Navigating Organizational Cultural Change: Mechanisms and Transformations

1. Chapter 5: Cultural change in organizations • This chapter allows you to gain an understanding of: • –Certain mechanisms for changing an organization’s culture. • – An instrument for diagnosing the changes required. • – The tensions between national and organizational culture in the change process.

2. Chapter 5: Cultural change in organizations • Concept 5.1: Organizational change as a cultural process: • Examines the process of adaptation. • Concept 5.2: Organizational change in a global environment: • Tackles the issue of changing the underlying culture of global organizations.

3. Concept 5.1 Organizational change as a cultural process Usually culture of company is dynamic. To survive and success - organization has to do with: 1. External factors Can influence organization change. include rapid technological change, changes in industries and markets, new deregulation policies, increased competition, the on going development of the global economy. Internal factors successful change has to do with maintaining both continuity and change, retaining the cultural foundation on which the company rests while changing its strategies and practices as response to environment.

4. CONT. • For internal factors also - 1 question need to answer: CAN ORGANIZATION CHANGE? • Organization sometimes need to change in terms of: • 1.Behavioural practices. • 2. Organization structures. WHY CHANGE? • To meet external pressure.

5. The Process of Change Why culture in organizations difficult to change? • Because the culture in term of way worker works, company assumptions and company concept already apply many years in organizations. • Examples: hierarchical pyramid (direction and management level) and movement up and down are clearly defined before. Why process of change complex? • Change not only about the organizational shift from A to B but transformation from A to B. • Shift vs. Transformation concept is similar to Doing vs. Being culture

6. CONT. Shift vs. Transformation OR Doing vs. Being: DoingCulture – Anglo Saxon Cultures. BeingCulture – Eastern Cultures. In ‘doing’ cultures people and groups are defined in terms of what they do, what they achieve. Organizational change seen more in linear fashion, putting the past state of affairs behind and pushing on with the new. In ‘being’ cultures people and groups are defined more in terms of affiliation, relationships with others. The past state of affairs gradually transforms to become a new state of affairs.

7. How To Change The Cultural in Organizations According to Laurent, two approach can be use: The instrumental of Organizations. The Nature of Organizational. Usually manager concerned just about the tangible matter such as changing jobs descriptions, replacing the manager and changing the company structure. Than what they do? Continuing running of the organization, re-assigning tasks and maintaining overall stability. NOT ENOUGH! A leader who engages people’s minds through vision. Minds cannot be managed, but they can be transformed through inspiring leaders who spread new visions that advocate new meanings and lines of thinking.

8. How To Change A Cultural Culture difficult to change but we can learn it and if we change quickly it will cost us. Cultural relates to our minds. According to Laurent 1989, our minds receptacles of culture and such give meaning and guidance to our experience. PARADIGM TRANSFORM / MIND TRANSFORM. Cultural difficult to change but can transform through inspiring leader who spread visions that advocate new meanings and new lines of thinking.

9. The mechanisms of change according to Schein (2004) 1. Primary mechanisms for changing culture What a leader considers important and pays attention to, what must be measured and controlled. The way a leader react to difficult situations and crises: shows others how to react in similar situations. The priorities set by a leader when allocating resources. The examples set by a leader: these deliberately teach and reinforce the desired values and behaviours. The criteria which a leader uses to allocate rewards and status as well as to reinforce desired behaviours. The criteria used for recruitment, promotion and dismissal.

10. 2. Secondary mechanisms for shaping the culture (only effective if consistent with primary mechanisms): The design and structure of the organization. The systems and procedures used . The ‘rites and rituals’ used The design and layout of the organization’s physical space. Stories of important events and people. Formal statements of the organization’s philosophy. The mechanisms of change according to Schein (2004) (Continued)

11. For Schein, culture plays an important role in determining: how environmental developments are perceived by members of organizations. how members of the organization react to the strategies designed to respond to those environmental developments. Schein describes: The major culture issues predominating at each phase of a company’s growth. The different change mechanisms that could be operating during each phase of growth. Cont.

12. Growth stage Function of culture I Birth & early growth Source of identity, commitment: the ‘glue’ Succession phase Status quo vs. change: keep or change culture? II Organizational mid-life (expansion) Integration declines as sub-cultures are spawned Loss of goals, values: crisis identity Chance to manage direction of cultural change III Organizational maturity Culture a constraint on innovation Culture a source of self-esteem Transformation option Managed cultural change needed, but essential elements preserved Destruction option (bankruptcy, takeover) Fundamental cultural change Change through replacement of people Growth states, Functions and Mechanisms of change. Table 10.1 Growth states, functions of culture and mechanisms of change Source: Schein (1989) p. 66, Figure 4-3, adapted

13. The mechanisms of change Table 10.2 Mechanisms of cultural change Source: Schein (1989) p. 66, Figure 4-3, adapted

14. Group Learning Process Responding to problems externally and internally. External Problem Concerned with responding to the environment. Internal Problem Arise from managing the internal development of the organizations. Cultures plays important roles not only how environmental developments are perceived by members of organizations. Also how the members of the organizations react to the strategies designed to respond to those environmental developments.

15. ‘Weak’ cultures vs. ‘Strong’ cultures Is cultural change easier to implement in an organization with a ‘weak’ culture rather than a ‘strong’ culture? Culture that develop in organization and been passed on from generation to generation difficult to change. Cultural change easier to implement in an organizations with weak culture rather than strong culture. Laurent (1989) said that: Weak culture may eventually crash since it is poorly coordinated, lacks direction and lack consistency. Workers have different view of what needs to be done. Strong culture may be throttled by rigid norms and behaviour and the resulting lack of innovation.

16. Knowing your company culture Laurent advocates a more conceptual differentiation which: takes account of the extent to which an organization knows itself. the environment in which it operates. The higher the degree of awareness, both internally and externally, the better an organization can interpret its environment and deal with it.

17. Concept 5.2Organizational change in a global environment Organizational change in multinationals is not just instrumental (becoming more cost-effective or more market-oriented). Such change is also transformational. Transformational is refers to ways of people in organization thinking – PARADIGM TRANSFORM.

18. Mapping corporate culture change • Use the competing values framework introduce by Cameron and Quinn (1997). • This CV devised what they call a Competing Values (CV) framework to categorize organizational effectiveness perspectives and associated types of organization. • The framework helps leaders to improve in a comprehensive way the organizations’ performance and value creation.

19. Using the CV framework The framework serves as a basis for:- diagnosing the predominant culture of an organization. assessing whether it is responding appropriately to the challenges and changes in the environment helping to diagnose and manage the interrelationships, congruencies and contradictions in the organization.

20. Mapping corporate culture change Figure 10.1 The competing values framework Source: Cameron and Quinn (1999), p. 32, Figure 3.1

21. The CV framework Table 10.3 The characteristics of the CV framework quadrants Source: based on Cameron and Quinn (1999)

22. Conclusion to Chapter 5 One crucial factor in any change process is the extent to which a company is aware of its culture and of the operational environment. Even if the culture of a multinational organization needs to be changed, any transformation carried out will need to: reflect the national culture. ensure that the subsidiaries involved remain integral parts of the whole multinational.