Organizational Change and Culture Chapter 17 Organizational Change and Culture

Organizational success depends on the organization’s adaptations to environmental changes.

Types of Changes Task Structure Technology People (behavior to complete the job to meet organizational objectives) Structure (the way the firm is organized to meet its mission and objectives) Technology (the machines and process used to get the task done) People (employees who complete the tasks) 4

Forces for Organizational Change Internal Environmental Forces Financial position New and revised mission and strategy Reorganization of formal structure Acquisition and merger External Environmental Forces Increased global competition Consumer demands Government laws Economic conditions Technological advances

Stages in the Change Process 1. Denial 4. Commitment 2. Resistance 3. Exploration

Resistance to Change Resistance to change involves the variables of intensity, source, and focus, and explains why people are reluctant to change. Reasons for resisting change: Status Quo Uncertainty Learning Anxiety Fear Managers should anticipate how employees will react to or resist change

Overcoming Resistance to Change Create a win-win situation Provide support Stay calm Avoid direct confrontation Use power and ethical politics Develop a positive climate for change Encourage interest in improvement Plan Give facts Clearly state why the change is needed and how it will affect employees

Lussier’s Change Model Change Models Lussier’s Change Model Step 1. Define the change Step 2. Identify possible resistance to change Step 3. Plan the change Step 4. Implement the change Give the facts Involve employees Provide support Step 5. Control the change Lewin’s Change Model Step 1. Unfreezing Step 2. Moving Step 3. Refreezing Exhibit 14.5

Organizational Culture Organizational culture – consists of the shared values and assumptions of how its members will behave Global firms need to incorporate national cultural values in their organizational culture Organizational culture is linked with positive organizational results Although culture can change, it is difficult to change beliefs and values

Ways to Learn the Organization’s Culture Slogans Symbols Ceremonies Heroes Stories Contracting protects the organization from changes in quantity or price on either the input or output side. We see this strategy used when management agrees to a long-term fixed contract to purchase materials and supplies or to sell a certain part of the organization’s output. Lobbying using influence to achieve favorable outcomes is a widespread practice used by organizations to manage their environment. 9

Strong and Weak Cultures Strong cultures – Organizations that have clear values that are shared to the extent of similar behavior e.g., IBM, PepsiCo, J.C. Penney Weak cultures – Organizations that have no stated values and do not enforce behavior

Positive and Negative Cultures Positive culture – Has norms that contribute to effective performance and productivity Negative culture – A source of resistance and turmoil that hinders effective performance

The most effective organizational culture that leads to effective performance is strong and positive.

Organizational Climate (1 of 2) Organizational climate – the relatively enduring quality of the internal environment of the organization perceived by its members Climate is employees’ perception of the atmosphere of the internal environment Climate is based on shared perceptions of the way things are done Successful companies tend to have strong cultures and positive climates

Organizational Climate (2 of 2) Organizational climate is important because: The employees’ perception of the organization serves as the basis for the development of their attitudes toward it Their attitudes in turn affect their behavior Morale – a state of mind based on attitudes and satisfaction with the organization Morale is an important part of organizational climate

Organizational identity and loyalty Dimensions of Climate Responsibility Structure Rewards Organizational identity and loyalty Warmth Dimensions of Climate Risk Support Exhibit 14.6

Dimensions of Climate: Summary (1 of 2) Structure: The degree of constraint on members The number of rules, regulations, and procedures Responsibility: The degree of control over one’s own job Rewards: The degree of being rewarded for one’s efforts and being punished appropriately Warmth: The degree of satisfaction with human relations

Dimensions of Climate: Summary (2 of 2) Support The degree of being helped by others and of experiencing cooperation Organizational Identity and Loyalty: The degree to which employees identify with the organization and their loyalty to it Risk The degree to which risk is encouraged

Training and Development The process of developing the ability to perform both present and future jobs Usually less technical Generally designed for professional and managerial employees Training The process of developing the necessary skills to perform the present job Typically used to develop technical skills of non-managers

Job Instructional Training Step 1. Preparation of the trainee Step 2. Trainer presentation of the job Step 3. Trainee performance of the job Step 4. Follow-up Exhibit 14.7

Performance Appraisal Ongoing process of evaluating employee job performance Also called: Performance job evaluation Performance review Merit rating Performance audit One of the manager’s most important and most difficult functions

Conducted properly, performance appraisal can decrease absenteeism and turnover, and increase morale and productivity.

Performance Appraisal Steps Organization’s strategy, goals, and objectives Step 1 State job responsibilities Step 5 Step 2 Conduct the formal appraisal interviews Develop standards and measurement methods Prepare the formal appraisal interviews Step 4 Step 3 Conduct informal appraisals – “Coaching” Exhibit 14.9

Objectives used to appraise employees’ performance: Evaluative Objectives Used as the basis of administrative decisions that reward or punish for past performance e.g., bonus pay e.g., salary decisions Used to make demotion, termination, transfer, and promotion decisions Developmental Objectives Used as the basis of decisions that improve future performance

Performance Appraisal Methods Ranking Management by Objectives (MBO) Narrative Rating Scale Behaviorally Anchored Rating Scales (BARS) Critical Incidents Break-even Analysis identifies profit or loss at various sales volumes Return on Investment measures productivity of assets Marginal Analysis compares the additional cost in a particular decision rather than average cost Game Theory mathematical models that analyze multi-party decision contexts Linear Programming for optimally solving resource allocation problems Queuing Theory for calculating waiting lines 5

Coaching Model Step 1. Refer to past feedback Step 2. Describe the current performance Step 3. Describe the desired performance Step 4. Get a commitment to change Step 5. Follow-up

Grid OD A six-phase program designed to improve management and organizational effectiveness Phases include: Phase 1. Training Phase 2. Team Development Phase 3. Inter-group Development Phase 4. Organizational Goal Setting Phase 5. Goal Attainment Phase 6. Stabilization

Survey Feedback Program Steps (1 of 2) An OD technique that uses a questionnaire to gather data that are used as the basis for change Management and the change agent do preliminary planning to develop an appropriate survey questionnaire The questionnaire is administered to all members of the organization / unit The survey data are analyzed to uncover problem areas for improvement

Survey Feedback Program Steps (2 of 2) The change agent feeds back the results to management Managers evaluate the feedback and discuss the results with their subordinates Corrective action plans are developed and implemented Measuring Climate. Commonly used to measure the organizational climate.

Team Building The OD technique designed to help work groups operate more effectively The most widely used OD technique The goals of team building programs vary, depending on: the group’s needs the change agent’s skills

Team Building: Typical Goals (1 of 2) To clarify the objectives of the team and responsibilities of each team member To identify problems preventing the team from accomplishing its objectives To develop team skills in: problem-solving decision-making objective-setting planning

Team Building: Typical Goals (2 of 2) To determine a preferred style of teamwork and to change that style To fully utilize the resources of each individual member To develop open, honest working relationships based on trust and an understanding of group members

Team-Building Program Agenda Topics Problem Solving Training Closure Process and Structure Evaluation Identification Climate Building Break-even Analysis identifies profit or loss at various sales volumes Return on Investment measures productivity of assets Marginal Analysis compares the additional cost in a particular decision rather than average cost Game Theory mathematical models that analyze multi-party decision contexts Linear Programming for optimally solving resource allocation problems Queuing Theory for calculating waiting lines 5

The Relationship among Organizational Culture, Climate, and Development (1 of 2) Climate is a sharing of perceptions and intangibles of the internal environment Culture is the values and assumptions of the ideal environment Culture informs climate Often, the concept of culture encompasses that of climate

The Relationship among Organizational Culture, Climate, and Development (2 of 2) OD is commonly used as the vehicle to change culture or climate OD programs tend to be wider in scope than culture or climate Culture and climate changes can be part of an extensive OD program addressing other issues as well

Global Differences Openness to change is influenced by: Cultural values Collective versus individual societies Openness to power and following orders for change without questioning authority Culture and country development Multinational corporations are continually seeking best practices to implement at all their global facilities