1. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 1 Organizational Culture and Change MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION Prepared by Deborah Baker Texas Christian University

2. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 2 learning objectives 1. Define organizational culture and the factors that influence it 2. List and describe the ways that culture is manifested 3. Explain the role of managers and employees in creating culture 4. Explain what factors make a culture effective 5. Define change and identify the kinds of change that can occur in an organization 6. Distinguish between evolutionary change and revolutionary change

3. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 3 learning objectives (continued) 7. Distinguish between planned and unplanned change 8. Explain the steps managers can follow to implement planned change 9. Identify the organizational qualities that promote change 10. Explain why people resist change and what managers can do to overcome that resistance 11. Explain why change efforts fail 12. Explain the purpose of an organizational development program

4. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 4 Organizational Culture Organizational Culture Organizational Culture A dynamic system of…. shared values. beliefs. philosophies. experiences. habits. expectations. norms. behaviors 1 1

5. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 5 Organizational Culture 1 1 Defines…. What is important to the organization. The way decisions are made. Methods of communication. The degree of structure. The freedom to function independently. How people should behave. How they should interact with each other. For what they should be striving

6. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 6 Factors Shaping Culture 1 1 Key organizational processes Dominant coalition Employees and other tangible assets Formal organizational arrangements Social system Technology External environment

7. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 7 Factors Shaping Culture 1 1

8. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 8 Key Organizational Processes 1 1. How managers communicate to employees. How they share decision making. How they structure the flow of work

9. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 9 Dominant Coalition 1 1. Objectives. Strategies. Personal characteristics. Interrelationships Organizational culture is greatly affected by …

10. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 10 Employees and Other Tangible Assets 1 1. Employee population. Plant and offices. Equipment. Tools. Land. Inventory. Money

11. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 11 Formal Organizational Arrangements 1 1. Structure of the organization. Procedures and rules. Specific mandated behaviors

12. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 12 Social System 1 1. Contributes norms and values to organizational culture. Includes the set of employee relationships that relate to power, affiliation, and trust. Includes the grapevine and the informal organization

13. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 13 Technology 1 1. Technological processes. Equipment and its use

14. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 14 External Environment 1 1 Suppliers The Economy RegulatorsCompetitors Markets

15. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 15 Manifestations of Culture 2 2 Stories Slogans Heroes Ceremonies Symbols Climate Physical environment Statements of principle

16. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 16 Statements of Principle 2 2 1. Quality 2. Responsibility 3. Mutuality 4. Efficiency 5. Freedom “Five Principles of Mars”

17. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 17 Symbols 2 2 “Disney’s Symbolic Language”. Employees are “cast members”. Customers are “guests”. A crowd is an “audience”. A work shift is a “performance”. A job is a “part”. A uniform is a “costume”. The personnel department is “casting”. Being on duty is “on stage”. Being off duty is “off stage”

18. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 18 Symbols 2 2 Nordstrom’s Employee Handbook

19. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 19 Climate 2 2. Encouragement to tap into the other person’s expertise. Empowers people. Rewards people for taking risks. Provides celebrations where peers cheer peers Healthy Climate. Management has different values. Management is in conflict. Management has widely divergent goals Unhealthy Climate

20. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 20 Role of Managers 3 3. Clearly defining the company’s mission and goals. Identifying the core values. Determining the amount to individual autonomy and the degree to which people work separately or in groups. Structuring the work in accordance with the corporation’s values to achieve its goals. Developing reward systems that reinforce the values of goals. Creating methods of socialization Management helps create culture by…

21. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 21 Kodak’s Five Core Values 3 3 1. Respect for the individual 2. Uncompromising integrity in everything Kodak does 3. Trust 4. Credibility 5. Continuous improvement

22. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 22 Visionary Managers and Companies 3 3. Translate their core values into tangible mechanisms. Indoctrinate people. Impose tightness of fit. Create a sense of belonging to something special

23. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 23 The Role of Employees 3 3. Contribute to the extent that they accept and adopt the culture. Contribute by helping to shape the values it embodies. Play a role in influencing organizational culture by forming subcultures

24. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 24 The Effectiveness of Culture 4 4 Adaptability to Environment Persuasiveness and Depth Coherence FactorsFactors

25. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 25 Sources of Change 5 5. Political. Social. Technological. Economic External Sources. Managerial policies or styles. Systems and procedures. Technology. Employee attitudes Internal Sources

26. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 26 Types of Change 5 5 Strategic Structural Process Oriented People Centered People Centered

27. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 27 Types of Change 5 5 Strategic Change Change in the strategy or mission of the organization Structural Change Structural Change Change through team building and downsizing Process-Oriented Change Change through new technology, shift to mechanical labor, adopting new procedures People-Centered Change Changes directed at the attitudes, behaviors, skills, or performance of employees

28. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 28 Process-Oriented Change 5 5

29. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 29 Rates of Change 6 6 Evolutionary Change The incremental steps taken to bring about progress and change Revolutionary Change Bold, discontinuous advances that bring about dramatic transformations in organizational strategies and structure

30. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 30 Examples of Change 6 6

31. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 31 Management and Change 6 6. Top Managers –Sensitive to the external environment –Need to stay tuned to the environment. Middle Managers –Likely will face structural, process-oriented, or people-centered changes. First-Line Managers –Participate in discussions about strategic or structural changes. –Institute process-oriented and people- centered change

32. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 32 How to Manage Change 7 7 Planned Change Trying to anticipate what changes will occur in the external and internal environment and then developing a response that will maximize the organization’s success Management by Reaction Management by Reaction A management method that does not anticipate change but merely reacts to it

33. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 33 Change Agent 7 7. Implements planned change. Could be the manager who conceived the need to change. Could be another manager within the organization. Could be an outsider

34. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 34 Five Phases of Growth 7 7 Creativity Direction Coordination Delegation Collaboration Phase 1 Phase 2 Phase 4 Phase 3 Phase 5

35. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 35 Model of Growth and Change 7 7 Source: Reprinted and adapted by permission of Harvard Business Review from “Evolution and Revolution as Organizations Grow,” by Larry E. Greiner, Harvard Business Review (July–August 1972): 55–64. Copyright © by the Harvard Business School Publishing Corporation; all rights reserved.

36. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 36 Phase 1: Creativity 7 7. Concerns for product and market. Informal social system. Entrepreneurial style of management

37. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 37 Phase 2: Direction 7 7. Implementation of rules, regulations, and procedures. Introduction of a functional organizational structure. Creation of an accounting system. Establishment of incentives, budgets, and work standards. Formal, impersonal communications

38. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 38 Phase 3: Delegation 7 7. Decentralization. Creation of profit centers. Less frequent communication from the top

39. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 39 Phase 4: Coordination 7 7. Managers emphasize coordination. Merger of decentralized work units. Introduction of formal organizationwide planning. Restriction of capital expenditures. Staff personnel begin to wield greater power

40. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 40 Phase 5: Collaboration 7 7. Introduction of a new people-oriented and flexible system. Problem solving by teams. Reductions in headquarters staff. Simplification of formal systems. Encouragement of an attitude of risk taking and innovation

41. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 41 Steps in Planned Change 8 8

42. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 42 Qualities Promoting Change 9 9 Adaptability Organizational Learning Mutual Trust

43. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 43 Implementation of Change 10. Why people resist change. Why efforts fail. What techniques can be used to modify behavior Manager must be aware of…

44. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 44 Resistance to Change 10. Loss of security. Fear of economic loss. Loss of power and control. Reluctance to change old habits. Selective perception. Awareness of weakness in the proposed change Sources of Resistance

45. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 45 Techniques for Overcoming Resistance 10 Participation Open Communication Sensitivity Advance Warning Security

46. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 46 Why Change Efforts Fail 11 Faulty Thinking Inadequate Process Lack of Acceptance and Commitment Lack of Resources Lack of Time and Poor Timing A Resistant Culture

47. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 47 Methods of Affecting Change 11 Unfreezing Change Refreezing Step 1 Step 2 Step 3 The Three-Step Approach

48. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 48 Methods of Affecting Change 11 The Three-Step Approach. Unfreezing –Managers who spot deficiencies in a subordinate’s behavior must identify the causes of that behavior. Change –The individual’s discomfort level rises –Employee to question his or her motives for the current behavior. Refreezing –Manager recognizes and rewards new and improved attitudes and behaviors

49. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 49 Methods of Affecting Change 11 Force-Field Analysis

50. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 50 Organizational Development 12 Organizational Development A process of conducting a thorough analysis of an organization’s problems and then implementing long-term solutions to solve them

51. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 51 Organizational Development Process 12

52. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 11 52 Organizational Development Strategies 12. Consultants. Surveys. Group discussions Diagnostic Strategies. Training programs. Meetings and seminars. Grid OD –laboratory training –team development –intergroup development –organizational goal setting –goal attainment –stabilization Change Strategies