Culture Change in the Organisation - Coursework Example

To sustain competition in the ever-changing business environment, companies understand that change has to be an on-going process. They have to think beyond short term measures. They recognize the factors that influence efficiency and effectiveness of the organization. Organizations need to have a climate that fosters creativity, harmony and teamwork. With companies diversifying and undergoing global expansion, change is inevitable. Organizations have to be market-driven, innovative and adaptive. They have to adapt change and any change in behavior in strongly determined by the organizational culture. This paper will discuss that organizational change requires not just changing the structure of the organization but changing the culture as well. Harris and Crane (2002) contend that cultural change is largely limited to modest behavior change but gradually cultural orientation is taking place in the form of market orientation, total quality management and innovation. It is generally believed that culture will cascade down from the management to the shop floor and such management espoused values will be widely shared and strongly held by all the employees. This assumes that the managers can manage the culture of the organization but it carries the risk that employee satisfaction level will fall. According to Schein (1998) culture is freely referred to anything that has to do with beliefs, values, norms, ideology and managerial style. If a change is to be given importance or resistance to change is encountered, managers speak of it as a cultural change. Mergers and acquisitions require ‘cultural blending’ according to managers. Culture according to Schein is a property of a group. It is the accumulated learning that the group has acquired over a period of time. This learning enables the organization to cope with the external adaptation and internal integration. Once these assumptions have been found to be valid and acceptable, they are transferred to the new members. How the culture is integrated depends upon the stability of the group. Hence culture remains largely unconscious and embedded in an organization’s daily actions. Thus organizational culture includes the artifacts (organizational structures and processes), values (strategies, goals and philosophies) and the underlying assumptions that are unconsciously taken for granted. While culture according to Schein is deeply embedded into the organization’s system the changed business environment demands changes brought into the culture. Organizational culture is the key to organizational excellence and to understand the culture is to understand the organization. According to Handy (1993) culture can be strong or weak depending upon the staff response to the stimulus. Musante (n.d.), states that at the time of economic turndown the companies having strong and adaptive cultures are better able to handle the financial crisis than those with weak and poorly defined cultures. The right combination of people and culture can mean the difference between the financial success and failure. As technology advances corporate culture will assume an even bigger role especially in the IT sector as competition increases. Schraeder, Tears and Jordan (2006) cite Gordan who observes that an organization’s culture is the product of successfully adapting to the environment and thus will resist change. Change in the environment calls for a change in the culture and these changes include new learning and can also involve the need for new people. Culture further serves as an informal control mechanism which defines acceptable behavior within an organization. Organizations in the service industry benefit from strong cultures where values are shared and supported throughout the organization. A positive culture can also be associated with organizational commitment and job satisfaction. Resistance to change in the face of environmental pressure and uncertainty is caused by the organization culture, says Schein (Lakomski, 2001). In order to change the culture, organizational learning needs to take place, which would help the organization to deal with the internal and external environments. The leader can transform the current stagnating culture into a productive culture. To bring at organizational change it is essential to change the organization al culture. When the resistance to change appears to be non-rational, the dynamics of culture have to be understood. The organization needs to first unfreeze the old assumptions after which cognitive restructuring takes place. Thereafter refeezing takes place which means that changed behaviors and new assumptions become embedded and reinforced as the new culture through which the organization can solve the problems. In this change model, the role of the leader in managing change becomes important as he should be competent to diagnose and respond appropriately to changes in the environment on an ongoing basis. Culture within an organization can be very dominant and influence employee behavior. At the same time people from different lifestyles, different regions and social cultures converge in an organization for a common purpose. They bring their own culture with them. This does not affect the culture of the company while the individual adapts the culture of the organization where he works. Today the corporate stress a lot on their corporate culture and it is used as a paradigm to understand an organization. Companies articulate their corporate culture and unspoken values through ‘a code of conduct’ (Reynolds, 2004). The code of conduct defines the acceptable and unacceptable behavior and in time, this becomes the culture of the organization. The core principles of any company comprises of honesty, ethics and integrity. To conduct business a company needs the support of its employees, shareholders, vendors and consumers. Its culture has to be projected to all these segments, which enhances its image and consequently its business. The change process in every organization is unique and depends upon the nature of the firm, nature of the business, work culture and values, management and leadership styles and the nature of the business. It also depends upon the nature and attitude of the employees. Resistance to change occurs due to the fear of the unknown pain, stress and disadvantages. Managing change in the human part of the organization is the major challenge as it involves values, preferences and attitudes towards a particular activity. Attitudes are difficult to change as people are more comfortable with what they have learned. Organizational culture and attitudes is closely linked with organizational change. Organizational culture appears to have some influence on attitudes toward organizational change (cited by Rashid, Sambasivan & Rahman, 2004). Innovation is the engine of change and if an organization has the positive cultural characteristics, it is ready to innovate. Research suggests that different types of organizational culture have different levels of acceptance on attitudes towards organizational change. Organizations today recognize the need to attract the right brains to thrive in the competitive market and retain the employees. “…the primary way to drive new innovation is by investing in people first”, (Stanford, 2005). Stanford maintains that a culture of innovation defined by its ability to anticipate customer needs and market dynamics will succeed in the next era. The Global CEO Study 2004, in which IBM surveyed 456 CEOs worldwide revealed that growth and innovation was impossible without a renewed focus on people. Hence, even to attract the right talent, change in the corporate culture is necessary. If the culture were not given importance, if attitudes and beliefs do not change with times, the organization and its culture would lag behind reality. Duck (2004) cites the example of Micro Switch where the managers continued to think of their company as the market leaders for years even after the customers had come to think of electric switches as dinosaurs. Gillette used to dictate the terms of sale and delivery for a long time and it took them a long time to accept that retail customers like Wal-Mart and Target were controlling the market. The value of culture is not overstated; it needs to be constantly reviewed and adjusted with time. If culture cannot be defined, it cannot be measured or managed. Culture consists of infinite variables, and the environment from which it grows changes on a daily basis. Although companies such as IBM and Wal-Mart have for decades understood the value of managing culture, most companies have not. When it comes to a sustainable competitive advantage, a companys culture is one of the most difficult things for competitors to copy. Many have studied the internal processes of General Electric or Toyota for years but were unable to duplicate their performance. The National Health Service (NHS) UK has a centralized approach to health care which needs to be replaced by a bottom-up approach to encourage innovation and acceptance at the local level (Ferlie & Shortell, 2001). The organization must have an ability to provide a climate and culture for change through its various decision making systems, operating systems and human resources practices. In the health sector managers are recognizing that ‘learning organizations’ can adapt better to the rapid environmental change and implement quality improvement practices more quickly. Such organizations become skilled at creating, acquiring and transferring knowledge and at modifying their behavior to reflect new knowledge and insights. The underlying culture of the organization becomes an important factor in such organizations. Members of an organization think and act in the same way but differently from members of similar other organizations (Steen, 2003). This implies that each organization has its own personality that determines its behavior. Steen cites the example of Arthur D Little and McKinsey, who were essentially in the same business but worked differently. Arthur D Little had as many strategies as consultants and data analysis was not important. They took pride in their chaotic organization. McKinsey on the other hand backed every conclusion by data and followed strict format for presentations. They always improved upon their previous weakness. These differences in behavior reflected the difference in the attitudes of the senior managers. This becomes the company culture, which is adhered to individually, as well as a team. People understand the organization through this culture. Despite organizations becoming global in their outlook barriers are becoming insignificant as information technology reduces the physical distance. Under these circumstances, national culture has a significant role to play in determining the practices and operations that should be applied. Culture according to Hofstede (1997, p4) is “the collective programming of the mind which distinguishes the members of one group or category of people from another” (cited by Hope & Mühlemann, 2001). Societies have developed common set of beliefs and developed a set pattern of behavior which allows them to live harmoniously. These are handed from one generation to another. Hofstede further believes that the culture in which an individual is immersed since birth is likely to have a much stronger effect on him than the organizational culture. This demonstrates the importance of managing diversity to ensure that workforce is not weakened in the future. Amin Rajan however disagrees as according to him globalization brings in different categories of customers to the market place which gives rise to apprehensions whether the organizations have the workforce required to meet the needs of such customers (Powell, 2006). Corporate restructuring has also led companies to create more vibrant cultures. Diversity initiatives are market-driven prompted by the need to have an innovative workforce. To instill a culture of diversity managers must have an inclusive management style. Diversity initiatives are important but change in management or leadership can wane the interest or determination. To manage cultural diversity of its workforce globally, Motorola undertook a firm-wide training and corporate training investment through its corporate university, ‘Motorola University’. This requires employees to complete 40 hours of training each year. Its operation extends to over 100 sites in 24 countries in six continents (Shaw, 2005). Motorola University provides training and development to all its employees, which includes manufacturing and operator training apart from studies and training in leadership and trans- cultural studies, technology and emerging market. This enables each employee to be a part of the value chain, an agent of chain within the corporation and protector of ethics, values and history of Motorola. Because of the diverse nature of the industry, the hospitality industry poses range of contradictions that are faced on a daily basis. Baum and Nickson (1998) recognize that in the hospitality industry each customer is an individual in her needs and the same customer may have differing demands in different circumstances while Gilbert and Tsao (2000) emphasize that cultural differences have an important impact on the results of all aspects in business such as marketing, management, leadership and decision making. According to Hofstede (1984), different cultures imply different mental programming, which governs activities, motivation and values (cited by Gilbert & Tsao). As such, the Ritz Carlton Hotel in the USA received the Malcolm Baldridge award for quality in 1992 but encountered problems in Hong Kong. It required a change in management approach and culture was identified as the main cause. The ‘best practice’ approach of USA was not feasible in this setting. The Hong King culture did not permit them to work too closely with each or to share information as ‘knowledge is power’ (cited by Hope & Mühlemann). This conforms to Hofstede’s strong versus weak uncertainty avoidance culture. This confirms that to operate in the competitive business environment, change in culture or adaptation of the local culture is important. The Great Wall Sheraton Hotel Beijing is a joint venture enterprise between the American ITT Sheraton Corporation and various Chinese business partners, and operated through a management contract under the brand name of ITT Sheraton Hotels and Resorts. ITT Sheraton’s global reputation for service excellence and quality requires the Beijing hotel’s commitment to quality and customer satisfaction (Mwaura, Sutton & Roberts, 1998). The Great Wall Sheraton Hotel has its own distinct US-influenced corporate culture. US companies strongly adhere to the US cultural values of social mobility, economic achievement, closeness to the customer and productivity through people but the influence of the Chinese is present in the environment, the language, the folklore and the practices of government, business and interpersonal relations. Theorists therefore argue that the Chinese culture is a strong determinant of the ways in which organizations in China are managed. Research demonstrated areas of divergence of between national and corporate cultures, which led to management difficulties. Culture that is necessary for the organization should be properly aligned with the external environment (Schraeder, Tears and Jordan, 2006). In line with their employee-oriented philosophy, the middle managers at Marriott UK were given the responsibility to involve and empower the staff, encourage participation, give them authority to do things they could never think of doing (Dodwell & Simmons, 1994). This according to Handy (1993) is power culture where power in any organization is usually concentrated in a few pairs of hands. Power culture control radiates from the centre like a web and reaches the staff through the rays. The group takes calculated risks and being cohesive, they react promptly to internal or external threats. Power culture did not work well with Marriott and led to the frustration among the middle managers who felt lost and neglected. They were confused about their position in the new structure. The change in management, change in strategy and change in culture adversely affected the performance. The organization then realized that before they could have a bottom-up culture, they needed to have a top-down education and learning process in place. Training is essential to the success of initiatives such as total quality management (Schraeder, Tears and Jordan, 2006). Venturing into strange cultures can be a chastening experience and unless the organization is prepared to introduce change, success is doubtful. The ‘Euro Disney’ theme park development demonstrates how national cultural differences can impact the transferability of a successful service delivery system between situations (Hope & Mühlemann). While it was successful in Japan, the French national culture resisted foreign influence as it was seen as diluting the French way of life despite the organization incorporating some European characteristics and facilities. While the French management and workforce support quality and excellence in services, this was seen as American arrogance. The French applicants also lacked the team spirit to fit into Disney’s team culture. Labor schedules were rigid at the French Park while the same system had not caused any problems in USA. Another reason which affected the success of the Euro Disney in France was that the Mediterranean visitors tend to be impatient and attempted to jump the queues which upset the queuing sensitivities of the British visitors (Trigg & Trigg, 1995 cited by Hope & Mühlemann). This demonstrates that to mange diversity of culture change is essential. This requires organizational learning and training the staff to adapt to the situation. Thus a study of the various organizations illustrate that people’s behavior is influenced by the organizational culture. Merely restructuring the organization is not sufficient to bring about organization change and changes in attitudes and culture is paramount for success. In bringing about change, the leader plays a vital role. He is responsible for transferring culture to the new entrants and ensuring the right learning at the right time. With advanced technology there is a demand for quality of products and services. Organizations have to necessarily adapt to the changing business environment. Any changes to be made in the organization ahs to be reviewed based on its organizational culture. Managers first need to defreeze, adopt new culture and again refreeze the new culture and assumptions for effectiveness and efficiency in the organization. Change would be effective depending upon the type of culture prevalent in the organization. To manage diversity cause by global expansion, firms need to adapt to the changed business environment and local cultures. The top-down approach is no more feasible in most organizations. Training is considered an essential component of change within an organization. Organizations with dominant and weak cultures pose a challenge to the leaders in fostering new and creative culture. Resistance to change is also inevitable in an organization but this resistance can be overcome with the right leadership, training and learning. Change in the culture aligned with the corporate objectives and accepted by the members results in motivation, job satisfaction and commitment from the employees. Thus merely changing the structure is not enough; changing culture is necessary in the changing environment. References: Dodwell, S., & Simmons, P., (1994), Trials and Tribulations in the Pursuit of Quality Improvement, International Journal of Contemporary Hospitality Management, Volume 6 Nos. 1/2, 1994, pp. 14-18 Duck, J. D., (2003), Strategy Leads Reality, Culture Lags Reality, Culture Drags Strategy, The Boston Consulting Group, 10 March 2007 Ferlie, E. B., & Shortell, Improving the quality of Healthcare in the United Kingdom and the United States: A Framework for change, The Milbank Quarterly, Vol. 79 No. 2 pp. 281-315 Gilbert, D. & Tsao, J. (2000), Exploring Chinese cultural influences and hospitality marketing relationships, International Journal of Contemporary Hospitality Management 12/1 [2000] 45-53 Handy C (1993), 10 Macrh 2007 Harris, L. C., & Crane, A., (2002), The Greening of Organizational Culture, Journal of Organizational Change Management, Vol. 15 No. 3 pp. 214-234 Hope, C. A. & Mühlemann, A. O. (2001), The impact of culture on best practice production/operations management, International Journal of management Reviews, Vol. 3 No. 3 pp. 199-217 Lakomski, G., (2001), Organizational change, leadership and learning: culture as cognitive process, The International Journal of Educational Management, 15/2 [2001] 68-77 Mwaura, G. Sutton, J. & Roberts, D. 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H., (2006), Organizational culture in public sector organizations, Leadership & Organization Development Journal Vol. 26 No. 6, 2005 pp. 492-502 Shaw, S., (2005), The corporate university, Journal of European Industrial Training Vol. 29 No. 1, 2005 pp. 21-39 Stanford, L., (2005), Corporate culture is the key to unlocking innovation and growth, URL: 10 March 2007 Steen, E. V. Den (2003), On the Origin and Evolution of Corporate Culture, < http://www.people.hbs.edu/bhall/NOMTalks/papers/evds_culture_evolution.pdf > 10 March 2007 Read More