Organization Culture and ChangeAn organization will redesign, reorganize and innovate current activities, the organization structure or processes to retain/improve current competitive position, customer focus, and customer satisfaction.All these changes need to take place in the overall context of the organization’s culture.Organization culture is like the flowing blood in the human system that connects and energizes the various internal organs.

What is Corporate Culture?• It is reflected in how things are done?(Flanagan, 1995)

and how problems are solved in an organization.• It may be defined as the ethics of a company (as US

firms do) or the shared value and team spirit (as Europeans prefer to define it)

• In biological terms, culture is like the DNA of an organization invisible to the naked eye, but critical to shaping the behavior.

• One culture could be distinguished from another in terms of how some commonly shared human problems are addressed and the specific solutions are sought (Trompenaars, 1993) affecting the performance of everyone within the culture in positive or negative ways.

Elements of Culture

– Basic assumptions– Artifacts– Values

Basic Assumptions

• What it is? What it stands for? What it is all about?

• It is what drives the organization, determines how its members perceive, think, feel and believe.

• It represents the core ideology.• For example-– Market-oriented communication system (AT&T)– Customer Orientation (Citi Bank)– Risk Taking and Innovation (Boeing, HP)– Employee Participation, Open Communication and

Security(Sony, Toyota)

Artifacts

• The visible manifestations of culture – Its structure, systems and subsystems,

symbols, plaques, etc.– Public documents it releases, media

reports and stories about it– Its rituals, norms, rules and procedures– The observable behavior of its membersFor example, 24 hr hotline for customers

that both IBM and Citibank provide.

Values• These are the social principles, goals and standards held by

members of an organization• They evolve from the core of the culture and the basic assumptions– Sam Walton captured the core value of Wal-Mart in the statement that

Wal-Mart puts the customer ahead of everything else. – Boeing maintained that product safety, applying the most conservative

safety standards, testing, and analysis – Belief and trust in employees, individual identity, and entrepreneurism

reflect the 3M core values.

They are reflected in the core capabilities of a company, form the basis of their policies and actions, and are generally not compromised for short-term benefits or financial gains.

As long as organization reflects its espoused values in its relation with customers, and its customers think it does, it can sell its products very well.

Basic Value Orientation that Influence Ways of Doing Business

The five basic value orientations given by Fons Trompenaars (1993) are –– Universalism vs. Partcularism– Collectivism vs. Individualism– Neutral vs. Affective– Diffuse vs. Specific– Achievement vs. Ascription– Norms

Dimensions of Culture

Manifest AspectsThe industry and its

competition; company history and tradition; goals, policies

and procedures; Systems and controls; technology, products

Intrinsic AspectsBasic Assumptions;

Values, Norms

Organization Culture Dealing with Change

• OC could be a help or a hindrance to change.• On the one hand it provides power for action, while

on the other, it filters information, exercises control over decision-making, and restrains action options.

• The prevailing bureaucratic culture may not enable an organization to quickly adapt to change

• In any change attempt, the existing culture has to be diagnosed to see whether the proposed business strategy fits in with it.

• However, cultural change is extremely difficult and long drawn process

Identifying and Diagnosing Organization Culture

• Diagnosing corporate culture requires uncovering and understanding the basic assumptions, values, norms and artifacts underlying organizational life as perceived and felt by organizational members.

• One needs to examine the following-– How managerial tasks are typically performed?– How are tasks supervised?– How is task performance monitored, appraised, and

rewarded?– How are decisions made and communicated?– How organizational relationships are usually managed?

Superior –subordinate relationships, team-spirit, interdepartmental co-ordination, union-management relations, customer-orientation, etc.

Some Techniques that Assist in Identifying/ Diagnosing an

Organization Culture• Interviewing employees at different levels• Administering relevant questionnaires and

conducting attitudinal and morale surveys• Analyzing the process aspects (organizational

policies, decisions, procedures, rules and regulations, how resources are procured and managed)

• Examining the organization’s external relations with its customers, clients, etc. to know their perception and evaluation of the organization.

Difficulties in diagnosing the cultural elements

• Cultural assumptions are generally taken for granted and less talked about

• Culture is implicit and can only be inferred from cultural artifacts

• Expressed beliefs and values may be different from what one really believes in and follows

• Organizations are generally characterized by subcultures

• Customers and clients may perceive the culture as an outcome of their personal experiences that may be positive or negative

Developing New Culture

• The needed changes or adjustments in value orientation

• Employee attitudes, skills and behaviors that would be congruent with the new values

• The entrenched habits have to be broken or modified to bring in desired behaviors

• The needed changes in administrative and work processes

• For example, United Stationers Inc. US, 4000 employees responses were analyzed to identify values for core organizational culture.

Employee-Culture Compatibility

• It is easy to determine individual-job fit, but it is difficult to determine whether he/she is right for the company culture.

• It can be fostered through mentoring and coaching a new hire.

• If the decisions and actions of the top management are not congruent with the corporate culture it will send a wrong signal to employees

Assessing Cultural Risk

• The extent of cultural risk depends upon two issues:– How important the changes are to the strategy– How compatible the changes are with the

culture

The risk is greater when the changes are highly important to the strategy but highly incongruent with the culture. Changes are easier to make when strategy aligns with the organizational culture.

Culture and life cycle of an organization

• When the organization is in its formative stage, culture is the unifying force that binds various activities in the context of the founder’s vision

• In the middle stage, it is found to be more implicit than explicit. Along with expansion and diversification of its activities, subcultures arise which may be congruent / incongruent to the main culture.

• A mature company needs to change its psyche in part or in totality to improve performance and achieve growth.

Enhancing Culture Consciousness among Work-Teams

Knowledge of Organiza tion Culture

What I do not know Aspects of the organization culture that I am not aware of but that others know (what I need to learn from others)

Aspects of the organization culture that are unknown to myself as well as to others in the work-team (collective consciousness)

What I know What is collectively known about the organization culture (common knowledge about the organization culture)

Aspects of the organization culture that I know but that others are not aware of (what I need to tell others)

What other know What others do not know

Is it possible to change the corporate culture?

• Culture is deep-seated in an organization as much as the personality in an individual

• Any attempt to change the corporate culture needs understanding of its cultural dimensions

• It is easy to change the outer layers like the artifacts and norms but difficult to change the values, basic assumptions as they are crystallized organizational experiences

• Cultural change may involve certain issues of ethical and legal sensitivity

When is change necessary?

• Fundamental changes in the business environment – technological, economic, political

• The industry is highly competitive• The organization is poised for growth

and expansion• To ensure organizational survival

Checklist for cultural change

• Formulate a clear picture of the firm’s new strategy and of the shared values, norms and behaviors

• Take a close look at the inner functioning of the organization• Identify aspects of the current culture that could still be valid• Identify the depth of the cultural change needed• Communicate the change translated into goals, activities

and behaviors• Make changes from top down.• Involve employees in the change process• Check on the leadership and support processes to overcome

anxiety among managers• Monitor the progress from time to time• Diffuse resistance.

New Conceptualization of Culture Change

• The ‘Machine Bureaucracy’ (Perrow, 1986) of yester years, in which decision making was driven by rules, regulations and precedent, is virtually obsolete.

• The pace of change in the organizational environment demands high level of responsiveness from employees right down the chain of command. Hence, they need to have a solid instinct for the organizations beliefs and values to know what constitutes appropriate behavior.

• This is especially true for the new breed of knowledge workers (Drucker, 1985), whose managers lack the knowhow to micro-manage subordinates knowledge based decisions.

• Culture provides a sense of understanding of an organization’s beliefs and values that is necessary when rules, regulations, and micro-management cannot be used to control behavior. (Slatzer & Narver, 1995)

Kotter’s Eight –Step Change Management Model

• Create a sense of urgency• Establishing a powerful group to guide the change• Develop a vision• Communicate the vision• Empower staff• Ensure there are short term wins• Consolidate gains• Institutionalize the change in the culture of the

organization

Levy and Merry(1986)

• Crisis-The internal pressure and needs are not compatible with the external needs. There is continuous disturbance and fluctuations within the internal system which brings it to a state of either perish or revitalize

• Transformation- Discontinuity of the past, generating commitment to change, reframing processes, creating new realities and insights.

• Transition-There is a planned and managed effort to translate ideas and visions into active steps, programs and structure. There is a definite movement from unstable state to a new stable state.

• Stabilization and Development-All the efforts of the earlier stage are internalized and get stabilized. The organization begins to move with new vigour.

Sathe’s Seven Phase Model

• Shock the organization• Break the old mind-set• Make the tough decisions• Demand performance• Track progress and begin vision• Weed out those unwilling or unable to

change; recognize and reward those willing and able to change

• Begin to build a culture of high competence and performance

Kaplan & Norton Four Phase Model

• Their schema for change involves an initial clarification of the vision, then translating this into a strategy with specific objectives.

• Communicating and linking objective and measures• Planning and target setting• Strategic feedback and learning

The linear model relates to the process of managing a single, organizational transformation effect resulting in an organizational form qualitatively different from the earlier one.In contrast, the cycle model appears to relate to an ongoing process of incremental change not involving a major upheavel.

Cultural Attributes of Change

• Organizations are cultures; they can be studied and manipulated as such. Just as the individual can adapt to their social surroundings, altering their appearance, beliefs and behaviors, so too can organizations (Kanter et al, 1992)

• Understanding cultural web and a changing environment greatly assist the organization to manage change (Johnson & Scholes, 1997)

Culturally related attributes suggested by Peters & Watermen (1982) and Kanter(1983; 1989)

• A clear and communicated strategic vision• Visible senior management involvement• People-based competitive edge• Marketing ethos• Consensus driven management• Awareness and reflection of social

responsibility

The Role of Communication

• Customize the message• Set the appropriate tone• Build the feedback• Set the example• Ensure penetration