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Cultural Change

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Lindsay Bolla

on 26 November 2013

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Transcript of Cultural Change

Transforming Organizational Culture
“When the culture is our own, it often goes unnoticed- until we try to implement a new strategy or program which is incompatible with their central norms and values Then we observe, first hand, the power of culture” - Corporate Culture and Performance
Organizational Culture
Culture Intervention
What and How
Origin and History
- Until 1980, the concept of corporate or organizational culture was hardly mentioned
- Competitive advantage between Japan and America
- Today it is a "HOT" topic
- Belief that a better understanding of how to build the “right” kind of culture or a “strong” culture will solve the problems of productivity

Recent Studies
-Culture can have:
- Significant impact on a firm’s long-term economic performance
- Predicted be the most important factor in determining the success or failure of firms
- Inhibit strong long-term financial performance
- Although tough to change, corporate cultures can be made more performance enhancing
- Without culture change there is little hope of enduring improvement in organization performance
Learning Objectives
-Know the definition of organizational culture.
-Understand the importance of a healthy culture
- Understand why an organization would change its culture
- Understand how to use one tool used to assess a culture
- Be able to describe how the change can be effective in the organization

Organizational Culture Assessment Instrument
Results and Conclusions
Real Life - General Motor's Case
- The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration.
Ways to Create Culture
Founder of the firm
Emerges over time as an organization encounters and overcomes challenges in its environment
Develops consciously by management teams
Cultural Intervention
A Healthy Culture
Acceptance and appreciation for diversity
Fair treatment/respect of each employee
Employee pride and enthusiasm for the organization and the work performed
Equal opportunity for each employee to realize their full potential within the company
Strong communication
Strong company leaders with a strong sense of direction
Ability to compete in industry innovation and customer service
Lower than average turnover rates
Investment in learning, training, and employee knowledge
Why is culture important?
-Strong cultures help business performance because they create a level of motivation in employee

- Corporate culture is used to control, coordinate, and integrate of company subsidiaries
1) Assessment
Focus on the entire organization as the unit of analysis
Assess different subunit cultures
Identify the common dominant attributes of the subunit cultures, and aggregate them.

Purpose and Target
Level: Organization Wide
Purpose: change the organizational culture
such that:
it meets goals
gains a competitive advantage
promotes healthy working relationships
is financially beneficial
Key Steps
1) Assess the culture
2) Create a Mission or Primary Task
3) Repair Structures and Processes
4) Create Interpersonal Relationships
5) Rewards and Punishment
6) Turnaround
Used to help identify the organization's current culture
Answer the six questions for the Orfalea College of Business organization in its current state
Divide 100 points between the 4 options

Step 1
-Used to diagnose your organization's culture
-Identify the culture organization members think should be used to match the future demands of the environment and the challenges to be faced by the company
- Respond to the same questions, but how you would prefer your organization to be in five years

Step 2
The Organizational Culture Profile

Review of the Objectives
-Know the definition of organizational culture.
-Understand the importance of a healthy culture
- Understand why an organization would change its culture
- Understand how to use tools to assess a culture
- Be able to describe how the change can be effective in the organization
“For all of its contemporary popularity, however, organizational culture remains a phenomenon that is as yet neither fully understood nor agreed upon”

Final Thoughts
Cultural change can have a positive effect on an organization's effectiveness
- In order to change an organization one must understand/identify the current culture
- One must understand the benefits of changing to a new culture
- Have a strong leadership to help promote an effective change
-Changing a culture can promote unprecedented results

- Organizations don’t know exactly what they are hunting for
- All kinds of organizational culture definitions can be found
- Many different kinds of models are advocated for creating, managing, changing, or even circumventing culture
Thank you!
Performance Measurement and Management (PMM)
- Identification of the outcomes
- Identification of the behaviors
- Incorporate the desired behaviors into a performance evaluation/appraisal system
- Linkage of performance and consequences
- Development of cultural change benchmarks against which to evaluate the progress of a team/unit/entire organization
- What exactly does the organization want to change?

- Early results are critical

- Create tasks that revolve around the alteration of organization systems, structures and skills.
3) Repair Structure and Processes
- Structure: Breaking business units into separate entities when they reach a certain size, reducing hierarchy, and liberally using ad hoc teams.

- Systems: Rewarding, not punishing. Risk takers by allocating funding for projects.

- Skills: Toward leading, encouraging, and coaching-versus controlling.
4) Interpersonal Relationships
- Create an environment that allows everyone to lead, and have enough discretion and accountability to contribute to its success.

- Listen to employees, customers, suppliers, unions, managers...etc

- Communicate and become more transparent.
5) Rewards and Punishment
- Create an open and participative organization.

- Create more opportunity for positive consequences, such as promotions, bonuses, or non-monetary rewards

- Create a culture that does not punish, and often rewards the behaviors that maintain the mission and vision statements of the company.
6) Turnaround
- All the mechanisms work together to create the total change process.

- Recognize the organization's past way of thinking, feeling and doing, and implement the new changes successfully.
How is Culture Learned?
Learning Mechanisms
- Anxiety and pain reduction
- Positive reward and reinforcement

- Different functions are served by different organizational stages, and the change issues are therefore different at each stage and each organization.
General Motors was losing market shares due to their poor quality product

Internal and External Problems:
Employee complaints
Low customer satisfaction
Cost to assemble cars were 30% above the Japanese competition
Sales trends were negative
Morale was low

GM reached out to Toyota, its best competitor, to help them design and build a new car together.
The conditions:
GM equipment and facilities would be used, but Toyota managers would be in charge
The combination of the two organizations lead to culture problems
Together, they designed the Chevy Nova which was replaced with the Geo Prism, then the Toyota Corolla.

Sales trends were positive, quality and customer satisfaction were the highest in the company, and productivity doubled the corporate average

Employee Testimonial
Worked for General Motors for 20 years
Before the acquisition, he would purposely make poor quality products which reflected badly on GM
After the acquisition, he was proud and felt responsible for the products he produced

2) Create a Mission or Primary Task
Example methods of research:
Power distance, uncertainty avoidance, Individual vs. collectivism, Masculinity, Long term
Mission, ability, involvement, consistency
Deal & Kennedy:
Work-hard, play-hard; tough-guy macho, process, bet-the-company
The Role of the Manager
Important Qualities
- Contain and absorb anxiety and risk
- Embedded non-economic assumptions and values
- Stimulate innovation
- Originate evolution through hybridization
- Possess leadership stamina, tenacity, and craftiness
- Possess strength and political power
-Required to be the symbolic capital at the top position in the management hierarchy

Reasons to change organizational culture
Market changes (growth, competitors, etc)
Political & legal environment
New business ownership
New management or leadership
Economic conditions
Barriers to cultural change
Traditional and set way of doing things:
- Loyalty to existing relationships
- Failure to accept the need for change
- Insecurity
-Preference for the existing arrangements
-Different person ambitions

Fear of:
- Loss of power
-Loss of skills
-Loss of income
-The unknown
- Inability to perform as well in the new situation
-Break up of work groups
People and empowerment focused
Value creation through innovation and change
Attention to the basics
Hands-on management
Doing the right thing
Freedom to grow and to fail
Commitment and personal responsibility
Emphasis on the future
Importance of a Healthy Culture
Competitive edge derived from innovation and customer service
Consistent, efficient employee performance
Team cohesiveness
High employee morale
Strong company alignment towards goal achievement
Importance of Leadership
Changing a culture is ultimately concerned with leadership and power issues

Targets: Attitudes, behaviors, established ideas and values of organizations members
Lead role
Human Resource Manager or the Personnel Manager
- Believed to have the knowledge or skills
New Results:
Most senior person
- Must challenge status quo
- Must excite and challenge managers
- No one can question or go against senior position

The Clan Culture: People orientated

The Adhocracy culture: Innovative

The Hierarchy culture: Stability and control

The Market Culture: Competitive and goal orientated

This tool is used to create an organizational culture profile which is an important step in initiating a culture change strategy
- Allows organization to see where organization falls now and see what needs to be changed to fit a new culture
Step 3
- Add together all responses that coincide with a specific letter (Pg. 26-27)
- Plot them on graph
- Determine organizational culture profile
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