1. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Chapter 4 Managing Organizational Culture and Change

2. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 2 Learning Objectives After reading this chapter, you should be able to: Identify the three major aspects of organizational culture. Apply a simple assessment tool to quickly gain a sense of the culture of an organization. Describe the importance of organizational culture. Identify the processes through which organizational culture can be developed and sustained. Use classification systems to identify various types of organizational culture. Identify the sources of resistance to change. Apply models to effectively manage change efforts.

3. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 3 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.

4. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 4 Core Values Expressed Values Visible Culture Levels of Corporate Culture

5. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 5 Key Effects of Organizational Culture Organizational Culture Employee Self-management Stability Socialization Strategy Implementation

6. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 6 Key Effects of Organizational Culture Employee Self-Management  Sense of shared identity  Facilitates commitment Stability  Sense of continuity  Satisfies need for predictability, security, and comfort

7. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 7 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 Key Effects of Organizational Culture

8. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 8 Stages of the Socialization Process Pre-arrival Encounter Metamorphosis

9. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 9 Managing Cultural Processes Cultural Symbols Company Rituals and Ceremonies Company Heroes Stories Language Leadership Organizational Policies and Decision Making

10. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 10 Characteristics and Types of Organizational Culture Cultural Uniformity versus Heterogeneity Strong versus Weak Cultures Culture versus Formalization National versus Organizational Culture

11. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 11 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

12. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 12 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

13. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 13 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

14. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 14 Competing Values Framework Focus Control Flexible Internal External Fixed

15. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 15 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

16. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 16 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

17. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 17 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.

18. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 18 Resistance to Change Self-Interest Lack of Trust and Understanding Uncertainty Different Perspectives and Goals Cultures that Value Tradition

19. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 19 Models of Organizational Change: The Star Model The Star Model: Five Points  Types of change-evolutionary or transformational  Structure  Reward system  Processes  People

20. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 20 Lewin’s Three-Step Model of Organizational Change Unfreezing--melting away resistance Change--departure from the status quo Refreezing--change becomes routine

21. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 21 Lewin’s Force Field Analysis Model Increase driving forces that drive change Reduce restraining forces that resist change or do both

22. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 22 Restraining forces Driving forces Status quo Desired state Time Force-field Model of Change

23. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 23 Implementing Organizational Change Top-down Change Change Agents Bottom-up Change

24. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 24 Four Types of Employees Alignment with culture NoYes PerformanceLowWorstGive Another Chance HighMake the tough choice Best

25. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Slide 25 Tactics for Introducing Change Communication and Education Employee Involvement Negotiation Coercion Top-Management Support