Corporate Culture and Change Management Business Policy Please note that these slides are not intended as a substitute to reading the recommended text for this course. 0
Objectives Understand the importance of change and how organisational culture can affect implementing change Map an organisational culture and its capacity for responding to the need for change Identify the sources of resistance to change and the measures and interventions necessary to overcome this resistance Chapters 5 & 14: Johnson, Scholes & Whittington 1
Change Organizational change is the process of converting an organization from its current state to some future desired state. 2
Types of Organizational Change Structure Technology Strategy Products Culture/People SOURCE: Based on Harold J. Leavitt, Applied Organizational Change in Industry: Structural, Technical, and Human Approaches, In New Perspectives in Organization Research, ed.w.w. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley, 1964), 55-74. 3
Forces for Change External Forces Competition Laws and regulations / Deregulation New technologies Labor market shifts Business cycles Social change Recession Global influences / competition Internal Forces Strategy modifications New equipment New processes Workforce composition Job restructuring Compensation and benefits Labor surpluses and shortages Employee attitude Performance gap = disparity between existing and desired performance levels 4
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. 5
CULTURE determines: The way we address problems Our receptivity to change The way we deal with each other The way we deal with stakeholders Our commitment to strategy 6
Culture s Functions Boundary-defining Conveys a sense of identity for organization members Facilitates commitment to something larger than one s individual self-interest Social glue that helps hold an organization together Provides appropriate standards for what employees should say or do 7
Culture Formation 8
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. 9
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. 10
Two Cultures Overt / Covert Formal / Overt Organization Org charts Mission statement Job def. / descriptions Production efficiency Span of Control Policies & Procedures Informal / Covert Organization Emotional feelings / needs / desires Effective relationships between managers & subordinates Personal / Group Goals & Perceptions Prestige & Power Structures Group norms / sentiments Grapevine Personal animosities / friendships 11
Levels of Culture Artifacts 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 12
Cultural Web Paradigm Power structure Stories Symbols Control system Organizational structure Rituals and routines 13
Cultural Web - Explained 14
Types of Organizational Culture (As identified by Charles Handy) Power Culture Role Culture Task Culture Person Culture Entrepreneurial Culture 15
Power Culture Concentrating power among a few people Usually is associated with autocratic leadership. Decisions are made quickly Managers are judged on results rather than how they obtain them. Usually a hierarchical organization structure Motivation is likely to focus on financial rewards like bonuses. Analogy of spiders web: there is no purpose without the spider. 16
Role Culture Each member of staff has a clearly defined job title and role Usually associated with bureaucratic organizations like government. The structure of the organization is clearly defined with clear delegated authority. Power comes from a person s position Decision-making and risk taking are frowned upon. Tall hierarchical organization structures Analogy big building: Solid and dependable not going anywhere fast 17
Task Culture Based on cooperation and team work Groups are formed to solve problems Communication may follow a matrix structure Creative & problem-solving spirit Very motivating environment that meets worker s intrinsic needs Analogy of a NET: the strength is derived from the many strands 18
Person Culture Individuals are given the freedom to express themselves and make decisions Most creative type of culture No emphasis on teamwork People who thrive here may find it difficult to work in a structured environment Analogy of a STAR: each person is different and operates alone 19
Entrepreneurial Culture Encourages management and workers to take risks and encourage new ideas and business ventures. Success is rewarded but failure is not automatically criticized Motivation can be high among people who like a challenge and risk taking 20
The Liabilities of Culture 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. 21
To make change a reality Change Agents Persons who act as catalysts and assume the responsibility for managing the change process. Types of Change Agents Managers: internal entrepreneurs Nonmanagers: change specialists Outside consultants: change implementation experts 22
Kinds of Change Kotter (1998) Incremental Tweaking the system or process Transitional Restructuring, reorganizing Transformational New vision, new mission, new values 23
Types of Strategic Change EXTENT OF CHANGE PROACTIVE TUNING PLANNED TRANSFORMATIONAL TYPE OF CHANGE REACTIVE ADAPTATION FORCED TRANSFORMATIONAL 24
Superficial vs. Embedded Change Superficial Old model of leadership Change Imposed Requires Command and Control Narrow stakeholders involved Incomplete map of current reality Focus on problems Vision shaped by elite Linear thinking Transmission by messages Plan then implement Embedded New model of leadership Co-created change Trust and cooperation Broader stakeholder engagement Complete map Focus on possibilities Vision shared by everyone Systems thinking Strategic thinking Plan and implement simultaneously 25
Model for Planned Organizational Change Source: Adapted from Larry Short, Planned Organizational Change, MSU Business Topics, Autumn 1973, pp. 53 61 ed. Theodore Herbert, Organizational Behavior: Readings and Cases (New York: McMillan, 1976), p. 351. 26
Lewin s Three-Step Change Model Force Field Analysis The process of determining which forces drive and which resist a proposed change Driving Forces Thought of as problems or opportunities that provide motivation for change Restraining Forces (Barriers) Lack of resources Resistance from middle managers Inadequate employee skills 27
Unfreezing Provoke dissatisfaction with the current state. Activate and strengthen top management support. Use participation in decision making. Build in rewards. 28
Changing / Moving Establish goals. Institute smaller, acceptable changes that reinforce and support change. Develop management structures for change. Maintain open, two-way communication. 29
Refreezing Build success experiences. Reward desired behaviour. Develop structures to institutionalize the change. Make change work. 30
Managing Resistance to Change Why People Resist Change? The ambiguity and uncertainty that change introduces The comfort of old habits A concern over personal loss of status, money, authority, friendships, and personal convenience The perception that change is incompatible with the goals and interest of the organization 31
Sources of Individual Resistance to Change Selective information processing Habit Fear of the unknown Individual Resistance Security Economic factors 32
Sources of Organizational Resistance to Change Threat to established resource allocations Structural inertia Sunk costs in a plant, equipment, personnel Threat to established power relationships Organizational Resistance Limited focus of change Threat to expertise Group inertia Group norms prevent individuals from change 33
Overcoming Resistance to Change Education and communication This tactic assumes that the source of resistance lies in misinformation or poor communication. Best used: Lack of information, or inaccurate information Participation and involvement Prior to making a change, those opposed can be brought into the decision process. Best used: Where initiators lack information, and others have power to resist Facilitation and support The provision of various efforts to facilitate adjustment. Best used: Where people resist because of adjustment problems 34
Overcoming Resistance to Change Negotiation and agreement Exchange something of value for a lessening of resistance. Best used: Where one group will lose, and has considerable power to resist Manipulation and cooperation Twisting and distorting facts to make them appear more attractive. Best used: Where other tactics won t work or are too expensive Explicit and implicit coercion The application of direct threats or force upon resisters. Best used: Speed is essential, and initiators have power 35
Dealing with Change 36