Chapter 4

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved

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Chapter 4

Managing Organizational

Culture and Change


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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.


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Organizational Culture• A 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.


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Core Values

Expressed Values

Visible CultureLevels of Corporate Culture


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Key Effects of Organizational Culture

Organizational Culture

Employee

Self-management

Stability

Socialization

Strategy

Implementation


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• Employee Self-ManagementSense of shared identityFacilitates commitment

• StabilitySense of continuitySatisfies need for predictability, security,

and comfort


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• SocializationInternalizing or taking organizational values

as one’s own

• Implementation Support of the Organization’s StrategyIf strategy and culture reinforce each other,

employees find it natural to be committed to the strategy



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Stages of the Socialization Process

Pre-arrival

Encounter

Metamorphosis


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Managing Cultural ProcessesCultural Symbols Company Rituals and

Ceremonies

Company Heroes

Stories

Language

LeadershipOrganizational Policies and Decision Making


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Characteristics and Types of Organizational Culture

• Cultural Uniformity versus Heterogeneity

• Strong versus Weak Cultures

• Culture versus Formalization

• National versus Organizational Culture


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Characteristics and Types of Organizational Culture (continued)

• Types: Traditional Control or Employee Involvement Traditional control

emphasizes the chain of commandrelies on top-down control and orders

Employee involvementemphasizes participation

and involvement


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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


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Competing Values Framework

• Based 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


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ArtifactsCeremonies and rites – McDonald’s,

award ceremoniesStories – Dayton-Hudson, NordstromSlogans/mission –

– Perot: Eagles don’t flock, gather one at a time

– Pepsico: We take eagles and teach them to fly in formation

Symbols – buttons, badges, logos, Stew Leonard


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Competing Values FrameworkFocus

Control

Flexible

Internal External

Fixed

EntrepreneurialGoal OrientedBureaucracyEmpowered


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Types of Change• Planned 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


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Forces for Change: Environmental Forces

• Put pressure on a firm’s relationships with customers, suppliers, and employees.

• Environmental forces include:TechnologyMarket forcesPolitical and regulatory agencies and

lawsSocial trends


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Forces for Change: Internal Forces

• Arise 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.


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Resistance to ChangeSelf-Interest

Lack of Trust and Understanding

UncertaintyDifferent Perspectives

and Goals

Cultures that Value Tradition


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Models of Organizational Change: The Star Model

• The Star Model: Five Points

Types of change-evolutionary or transformational

StructureReward systemProcessesPeople


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Lewin’s Three-Step Model of Organizational Change

• Unfreezing--melting away resistance

• Change--departure from the status quo

• Refreezing--change becomes routine


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Lewin’s Force Field Analysis Model

• Increase driving forces that drive change

• Reduce restraining forces that resist change

• or do both


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Restraining forces

Driving forces

Status quo

Desired state

Time

Force-field Model of Change


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Implementing Organizational Change

Top-down Change

Change Agents

Bottom-up Change


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Four Types of Employees

Alignment with cultureNo Yes

Performance Low Worst Give Another Chance

High Make the tough choice

Best


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Slide 26Tactics for Introducing Change

Communication and Education

Employee Involvement

Negotiation

Coercion

Top-Management Support

Chapter 4

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