The Nature of the Existing Culture in the Organization - Essay Example

Business strategy: choice and impact Contents 1Introduction 3 2Case Analysis 3 2.1Apply Balogun and Hope Hailey’s Change Kaleidoscope model to the case and use this to discuss the strategic change context in January 2012, at the start of the merger process. 3 2.2Apply Johnson’s Cultural Web model to the case and use this to compare and contrast the culture of Greenhealth and Cranberry before the merger (2011) with the new Greenhealth-Cranberry after the merger (2013). 9 2.3Critically evaluate the change process that took place during 2012-13 using relevant academic theory. 12 3Conclusion 17 4References 18 1 Introduction Change is necessary to sustain in the changing environment. Adopting a single strategy for long time is not enough to build sustainable competitive advantage. Chang is initiated in the course of time for survival and growth of a firm. It is found that most of the organizations undergo some kind of change during their operations. Radical transition of organizations can be a crucial initiator in implementing strategic change. In order to change an organization to a desired state, the thing that needs to be taken into account as a matter of supreme priority is organizational culture consisting of the human resources engaged in it (Johnson, 1992). In this paper, the process of implementing strategic change and the link between change and culture are discussed in the context of two different frameworks to analyze strategic change. First one is known as the Culture web, which is used to analyze the organization’s existing culture, barriers to change and to make a future plan which can initiate change. The second framework, known as the change kaleidoscope, is implemented after designing the cultural web. This second framework is employed to develop the approaches that can initiate change. 2 Case Analysis 2.1 Apply Balogun and Hope Hailey’s Change Kaleidoscope model to the case and use this to discuss the strategic change context in January 2012, at the start of the merger process. Answer: The case has discussed the merging phenomenon between Greenhealth and Cranberry, two UK based firms engaged in businesses that can be complementary to each other. Greenhealth, a century old company, consists of lack of transparency in their management style due to bureaucratic dictatorship of the chief administrators and de motivated staffs. Although Cranberry is a very profitable and newly emerged business engaged in herbal beauty products, they have revenue almost same as that that of Greenhealth. Cranberry realized that in order to promote global expansion, new product development as well as customized product for broader segment of target customers are required. The Vitamins, minerals and herbals supplements can be utilised in a proper manner to develop new natural beauty products for new segments, especially for men. The strategic change initiated by this merging activity can be analyzed from the framework known as Change Kaleidoscope model. The model was developed to implement a context sensitive approach to change. The kaleidoscope contains An outer ring that can relate the larger context of organizational strategic change. The middle consists of more specific contextual features like time, scope, power, capacity etc. These factors have direct influence on change situation. The inner ring contains the menu of design choices that starts when the change process is implemented (Balogun and Hope Hailey, 1999). The merging processes were performed with an objective of reducing costs, as well as expand globally. The context of strategic change can be explained from the change kaleidoscope framework. Time: This is the time horizon within which the organization needs to finish necessary change. In case of Greenhealth, the century old company is suffering from internal management problems. Although the employees enjoy substantial freedom in expressing ideas and suggestions about the product and necessary improvements, but the lack of transparency in management style leads to lack of motivation among the staff. The thing that is common between both the companies is their need of rapid transformation to capture new market. Thus, the time horizon of this merger activity is less. Scope: The extent to which the change is required is known as the scope. Scope of change in Balogun’s Kaleidoscope model is expressed in terms of realignment or transformation of the organization. In this case, both of the organizations have almost same revenue, which indicates that there may not be huge problem in merging the twos. Moreover, the divisional structure used by Cranberry to target different markets can be easily fit into the functional structure of Greenhealth. Thus the scope of change is organization wide. Preservation: Preservation refers to the extent to which organizational resources (human and financial), competencies and working culture is retained during the change process. Cranberry found that although Greenhealth employees are demotivated and often do not response well to the management staff, but the experienced staff have the necessary expertise that is needed to develop new products. Thus some selected preservation of organizational human resources need to be there, but the culture of the two companies should be same. The working culture in Greenhealth was poor, for this reason, Cranberry decided that the culture needs radical change. Diversity: This is the diversity of the subcultures between the organizational groups. In Greenhealth, as the company was following a functional structure, the difference between subcultures were highly present, whereas in case of Cranberry, the difference between subculture is low because each divisions operated with an objective of selling the product in the selected domain only. Capability: Capability is the ability of the individual, management and the organization to cope with the change process. Two companies were located in two distinct places, thus it was difficult for the employees to engage in relocation. Greenhealth employees were never ready to relocate to the North of England where Cranberry was located. Managers and directors of Cranberry were very employee concerned and they quickly realized that in order to initiate change, the governing bodies must match with each other. Greenhealth’s management team, headed by the dictator-like director, was never capable enough to embrace change. On the other hand, Cranberry’s governing authorities were quite ready for change. Capacity: Capacity is the ability of the organizations to formulate and implement change using their resources. The resources can be of financial and human in nature. Both the companies were financially sound in nature. Their revenues in 2011 were almost same. In case of human resources, they were adequate for both of the companies and the human resources were competent enough to adopt change. Readiness: This factor is totally related to the organizational manpower. The staffs must be aware of the need for initiating change and they should be committed enough to identify and encourage the personal changes required to perform wider organizational change. The staff members from Cranberry were quite aware of the need of change in their organization. But the employees of Greenhealth were quite resistive against the change, though they do have clear understanding of the necessity of change. Power: The power of the change agents, i.e. the management, and key people. Strong bureaucratic structure in Greenhealth was not suitable for change because the powerful people in administration used coercive power to control employees. On the other hand, Cranberry was quite ready for change, and the power structure in the administration was friendly enough to commence necessary changes. From the above discussions, the changed design choices can be deduced below: It should be reconstruction It should be top down and participative. Management development and facilitation programs along with appropriate leadership (Balogun, 2001). 2.2 Apply Johnson’s Cultural Web model to the case and use this to compare and contrast the culture of Greenhealth and Cranberry before the merger (2011) with the new Greenhealth-Cranberry after the merger (2013). Answer: Corporate culture can become the focus of attention during the periods of organizational change. Cultural clash between companies is an inevitable occurrence during merging of two companies. It is found that irrespective of the matching, some distinct differences always exist between companies work environment. The elusive impact of cultural change can play a key role in planning and formulating change. The framework for looking at the changing organization culture is known as Cultural Web. Developed by Johnson and Scholes, the cultural web defines six interrelated elements that help to identify the pattern of working environment in an organization. The cultural web is shown below: (Source: Johnson, et.al, 2012) Cultural Web Model for Greenhealth and Cranberry Greenhealth Culture Cranberry Culture Before Merger Stories: Employees are in a close relationship with each other, and they are quite dissatisfied with the company’s policy Symbols: Employees were quite stringent on the status symbols of their enterprise. Routines: Rules of the organization were very strict and people used to follow routine work as directed by the top management. Power Structure: Strict bureaucracy in power structure headed by a single director. Controls: Strict control over the processes due to centralization of power. Organizational structure: Functional structure where different departments were responsible for the work in their domain only. Stories: Employees were satisfied with their work culture and they were fully aware of the need for change. Symbols: Employees were quite stringent on the status symbols of their enterprise. Routines: Rules of the organization were not very strict and people often enjoyed substantial freedom in working environment. Power Structure: Informal decentralized management structure. Power was equally divided into each department. Controls: Less strict control over the employees. Organizational structure: Divisional structure where each division headed by single directors were responsible for sales in those areas only. After Merger Stories: Employees have accepted the different nature of other employees. In case of Cranberry, their employees were friendly enough to accept the new employee’s culture, whereas Greenhealth’s employees were not ready to accept the changes. A common headquarter was established in between the two factories where employees share their views and ideas. Symbols: Status symbols of employees change to a new dimension because People were more concerned with cooperating and coordinating with different employees. Routines: The organizations were following less strict routine and the direction of top management was in accordance with the viewpoint of employees. Power Structure: Informal decentralized management structure. Power was equally divided into each department. Controls: Less strict control over the employees were planned due to market expansion and new product development. Organizational structure: Divisional structure with three divisional directors from Cranberry and one from the marketing & sales and operations team of Greenhealth. Each divisional directors were responsible for controlling three functional teams under them. [N.B. – After Merging, both the companies became a single identity and work of their own. For this reason, in after merger, Greenhealth and Cranberry’s culture are considered as single one] 2.3 Critically evaluate the change process that took place during 2012-13 using relevant academic theory. Answer: The change process in these two companies was initiated by the merging process. Greenhealth opted for change because they have realized that though they are receiving huge revenue from their business, it won’t sustain that long because the internal strength of the organization is weakening due to dissatisfaction and demotivation among employees. Cranberry opted for change because they have realized that in order to increase profit; they need to expand their existing market and develop new products for the existing market. This can be possible by adding extra values to their products, which was a ready offering from Greenhealth. The main objectives of merging were: Reduction of operating cost through staff and estate reduction. Expansion to new potential markets. New Product Development for existing and new markets. The change process can be evaluated using Kotter’s Change Process Model. Kotter’s Model gives an insight into the scale of required change considering the degree of change needed in the processes. (Source: Kotter, 1995) Step 1: Creating urgency Change cannot be pursued overnight and it needs large amount of resources. For example, restructuring an organizational structure may become a difficult task if the resources are inadequate. To identify the urgency of change, SWOT Analysis is performed. In this case the Greenhealth and Cranberry had the strength of technology, brand image and expert manpower, but the main weakness that Greenhealth had, was their highly bureaucratic organizational structure due to centralized administration. Employees of the organization were not motivated to do the work due to this and this was surely their greatest weakness. Both of companies wanted to expand their market outside, Greenhealth in Europe market and Cranberry in US market. There were ample opportunities for them outside their home country. Competitors were adding value added products to their offerings, and in the long run, this can emerge as the biggest threat. Step 2: Creation of guiding coalition If a change is needed, convincing the people associated with the organizations need to be done. Leaders in the organization are responsible for creating a coalition between the people. In case of Greenhealth the coalition between management and people were absent because most of the people were not satisfied with the existing management. Cranberry’s employees were very supportive and the leaders were involved in emotional commitment with them. Thus urgency for change was easily transferred to the bottom of the management. Step 3: Creation of vision for change There should be a clear vision of the future of the organization after the change. Greenhealth knew that in order to expand the market share, internal change of the organization is needed. Cranberry was sure of their changing activities. Their management team knew that the restructured organization can help in developing new market. Step 4: Communication of vision The employees in the organization must aware of the changed vision. The people must interact freely with the top management. The merged companies used the management principles used by Cranberry. Employees were encouraged to do out of box thinking and the vision of the organization was communicated in a proper manner. Step 5: Empowering people to fulfill the vision There exists certain change leaders who are instrumental in change process. For example, Cranberry realized that though their directors were sufficient enough to deal with the different regions, marketing/sales and operations team from Greenhealth had the desired expertise to address the US market. Thus they provided the necessary power to that team for expanding in US market by selecting divisional director from that team. Step 6: Creation of short term wins There should be some short term goals of the organization which can realize profit. This can be in terms of cost reduction. That is why, in this merging situation, cost reduction methods were implemented at the first position. Step 7: Build on gains Kotter agreed that many projects failed to deliver because the results were declared too early. Thus it is recommended that the goals must be set on the gains received. Succession planning needs to be done at the top level during the operations. Greenhealth was unsure of the success with Cranberry, because most of the employees were not willing to work in the merged company. When the plan of change was taken into account, Cranberry’s management started to build further objectives based on the revenue earned from the merging activities. Step 8: Institutionalization of change In this level, the work culture is involved in the change process and it involves generation of word of mouth to resolve the issues related to change. After merging process, both of the organizations top team realized the involvement of people and they have designed an organizational structure which is suiting both the organizations. In this way, the cultures of the two organizations are mixed into one and the change is accepted. 3 Conclusion Thus, from the above conclusion the following things can be concluded- Major changes require a shift in the organization culture which is nothing but the attitudes and behaviors of the human resources working in the organization. It is found that many changes fail to take place due to fault in addressing the cultural and political reality of the enterprise that occurs due to management’s misconception about: The nature of the existing culture in the organization. Misconception about the difficulty to change the existing culture. Misconceptions about the wide range of interventions that are required to formulated cultural shift. If change implementation efforts are targeted to be successful, they need to be redesigned to fit the organizational objectives. Change is a complex activity, and because of the complexity of change, the process is often affected by the changing organizational objectives. Organizational change often seen as a misguided effort of changing the organizational structure itself, whereas the change is about changing the people associated and their way of commencing the business. 4 References Balogun, J. and Hope Hailey, V., 1999. Exploring Strategic Change. Prentice Hall. Balogun, J., 2001. Strategic change. MANAGEMENT QUARTERLY PART 10. [Pdf]. Available at: http://www.tomorrowsleaders.com/A5569D/icaew/content.nsf/DocumentLookup/ICAEWSTR0109/$file/MQ10+Strategy.pdf. [Accessed on March 28, 2014]. Johnson, G., 1992. Managing strategic change— strategy, culture and action. Long Range Planning, 25(1). Johnson, J. et.al, 2012. Fundamentals of Strategy. Pearson Education. Kotter, J. P., 1995. Leading Change. Harvard Business Review Press. Read More