1. Chapter 5Chapter 5
ManagingManaging
Organizational CultureOrganizational Culture
and Changeand Change

2. 5-2Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Management ChallengesManagement Challenges
After reading this chapter, you should be able to:After reading this chapter, you should be able to:
 Describe how organizational culture helpsDescribe how organizational culture helps
management achieve its objectives.management achieve its objectives.
 Understand how cultural symbols, rites,Understand how cultural symbols, rites,
ceremonies, heroes, and stories are used toceremonies, heroes, and stories are used to
sustain an organization’s culture.sustain an organization’s culture.
 Recognize the differences between strong andRecognize the differences between strong and
weak organizational cultures, and identify situationsweak organizational cultures, and identify situations
in which each of these cultures may bein which each of these cultures may be
advantageous.advantageous.
 Adapt to organizational change and the forces thatAdapt to organizational change and the forces that
drive change.drive change.

3. 5-3Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Management ChallengesManagement Challenges (continued)(continued)
 Identify the four different types of organizationalIdentify the four different types of organizational
cultures and the characteristics of people who fitcultures and the characteristics of people who fit
best with each.best with each.
 Direct and counsel employees who resistDirect and counsel employees who resist
organizational change.organizational change.
 Apply the tactics of change agents while taking intoApply the tactics of change agents while taking into
consideration potential sources of resistance.consideration potential sources of resistance.
 Use tools that enhance our understanding of theUse tools that enhance our understanding of the
change process, such as Lewin’s three-step modelchange process, such as Lewin’s three-step model
of change and force field analysis.of change and force field analysis.

4. 5-4Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Skills for managing organizational culture andSkills for managing organizational culture and
change:change:
 Cultural diagnostic skillsCultural diagnostic skills
 Cultural strategic skillsCultural strategic skills
 Managing culture skillsManaging culture skills
 Change management skillsChange management skills

5. 5-5Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Organizational CultureOrganizational Culture
 A system of shared values, assumptions,A system of shared values, assumptions,
beliefs, and norms that unite the members ofbeliefs, and norms that unite the members of
an organization.an organization.
 Reflects employees’ views aboutReflects employees’ views about “the way“the way
things are done around here.”things are done around here.”
 The culture specific to each firm affects howThe culture specific to each firm affects how
employees feel and act and the type ofemployees feel and act and the type of
employee hired and retained by theemployee hired and retained by the
company.company.

6. 5-6Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CoreCore
ValuesValues
ExpressedExpressed
ValuesValues
VisibleVisible
CultureCulture
Levels of CorporateLevels of Corporate
CultureCulture

7. 5-7Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Functions performed by organizationalFunctions performed by organizational
culture:culture:
 Employee Self-ManagementEmployee Self-Management
 Sense of shared identitySense of shared identity
 Generation of commitmentGeneration of commitment
 StabilityStability
 Sense of continuitySense of continuity
 Satisfies need for predictability, security, andSatisfies need for predictability, security, and
comfortcomfort

8. 5-8Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Functions performed by organizationalFunctions performed by organizational
culture:culture: (continued)(continued)
 SocializationSocialization
 Internalizing or taking organizational valuesInternalizing or taking organizational values
as one’s ownas one’s own
 Implementation Support of theImplementation Support of the
Organization’s StrategyOrganization’s Strategy
 If strategy and culture reinforce each other,If strategy and culture reinforce each other,
employees find it natural to be committed toemployees find it natural to be committed to
the strategythe strategy

9. 5-9Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Stages of the Socialization ProcessStages of the Socialization Process
Pre-arrivalPre-arrival
EncounterEncounter
MetamorphosisMetamorphosis

10. 5-10Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Creating and Sustaining OrganizationalCreating and Sustaining Organizational
CultureCulture
Cultural SymbolsCultural Symbols Company RitualsCompany Rituals
and Ceremoniesand Ceremonies
Company HeroesCompany Heroes
StoriesStories
LanguageLanguage
LeadershipLeadership
OrganizationalOrganizational
Policies andPolicies and
Decision MakingDecision Making

11. 5-11Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Aspects of organizational cultureAspects of organizational culture
 Cultural Uniformity versus HeterogeneityCultural Uniformity versus Heterogeneity
 Strong versus Weak CulturesStrong versus Weak Cultures
 Culture versus FormalizationCulture versus Formalization
 National versus Organizational CultureNational versus Organizational Culture
 Organizational FitOrganizational Fit
 Baseball team cultureBaseball team culture
 Club cultureClub culture
 Academy cultureAcademy culture
 Fortress cultureFortress culture

12. 5-12Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
ManagingManaging Organizational ChangeOrganizational Change
 Organization culture can facilitate or inhibitOrganization culture can facilitate or inhibit
changechange in an organization.in an organization.
 A firm attempts to change organizationalA firm attempts to change organizational
culture because the current culture hindersculture because the current culture hinders
the attainment of corporate goals.the attainment of corporate goals.
 EnvironmentalEnvironmental andand internalinternal forces canforces can
stimulate the need for organization change.stimulate the need for organization change.

13. 5-13Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Forces for Change: Environmental ForcesForces for Change: Environmental Forces
 Put pressure on how a firm conducts itsPut pressure on how a firm conducts its
business and its relationships withbusiness and its relationships with
customers, suppliers, and employees.customers, suppliers, and employees.
 Environmental forces include:Environmental forces include:
 TechnologyTechnology
 Market forcesMarket forces
 Political and regulatory forcesPolitical and regulatory forces
 Social trendsSocial trends

14. 5-14Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Forces for Change: Internal ForcesForces for Change: Internal Forces
 Come from decisions made within theCome from decisions made within the
company.company.
 May originate with top executives andMay originate with top executives and
managers and travel in a top-down direction.managers and travel in a top-down direction.
 May originate with front-line employees orMay originate with front-line employees or
labor unions and travel in a bottom-uplabor unions and travel in a bottom-up
direction.direction.

15. 5-15Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Resistance to ChangeResistance to Change
Self-InterestSelf-Interest
Lack of Trust andLack of Trust and
UnderstandingUnderstanding
UncertaintyUncertainty
DifferentDifferent
Perspectives andPerspectives and
GoalsGoals
Cultures thatCultures that
Value TraditionValue Tradition

16. 5-16Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Models of Organizational ChangeModels of Organizational Change
 Lewin’s three-step modelLewin’s three-step model
 Force-field analysis modelForce-field analysis model

17. 5-17Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Lewin’s Three-Step Model of OrganizationalLewin’s Three-Step Model of Organizational
ChangeChange
UnfreezingUnfreezing RefreezingRefreezingChangeChange

18. 5-18Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Restraining forcesRestraining forces
Driving forcesDriving forces
StatusStatus
quoquo
DesiredDesired
statestate
TimeTime
Force-field Model of ChangeForce-field Model of Change

19. 5-19Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Implementing Organizational ChangeImplementing Organizational Change
Top-down ChangeTop-down Change
Change AgentsChange Agents
Bottom-up ChangeBottom-up Change

20. 5-20Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Change agents should take the following stepsChange agents should take the following steps
to obtain a successful change outcome:to obtain a successful change outcome:
1.1. Establish a sense ofEstablish a sense of
urgency.urgency.
2.2. Form a powerfulForm a powerful
coalition of supporterscoalition of supporters
of change.of change.
3.3. Create a vision ofCreate a vision of
change.change.
4.4. Communicate theCommunicate the
vision of change.vision of change.
5.5. Empower others toEmpower others to
act on the vision.act on the vision.
6.6. Plan and create short-Plan and create short-
term wins.term wins.
7.7. ConsolidateConsolidate
improvements andimprovements and
produce still moreproduce still more
change.change.
8.8. Institutionalize newInstitutionalize new
approaches.approaches.

21. 5-21Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Tactics for Introducing ChangeTactics for Introducing Change
Communication andCommunication and
EducationEducation EmployeeEmployee
InvolvementInvolvement
NegotiationNegotiation
CoercionCoercion
Top-ManagementTop-Management
SupportSupport

22. 5-22Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Applications of Management Perspectives:Applications of Management Perspectives:
For the ManagerFor the Manager
 Certain types of changes routinely provokeCertain types of changes routinely provoke
strong employee resistance:strong employee resistance:
 Changes that affect skill requirements.Changes that affect skill requirements.
 Changes that represent economic or status loss.Changes that represent economic or status loss.
 Changes that involve disruption of socialChanges that involve disruption of social
relationships.relationships.
 By being aware of the sources of resistance,By being aware of the sources of resistance,
managers can better apply tactics to make themanagers can better apply tactics to make the
changes more palatable for employees.changes more palatable for employees.

23. 5-23Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Applications of Management Perspectives:Applications of Management Perspectives:
For Managing TeamsFor Managing Teams
 Teams can help test the waters for aTeams can help test the waters for a
proposed change.proposed change.
 Various employee teams can serve as focusVarious employee teams can serve as focus
groups in order to find ways to make agroups in order to find ways to make a
change in policy more acceptable tochange in policy more acceptable to
employees.employees.

24. 5-24Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Applications of Management Perspectives:Applications of Management Perspectives:
For IndividualsFor Individuals
 Learning the specifics about the companyLearning the specifics about the company
culture can help you determine your fit withculture can help you determine your fit with
the organization and the possibility ofthe organization and the possibility of
succeeding.succeeding.
 Ask questions and gather information duringAsk questions and gather information during
the recruiting process to get a handle on thethe recruiting process to get a handle on the
company culture and assess whether youcompany culture and assess whether you
will function comfortably in it.will function comfortably in it.