Chapter 14
Organizational Culture
and Change
PowerPoint Presentation by Charlie Cook
Copyright © 2005 South-Western. All rights reserved.
Learning Objectives
After reading and studying this chapter and doing the
exercises, you should be able to:
1. Present an analysis of the importance of organizational
culture.
2. Present two models of the change process in organizations.
3. Describe why people resist change and how to manage such
resistance.
4. Describe three major factors that create organizational
change.
5. Explain the nature of organization development.
6. Develop useful insights into managing change in your job
and career.
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14–2
Organizational Culture
• Organizational culture
 A system of shared values and beliefs that influence
worker behavior.
 Determinants of an organization’s culture:
 The values, administrative practices, and
personality of the firm’s founder
 The characteristics of its top-level managers
 The culture of the society (its norms, values, and
beliefs) in which the firm functions
 The industry in which the firm competes
 The firm’s code of conduct
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Dimensions of Organizational Culture
• Values
• Organizational stories
• Myths
• Degree of stability
• Resource allocations and rewards
• Traditions, rites, and rituals
• Ownership culture
• Corporate spiritualism
• Organizational spirituality
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How Workers Learn Culture
• The socialization process
 A process of coming to understand the values, norms,
and customs of the organization.
 Perpetuates the organization by indoctrinating new
workers into the ways of the organization.
• Observation of leaders
 Leaders provide vital guidance to
new workers through what leaders
pay attention to, measure,
and control.
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14–5
Consequences and Implications
of Organizational Culture
EXHIBIT 14-2
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14–6
General Considerations About Managing
Change
• Changes in the competitive environment creates
the need for change in firms.
• Types of change in organizations:
 Changes in technology
 Changes in organizational structure
 Coworkers and customers
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Models of the Change Process
• The Growth Curve Model
 Formative phase—lack of structure, trial and error,
and entrepreneurial risk taking
 Normative phase—stability, maintenance, and
predictability.
 Integrative phase—redefining the firm and choosing
a new direction.
 Force-field
theory : an organization simultaneously
faces forces of change and of resistance to
change.
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14–8
The Growth Curve Model of
Organizational Change
EXHIBIT 14-3
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14–9
Models of the Change Process (cont’d)
• Lewin’s Unfreezing-Changing-Refreezing Model
 Unfreezing
 Overcoming
resistance to change by resolving fear
and feelings about letting go of the “old.”
 Changing (or moving on to a new level)
 Moving
on to other things through active
participation in the change process.
 Refreezing
 Encouraging
recognition of successful change and
rewarding people for implementing the change.
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14–10
The Change Process (Kurt Lewin)
Unfreezing
Changing
Refreezing
EXHIBIT 14-4
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14–11
Why People Resist Change
• Resistance comes from:
 Fear of a unfavorable outcome (e.g., less money,
personal inconvenience, more work)
 Disrupted social relationships at work
 Not wanting to break with well-established habits
 A general fear of the unknown and uncertainty
 Fear that an unrecognized weakness in the proposed
change will result in unfavorable outcome.
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Gaining Support for Change
• Allow for discussion and negotiation.
• Allow for participation by those affected by the
change.
• Point out the potential benefits.
• Avoid change overload.
• Gain political support for the change.
• Provide education.
• Use manipulation and co-optation.
• Avoid poor performance as the reason for change.
• Use explicit and implicit coercion.
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Methods for Dealing with Resistance to
Change
• Education and communication
• Participation and involvement
• Facilitation and support
• Negotiation and agreement
• Manipulation and co-optation
• Explicit and implicit coercion
Source: Adapted and reprinted by permission of Harvard Business Review. From “Choosing
Strategies for Change” by John P. Kotter and Leonard A. Schlesinger, March–April 1979, p. 111.
Copyright © 1979 by the President and Fellows of Harvard College, all rights reserved.
Copyright © 2005 South-Western. All rights reserved.
EXHIBIT 14-5
14–14
Three Major Factors that Create
Organizational Change
Management
Initiatives
Changes in
Technology
Organizational
Change
New Work
Processes
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14–15
Downsizing and Restructuring
• Primary reason for downsizing:
 Reductions in the size of the firm to lower costs and
allow the firm to become more competitive.
• Dangers in downsizing:
 Inability to capitalize on postrestructuring opportunities
due to understaffing.
 Loss of critical human
assets reduces
organizational learning.
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14–16
The Costs of Downsizing versus The No-Layoff Payoff
• Massive layoffs can backfire
after taking into account:
• Companies that avoid
downsizing say they get:
 Severance and rehiring
costs
 A fiercely loyal, more
productive workforce
 Potential lawsuits from
aggrieved workers
 Higher customer satisfaction
 Loss of institutional memory
and trust in management
 Lack of staffers when the
economy rebounds
 Survivors who are risk
averse, paranoid, and
political
 Readiness to snap back with
the economy
 A recruiting edge
 Workers who aren’t afraid to
innovate, knowing that their
jobs are safe
Source: Michelle Conlin, “Where Layoffs Are a Last Resort,” Business Week, October 8, 2001, p. 42.
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EXHIBIT 14-6
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Keys to Successful Restructuring
• Integrate downsizing with long-term strategies.
• Identify and protect high-potential employees.
• Decentralize and empower employees.
• Redefine the positions of surviving employees.
• Eliminate low-value and non-value activities.
• Emphasize teamwork and cooperation.
• Define the new structure by specifying horizontal
and vertical relationships.
• Support and train, then evaluate and reward
performance.
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14–18
Information Technology (IT) and
Organizational Change
• IT’s effects on organizations
 Fewer middle management and coordinator positions.
 Increased organizational democracy through direct
communications between all organizational layers.
 More direct contact with customers and suppliers.
 Enterprise software supplanting managers and their
work.
 Changes in work itself that blurs the line between
work and non-work time.
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14–19
Disruptive Technology
• Ignoring technological changes in emerging
markets puts a firm at a competitive
disadvantage.
 Meeting the challenge of disruptive change:
 Create new organizational structures in which to
develop new processes, products or services.
 Spin out an independent organization in which to
develop new processes, products, or services.
 Acquire a firm with processes and values that
closely match new processes, products, or
services requirements.
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14–20
Transitioning from Carrying Out a Job to
Performing Work
• Organizational concerns:
 Job descriptions too rigid for the flexible work roles of
today’s workers.
 Hiring a person “to work” (seeking a better personorganization fit) rather than to fill a specific job.
 Matching workers’ skills to project requirements.
 Shifting from a bureaucratic focus on fixed job
descriptions to an emphasis on ever changing “work
roles” for employees.
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Organizational Development as a
Change Strategy
• Organizational Development (OD)
 Is any strategy, method, or technique
for making organizations more effective
by bringing about constructive,
planned change.
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Organization Development Interventions
Individual Level
Small-Group Level
Executive (or business) coaching
Employee assistance programs (EAPs)
Career development programs
Organizational behavior modification
(OB Mod)
Job enrichment
Wellness programs (stress reduction)
Sexual harassment avoidance training
Team development
Cultural diversity training
Modified work schedules
Creativity training
Intergroup conflict resolution
Quality improvement teams
Self-managing teams
Organization Level
Six Sigma
Gainsharing
Survey feedback (attitude surveys)
Action research (employees participate in
implementing changes identified by a consultant)
Implementing organization learning
Knowledge management
EXHIBIT 14-7
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14–23
A Process Model
of Organization
Development
Preliminary Identification of a Problem
Managerial Commitment
Data Collection and Analysis
Data Feedback
Identification of Specific Problem Areas
Development of Change Strategies
Initiation of Behavior
Source: Joseph A. Young and Barbara Smith, “Organizational Change
and the HR Professional,” Personnel, October 1988: p. 48. Reprinted
with the permission of Personnel published by the Society for Human
Resource Management, Alexandria, VA.
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Evaluation
EXHIBIT 14-8
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Process Consultation
• A widely used OD intervention in which the
communication pattern of an organizational unit
is examined by a process consultant.
 Consultant’s role is to observe and
raise questions challenging
the status quo and define
what really is happening
in the unit.
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14–25
Large-Scale Organizational Change
• Purpose and process:
 To accomplish a major change in the firm’s strategy
and culture, also referred to as “bending the frame.”
 Requires getting a critical mass of people throughout
the firm committed to outcomes of the change.
 Political
campaign
 Marketing
 Military
campaign
campaign
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Large-Scale Organizational Change
• Signs of the need for large-scale change:
 Top executives micromanaging instead of delegating
 A high turnover rate of employees
 Ineffective communication in the organization.
 A compensation system that rewards people for
actions unrelated to business success
 Loss of established business and failure acquire new
business
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Total Quality Management (TQM)
• A management system for improving
performance throughout a firm by:
 Maximizing
customer satisfaction
 Making
continuous improvements
 Relying
heavily on employee involvement
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Total Quality Management (TQM) (cont’d)
• TQM is a fundamental change in an
organization’s culture to one that includes:
 A focus on the customer
 An environment of trust and openness
 Formation of work teams
 Breaking down internal barriers
 Sharing power.
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Six Sigma as OD
• Six Sigma
 A data-driven statistically-based method for achieving
near-perfect quality with an emphasis on preventing
problems from occurring in the process .
 Features:
 Emphasizes
motivating people
to work together to achieve
higher levels of productivity
 Is
a fusion of technical and
social systems for creating
a culture of quality.
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14–30
Managing Change Yourself
• Empirical research about coping with
organizational change:
 Having a positive self-concept and a tolerance for risk
were both positively related to having a tolerance for
ambiguity and positive affectivity.
 Optimistic people who can tolerate
a lack of clarity and structural
change cope well with change.
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Suggestions for Coping with Change
• Practice dealing with ambiguous tasks.
• Maintain a positive general disposition.
• Look for personal value (“silver lining”) embedded in a forced
change.
• When faced with significant change, ask yourself “what if”
questions.
• When confronting major change, force yourself to enjoy at
least some small aspect of the change.
• Recognize that change is inevitable: Change before you have
to and you will get a better deal.
• Stop trying to be in control all the time.
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