Understanding Cross-cultural Management

CHAPTER 10 CULTURAL CHANGE IN ORGANIZATIONS

Concept 10.1: Organizational change as a cultural process Concept 10.2: Organizational change in a global environment
Slide 10.1 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Organizational change as a cultural process

Success of an organization has to do with
External factors responding to rapid technological change, changes in industries and markets, new deregulation policies, increased competition, the ongoing 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

Slide 10.2

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The process of change

Two differing concepts of change, shift versus transformation
In doing cultures people and groups are mostly defined in terms of what they do, what they achieve
organizational change is perceived more in linear fashion, a question of 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, the relationships they have with others in the organization
the past state of affairs gradually transforms to become a new state of affairs

Slide 10.3

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The process of change (Continued)

According to Laurent, both the instrumental and social nature of the organization must be considered: Managing change involves ensuring the on-going running of the organization, re-assigning tasks, maintaining overall stability, but this is not enough Inspirational guidance also needed: a leader who engages peoples minds through vision Minds cannot be managed, but they can be transformed through inspiring leaders who spread new visions which advocate new meanings and lines of thinking
Slide 10.4 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The process of change (Continued)

According to Deal and Kennedy (2000), many company managers may go about dealing with tangible factors involved in change, do not pay attention to the cultural issues involved: To become, for example, more marketing-oriented involves subjecting the company to a fundamental cultural change which involves everyone in the organization The change is not just changing routines but also identifying with role-models who embody a new purpose or goal Such fundamental change is often a gradual and sometimes painful transformation
Slide 10.5 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The mechanisms of change (Schein)

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 ands 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
Slide 10.6 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The mechanisms of change (Schein) (Continued)

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 organizations physical space Stories of important events and people Formal statements of the organizations philosophy

Slide 10.7

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The mechanisms of change (Schein) (Continued)

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 companys growth the different change mechanisms which could be operating during each phase of growth
Slide 10.8 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

The mechanisms of change (Schein) (Continued)

Growth stage I Birth & early growth Succession phase II Organizational midlife (expansion) III Organizational maturity Transformation option Destruction option (bankruptcy, takeover)
Source: Schein (1989) p.66, Figure 4-3, adapted Slide 10.9 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Function of culture
Source of identity, commitment: the glue Status quo vs. change: keep or change culture? Integration declines> sub-cultures Loss of goals, values: crisis identity Chance to manage direction of cultural change Culture a constraint on innovation Culture a source of self-esteem Managed cultural change needed, but essential elements preserved Fundamental cultural change Change through replacement of people

Table 10.1 Growth States, Functions of Culture and Mechanisms of Change

The mechanisms of change (Schein) (Continued)

Natural evolution

Self-guided evolution (therapy)

Managed evolution (hybrids) Planned change and organizational development Technological seduction

A culture of what works best as organization grows (without too much stress) unfreeze organizational culture > allow changes where needed changes made by insiders in key positions, thus meeting less resistance reduce conflict between sub-cultures resulting from expansion technology changes force cultural changes (different behaviour patterns) discrepancies between values and actual practices> culture must be revised

Change through scandal, explosion, myth Change realized gradually (e.g. recruitment and selection Incrementalism Coercive persuasion
policies changed) Change agents put forward new assumptions, reward managers who take them on board Turnaround individual or team knows where org. must go: uses some or all of above mechanisms Group bearing the old culture is replaced

Turnaround
Re-organization and rebirth
Table 10.2 Mechanisms of cultural change
Source: Schein (1989) p.66, Figure 4-3, adapted Slide 10.10

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Can organizational culture really be changed?

Deal and Kennedy (2000) argue that a culture which has developed along with the organization will be difficult to change. If the external factors have a strong influence on the organizational culture, then it is unlikely to change unless the external environment changes in line with desired changes. If organizational culture depends on internal factors, then culture can be directed and changed focus on the leader as instigator of changes, OR focus more on how to initiate change at the three levels off corporate culture as defined by Schein
Slide 10.11 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Weak cultures v Strong cultures

Is cultural change easier to implement in an organization with a weak culture rather than a strong culture?
Laurent (1989) considers that both are in a way doomed to extinction: The organization with a weak culture may eventually crash since it is poorly coordinated, lacks direction and consistency The organization with a strong culture may be throttled by rigid norms and behaviour and the resulting lack of innovation.
Slide 10.12 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

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
Slide 10.13 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Cultural change in organizations

Concept 10.2

Organizational change in a global environment

Slide 10.14

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Tension between organizational & national cultures

Do organizational values push aside or dilute the national culture of an organizations environment?
Laurents conclusions drawn from his research:
cultural differences among managers working within a multinational company were significantly greater than those cultural differences among managers working for companies in their own (native) country nationally bounded collective perceptions of organizations did not appear to be diminished in any way through international business on the contrary these perceptions appear to be reinforced through the international exposure
Slide 10.15 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Tension between organizational & national cultures (Continued) The different national companies of multinationals probably prefer different ways of bringing about the changes which HQ wishes to implement The transformation of an organization from A to B may involve following a different path in one part of the multinational than in another, even if the endresult (B) is the same The outset of the transformation to B will depend on how the national organization interprets its own present situation (A)

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Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Does an international corporate culture exist?

It is argued that more and more international companies, including their national constituents, share a management culture which has no roots in any particular national culture:
international managers increasingly homogeneous business practices increasingly convergent

A true multinational, however, does not subordinate national cultures:

regards them as a source of learning increases synergy within the company
Slide 10.17 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Mapping corporate culture change

Flexibility & Discretion

Hierarchy Internal Focus and Integration Market

Clan External Focus and Differentiation Adhocracy

Stability & Control

Figure 10.1

The Competing Values Framework

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Source: Cameron and Quinn (1999), p. 32, Figure 3.1 Slide 10.18

The CV framework
values tradition, continuity, rationalization and regulation. It focuses more on internal than external (market) issues and values stability and control over flexibility and discretion. This is the traditional command and control model of organizations, which can work effectively if the goal is efficiency and the organizational environment is stable and simple also values stability and control but is more focused on external rather than internal issues. This culture values profit, productivity, competitive advantage and achievement focuses on internal issues and flexibility and discretion rather than seeking stability and control. It values team-spirit, participation, consensus and mutual support focuses on external issues and values flexibility. Its key values are adaptability, innovation

The Hierarchy Culture

The Market Culture

The Clan Culture

The Adhocracy Culture

Table 10.3

The characteristics of the CV framework quadrants

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

Source: based on Cameron & Quinn (1999) Slide 10.19

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

Altogether, the framework helps leaders to improve in a comprehensive way the organizations performance and value creation.
Slide 10.20 Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009

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

Slide 10.21

Browaeys and Price, Understanding Cross-cultural Management, 1st Edition, Pearson Education Limited 2009