McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

4 Chapter Managing Organizational Culture and Change Managing Organizational Culture and Change McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives After reading this chapter, you should be able to: Build and maintain an appropriate company culture. Understand the roles of symbols, rites, ceremonies, heroes, and stories in an organization's culture. Identify the various categories of organizational cultures and the characteristics of people who fit best with them. Adapt to organizational change and the forces that drive change. Work with employees who resist change. Use tools to help implement change, including Lewin’s three- step model of change and force field analysis. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Culture A system of shared values, assumptions, beliefs, and norms that unite the members of an organization. Reflects employees’ views about “the way things are done around here.” The culture specific to each firm affects how employees feel and act and the type of employee hired and retained by the company. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Core Values Expressed Values Visible Culture Levels of Corporate Culture McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Functions Performed By Organizational Culture Employee Self-Management  Sense of shared identity  Facilitates commitment Stability  Sense of continuity  Satisfies need for predictability, security, and comfort McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Functions Performed By Organizational Culture (cont) Socialization  Internalizing or taking organizational values as one’s own Implementation Support of the Organization’s Strategy  If strategy and culture reinforce each other, employees find it natural to be committed to the strategy McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Stages of the Socialization Process Pre-arrival Encounter Metamorphosis McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Creating and Sustaining Organizational Culture Cultural Symbols Company Rituals and Ceremonies Company Heroes Stories Language Leadership Organizational Policies and Decision Making McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Characteristics and Types of Organizational Culture Cultural Uniformity versus Heterogeneity Strong versus Weak Cultures Culture versus Formalization National versus Organizational Culture McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Characteristics and Types of Organizational Culture (continued) Types: Traditional Control or Employee Involvement  Traditional control emphasizes the chain of command relies on top-down control and orders  Employee involvement emphasizes participation and involvement McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Four Types of Culture Classification Baseball team culture--rapidly changing environment Club culture--seeks loyal, committed people Academy culture--hires experts who are willing to make a slow steady climb up a ladder Fortress culture--focused on surviving and reversing sagging fortunes McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Competing Values Framework Based on two dimensions: focus and control  Focus--whether the primary attention of the organization is directed toward internal dynamics or directed outward toward the external environment  Control--the extent to which the organization is flexible or fixed in how it coordinates and controls activities McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Types of Change Planned Change--change that is anticipated and allows for advanced preparation Dynamic Change--change that is ongoing or happens so quickly that the impact on the organization cannot be anticipated and specific preparations cannot be made McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Forces for Change: Environmental Forces Put pressure on a firm’s relationships with customers, suppliers, and employees. Environmental forces include:  Technology  Market forces  Political and regulatory agencies and laws  Social trends McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Forces for Change: Internal Forces Arise from events within the company. May originate with top executives and managers and travel in a top-down direction. May originate with front-line employees or labor unions and travel in a bottom-up direction. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Resistance to Change Self-Interest Lack of Trust and Understanding Uncertainty Different Perspectives and Goals Cultures that Value Tradition McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Models of Organizational Change: The Star Model The Star Model: Five Points  Types of change-evolutionary or transformational  Structure  Reward system  Processes  People McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Lewin’s Three-Step Model of Organizational Change Unfreezing--melting away resistance Change--departure from the status quo Refreezing--change becomes routine McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Lewin’s Force Field Analysis Model Increase driving forces that drive change Reduce restraining forces that resist change or do both McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Restraining forces Driving forces Status quo Desired state Time Force-field Model of Change McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Implementing Organizational Change Top-down Change Change Agents Bottom-up Change McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Eight Steps to a Planned Organizational Change Establish a sense of urgency. Form a powerful coalition of supporters of change. Create a vision of change. Communicate the vision of change. Empower others to act on the vision. Plan and create short- term wins. Consolidate improvements and produce still more change. Institutionalize new approaches. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Tactics for Introducing Change Communication and Education Employee Involvement Negotiation Coercion Top-Management Support McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Applications: Management is Everyone’s Business — For the Manager Certain types of changes routinely provoke strong employee resistance:  Changes that affect skill requirements.  Changes that represent economic or status loss.  Changes that involve disruption of social relationships. By being aware of the sources of resistance, managers can better apply tactics to make the changes more palatable for employees. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Applications: Management is Everyone’s Business — For Managing Teams Teams can help test the waters for a proposed change. Various employee teams can serve as focus groups in order to find ways to make a change in policy more acceptable to employees. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Applications: Management is Everyone’s Business — For Individuals Learning the specifics about the company culture can help you determine your fit with the organization and the possibility of succeeding. Ask questions and gather information during the recruiting process to get a handle on the company culture and assess whether you will function comfortably in it. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.