Organization Culture and Change

An 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 members
For 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 Aspects
The industry and its
competition; company history
and tradition; goals, policies
and procedures; Systems and
controls; technology, products

Intrinsic Aspects
Basic 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
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)
What I know What is collectively known
about the organization
culture (common
knowledge about the
organization culture)
What other know
tion Culture
Aspects of the organization
culture that are unknown
to myself as well as to
others in the work-team
(collective consciousness)
Aspects of the organization
culture that I know but that
others are not aware of
(what I need to tell others)
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