Chapter Thirteen Organizational Culture and Change

Chapter ThirteenChapter Thirteen

Organizational Culture Organizational Culture

and Changeand Change

Copyright © 2007 by Nelson, a division of Thomson Canada LimitedCopyright © 2007 by Nelson, a division of Thomson Canada Limited

ObjectivesObjectivesAfter reading and studying this chapter, you should be able to:After reading and studying this chapter, you should be able to:

1.1. Present an analysis of the importance of Present an analysis of the importance of organizational culture.organizational culture.

2.2. Present two models of the change Present two models of the change process in organizations.process in organizations.

3.3. Describe why people resist change and Describe why people resist change and how to manage such resistance.how to manage such resistance.

4.4. Describe three major factors that create Describe three major factors that create organizational change.organizational change.

5.5. Explain the nature of organizational Explain the nature of organizational development.development.

6.6. Develop useful insights into managing Develop useful insights into managing change in your job and career.change in your job and career.


Organizational CultureOrganizational Culture Organizational cultureOrganizational culture: a system of shared values : a system of shared values

and beliefs that influences worker and beliefs that influences worker behaviourbehaviour.. Like an organization’s personalityLike an organization’s personality

Determinants of an organization’s culture:Determinants of an organization’s culture: The values, administrative practices, vision and The values, administrative practices, vision and

personality of the firm’s founderpersonality of the firm’s founder The characteristics of its top-level managersThe characteristics of its top-level managers The culture of the society (its norms, values, and The culture of the society (its norms, values, and

beliefs) in which the firm functionsbeliefs) in which the firm functions The industry in which the firm competesThe industry in which the firm competes

Subcultures also exist: pockets in which Subcultures also exist: pockets in which organizational culture differs from the dominant organizational culture differs from the dominant cultureculture


Dimensions of Organizational Dimensions of Organizational CultureCulture

ValuesValues Organizational storiesOrganizational stories MythsMyths Degree of stabilityDegree of stability Resource allocations and rewardsResource allocations and rewards Traditions, rites, and ritualsTraditions, rites, and rituals Ownership cultureOwnership culture Corporate spiritualismCorporate spiritualism Organizational spiritualityOrganizational spirituality


How Workers Learn The How Workers Learn The CultureCulture

The socialization processThe socialization process A process of coming to understand the values, A process of coming to understand the values,

norms, and customs of the organization.norms, and customs of the organization. Perpetuates the organization by indoctrinating new Perpetuates the organization by indoctrinating new

workers into the ways of the organization.workers into the ways of the organization. Mostly through observation & imitationMostly through observation & imitation

Teachings of leadersTeachings of leaders Leaders provide vital guidance to new workers Leaders provide vital guidance to new workers

through what leaders pay attention to, through what leaders pay attention to, measure, control, reward, give resources tomeasure, control, reward, give resources to


Exhibit 13-3 Exhibit 13-3 Consequences & Implications Consequences & Implications

of Organizational Cultureof Organizational Culture


General Considerations About General Considerations About Managing ChangeManaging Change

Changes in the competitive Changes in the competitive environment creates the need for environment creates the need for change in firms. change in firms.

Types of change in organizations:Types of change in organizations: Changes in technologyChanges in technology

Changes in organizational structureChanges in organizational structure

Coworkers and customersCoworkers and customers


The Growth Curve Model of The Growth Curve Model of ChangeChange

Change is inevitable throughout a firm’s Change is inevitable throughout a firm’s life cycle; three phases in sequence:life cycle; three phases in sequence: Formative:Formative:

Lack of structure, risk-taking, trial & errorLack of structure, risk-taking, trial & error Focus on market, aiming for stabilityFocus on market, aiming for stability

Normative:Normative: Stability achieved; focus on maintaining status quoStability achieved; focus on maintaining status quo Goal is survival & predictability; more bureaucraticGoal is survival & predictability; more bureaucratic

Integrative:Integrative: Redefining the firm and choosing a new directionRedefining the firm and choosing a new direction Most resistance to change hereMost resistance to change here

Force-field theory : an organization Force-field theory : an organization simultaneously faces forces of change and of simultaneously faces forces of change and of resistance to change.resistance to change.


Exhibit 13-4 The Growth Curve Exhibit 13-4 The Growth Curve Model of ChangeModel of Change


The Unfreezing-Changing-The Unfreezing-Changing-Refreezing ModelRefreezing Model

Lewin suggested three steps necessary for Lewin suggested three steps necessary for successful change:successful change: UnfreezingUnfreezing

Reducing or eliminating resistance to change Reducing or eliminating resistance to change

ChangingChanging Moving on to other things through active participation Moving on to other things through active participation

in the change process, extensive two-way in the change process, extensive two-way communication.communication.

RefreezingRefreezing Encouraging recognition of successful change and Encouraging recognition of successful change and

rewarding people for implementing the change.rewarding people for implementing the change.


The Change Process (Kurt The Change Process (Kurt Lewin)Lewin)


Why People Resist ChangeWhy People Resist Change

Fear of an unfavourable outcome (e.g., less Fear of an unfavourable outcome (e.g., less money, personal inconvenience, more work)money, personal inconvenience, more work)

Disrupted social relationships at workDisrupted social relationships at work

HabitsHabits

Competing commitmentsCompeting commitments

A general fear of the unknownA general fear of the unknown

Fear that an unrecognized weakness in the Fear that an unrecognized weakness in the proposed proposed change will result in unfavourable outcomechange will result in unfavourable outcome


Gaining Support for ChangeGaining Support for Change

Allow for discussion and negotiation.Allow for discussion and negotiation. Allow for participation by those affected by the Allow for participation by those affected by the

change.change. Point out the potential benefits.Point out the potential benefits. Avoid change overload.Avoid change overload. Gain political support for the change.Gain political support for the change. Provide education.Provide education. Avoid citing poor performance as reason for change.Avoid citing poor performance as reason for change. Incorporate human touch.Incorporate human touch. Pay attention to the emotional aspects of the change.Pay attention to the emotional aspects of the change.


Methods for Dealing with Methods for Dealing with Resistance to ChangeResistance to Change

Education and communicationEducation and communication When lack of information or inaccurate informationWhen lack of information or inaccurate information

Pro: people will often help with the change, once Pro: people will often help with the change, once persuadedpersuaded

Con: can be time-consumingCon: can be time-consuming

Participation and involvementParticipation and involvement When initiators don’t have all info needed to design the When initiators don’t have all info needed to design the

change, & others have considerable power to resistchange, & others have considerable power to resist

Pro: gains commitment to change, & uses their informationPro: gains commitment to change, & uses their information

Con: time-consuming if participants’ design is Con: time-consuming if participants’ design is inappropriateinappropriate


Methods for Dealing with Methods for Dealing with Resistance to Change (cont.)Resistance to Change (cont.)

Facilitation and supportFacilitation and support Where resistance is due to adjustment problemsWhere resistance is due to adjustment problems

Pro: best results for adjustment problemsPro: best results for adjustment problems

Con: can be time-consuming, expensive & still failCon: can be time-consuming, expensive & still fail

Negotiation and agreementNegotiation and agreement When someone will clearly lose out in the change, & When someone will clearly lose out in the change, &

has power to resisthas power to resist

Pro: can be relatively easy way to avoid major Pro: can be relatively easy way to avoid major resistanceresistance

Con: can be expensive if alerts others to negotiateCon: can be expensive if alerts others to negotiate


Methods for Dealing with Methods for Dealing with Resistance to Change (cont.)Resistance to Change (cont.)

Manipulation and co-optationManipulation and co-optation Where other tactics won’t work or are too expensiveWhere other tactics won’t work or are too expensive

Pro: can be quick & inexpensive solution to resistancePro: can be quick & inexpensive solution to resistance

Con: can lead to future problems if people feel Con: can lead to future problems if people feel manipulatedmanipulated

Explicit and implicit coercionExplicit and implicit coercion Where speed essential & change initiators have Where speed essential & change initiators have

considerable powerconsiderable power

Pro: speedy, can overcome any resistancePro: speedy, can overcome any resistance

Con: risky if leaves people mad at initiatorsCon: risky if leaves people mad at initiators


Forces for Change: Downsizing Forces for Change: Downsizing & Restructuring& Restructuring

Primary reason for downsizing:Primary reason for downsizing: Reductions in the size of the firm to lower costs Reductions in the size of the firm to lower costs

and allow the firm to become more and allow the firm to become more competitive.competitive.

Dangers in downsizing:Dangers in downsizing: Creates confusion & resentmentCreates confusion & resentment Inability to capitalize on post-restructuring Inability to capitalize on post-restructuring

opportunities due to understaffing.opportunities due to understaffing. Loss of critical human assets reduces Loss of critical human assets reduces

organizational learning.organizational learning.


Exhibit 13-7 The Costs of Exhibit 13-7 The Costs of Downsizing versus The No-Layoff Downsizing versus The No-Layoff

PayoffPayoff Massive layoffs can Massive layoffs can

backfire after taking into backfire after taking into accountaccount:: Severance and rehiring Severance and rehiring

costscosts Potential lawsuits from Potential lawsuits from

aggrieved workersaggrieved workers Loss of institutional Loss of institutional

memory and trust in memory and trust in managementmanagement

Lack of staffers when Lack of staffers when the economy reboundsthe economy rebounds

Survivors who are risk Survivors who are risk averse, paranoid, and averse, paranoid, and politicalpolitical

Companies that avoid Companies that avoid downsizing say they getdownsizing say they get::

A fiercely loyal, more A fiercely loyal, more productive workforceproductive workforce

Higher customer Higher customer satisfactionsatisfaction

Readiness to snap back Readiness to snap back with the economywith the economy

A recruiting edgeA recruiting edge Workers who aren’t Workers who aren’t

afraid to innovate, afraid to innovate, knowing that their jobs knowing that their jobs are safeare safe


Keys to Successful Keys to Successful RestructuringRestructuring

Integrate downsizing with long-term strategies.Integrate downsizing with long-term strategies. Identify and protect high-potential employees.Identify and protect high-potential employees. Decentralize and empower employees. Decentralize and empower employees. Redefine the positions of surviving employees.Redefine the positions of surviving employees. Eliminate low-value and non-value activities.Eliminate low-value and non-value activities. Emphasize teamwork and cooperation.Emphasize teamwork and cooperation. Define the new structure by specifying horizontal Define the new structure by specifying horizontal

and vertical relationships.and vertical relationships. Support and train, then evaluate and reward Support and train, then evaluate and reward

performance.performance.


Forces for Change: Information Forces for Change: Information TechnologyTechnology

IT’s effects on organizations:IT’s effects on organizations: Has made delayering of organizations possible Has made delayering of organizations possible

through easier access to infothrough easier access to info Fewer middle management and coordinator Fewer middle management and coordinator

positions.positions. Increased organizational democracy through direct Increased organizational democracy through direct

communications between all organizational layers.communications between all organizational layers. Many communications more impersonal.Many communications more impersonal. More direct contact with customers and suppliers.More direct contact with customers and suppliers. Enterprise software supplants managers & their Enterprise software supplants managers & their

work.work. Changes in work itself that blur the line between Changes in work itself that blur the line between

work and non-work time.work and non-work time.


Forces for Change: Transition Forces for Change: Transition from Carrying Out Job to from Carrying Out Job to

Performing WorkPerforming Work Job descriptions too rigid for the flexible Job descriptions too rigid for the flexible

work roles of many of today’s workers.work roles of many of today’s workers.

Now hiring a person “to work” (seeking Now hiring a person “to work” (seeking a better person-organization fit) rather a better person-organization fit) rather than to fill a specific job. Duties will than to fill a specific job. Duties will change as projects change.change as projects change.

Shifting from a bureaucratic focus on Shifting from a bureaucratic focus on fixed job descriptions to an emphasis on fixed job descriptions to an emphasis on ever changing “work roles” for ever changing “work roles” for employees.employees.


Organizational Development Organizational Development (OD)(OD)

Is any strategy, method, or technique Is any strategy, method, or technique

for making organizations more for making organizations more effective effective by bringing about constructive, by bringing about constructive, planned change.planned change.


OD InterventionsOD InterventionsOrganization LevelSix SigmaGainsharingSurvey feedback Action research Implementing organization learningKnowledge management

Individual LevelExecutive (or business) coaching Employee assistance programs (EAPs)Career development programsOB Modification Job enrichmentWellness programsSexual harassment avoidance training

Small-Group LevelTeam developmentCultural diversity trainingModified work schedulesCreativity trainingIntergroup conflict resolutionQuality improvement teams

Self-managing teams


Process Model of ODProcess Model of OD OD methods must be tailored to the particular OD methods must be tailored to the particular

firmfirm Process model recommends approach to do so:Process model recommends approach to do so:

1.1. Preliminary identification of problemPreliminary identification of problem

2.2. Managerial commitment to changeManagerial commitment to change

3.3. Data collection & analysisData collection & analysis

4.4. Data feedbackData feedback

5.5. Identification of specific problem areasIdentification of specific problem areas

6.6. Development of change strategiesDevelopment of change strategies

7.7. Initiation of behaviourInitiation of behaviour

8.8. Evaluation Evaluation


Process ConsultationProcess Consultation

A widely used OD intervention in A widely used OD intervention in which the communication pattern of which the communication pattern of an organizational unit is examined an organizational unit is examined by a process consultant.by a process consultant. Consultant’s role is to observe and raise Consultant’s role is to observe and raise

questions challenging the status quo questions challenging the status quo and define what really is happening in and define what really is happening in the unit.the unit.


Large-Scale Organizational Large-Scale Organizational ChangeChange

To accomplish a major change in the firm’s To accomplish a major change in the firm’s strategy and culture, also referred to as strategy and culture, also referred to as “bending the frame.”“bending the frame.”

Needed if there are major internal or external Needed if there are major internal or external problems, e.g., high turnover, loss of established problems, e.g., high turnover, loss of established business and failure acquire new businessbusiness and failure acquire new business

Requires getting a critical mass of people Requires getting a critical mass of people throughout the firm committed to throughout the firm committed to outcomes of the change.outcomes of the change.

Political campaignPolitical campaign Marketing campaignMarketing campaign Military campaignMilitary campaign


Six Sigma as ODSix Sigma as OD A data-driven statistically-based method for A data-driven statistically-based method for

achieving near-perfect quality with an achieving near-perfect quality with an emphasis on preventing problems from emphasis on preventing problems from occurring.occurring. Features:Features:

Emphasizes statistical analysis & measurement in Emphasizes statistical analysis & measurement in design, manufacturing & customer-oriented activitiesdesign, manufacturing & customer-oriented activities

Emphasizes motivating people to work together to Emphasizes motivating people to work together to achieve achieve higher levels of productivityhigher levels of productivity

A fusion of technical and social systems for creating A fusion of technical and social systems for creating a culture of quality.a culture of quality.


Managing Change YourselfManaging Change Yourself

Empirical research about coping with Empirical research about coping with organizational change:organizational change: Having a positive self-concept, tolerance Having a positive self-concept, tolerance

for ambiguity and a tolerance for risk are for ambiguity and a tolerance for risk are positively related to coping with changepositively related to coping with change

Optimistic people who can tolerate a Optimistic people who can tolerate a lack of clarity and structural change lack of clarity and structural change cope well with change.cope well with change.


Suggestions for Coping Suggestions for Coping with Changewith Change

Practice dealing with ambiguous tasks.Practice dealing with ambiguous tasks. Maintain a positive general disposition.Maintain a positive general disposition. Look for personal value (“silver lining”) Look for personal value (“silver lining”)

embedded in a forced change.embedded in a forced change. When faced with significant change, ask yourself When faced with significant change, ask yourself

“what if” questions.“what if” questions. When confronting major change, force yourself to When confronting major change, force yourself to

enjoy at least some small aspect of the change.enjoy at least some small aspect of the change. Recognize that change is inevitable: Change Recognize that change is inevitable: Change

before you have to and you will get a better deal.before you have to and you will get a better deal. Stop trying to be in control all the timeStop trying to be in control all the time

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Chapter Thirteen Organizational Culture and Change