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Chapter 4

Managing Organizational Culture and Change

Learning ObjectivesAfter reading this chapter, you should be able to:

Identify the three major aspects of organizational culture.

Apply a simple assessment tool to quickly gain a sense of the culture of an organization.

Describe the importance of organizational culture.

Identify the processes through which organizational culture can be developed and sustained.

Use classification systems to identify various types of organizational culture.

Identify the sources of resistance to change.

Apply models to effectively manage change efforts.

Working Out at REI Critical Thinking Questions focus on:

What if an employee does not fit organizational culture?

How does outdoor-oriented organizational culture contribute to REI

Is REI’s organizational culture sustainable (over time)?

Organizational CultureA system of shared values, assumptions,

beliefs, and norms that unite the members of an organization.

Reflects employees’ views about “the way things are done around here.”

The culture specific to each firm affects how employees feel and act and the type of employee hired and retained by the company.

Core Values

Expressed Values

Visible Culture

Levels of Corporate Culture

Key Effects of Organizational Culture

Organizational Culture

Employee

Self-management

Stability

Socialization

Strategy

Implementation

Key Effects of Organizational CultureEmployee Self-Management

Sense of shared identityFacilitates commitment

StabilitySense of continuitySatisfies need for predictability, security, and

comfort

Socialization Internalizing or taking organizational values as

one’s own

Implementation Support of the Organization’s Strategy If strategy and culture reinforce each other,

employees find it natural to be committed to the strategy

Key Effects of Organizational Culture

Stages of the Socialization Process

Pre-arrival

Encounter

Metamorphosis

Managing Cultural Processes

Cultural Symbols Company Rituals and Ceremonies

Company Heroes

Stories

Language

Leadership

Organizational Policies and Decision Making

Characteristics and Types of Organizational CultureCultural Uniformity versus

Heterogeneity

Strong versus Weak Cultures

Culture versus Formalization

National versus Organizational Culture

Characteristics and Types of Organizational Culture (continued)

Types: Traditional Control or

Employee Involvement Traditional control

emphasizes the chain of command relies on top-down control and orders

Employee involvement emphasizes participation

and involvement

Four Types of Culture Classification

Baseball team culture--rapidly changing environment

Club culture--seeks loyal, committed people

Academy culture--hires experts who are willing to make a slow steady climb up a ladder

Fortress culture--focused on surviving and reversing sagging fortunes

Competing Values FrameworkBased on two dimensions: focus and control Focus--whether the primary attention of the

organization is directed toward internal dynamics or directed outward toward the external environment

Control--the extent to which the organization is flexible or fixed in how it coordinates and controls activities

Competing Values FrameworkFocus

Control

Flexible

Internal External

Fixed

EntrepreneurialGoal OrientedBureaucracyEmpowered

Example of how “culture” works Hoosiers Writing: describe the “ideal team” that is

being imposed on the new coach. Exchange sheets Return and complete the “ideal team”

Types of ChangePlanned Change--change that is

anticipated and allows for advanced preparation

Dynamic Change--change that is ongoing or happens so quickly that the impact on the organization cannot be anticipated and specific preparations cannot be made

Forces for Change: Environmental ForcesPressure on a firm from relationships with customers, suppliers, and employees.

Environmental forces include:TechnologyMarket forcesPolitical and regulatory agencies and

lawsSocial trends

Forces for Change: Internal ForcesArise from events within the

company.

May originate with top executives and managers and travel in a top-down direction.

May originate with front-line employees or labor unions and travel in a bottom-up direction.

Resistance to Change

Self-Interest

Lack of Trust and Understanding

UncertaintyDifferent Perspectives

and Goals

Cultures that Value Tradition

Models of Organizational Change: The Star ModelThe Star Model: Five Points

Types of change-evolutionary or transformational

Structure Reward system Processes People

Lewin’s Three-Step Model of Organizational ChangeUnfreezing--melting away resistance

Change--departure from the status quo

Refreezing--change becomes routine

Lewin’s Force Field Analysis ModelIncrease driving forces that drive change

Reduce restraining forces that resist change

or do both

Restraining forces

Driving forces

Status quo

Desired state

Time

Force-field Model of Change

Implementing Organizational Change

Top-down Change

Change Agents

Bottom-up Change

Four Types of Employees

Alignment with culture

No Yes

Performance Low Worst Give Another Chance

High Make the tough choice

Best

Tactics for Introducing Change

Communication and Education

Employee Involvement

Negotiation

Coercion

Top-Management Support

Working Out at REI Responses to Critical Thinking Questions:

REI’s distinctive culture will attract right people Opportunity for educating or socializing new

employees Achieving a desirable culture is important in its

own right, notwithstanding possible impact on sales and profits

Sustaining organizational culture is a critical challenge

Time permitting Pike Place Fish Market