology • Changes in organizational structure • Coworkers and customers

Models of the Change Process • The Growth Curve Model Formative phase—lack of structure, trial and error, and entrepreneurial risk taking Normative phase—stability, maintenance, and predictability Integrative phase—redefining the firm and choosing a new direction.

High Normative Degree of Structure Integrative Formative Low Beginning TIME EXHIBIT 13-2 The Growth Curve Model ofOrganizational Change

Unfreezing-Changing-Refreezing Model (Kurt Lewin) • Unfreezing • Reducing or eliminating resistance to change by resolving fear and feelings about letting go of the “old.” • Changing (or moving on to a new level) • Moving on to other things through active participation in the change process. • Refreezing • Encouraging recognition of successful change and rewarding people for implementing the change. Force-field theory • A organization simultaneously faces forces of change and of resistance to change.

Why People Resist Change • Resistance comes from: • Fear of an unfavorable outcome (e.g., less money, personal inconvenience, more work) • Disrupted social relationships at work • Not wanting to break with well-established habits • A general fear of the unknown and uncertainty • Fear that an unrecognized weakness in the proposed change will result in unfavorable outcome.

Why People Resist Change Gaining Support for Change: • Allow for discussion and negotiation. • Allow for participation by those affected by the change. • Point out the potential benefits. • Avoid change overload. • Gain political support for the change. • Provide education. • Use manipulation and co-optation. • Avoid poor performance as the reason for change. • Use explicit and implicit coercion.

Downsizing as a Change Strategy • Primary reason for downsizing: • Reductions in the size of the firm that must be made to lower costs and allow the firm to become more competitive. • Dangers in downsizing: • Inability to capitalize on post-restructuring opportunities due to understaffing. • Loss of critical human assets reduces organizational learning.

Restructuring as a Change Strategy • Keys to successful restructuring: • Integrate restructuring with the firm’s long-term strategies. • Identify and protect high-potential employees. • Decentralize and empower employees to do their jobs. • Redefine the positions of surviving employees. • Eliminate low-value and non-value activities. • Emphasize teamwork and cooperation. • Define the new structure by specifying horizontal and vertical relationships. • Support and train, then evaluate and reward performance.

Transition: Carrying Out a Job & Work • Traditional job descriptions that are too rigid for the flexible work roles of today’s workers. • The trend in hiring a person “to work” (seeking a better person-organization fit) rather than to fill a specific job. • Attaining a match of workers’ skills to a project’s requirements. • Leaders have difficulty in shifting from the traditional focus on fixed job descriptions to an emphasis on ever changing “work roles” for employees.

Organizational Development (OD) as a Change Strategy • Organizational Development • Is any strategy, method, or technique for making organizations more effective by bringing about constructive, planned change.

Individual Level Executive coaching Employee assistance programs (EAPs) Career development programs Organizational behavior modification (OB Mod) Job enrichment Wellness programs, including stress reduction Sexual harassment avoidance training Organizational Level Total quality management (TQM) Grid organization development Gainsharing Survey feedback (attitude surveys) Action research (employees participate in implementing changes identified as needed by a consultant) Helping an organization learn Knowledge management OD Interventions

Process Consultation A widely used OD intervention in which the communication pattern of an organizational unit is examined by a process consultant. • Consultant’s role is to observe and raise questions challenging the status quo and define what really is happening in the unit.

Large-Scale Organizational Change • Purpose and process: • To accomplish a major change in the firm’s strategy and culture, also referred to as “bending the frame.” • Requires getting a critical mass of people throughout the firm committed to outcomes of the change. • Signs of the need for change: • Top executives micromanaging instead of delegating. • A high turnover rate of employees. • Ineffective communication in the organization. • A compensation system that rewards people for actions unrelated to business success. • Loss of established business and failure acquire new business.

Total Quality Management (TQM) • Is a management system for improving performance throughout a firm by: • maximizing customer satisfaction, • making continuous improvements, • and relying heavily on employee involvement. • Is a fundamental change in the organization’s culture to one that includes a focus on the customer, an environment of trust and openness, formation of work teams, breaking down internal barriers, and sharing power.

Six Sigma as Organizational Development • Six Sigma • Is a data-driven statistically-based method for achieving near-perfect quality with an emphasis on preventing problems from occurring in the process . • Features: • Emphasizes motivating people to work together to achieve higher levels of productivity. • Is a fusion of technical and social systems for creating a culture of quality.

Organizations Individuals

Types of Change • First-Order Change: Attempt to improve efficiency or effectiveness what we are already doing • Second-Order Change: Systemic in nature, attempt to modify the very way an organization is put together, altering assumptions, goals, structures, roles and norms. Require people to change beliefs, not just they way they do things.

Reducing Resistance to Change 1. Make the purpose of change clear 2. Involve participants in the planning 3. Pay attention to the work patterns and habits of those involved 4. Communicate clearly and consistently

Reducing Resistance to Changecontinued 5. Remove the fear of failure 6. Be cognizant of other pressures 7. Make the costs and benefits clear 8. Ensure the change initiator is trusted 9. Understand the present situation and satisfaction with it

Factors Important to Change • Relative Advantage - cost/benefit • Compatibility - more alike, the more likely to adopt • Complexity - more complex, more difficult • Trialability - opportunity to try a change increases adoption • Observability - opportunity to observe change in action increases adoption

1. People feel awkward 2. People first think about what they have to give up 3. People feel alone 4. People can only handle so much change at one time PROVIDE INFORMATION EMPHASIZE WHAT WILL BE GAINED BRING PEOPLE TOGETHER INTRODUCE CHANGE INCREMENTALLY People Dynamics of Change

5. People are at different levels of readiness 6. People often are concerned about resources at the beginning of change 7. People will revert to the known ACKNOWLEDGE DIFFERENCES PROVIDE INFORMATION ABOUT RESOURCES PROVIDE CONTINUED SUPPORT AND ENCOURAGEMENT People Dynamics of Change continued

CHANGE Building Blocks of Change ACTION PLAN RESOURCES INCENTIVES SKILLS VISION

CONFUSION Building Blocks of Change ACTION PLAN (False Starts) RESOURCES (Unsustainable Change) INCENTIVES (Isolated Change) SKILLS (Frustration) VISION

Managing Change Yourself Suggestions for Coping with Change • Practice dealing with ambiguous tasks. • Maintain a positive general disposition. • Look for personal value (“silver lining”)embedded in a forced change. • When faced with significant change, ask yourself “what if” questions. • When confronting major change, force yourself to enjoy at least some small aspect of the change. • Recognize that change is inevitable: Change before you have to and you will get a better deal. • Stop trying to be in control all the time.

Organizational Culture