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Managing OrganizationalCulture and Change

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1. Explain what organizational culture is and how an organizational culture is created and sustained.

2. Explain how culture is learned by members of an organization.

3. Explain how successful organizational change, whether induced or imposed, requires altering the organization’s culture.

4. Explain the processes involved in managing organizational change.

5. Describe two models of organizational change.

6. Explain how managers deal with organizational change in unionized environments.

Learning Outcomes

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Organizational Culture

Organizational culture refers to a system of shared meanings, held by organization members, that distinguishes the organization from other organizations.

Culture can be viewed as something that helps employees make sense of the organization ad guides their behaviour.

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Values and Norms

Organizational values and norms inform workers about what goals they should peruse and how they should behave to reach these goals.

Some organizations work hard to create a culture that encourages and rewards risk taking.

Microsoft, Oracle seek innovation.Others create an environment of caution.

Oil refineries, nuclear power plants must focus on caution.

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Levels of CultureCulture exists at two levels-the visible and invisible level.We see culture through its artifacts-what you see, hear and feel when you are within an organization.At the invisible level of cultural are the values , beliefs, andassumptions that make up the organizational culture.Beliefs are the understanding of how objects and ideas relate to each other .Assumptions are the taken for granted notions of how something should be in an organization.

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Developing an Organizational Culture

Culture is created and sustained in three ways.Hiring: the founders and/or senior managers of the organization only hire and keep employees who think and feel the way they do. Socialization: the management socializes employees to their way of thinking and feeling. Role modelling: top managers serves as role models. By observing managers’ behaviour, employees identify with them and thereby internalize their beliefs, values, and assumptions.

Essentials of Contemporary Management, 3Ce Copyright (c) 2010 The McGraw-Hill Companies, Inc. All rights reserved.

7-7Figure 7.1 | Factors Creating aStrong Organizational Culture

Essentials of Contemporary Management, 3Ce Copyright (c) 2010 The McGraw-Hill Companies, Inc. All rights reserved.

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Teaching the Culture to Employees

Founder’s values are critical as they hire the first set of managers.

Founders likely hire those who share their vision.This develops the culture of the firm.

Socialization Process: newcomers learn norms and values.

Learn not only because “they have to” but because they want to.Organizational behaviour, expectations, and background is presented.

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Teaching the Culture to Employees

Ceremonies and Rites: formal events that focus on important incidents.

Rite of passage: how workers enter firm & advance.Rite of integration: build common bonds with office parties, celebrations.Rites of enhancement: enhance worker commitment to values. Promotions, awards dinners.

Stories and Language: Organizations repeat stories of founders or events.

Show workers how to act and what to avoid.Stories often have a hero that workers can mimic.Most firms also have their own jargon that only workers understand.

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TYPE OF RITE EXAMPLE OF RITE PURPOSE OF RITE

Rite of passage Induction and basic training Learn and internalizenorms and values

Rite of integration Office Christmas party Build common normsand values

Rite of enhancement Presentation of annual Motivate commitmentaward to norms and values

Table 7.1 | Organizational Rites

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Teaching the Culture to Employees

Material Symbols: the organization’s layout, size of offices, whether individuals wear uniforms or there is a dress code, and what kind of automobiles top executives are given, are examples of material symbols.

Material symbols convey to employees what is important, how much distance there is between top management and employees, and what kind of behaviour is important.

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Organizational Culture and Change

Organizational change must alter policies, structures, behaviours, and beliefs in order to move forward

These factors are considered to be the organizational culture.

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Managing Organizational ChangeAssess need for change: recognize a problem exists and find its source.

Look inside and outside the firm for sources.Decide on the change to make: determine the ideal future state.

Decide exactly what the future company will look like.What obstacles need to be changed to get there.

Implement the change: a top-down change is quickest, bottom-up is more gradual.

Bottom-up is more effective at eliminating obstacles.Evaluate Change: was it successful? Benchmark (compare) your change to others.

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Figure 7.2 | Four Steps in theOrganizational Change Process

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Lewin’s Model of Change

1. Unfreezing: overcoming the resistance to change

2. Moving: getting the change process underway

3. Refreezing: cements into place the new changes so that people don’t fall back to old habits

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Figure 7.4 | Unfreezing the Status Quo

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Resistance to Change

Individuals and organizations resist changeIndividual resistance:

HabitSecurityEconomic factorsFear of the unknownSelective information processingCynicism

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Resistance to ChangeOrganizational resistance:

Structural inertiaLimited focus of changeGroup inertiaThreat to expertiseThreat to established power relationshipsThreat to established resource allocations

Essentials of Contemporary Management, 3Ce Copyright (c) 2010 The McGraw-Hill Companies, Inc. All rights reserved.

7-19Managing Change

in a Unionized EnvironmentThere are four essential elements to managing change in a unionized environment

Dealing with and resolving day-to-day issuesA business education process to help employees understand the need for changeA jointly developed strategic vision for the organizationA nontraditional, problem-solving method of negotiating collective agreements