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McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
4Chapter
Managing OrganizationalCulture and Change
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Learning ObjectivesAfter reading this chapter, you should be able to:
Build and maintain an appropriate company culture.Understand the roles of symbols, rites, ceremonies, heroes, and
stories in an organization's culture.Identify the various categories of organizational cultures and
the characteristics of people who fit best with them.Adapt to organizational change and the forces that drive
change.Work with employees who resist change.Use tools to help implement change, including Lewin’s three-
step model of change and force field analysis.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Organizational CultureA system of shared values, assumptions, beliefs,
and norms that unite the members of an organization.
Reflects employees’ views about “the way things are done around here.”
The culture specific to each firm affects how employees feel and act and the type of employee hired and retained by the company.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Core Values
Expressed Values
Visible CultureLevels of Corporate Culture
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Functions Performed By Organizational Culture
Employee Self-ManagementSense of shared identityFacilitates commitment
StabilitySense of continuitySatisfies need for predictability, security, and
comfort
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Functions Performed By Organizational Culture (cont)
SocializationInternalizing or taking organizational values as
one’s own
Implementation Support of the Organization’s StrategyIf strategy and culture reinforce each other,
employees find it natural to be committed to the strategy
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Stages of the Socialization Process
Pre-arrival
Encounter
Metamorphosis
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Creating and Sustaining Organizational Culture
Cultural Symbols Company Rituals and Ceremonies
Company Heroes
Stories
Language
LeadershipOrganizational Policies and Decision Making
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Characteristics and Types of Organizational Culture
Cultural Uniformity versus Heterogeneity
Strong versus Weak Cultures
Culture versus Formalization
National versus Organizational Culture
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Characteristics and Types of Organizational Culture (continued)
Types: Traditional Control or Employee Involvement Traditional control
emphasizes the chain of command relies on top-down control and orders
Employee involvement emphasizes participation and
involvement
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Four Types of Culture Classification
Baseball team culture--rapidly changing environment
Club culture--seeks loyal, committed people
Academy culture--hires experts who are willing to make a slow steady climb up a ladder
Fortress culture--focused on surviving and reversing sagging fortunes
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Competing Values Framework
Based on two dimensions: focus and control
Focus--whether the primary attention of the organization is directed toward internal dynamics or directed outward toward the external environment
Control--the extent to which the organization is flexible or fixed in how it coordinates and controls activities
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Types of ChangePlanned Change--change that is
anticipated and allows for advanced preparation
Dynamic Change--change that is ongoing or happens so quickly that the impact on the organization cannot be anticipated and specific preparations cannot be made
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Forces for Change: Environmental Forces
Put pressure on a firm’s relationships with customers, suppliers, and employees.
Environmental forces include:TechnologyMarket forcesPolitical and regulatory agencies and lawsSocial trends
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Forces for Change: Internal Forces
Arise from events within the company.
May originate with top executives and managers and travel in a top-down direction.
May originate with front-line employees or labor unions and travel in a bottom-up direction.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Resistance to Change
Self-Interest
Lack of Trust and Understanding
UncertaintyDifferent Perspectives
and Goals
Cultures that Value Tradition
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Models of Organizational Change: The Star Model
The Star Model: Five Points Types of change-evolutionary or
transformationalStructureReward systemProcessesPeople
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Lewin’s Three-Step Model of Organizational Change
Unfreezing--melting away resistance
Change--departure from the status quo
Refreezing--change becomes routine
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Lewin’s Force Field Analysis Model
Increase driving forces that drive change
Reduce restraining forces that resist change
or do both
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Restraining forces
Driving forces
Status quo
Desired state
Time
Force-field Model of Change
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Implementing Organizational Change
Top-down Change
Change Agents
Bottom-up Change
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Eight Steps to a Planned Organizational Change
Establish a sense of urgency.
Form a powerful coalition of supporters of change.
Create a vision of change. Communicate the vision
of change.
Empower others to act on the vision.
Plan and create short-term wins.
Consolidate improvements and produce still more change.
Institutionalize new approaches.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Tactics for Introducing Change
Communication and Education
Employee Involvement
Negotiation
Coercion
Top-Management Support
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Applications: Management is Everyone’s Business—For the Manager
Certain types of changes routinely provoke strong employee resistance:Changes that affect skill requirements.Changes that represent economic or status loss.Changes that involve disruption of social relationships.
By being aware of the sources of resistance, managers can better apply tactics to make the changes more palatable for employees.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Applications: Management is Everyone’s Business—For Managing Teams
Teams can help test the waters for a proposed change.
Various employee teams can serve as focus groups in order to find ways to make a change in policy more acceptable to employees.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Applications: Management is Everyone’s Business—For Individuals
Learning the specifics about the company culture can help you determine your fit with the organization and the possibility of succeeding.
Ask questions and gather information during the recruiting process to get a handle on the company culture and assess whether you will function comfortably in it.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.