Chapter 2: Cultivating Organizational Culture and Ethical Behavior

Kreitner/Kinicki/Cole Fundamentals of Organizational Behaviour: Key Concepts, Skills, and Best Practices

Chapter 13 Organizational Culture and Change

Chapter Learning Objectives

 Discuss the layers and functions of organizational culture.  Summarize the methods used by organizations to embed their cultures.  Describe the three phases of organizational socialization.  Discuss the external and internal forces that create the need for organizational change.  Describe Lewin’s change model and the systems model of change.  Review the 10 reasons employees resist change.  Identify alternative strategies for overcoming resistance to change.

Opening Case

In the Pit

This case profiles the Toronto Symphony Orchestra (TSO), and chronicles the significant changes it has encountered recently in its fight for survival. Many internal and external forces for change are at work in this situation. The orchestra appears to have been through the unfreezing stage and the change stage. One of the big changes is the new CEO. Now the TSO is headed for the refreezing stage. The new CEO seems to be fully aware of the difficulties that lie ahead and appears to anticipate the need to deal with resistance to the changes. Given its ‘near-death’ experience, all stakeholders will be watching Andrew Shaw as he guides the TSO into the next stage of its history.

Chapter Summary

Foundation of Organizational Culture

Organizational culture is the set of shared values, beliefs, and implicit assumptions that underlie a company’s identity. There are three fundamental layers of organizational culture, as shown in Figure 13-1. The three layers are observable artifacts, espoused/championed values and basic underlying assumptions.

Observable artifacts consist of the physical manifestations of an organization’s culture such as dress, myths and stories. You might spend some time on the terrible incident at Sitel Canada provided in the text.

Espoused values. Values are enduring beliefs in a mode of conduct or end-state. Espoused values are the stated values and norms that are preferred

Chapter 13 - 1 Kreitner/Kinicki/Cole Fundamentals of Organizational Behaviour: Key Concepts, Skills, and Best Practices by an organization. These values are often set by the founder and by the top management team. Enacted values represent the values and norms that actually are exhibited or converted into employee behaviour.

Basic assumptions are the underlying assumptions that are unobservable and represent the core of the organizational culture. They are often taken for granted and thus are highly resistant to change. You could discuss your college or university and the culture in terms of what might be hard to change and why.

Four Functions of Organizational Culture. There are four functions of culture, as shown in Figure 13-2.

(1) Give members organizational identity—3M and innovation. (2) Facilitate collective commitment—3M has a corporate value of being proud of being a part of the company. (3)Promote social system stability—3M has stayed steady even with downturns in its own fortunes. (4)Shape behaviour by helping members make sense of their surroundings—3M sets expectations for innovation in a number of ways such as through internships and co-op programs.

Outcomes Associated with Organizational Culture. Research has discovered many things about organizational culture. Several studies have shown that organizational culture was significantly correlated with employee behaviour and attitudes. Why would this be the case? Results from other studies revealed that the congruence between an individual’s values and organizational values was significantly associated with organizational commitment, job satisfaction, intention to quit, and turnover. Further, there is not one type of organizational culture that drives financial performance. Finally, studies of mergers indicate that they frequently fail due to incompatible cultures.

How Cultures are Embedded in Organizations. A culture is initially the outgrowth of the founder’s philosophy. The following shows the mechanisms or ways for embedding culture into an organization:

 Formal statements of philosophy, mission & values.  The design of physical space, work environments, and buildings.  Slogans, language, acronyms, and sayings.  Deliberate role modeling, training programs, teaching, and coaching by managers and supervisors.  Explicit rewards, status symbols eg. titles, and promotion criteria.  Stories, legends, and myths about key people and events.  The organizational activities, processes, or outcomes that leaders pay attention to, measure, and control.  Leaders’ reactions to critical incidents and organizational crises.

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 The workflow and organizational structure.  Organizational systems and procedures.  Organizational goals and the associated criteria used for recruitment, selection, development, promotion, layoffs, and retirement of people.

You might assign your students the task of interviewing teachers and/or students in different departments in the college or university as to what they think their culture is regarding the department and its students. They could devise a questionnaire, complete a survey, tabulate the data and make a presentation to class on the topic of culture as it applies to your college or university.

Embedding Organizational Culture Through Socialization Process and Mentoring

There are two basic processes for embedding organizational culture into the organization: socialization and mentoring. Organizational socialization is defined as the process by which a person learns the values, norms, and required behaviours that permit him to participate as a member of the organization. Where else do we see socialization in our society? Do all organizations in all societies socialize their employees and managers?

Mentoring is the process of forming and maintaining developmental relationships between a mentor and a junior person. Mentoring contributes to creating a sense of oneness by promoting the acceptance of the organization’s core values throughout the organization. The socialization aspect of mentoring also promotes a sense of membership. How do professors act as mentors?

A Three-Phase Model of Organizational Socialization. Initial membership in an organization can be confusing. Organizational socialization can help. The entire sequence can take from a few weeks to a year depending on the individual and the complexity of the situation. A three-phase model of organizational socialization is shown in Figure 13-3.

Phase 1: Anticipatory Socialization. This type of socialization happens before one joins the organizations, such as seeing ads like those for the Armed Forces. In this phase one anticipates realities about the organization and the new job, the organization’s need for specific skills and abilities, and the organization’s sensitivity to employees’ own needs and values. Unrealistic expectations about the nature of work, pay and promotions may occur at this time. How does the image of a company impact this phase?

Phase 2: Encounter. Once a new employee starts work and becomes a member of the organization, many organizations use a combination of orientation and training. What type of training and orientation does your college or university use? Is it effective? Why or why not?

Phase 3: Change and Acquisition. The mastery of important tasks and resolution of role conflict signals the beginning of this final stage of socialization. If one does not make it, one will leave voluntarily or involuntarily from the organization.

Practical Applications of Socialization Research. Practical applications of socialization research include the following:

(1) a formal organized approach should be used; (2) managers play a key role in the encounter phase; (3) the organization can benefit by training new employees to use proactive socialization behaviours; and (4) managers should pay attention to the socialization of diverse employees. What does diversity mean in this context?

Mentoring. Research has shown that mentored employees perform better on the job and experience more rapid career development. What happens to mentoring when gender or racial issues may get in the way of the mentor or the mentoree?

Functions of mentoring. There are two general functions of mentoring— career and psychological. Five career functions that enhance career development are sponsorship, exposure-and-visibility, coaching, protection, and challenging assignments. Four psychological functions are role modeling, acceptance-and-confirmation, counseling, and friendship. What happens when there is a ‘bad’ role model as your boss? What can you do?

Getting the most out of mentoring. In order to get full benefits from a mentoring program:

 Train mentors and protégés on how to use career and psychosocial mentoring  Use both formal and informal mentoring.  Inform diverse employees about the benefits and drawbacks of meeting with same/different employees.  Encourage women to mentor others.  Increase the number of diverse mentors in high-ranking positions.

A Model of Societal and Organizational Cultures

Societal culture involves shared meanings and socially-derived, taken-for- granted assumptions about how to think and act. Figure 13-4 illustrates how culture influences organizational behaviour through the impact of organizational culture and the impact of societal culture that employees bring with them to the workplace. Both types of culture affect employees’ personal values/ethics, attitudes, assumptions, and expectations, which in turn affects their behaviour in

Chapter 13 - 4 Kreitner/Kinicki/Cole Fundamentals of Organizational Behaviour: Key Concepts, Skills, and Best Practices organizations. The Ethics at Work box highlights differences in hiring practices between different societal cultures. The International OB box provides information on recent changes to the traditional Japanese policy of jobs-for-life.

Forces of Change

Organizations encounter many different forces for change, from both external and internal sources. Awareness of the forces for change can help managers to determine when they should consider implementing an organizational change.

External forces. External forces for change originate outside the organization. There are four key external forces for change: demographic characteristics, technological advancements, market changes, and social and political pressures. Why should organizations not create their own change before they are forced to change? Can strategies and planning future scenarios help this? Can organizations always be scanning the environment and testing the waters of change? What if they do not in a globalized environment? You might want to ask your students if they think that religion and globalization should be added and other broader categories such as economics and science?

Demographic characteristics. Organizations need to effectively manage diversity if they are to receive maximum contribution and commitment from employees. What about the continued reality of conflict and prejudice in our nation and world? There are implications associated with hiring the 80 million people dubbed the Net or Echo-Boom Generation born between 1977 and 1997 (most of the students in your classroom one might assume). These employees are technologically equipped and therefore, armed with the most powerful tools for business and that makes them unique in history. In one way it is the young teaching the old which places the hierarchy upside down and is very confusing for those used to being the knowledgeable ones and possessing the power/authority. You might ask if any of your students are managing older people and what it is like.

Technological advancements are increasingly used as means of improving productivity and market competitiveness. This is one of the biggest forces for change. Why?

Market changes include the emergence of a global economy that is forcing companies to change the way they do business.

Social and political pressures. There are examples such as the tobacco companies getting lots of pressure and political events such as the fall of the Berlin Wall. You might want your students to fill in what they think the most important social and political events of the last 20 years.

Internal Forces. Internal forces for change include the changes that comes from the inside to the organization. These forces can be subtle such as low job satisfaction or can manifest in outward signs such as low productivity.

Models of Planned Change

North American managers are criticized for emphasizing the short-term, quick-fix solutions to organizational problems (remember the demands of the stock market and more active shareholders). Quick fixes do not work for really changing an organization.

Lewin’s change model. Lewin’s model of change has three stages for creating change:

Unfreezing. The unfreezing stage is focused on creating the motivation to change where individuals are encouraged to replace old behaviours and attitudes with those desired by management. How would you go about doing this stage? Benchmarking can be used to help unfreeze an organization. Benchmarking is a process by which a company compares its performance with that of high- performing organizations and tries to change accordingly.

Changing involves learning and at this stage the employee is provided with new information, new behavioural models or new ways of looking at things. How would you present these to be the most effective?

Refreezing is stabilizing the change by helping employees integrate the changed behaviour or attitude into their normal way of doing things. How do you think this might be done most effectively?

Kotter’s Eight Steps for Leading Organizational Change. Kotter’s steps for change build on Lewin’s three stages, as seen in Table 13-1.

Organizational Development or OD is a set of techniques or tools that are used to implement organizational change.

OD involves profound change using change agents for creating long- lasting results.

OD is value-loaded because it is rooted partially in humanistic psychology; many OD consultants carry certain values or biases into the client organization. What consultant does not carry a pre-existing set of biases and values?

OD is a diagnosis/prescription cycle because consultants have long used the medical model of organizations, which uses such terms as ‘sick’ or ‘monitor’ progress. Why do they reify the process?

OD is Process Oriented. It is at its best when it focuses in on the form and not the content of behavioural and administrative dealings. Why might this be?

OD Research and Practical Implications Planned organizational change does work. Change programs are more successful when they are geared toward meeting both short- and long-term goals. Organizational change is more likely to succeed when top management is truly committed to the change process.

Understanding and Managing Resistance to Change

We are all creatures of habit and it is difficult to change. Managers must learn to manage resistance to change because if they do not there can be a number of costly consequences.

Why People Resist Change in the Workplace. Resistance to change is an emotional/behavioural response to real or imagined threats to an established work routine. Resistance can be subtle or overt. Ten of the leading reasons for resistance to change are:

 An individual’s predisposition toward change.  Surprise and fear of the unknown.  Climate of mistrust.  Fear of failure.  Loss of status and/or job security.  Peer pressure.  Disruption of cultural traditions and/or group relationships.  Personality conflicts.  Lack of tact and/or poor timing.  Nonreinforcing reward systems.

Alternative Strategies for Overcoming Resistance to Change. Before looking at strategies to overcome resistance to change, one must look at four key conclusions: (1) an organization must be ready for change; (2) organizational change is less successful when top management fails to keep employees informed about the process of change; (3) do not assume that people are consciously resisting change; and (4) provide employees the opportunity to discuss how the proposed change might affect them. What do you think of the list? Could you add any others? The Focus on Diversity box describes initiatives in Canada aimed at facilitating employment equity, a change which has faced considerable resistance.

Table 13-2 illustrates six strategies for overcoming resistance to change. They are: 1. education + communication 2. participation + involvement

3. facilitation + support 4. negotiation + agreement 5. manipulation + cooptation 6. explicit + implicit coercion.

What are the ethical concerns behind each of these approaches? Is ethical behaviour important in changing behaviours?

Internet Exercises

1. Organizational Culture

This exercise asks students to look at organizational culture by reviewing the Websites of two organizations to assess their culture. Students begin by doing a general search on the key words ‘organizational culture’ and ‘corporate vision and values’, in order to identify potential organizations that they could investigate further.

You might designate some organizations that have undergone changes in ethics and philosophy in recent times. Examples are H-P, IBM and Ford. Disney has also changed under Eisner’s management from a “make people happy” to a more money-oriented approach. You might have your students look at these companies as they were initially established and how new management with different ideas and different times chose different ethical guidelines for their actions.

The questions asked are:

1. What are the organization’s espoused values and beliefs? Answers will vary by organization.

2. What methods appear to have been used to embed culture in these organizations? Answers will vary by organization.

2. How Comfortable Are You With Change?

This exercise provides an opportunity for students to assess their resistance to change. They are instructed to go to the Website www.webhome.idirect.com/~kehamilt/ob14.html, review the information on organizational change, and then click on the online quiz. The quiz is automatically scored by clicking on ‘Score the Exercise’. The higher the score, the greater the student’s comfort with change. The questions asked are:

1. What was your score? What does it tell you about your level of acceptance of change? Personal opinion.

2. If your score was low, indicating resistance to change, what might you do to try to become more open to change? Explain. Personal opinion, probably seeking out information about changes and discussing them with others.

3. If your score was high, indicating comfort with change, think about how this might make it difficult for you to deal with others who fear and resist change. How might you try to understand their point of view? Explain. Personal opinion, probably discussing the changes with others to find out why they are uncomfortable. They may feel they will lose out as a result of the change, and may see you as someone who will benefit.

Experiential Exercises

1. Assessing an Organization’s Readiness for Change

This exercise asks students to evaluate a company they work for, or are familiar with, that has undertaken a change effort. After completing the 16-item questionnaire using the 3-point scale provided, they sum their responses to calculate a total score. The total score can be interpreted using the arbitrary norms provided: 40-48 = high readiness for change; 24-39 = moderate readiness for change; 16-23 = low readiness for change. The question asked is:

1. Did this level of readiness for change relate to the success of the change effort? In most cases, the organizations with higher readiness scores will have experienced more successful change efforts than those with low scores.

2. Cross-Cultural Awareness

This exercise focuses on differences in societal culture and provides an opportunity for students to compare their work goal priorities to those from people in other countries. Students rank the 11 aspects of work life in order of importance to them - the most important aspect of work life is ranked as ‘1’ and the least important aspect is ranked ‘11’. Then they compare their rankings with the rankings provided by workers in the US, Britain, Germany, and Japan. The questions asked are:

1. Which national profile of work goals most closely matches your own? Is this what you expected or not? Personal opinion.

2. Are you surprised by any of the rankings in the four national samples? Explain. Personal opinion.

3. What types or motivational/leadership adjustments would a manager make when moving between the four countries? Canadian managers

would probably not make many changes in the US, Britain, or Germany, other than ensuring that pay is competitive in Germany. In Japan, the importance of autonomy could be addressed by instituting self-managed teams and quality circles. It would also be important in Japan to take care that employees are hired for jobs where they feel there is a good match with their skills and preferences – this would mean extra work in the selection process and in designing effective training.

Personal Awareness and Growth Exercises

1. Have You Been Adequately Socialized?

This exercise provides students with the opportunity to assess the socialization experience at their workplace. After completing the 8-item questionnaire using the 5-point scale provided, they sum their responses to calculate a total score. The total score can be interpreted by comparing it to the norms provided: 8-18 = low socialization; 19-29 = moderate socialization; 30-40 = high socialization. Discussion can revolve around examples provided by students in the high socialization category.

2. Creating Personal Change Through Force-Field Analysis

This exercise introduces the force-field analysis of change, and is a supplement to the material provided in the chapter. A brief introduction should be presented to the class, based on the material in the text. Detailed instructions for the exercise are provided in the text. The questions asked are:

1. What was your reaction to doing a force-field analysis? Was it insightful and helpful? Personal opinion.

2. Was it valuable to receive feedback about your force-field analysis from a partner? Explain. Personal opinion.

3. How would you assess the probability of effectively implementing your recommendations? Personal opinion.

Video Case

Gap Adventures

This video profiles an adventure travel/ecotourism company owned by a young entrepreneur, Bruce Poon Tip. The company has grown rapidly and a new marketing expert, Dave Bowen, had been brought in to facilitate a change to greater customer focus. The company has a strong culture, and resistance to change soon appear when cultural assumptions are questioned, and artifacts are redesigned. The questions asked are:

1. What corporate values have changed at Gap Adventures since the arrival of Dave Bowen? Less focus on ethical sensibilities, conservationism, and the laid-back family atmosphere, and more focus on customers, hard work, discipline, efficiency.

2. Explain how the culture change at Gap Adventures has affected the four functions of culture. The organizational identity has changed shifted from a small, family atmosphere with entrepreneurial spirit to a more traditional corporate identity. The collective commitment has been strained by Dave’s style. The social system has become less stable with the advent of Dave’s authority and the decrease in Bruce’s involvement in the day-to- day activities of the company. The company may make less sense to employees than it did before when it was so unique because its underlying values have changed.

3. Do you agree with Bruce’s assessment of the changes at Gap Adventures, as he expresses them at the end of the video? Personal opinion, but many may agree with his view that the company is more serious, more controlled, more corporate and less relaxed.

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