Organizational Culture and Change Chapter 10 Organizational Culture and Change

Organizational Culture Questions for Consideration Questions for Consideration What is organizational culture? When is organizational culture functional? Dysfunctional? How do employees learn about the culture of their organization?

Henry Mintzberg on Culture “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.” Material pertinent to this discussion is found on pages 323.

Organizational Culture The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization. Culture is shared Culture helps members solve problems Culture is taught to newcomers Culture strongly influences behaviour Material pertinent to this discussion is found on pages 324. Organizational culture is the pattern of shared values, beliefs, and assumptions considered to be the appropriate way to think and act within an organization. Seven key characteristics of what the organization values capture the essence of culture: (1) Innovation and risk taking, (2) Attention to detail, (3) Outcome orientation, (4) People orientation, (5) Team orientation, (6) Aggressiveness, and (7) Stability.

Exhibit 10-1 Layers of Culture Artifacts of Material Symbols Organizational Language Culture Rituals Stories Organizational Beliefs Material pertinent to this illustration is found on pages 324-325. The layers of culture include Displayed Layer 1) Artifacts Aspects of an organization’s culture that you see, hear, and feel Hidden Layer 2) Beliefs The understandings of how objects and ideas relate to each other 3) Values The stable, long-lasting beliefs about what is important 4) Assumptions The taken-for-granted notions of how something should be in an organization Culture Values Assumptions

Levels of Culture Artifacts Beliefs Values Assumptions Aspects of an organization’s culture that you see, hear, and feel Beliefs The understandings of how objects and ideas relate to each other Values The stable, long-lasting beliefs about what is important Assumptions The taken-for-granted notions of how something should be in an organization Material pertinent to this exercise is found on pages 324-325.

Characteristics of Organizational Culture Innovation and risk-taking The degree to which employees are encouraged to be innovative and take risks. Attention to detail The degree to which employees are expected to exhibit precision, analysis, and attention to detail. Outcome orientation The degree to which management focuses on results or outcomes rather than on technique and process. People orientation The degree to which management decisions take into consideration the effect of outcomes on people within the organization. Material pertinent to this discussion is found on page 325-326.

Characteristics of Organizational Culture Team orientation The degree to which work activities are organized around teams rather than individuals. Aggressiveness The degree to which people are aggressive and competitive rather than easygoing. Stability The degree to which organizational activities emphasize maintaining the status quo in contrast to growth. Material pertinent to this discussion is found on pages 325-326.

Exhibit 10-2 Contrasting Organization Cultures Organization A Organization B • Managers must fully document • Management encourages and all decisions. rewards risk-taking and change. • Creative decisions, change, and risks • Employees are encouraged to are not encouraged. “ run with ” ideas, and failures are treated as “ learning experiences. ” • Extensive rules and regulations exist • Employees have few rules and for all employees. regulations to follow. • Productivity is valued over employee • Productivity is balanced with treating Material pertinent to this illustration is found on pages 325-326. morale. its people right. • Employees are encouraged to stay • Team members are encouraged to interact within their own department. with people at all levels and functions. • Individual effort is encouraged. • Many rewards are team based.

Do Organizations Have Uniform Cultures? Organizational culture represents a common perception held by the organization members. Core values or dominant (primary) values are accepted throughout the organization. Dominant culture Expresses the core values that are shared by a majority of the organization’s members. Subcultures Tend to develop in large organizations to reflect common problems, situations, or experiences. Material pertinent to this discussion is found on pages 326-327. Most organizations have a dominant culture and numerous sets of subcultures. The first expresses the core values that are shared by a majority of members. Subcultures develop to reflect common problems, situations, or experiences that members face such as department or geographical differentiation.

Exhibit 10-3 How Organizational Culture Forms Top Philosophy management of Selection Organization's organization's criteria culture founders Socialization Material pertinent to this illustration is found on pages 327-331. As with most creations, culture begins with the organization's founders, who have a major impact in establishing the early culture. They are unconstrained by previous customs, their small size usually facilitates the founders' imposing their vision on other organization members, and they also have biases on how to get the idea fulfilled. They have a vision or mission of what the organization should be. Instructor can get students in the class who have some work experience to tell the ‘creation stories’ of organizations in which they have worked and discuss how those stories fit in with the organizational culture.

Keeping a Culture Alive Selection Identify and hire individuals who will fit in with the culture Top Management Senior executives establish and communicate the norms of the organization Socialization Organizations need to teach the culture to new employees Material pertinent to this discussion is found on pages 327-331.

Exhibit 10-5 Culture Typology Fragmented Networked Low High Solidarity Mercenary Communal Sociability Material pertinent to this illustration is found on pages 332-333. Goffee and Jones have identified types of cultures, linking them to how people might fit in. They start with two dimensions that underlie organizational culture. The first they call sociability. This is a measure of friendliness. The second is solidarity. It's a measure of task-orientation. From these two dimensions they identify four types of cultures: Networked culture (high on sociability; low on solidarity). These organizations view members as family and friends. People know and like each other. The major negative associated with this culture is that the focus on friendships can lead to a tolerance for poor performance and creation of political cliques. Mercenary culture (low on sociability; high on solidarity). These organizations are fiercely goal-focused. People are intense and determined to meet goals. Mercenary cultures aren't just about winning; they're about destroying the enemy. The downside of this culture is that it can lead to an almost inhumane treatment of people who are perceived as low performers. Fragmented culture (low on sociability; low on solidarity). These organizations are made up of individualists. There is little or no identification with the organization. In fragmented cultures, employees are judged solely on their productivity and the quality of their work. The major negatives in these cultures are excessive critiquing of others and an absence of collegiality. Communal culture (high on sociability; high on solidarity). This final category values both friendship and performance. People have a feeling of belonging but there is still a ruthless focus on goal achievement. The downside of these cultures is that they often consume one's total life. Their charismatic leaders frequently look to create disciples rather than followers, resulting in a work climate that is almost "cult-like."

Culture’s Functions Social glue that helps hold an organization together Provides appropriate standards for what employees should say or do Boundary-defining Conveys a sense of identity for organization members Material pertinent to this discussion is found on pages 334-335. Culture has a number of functions. It has a boundary defining role, it conveys a sense of identity, facilitates the generation of commitment to something larger than self-interest, enhances social system stability, and serves as a sense-making and control mechanism that guides and shapes the attitudes and behaviour of employees. An organization’s culture, when it is strong and consistent, also determines the image the organization presents outside to the greater world. A good example of this is Disney.

Culture’s Functions Facilitates commitment to something larger than one’s individual self-interest Enhances social system stability Serves as a “sense-making” and control mechanism Guides and shapes the attitudes and behaviour of employees Material pertinent to this discussion is found on pages 334-335.

Culture as a Liability Culture can have dysfunctional aspects in some instances Culture as a Barrier to Change When organization is undergoing change, culture may impede change Culture as a Barrier to Diversity Strong cultures put considerable pressure on employees to conform Culture as a Barrier to Mergers and Acquisitions Merging the cultures of two organizations can be difficult, if not impossible Material pertinent to this discussion is found on pages 335-337. Culture as a Liability occurs when the shared values are not in agreement with those that will further the organization's effectiveness. This occurs when the environment is dynamic, and the entrenched culture may no longer be appropriate. The culture at Enron became a liability as individuals put more and more effort into pretending that everything was going well.

Conditions for Culture Change A dramatic crisis Turnover in leadership Young and small organizations Weak culture Material pertinent to this discussion is found on pages 337-338.

Exhibit 10-6 Suggestions for Changing Culture Have top-management people become positive role models, setting the tone through their behaviour. Create new stories, symbols, and rituals to replace those currently in vogue. Select, promote, and support employees who espouse the new values that are sought. Redesign socialization processes to align with the new values. Material pertinent to this discussion is found on page 338.

Exhibit 10-6 Suggestions for Changing Culture (cont’d) Change the reward system to encourage acceptance of a new set of values. Replace unwritten norms with formal rules and regulations that are tightly enforced. Shake up current subcultures through transfers, job rotation, and/or terminations. Work to get peer group consensus through utilization of employee participation and creation of a climate with a high level of trust. Material pertinent to this discussion is found on page 338.

Exhibit 10-7 Lewin’s Three-Step Change Model Refreezing Moving Unfreezing Material pertinent to this illustration is found on pages 338-339. Unfreezing: getting ready for change minimizing resistance Moving: Making the change changing people (individuals and groups); tasks; structure; technology Refreezing: Stabilizing the change reinforcing outcomes, evaluating results, making constructive modifications

Implementing Change Unfreezing: getting ready for change Minimizing resistance Moving: making the change Changing people (individuals and groups); Tasks; Structure; Technology Refreezing: stabilizing the change Reinforcing outcomes, evaluating results, making constructive modifications Material pertinent to this discussion is found on pages 338-340.

Exhibit 10-8 Unfreezing the Status Quo Desired state Restraining forces Status Material pertinent to this illustration is found on pages 338-340. quo Driving forces Time

Unfreezing Arouse dissatisfaction with the current state Tell them about deficiencies in organization Activate and strengthen top management support Need to break down power centres Use participation in decision making Get people involved Build in rewards Tie rewards to change/use recognition, status symbols, praise to get people to go along Material pertinent to this discussion is found on pages 339-340.

Moving Establish goals E.G. Make business profitable by end of next year Institute smaller, acceptable changes that reinforce and support change E.G. Procedures and rules, job descriptions, reporting relationships Develop management structures for change E.G. Plans, strategies, mechanisms that ensure change occurs Maintain open, two-way communication Material pertinent to this discussion is found on pages 339-340.

Refreezing Build success experiences Reward desired behaviour Set targets for change, and have everyone work toward targets Reward desired behaviour GOOD - reward behaviour that reinforces changes BAD - reward old system (e.g., people relying on old systems while computerization is going on) Develop structures to institutionalize the change Organizational retreats, appropriate computer technology, performance appraisals that examine change efforts Make change work Material pertinent to this discussion is found on pages 339-340.

Exhibit 10-9 Sources of Individual Resistance to Change Selective Habit information processing Individual Resistance Material pertinent to this illustration is found on pages 340-342. Security Fear of the unknown Economic factors

Cynicism About Change Feeling uninformed about what was happening Lack of communication and respect from one’s supervisor Lack of communication and respect from one’s union representative Lack of opportunity for meaningful participation in decision-making Material pertinent to this discussion is found on page 342.

Exhibit 10-11 Sources of Organizational Resistance to Change Threat to established resource allocations Structural inertia power relationships Limited focus of change Threat to expertise Group Material pertinent to this illustration is found on pages 342-344.

Overcoming Resistance to Change Education and Communication This tactic assumes that the source of resistance lies in misinformation or poor communication. Participation Prior to making a change, those opposed can be brought into the decision process. Facilitation and Support The provision of various efforts to facilitate adjustment. Material pertinent to this discussion is found on pages 344-346.

Overcoming Resistance to Change Negotiation Exchange something of value for a lessening of resistance. Manipulation and Cooperation Twisting and distorting facts to make them appear more attractive. Coercion The application of direct threats or force upon resisters. Material pertinent to this discussion is found on pages 344-346.

Summary and Implications Employees form an overall subjective perception of the organization based on such factors as degree of risk tolerance, team emphasis, and support of people. This overall perception becomes, in effect, the organization’s culture or personality. These favourable or unfavourable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures. Just as people’s personalities tend to be stable over time, so too do strong cultures. This makes strong cultures difficult for managers to change. Material pertinent to this discussion is found on pages 346-347.

Summary and Implications One of the more important managerial implications of organizational culture relates to selection decisions. Hiring individuals whose values don't align with those of the organization is not good. Change must be managed, it is not an easy process Individuals and organizations resist change To be successful at change, it is necessary to break down the resistance to change Material pertinent to this discussion is found on pages 346-347.

OB at Work

For Review 1. Can an employee survive in an organization if he or she rejects its core values? Explain. 2. How can an outsider assess an organization’s culture? 3. What defines an organization’s subcultures? 4. How can culture be a liability to an organization? 5. What benefits can socialization provide for the organization? For the new employee? Material pertinent to this exercise is found on page 348.

For Review 6. Describe four cultural types and the characteristics of employees who fit best with each. 7. How does Lewin’s three-step model of change deal with resistance to change? 8. What is the difference between driving forces and restraining forces? 9. What are the factors that lead individuals to resist change? 10. What are the factors that lead organizations to resist change? Material pertinent to this exercise is found on page 348.

For Critical Thinking 1. Contrast individual personality and organizational culture. How are they similar? How are they different? Is socialization brainwashing? Explain. Can you identify a set of characteristics that describes your college’s or university’s culture? Compare them with several of your peers. How closely do they agree? “Resistance to change is an irrational response.” Do you agree or disagree? Explain. Material pertinent to this exercise is found on page 348.

Breakout Group Exercises Form small groups to discuss the following: 1. Choose two courses that you are taking this term, ideally in different faculties, and describe the culture of the classroom in each. What are the similarities and differences? What values about learning might you infer from your observations of culture? 2. Identify artifacts of culture in your current or previous workplace. From these artifacts, would you conclude that the organization had a strong or weak culture? 3. Reflect on either the culture of one of your classes, or the culture of the organization where you work, and identify aspects of that culture that could be changed. How might some of these changes be made? Material pertinent to this exercise is found on page 351.