UNDERSTANDING

CORPORATE CULTURE AND

CHANGE MANAGEMENT

Change Management -Written assignment Trimester 3 GLC-HR-2009-11

Submitted To: Dr. Saritprabha Das

Submitted By: Deepshikha Satayarthi - 40 Edwin Thekakekera - 08 Ketaki - 56 Komal Rathore - 13 Raveena Beniwal - 43 Shailee Mehta - 35 1

CONTENTS

Defining Organizational Culture Defining Corporate Culture Defining Change Management and the related Models Dimensions of Corporate Culture Types of Corporate culture Role of Senior Management How Corporate culture can help in bringing about change ARTICLE : Managing Change: Understanding Corporate Culture( Characteristics and Benefits)

Organizational Culture Organizational culture is an idea in the field of Organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. According to Charles Handy, there are four types of Organizational Culture:

A Power Culture which concentrates power among a few. In a Role Culture, people have clearly delegated authorities within a highly defined structure. By contrast, in a Task Culture, teams are formed to solve particular problems. Power derives from expertise as long as a team requires expertise. A Person Culture exists where all individuals believe themselves superior to the organization.

According to G. Johnson described a cultural web, identifying a number of elements that can be used to describe or influence Organizational Culture:

The Paradigm: What the organization is about; what it does; its mission; its values. Control Systems: The processes in place to monitor what is going on. Organizational Structures: Reporting lines, hierarchies, and the way that work flows through the business. Power Structures: Who makes the decisions, how widely spread is power, and on what is power based? Symbols: These include organizational logos and designs, but also extend to symbols of power such as parking spaces and executive washrooms. Rituals and Routines: Stories and Myths: build up about people and events, and convey a message about what is valued within the organization.

Corporate Culture
Organizational culture is not the same as corporate culture. It is wider and deeper concepts, something that an organization 'is' rather than what it 'has'. Corporate culture is the total sum of the values, customs, traditions and meanings that make a company unique. Corporate culture is often called "the character of an organization" since it embodies the vision of the companys founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behavior.

Change Management and related Models Change is an inevitable part of life. As time passes changes happen. Organizations need to change with time. Globalization and competition are the two main drivers of change in organization. The process of bringing about change in the organization is known as change management. Change Management is an approach that is structured to make change in the individual , team , society and organization form its current state to the desired state. There are four main types of organizational change: Planned Change: Change that is intentional and goal oriented Unplanned Change: Change that takes place without pre planning or preparation and is accidental First order Change: Also known as transactional change , here the change is in some particular features of the organization but the fundamental structure and process of the organisational remain the same. E.g. Organisation Climate Second Order Change: This change is also known as transformational change. Here, the nature of the organization is substantially and fundamentally changed or altered. Organisation / Corporate Culture. 4

Kurt Lewin Is The Father Of Change Management. He has given the following model of change: UNFREEZE MOVE REFREEZE

Kotters 8 Step Change Model

Dimensions of Corporate culture 5

Corporate culture is shaped by the following:

Types of Corporate Culture

Incubator

organizations secondary to Guided Missile individual fulfillment highly Egalitarian existence precedes task-oriented, impersonal organization team approach emphasized aim at self-expression and self-fulfillment cross-disciplinary personal and egalitarian minimal structure; minimal hierarchy emotional commitment creative, innovative

performance emphasized loyalty to professions / project greater than to company Motivation intrinsic

Family

Eiffel Tower

personal, close face-to-face

hierarchal

relationship hierarchal ("father knows best") power-oriented (leader is fatherly figure) home-like work atmosphere long-term relationships of employee to company; high loyalty values, norms, atmosphere set by father" or "elder brother"

structure more important than function leader is boss (not father) relationships specific; status ascribed highly bureaucratic, depersonalized rules dominate; roles before people careers depend upon professional qualifications symbolic of machine age

Senior management may try to determine a corporate culture.

Every organization has its own unique culture or value set. Most organizations don't consciously try to create a certain culture. The culture of the organization is typically created unconsciously, based on the values of the top management or the founders of an organization. The importance of corporate culture is growing as the result of several recent developments. Companies are encouraging employees to be more responsible and act and think like owners. In exchange for more flexible work schedules, employees are expected to always be "on-call." With the demise of more traditional communities (e.g. neighborhoods, etc.), companies are filling employees' need to belong to a community. At the same time companies are encouraging teamwork and the formation of teams. Culture plays a vital role. Leaders must learn to harness the positive aspects of a culture in the change efforts. Culture is much like the water in an aquarium. While it is largely invisible, its chemistry and life-supporting qualities profoundly affect its inhabitants.

An organization requiring transformation is like an aquarium polluted by too many algae, and requires restoration. Leaders effecting an organizational transformation must understand the vital role that corporate culture plays in any change efforts.

The biggest problem with such a task is that the most powerful individuals stand to lose the most. Often, they will resist the changes necessary to move ahead in order to avoid losing power.

Resistance to change
Even though change is an inevitable part of life , most people are resistant to change. The reasons for the same are as follows:

Individual Factors

Group Factors

Corporate Culture and Change Management

. Corporate culture can help in bringing about change in the following ways: Provide the key to mastering change. - Corporate culture is an ever-evolving process and invariably it is a part of change that takes place in an organization. Corporate culture if implemented properly will help in Mastering change so that whatever the change may be, it can be incorporated into the organization without creating any huge difficulties / neglect from employees. Build new standards of communication that get better results - Agreement on beliefs and values facilitates communication. If Management wants to connect with all of their staff, they need to combine

three styles of effective communication: emotional, factual, and symbolic. These can be built into the corporate culture, thus making it a part of the organization itself. Create greater customer satisfaction - Customer satisfaction has become the most important aspect of any service industry; corporate culture can help you by preparing you to give the customer what they must have i.e. build a communication that allows your people to succeed and increase the speed and value of organizational learning. Cooperation between employees - Shared values may enhance goodwill and mutual trust, encouraging cooperation. This will help in any new implementation, as there would be a coordinated and collective effort from all. Decision-making - Shared beliefs and values lead to more efficient decision making since there are fewer disagreements about which premises should prevail. Employee Commitment - Strong cultures foster strong identification and feelings through beliefs and values the employee can share with others. This would help the company accommodate change or implement anything new keeping in mind that they have a set of committed employees. Therefore they need not worry about attrition as a result of any change that may be implemented. Corporate behavior - Culture helps organization members make sense of their behavior by providing justification for it. This would enable a smooth implementation of any change that might be proposed. In the end we need to keep in mind that corporate culture could be used as a perfectly crafted tool to implement any change. A good corporate culture will by all means help in change and a perfect implementation would fasten and ease the change implementation that is required. So, while practice may never make perfect when it comes to organizational change, understanding and managing corporate culture can influence the final outcome of your change efforts.

ARTICLE: Managing Change: Understanding Corporate Culture (A Nutshell Description of Corporate Culture and Change) Many organisations today are hard pressed to change as they are driven by a strong need to change through this digital and the K-economy era. There is no alternative. They have to change to enable their organisations to compete and survive. However, many CE0s are unhappy because many of the changes implemented are not sustainable. The scenario sounds too familiar. An organisation suddenly realizes the need to change due 10

to external pressure of competition. It decides to take a quick and simple way, i.e. undertake training for staff to improve their competency and motivation. Their staff members are sent off to a nice resort for a couple of days where they brainstorm issues, develop strategies to resolve problems, build team spirit and nurture a sense of camaraderie. When the staff members come back, they are all charged up for two weeks and then the enthusiasm subsides and everyone goes about doing things the old beaten way. The issues are still there. The result is that there is no iota of change happening. It is likewise with the implementation of change initiatives, be they TQM or business process reengineering or the GRID management approach all started well but have not ended up well. As a consultant, I have been posed the most common question from CEOS: How do you sustain a change initiative and the enthusiasm for continuous improvement? There is one great strategic flaw in the way most organisations go about implementing change. They go about managing change in a superficial manner through merely changing the structure, process, strategy and technology without addressing the fundamentals that drive the organisation. And these fundamentals are the components that influence and guide the behaviour of people in organisations. It is these very basic components that make up the corporate culture of an organisation. Unless an organisation takes time to shape its corporate culture to the desired change, the effort and results will not be sustainable.

Corporate culture is the way people do things in an organisation. It is a set of norms comprising of beliefs, attitudes, core values and behavioural patterns shared by people in an organisation. It is these shared beliefs, core values and patterns of behaviour which influence the performance of an organisation. Beliefs are the assumptions or perceptions about things, which people and the organisation as a whole take as true or valid. For example, an organisation may have a shared belief about the great potential of its people. Core values are the primary or dominant values that are accepted throughout the organisation, e.g. the core value of respect. A pattern of behaviour is the way people act towards one another. For instance, an organisation that has the belief in the potential of its people and has the core value of respect will have the desired pattern of behaviour of treating people well. KL Strategic Change Consulting Group, in its consulting work with over 250 Asian organisations, has found that the corporate cultures of Asian organisations play a significant 11

role in determining the capability and speed of leading change within the organisations as well as in the industry. Thus corporate culture is important as it will determine whether or not an organisation survives in the face of changes, turbulence and challenges in the environment. The model developed by KL Strategic Change Consulting shows a direct correlation in how an organisation's beliefs and assumptions influence the core values, which in turn shape the behaviour of people. And it is this behaviour pattern that ultimately affects the performance of an organisation.

Characteristics of Corporate Culture How does one go about specifically to describe the corporate culture of an organisation? There are certain characteristics that an organisation values, which distinguish it from other organisations. It is this set of characteristics that provide a start for describing the corporate culture of an organisation. Overall, organisation behaviour experts can agree that there are about 10 characteristics which collectively provide insights into the essence of the culture of an organisation. The following are the 10 differential characteristics: 1. Individual initiative: the degree of responsibility, freedom and independence that individuals have 2. Risk tolerance: the degree to which employees are encouraged to be aggressive, innovative and risk-taking 12

3. Direction: the degree to which the organisation creates clear objectives and performance expectations 4. Integration: the degree to which the units within the organisation are encouraged to operate in a coordinated manner 5. Management support: the degree to which managers provide clear communication, assistance and support to their subordinates 6. Control: the number of rules and regulations, and the amount of direct supervision that is used to oversee and control employee behaviour 7. Identity: the degree to which members identify with the organisation as a whole rather than with their particular work group or field of professional expertise 8. Reward system: the degree to which reward allocations (i.e. salary increase and promotions) are based on employee performance in contrast to seniority, favouritism and so on 9. Conflict tolerance: the degree to which employees are encouraged to air conflicts and criticisms openly 10. Communication patterns: the degree to which organisational communications are restricted to the formal hierarchy of authority To understand the corporate culture of an organisation, employees are invited to participate in rating these characteristics on a continuum from low to high that corresponds with a scale from 1 to 10. By collating the input from a representative sample of employees, a composite picture of the organisation culture can then be determined. This description will provide a good starting point for employees to develop a common understanding about the organisation, the way things are done and how people are supposed to behave.

The Benefits of Corporate Culture How does corporate culture help an organisation? What benefits can an organisation derive from developing a strong and conducive corporate culture? In our corporate culture work, we have found that our clients benefited in the following ways: 13

It helps align the company towards achieving its vision, mission and goals. It increases the team cohesiveness of various departments, divisions or units within an organisation as its corporate culture serves as the 'glue' that bonds people together. It shapes the behaviour of staff at work by encouraging the assimilation of core values and the desired behaviour, thereby enabling the organisation to be more effective and efficient. A common culture promotes consistency, resolves conflict and facilitates coordination and control. It increases staff motivation through a sense of belonging, loyalty and common beliefs and values, which encourage them to think positively of themselves and their organisations. A strong culture enables an organisation to pull all its people together and maximise their potential; this certainly provides a competitive edge.

A study of 200 companies by Harvard Business School researchers John Kotter and James Heskett found that corporate culture has a strong impact on the performance of organisations. This landmark study provides four significant conclusions as follows:

Corporate culture can have a significant impact on a firm's long-term economic performance. Corporate culture will probably be an even more critical factor in determining the success or failure of firms in this new millennium. Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people. Although difficult to change, corporate cultures can be made more performance enhancing.

A company with a strong positive culture will motivate people to continue growing, learning and improving. Research has shown that employees have higher motivation and satisfaction working in organisations which are well managed with managers and employees who practise sound principles, common beliefs and shared values.

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Thus it can be seen that to enable change initiatives and the enthusiasm for continuous improvement to be sustained, organisations need to develop a conducive corporate culture to support such efforts. They need to inculcate beliefs, assumptions and core values that shape behaviour towards the desired results. To do this requires more than just simply instituting a performance management system. It requires a mindset change of the way people create their own identities, make sense of their working lives and find meaning from their work. And that is going to the core of fundamental change the change in corporate culture.

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