Topic 5 – Cultural Change in Organisations Organizational change as a cultural process

Success of an organization has to do with

CULTURAL CHANGE IN • External factors
– responding to rapid technological change, changes in
ORGANIZATIONS industries and markets, new deregulation policies,
increased competition, the ongoing development of the
global economy
• Internal factors
• Concept 1: Organizational change as a – successful change has to do with maintaining both
cultural process continuity and change, retaining the cultural foundation
• Concept 2: Organizational change in a global on which the company rests while changing its
strategies and practices as response to environment
environment

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The process of change The process of change (Continued)

Two differing concepts of change, shift versus According to Laurent, both the instrumental and social
transformation nature of the organization must be considered:
• In ‘doing’ cultures people and groups are mostly defined • Managing change involves ensuring the on-going
in terms of what they do, what they achieve running of the organization, re-assigning tasks,
– organizational change is perceived more in linear fashion, a
question of putting the past state of affairs behind and pushing on
maintaining overall stability, but this is not enough
with the new • Inspirational guidance also needed: a leader who
• In ‘being’ cultures people and groups are defined more in engages people’s minds through vision
terms of affiliation, the relationships they have with others • Minds cannot be managed, but they can be
in the organization
transformed through inspiring leaders who spread new
– the past state of affairs gradually transforms to become a new
state of affairs visions which advocate new meanings and lines of
thinking
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The process of change (Continued) The mechanisms of change (Schein)

According to Deal and Kennedy (2000), many company Primary mechanisms for changing culture
managers may go about dealing with tangible factors • What a leader considers important and pays attention to,
involved in change, do not pay attention to the cultural what must be measured and controlled
issues involved: • The way a leader react to difficult situations ands crises:
• To become, for example, more marketing-oriented shows others how to react in similar situations
involves subjecting the company to a fundamental cultural • The priorities set by a leader when allocating resources
change which involves everyone in the organization
• The examples set by a leader: these deliberately teach
• The change is not just changing routines but also and reinforce the desired values and behaviours
identifying with role-models who embody a new purpose
• The criteria which a leader uses to allocate rewards and
or goal
status as well as to reinforce desired behaviours
• Such fundamental change is often a gradual and
• The criteria used for recruitment, promotion and dismissal
sometimes painful transformation

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 The mechanisms of change (Schein) The mechanisms of change (Schein)
(Continued) (Continued)

Secondary mechanisms for shaping the culture (only For Schein, culture plays an important role in determining:
effective if consistent with primary mechanisms): • how environmental developments are perceived by
• The design and structure of the organization members of organizations
• The systems and procedures used • how members of the organization react to the strategies
• The ‘rites and rituals’ used designed to respond to those environmental
• The design and layout of the organization’s physical space developments
• Stories of important events and people Schein describes:
• Formal statements of the organization’s philosophy • the major culture issues predominating at each phase of
a company’s growth
• the different change mechanisms which could be
operating during each phase of growth

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The mechanisms of change (Schein) The mechanisms of change (Schein)

(Continued) (Continued)
Natural evolution A culture of what works best as organization grows
Growth stage Function of culture (without too much stress)
I Birth & early growth Source of identity, commitment: the ‘glue’ Self-guided evolution (therapy) ‘unfreeze’ organizational culture > allow changes where
needed
Status quo vs. change: keep or change culture? Managed evolution (hybrids) changes made by insiders in key positions, thus meeting
Succession phase less resistance
Planned change and organizational reduce conflict between sub-cultures resulting from
II Organizational mid- Integration declines> sub-cultures expansion
development
life (expansion) Loss of goals, values: crisis identity Technological seduction technology changes force cultural changes (different
Chance to manage direction of cultural change behaviour patterns)
Change through scandal, explosion, discrepancies between values and actual practices>
III Organizational Culture a constraint on innovation myth culture must be revised
maturity Culture a source of self-esteem Incrementalism Change realized gradually (e.g. recruitment and selection
policies changed)
Transformation option Managed cultural change needed, but essential
Coercive persuasion Change agents put forward new assumptions, reward
elements preserved managers who take them on board
Destruction option Fundamental cultural change Turnaround Turnaround individual or team knows where org. must go:
uses some or all of above mechanisms
(bankruptcy, takeover) Change through replacement of people Re-organization and rebirth Group bearing the old culture is replaced
Table 10.1 Growth States, Functions of Culture and Mechanisms of Change Table 10.2 Mechanisms of cultural change
Source: Schein (1989) p.66, Figure 4-3, adapted Source: Schein (1989) p.66, Figure 4-3, adapted

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Can organizational culture really be changed? ‘Weak’ cultures v ‘Strong’ cultures

• Deal and Kennedy (2000) argue that a culture which has Is cultural change easier to implement in an
developed along with the organization will be difficult to organization with a ‘weak’ culture rather than a
change.
‘strong’ culture?
• If the external factors have a strong influence on the
• Laurent (1989) considers that both are in a way doomed
organizational culture, then it is unlikely to change unless
to extinction:
the external environment changes in line with desired
changes. – The organization with a weak culture may eventually
crash since it is poorly coordinated, lacks direction
• If organizational culture depends on internal factors, then
and consistency
culture can be directed and changed
– The organization with a strong culture may be throttled
– focus on the leader as instigator of changes, OR
by rigid norms and behaviour and the resulting lack of
– focus more on how to initiate change at the three innovation.
levels off corporate culture as defined by Schein
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 Knowing your company culture Cultural change in organizations

• Laurent advocates a more conceptual

differentiation which
– takes account of the extent to which an Concept 2
organization knows itself Organizational change
– the environment in which it operates in a global environment
• The higher the degree of awareness, both
internally and externally, the better an
organization can interpret its environment and
deal with it

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Tension between organizational & national Tension between organizational & national
cultures cultures (Continued)

Do organizational values push aside or dilute the • The different national companies of multinationals
national culture of an organization’s environment? probably prefer different ways of bringing about the
• Laurent’s conclusions drawn from his research: changes which HQ wishes to implement
– cultural differences among managers working within • The transformation of an organization from A to B
a multinational company were significantly greater may involve following a different path in one part of
than those cultural differences among managers the multinational than in another, even if the end-
working for companies in their own (native) country result (B) is the same
– ‘nationally bounded’ collective perceptions of • The outset of the transformation to B will depend on
organizations did not appear to be diminished in any how the national organization interprets its own
way through international business present situation (A)
– on the contrary these perceptions appear to be
reinforced through the international exposure
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Does an international corporate culture exist? Mapping corporate culture change

Flexibility & Discretion

• It is argued that more and more international
companies, including their national constituents,
share a management culture which has no roots Clan Adhocracy
in any particular national culture: External
Internal
Focus and
– international managers increasingly homogeneous Focus and
Differ-
Integration
– business practices increasingly convergent entiation
Hierarchy Market
• A true multinational, however, does not subordinate
national cultures:
– regards them as a source of learning Stability & Control
– increases synergy within the company
Figure 10.1 The Competing Values Framework
Source: Cameron and Quinn (1999), p. 32, Figure 3.1

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 The CV framework “Collaborate (Clan)” Culture

values tradition, continuity, rationalization and regulation. It focuses more • An open and friendly place to work where
on internal than external (market) issues and values stability and control
The Hierarchy
over flexibility and discretion. This is the traditional ‘command and
people share a lot of themselves.
Culture
control’ model of organizations, which can work effectively if the goal is
efficiency and the organizational environment is stable and simple
• It is like an extended family.
• Leaders are considered to be mentors or even
The Market
also values stability and control but is more focused on external rather
than internal issues. This culture values profit, productivity, competitive
parental figures.
Culture
advantage and achievement • Group loyalty and sense of tradition are strong.
focuses on internal issues and flexibility and discretion rather than • There is an emphasis on the long-term benefits of
The Clan
Culture
seeking stability and control. It values team-spirit, participation, human resources development and great
consensus and mutual support
importance is given to group cohesion. There is a
The
focuses on external issues and values flexibility. Its key values are
strong concern for people.
Adhocracy
Culture
adaptability, innovation • The organization places a premium on teamwork,
participation, and consensus.
Table 10.3 The characteristics of the CV framework quadrants
Source: based on Cameron & Quinn (1999)

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Adhocracy Culture “Control (Hierarchy)” Culture

• A dynamic, entrepreneurial, and creative place to • A highly structured and formal place to work.
work. • Rules and procedures govern behavior.
• Innovation and risk-taking are embraced by • Leaders strive to be good coordinators and
employees and leaders.
organizers who are efficiency-minded.
• A commitment to experimentation and thinking
differently are what unify the organization. • Maintaining a smooth-running organization is
• They strive to be on the leading edge. most critical.
• The long-term emphasis is on growth and acquiring • Formal policies are what hold the group together.
new resources. • Stability, performance, and efficient operations
• Success means gaining unique and new products or are the long-term goals.
services. • Success means dependable delivery, smooth
• Being an industry leader is important. scheduling, and low cost.
• Individual initiative and freedom are encouraged. • Management wants security and predictability.

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“Compete (Market)” Culture Using the CV framework

• A results-driven organization focused on job

completion. The framework serves as a basis for
• People are competitive and goal-oriented. – diagnosing the predominant culture of an organization
• Leaders are demanding, hard-driving, and – assessing whether it is responding appropriately to the
productive. challenges and changes in the environment
• The emphasis on winning unifies the organization. – helping to diagnose and manage the
• Reputation and success are common concerns. interrelationships, congruencies and contradictions in
• Long-term focus is on competitive action and the organization
achievement of measurable goals and targets. Altogether, the framework helps leaders to improve
• Success means market share and penetration. in a comprehensive way the organizations’
• Competitive pricing and market leadership are performance and value creation.
important.

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 Conclusion

• 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

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