keys to managing change in organizations

keys to managing change in organizations

A Sample Answer For the Assignment: keys to managing change in organizations

Title:  keys to managing change in organizations

In order to increase the chances of successful organization change and development, it is useful to consider seven keys to managing change in organizations. After reading Chapter 16 of the textbook, list and describe in your own words the seven keys. Companies that change appropriately can continue as viable businesses. Those that do not make the right changes, like Kodak, lose their ability to compete, cease to exist by going out of business, or get gobbled up by a more successful organiza-tion. This chapter is about how organizations need to face the prospect of change and develop processes to ensure their viability in a complex, ever-changing global environment. The chapter begins with a discussion of some of the forces that cre-ate pressures for change followed by a detailed explanation of the complex change process. Then we describe organization development and sources of resistance to change, finishing with a summary view of how to manage change in organizations. FORCES FOR CHANGE An organization is subject to pressures for change from far more sources than can be discussed here. Moreover, it is difficult to predict what types of pressures for change will be most significant in the next decade because the complexity of events and the rapidity of change are increasing. However, it is possible—and important—to discuss the broad categories of pressures that probably will have major effects on organizations. The four areas in which the pressures for change appear most powerful involve people, technology, information processing and com-munication, and competition. Table 16.1 gives examples of each of these categories. People Approximately 76 million people were born in the United States between 1946 and 1964. As we discussed in Chapter 2, these baby boomers differed significantly from previous generations with respect to education, expectations, and value systems. As this group has aged, the median age of the U.S. population has also gradually increased. The special characteristics of baby boomers show up in distinct purchasing patterns that affect product and service innovation, technological change, and marketing and promotional activities. Employment practices, compensation systems, promotion and managerial succession systems, and the entire con-cept of human resource management are also affected. Other population-related pressures for change involve the generations that sandwich the baby boomers: the increasing numbers of senior citizens and those born after 1960. The parents of the baby boomers are liv-ing longer, healthier lives than previous generations, and today they expect to live the “good life” that they missed when they were raising their children. The impact of the large number of senior citizens is already evident in part-time employment practices, in the marketing of everything from hamburgers to packaged tours of Asia, and in service areas such as health care, recreation, and financial services. The post-1960 generation of workers who entered the job market in the 1980s—often called generation X—was different from the baby boom generation. Sociologists and psychologists have identified another group, often called millennials, born from roughly between 1980 and 2000 (experts differ on start and end dates from as early as 1977 to as late as 2002), who seem to be experiencing a distinct and separate life stage in between adolescence and adulthood in which young people may jump from job to job and relationship to relationship, often living at home with few responsi-bilities and experimenting with life. Millennials are putting off marriage, childbear-ing, home purchases, and most adult responsibilities.2 However, they seem to be much more group oriented, to celebrate diversity, are optimistic, and they assimilate technology very fast.3 On the job, millennials seem to prefer positive reinforce-ment, like clarity in job assignments, want more flexibility in how to do their jobs, and want to be treated as different individuals rather than everyone being treated the same.4 These changes in demographics extend to the composition of the workforce, family lifestyles, and purchasing patterns worldwide. The increasing diversity of the workforce in coming years will mean signifi-cant changes for organizations. This increasing diversity was discussed in some detail in Chapter 2. In addition, employees are facing a different work environ-ment in the twenty-first century. The most descriptive word for this new work environment is “change.” Employees must be prepared for constant change. Change is occurring in organizations’ cultures, structures, work relationships, and customer relationships, as well as in the actual jobs that people do. People will have to be completely adaptable to new situations while maintaining pro-ductivity under the existing system.5 Our Understand Yourself feature will give you some insights into your own readiness for change. Technology Not only is technology changing, but the rate of technological change is also increasing. In 1970, for example, all engineering students owned computa-tional devices known as “slide rules” and used them in almost every class. By 1976, slide rules had given way to portable electronic calculators. Now, most of those functions are handled by apps on smartphones. In 1993, the Scholastic Aptitude Test (SAT), which many college-bound students take to get into college, allowed calculators to be used during the test. Today students cannot make it through the university without owning or at least having ready access to a digital device of some sort—a laptop or notebook computer or iPad, for instance. Entire campuses at most universi-ties are wired for direct computer access for email and class assignments and for connection to the Internet. Many schools, from kindergarten to graduate schools, are now BYOT—“bring your own technology”—and utilize online educational tools throughout the cur-riculum.6 With 3G and 4G technology, people have Internet access from just about anywhere. Technological development is increasing so rapidly in almost every field that it is quite difficult to predict which products will dominate ten years from now. DuPont is an example of a company that is making major changes due to new technological developments. Although its business had been based on pet-rochemicals since the end of the nineteenth century, DuPont changed its basic business strategy as new technology developed in the life sciences. It reorga-nized its eighty-one business units into only three and invested heavily in agri- chemicals and the life sciences. Realizing that a biotechnology-based business changes much more rapidly than a petrochemical-based business, DuPont has had to make cultural changes in addition to the structural ones to make the strategy work.7 Interestingly, organization change is self-perpetuating. With the advances in information technology, organizations generate more information, and it circulates faster. Consequently, employees can respond more quickly to problems, so the organization can respond more quickly to demands from other organizations, customers, and competitors. Toyota, long known as a leader in developing and using new technologies in its plants, has introduced advanced robots, “kokino robotto,” in its efforts to improve efficiency in its plants and reduce its costs to the level of China’s.8 New technology will affect organizations in ways we cannot yet predict. Gesture technology may eliminate all controls in your home, from your AV system remote to your thermostat, and replace them with your own gestures with your hands and fingers. HP’s TouchSmart technology allows people to touch things without actually touching them and could drive innovations inmedicine and education within a decade. Sensawaft technology will allow peo-ple to control devices such as smartphones and ATMs using exhaled breath—which could dramatically increase mobility and control for people with limited mobility.9 Several companies are developing systems to manufacture chemicals and exotic electronic components in space. The Internet, the World Wide Web, and cloud computing are changing the way companies and individuals communicate, market, buy, store, and distribute faster than organizations can respond. Thus, as organizations react more quickly to change, change occurs more rapidly, which in turn necessitates more rapid responses. Information Processing and Communication Advances in information processing and communication have paralleled each other. A new generation of computers, which will mark another major increase in processing power, is being designed. Satellite systems for data transmission are already in use. Today many people carry a single device in their pocket that serves as their portable computer, e-reader, pocket-size television, camera, video recorder, music player, and personal communication device (telephone). And they work all over the world. Social networking may be the most radical and fastest growing aspect of the advances in information processing and communication so far. Through such platforms as Facebook, Twitter, LinkedIn, Ning, Yammer, Bebo, Viadeo, Skype, FaceTime, and many others, people are networking with others exploring common interests. People are spending hours reading about others and updating their own sites. Business uses of this phenomenon include adver-tising, marketing, market research and test marketing, recruiting, and more. And everyone looking for a job starts with Monster.com, Jobing.com, and sim-ilar sites.10 Employees do not need offices because they work with computers and com-municate through new data transmission devices. Increasingly, people are working from home or other locations instead of going to the office every day. Depending on the company and the type of work, some employees actually go into the office only a few days a month. Taking advantage of this trend, some companies are reconfiguring traditional space by minimizing offices dedicated to one individual and creating communal spaces, unassigned cubicles, and shared spaces. In addition to saving on office space costs, these types of shared spaces seem to be creating new ways for employees to collaborate and get work done. American Express estimates that 20 percent of their 5,000-person workforce are in the office at their headquarters in New York more than a few days a week. GlaxoSmithKline estimates it is saving almost $10 million a year in real-estate costs by using unassigned seating that is made possible by having more and more employees who work somewhere other than the traditional office.11 Flexible work stations, both inside and outside of offices, are more elec-tronic than paper and pencil. For years, the capability has existed to gener-ate, manipulate, store, and transmit more data than managers could use, but the benefits were not fully realized. Now the time has come to utilize all of that information-processing potential, and companies are making the most of it. Typically, companies received orders by mail in the 1970s, by tollfree telephone numbers in the 1980s, by fax machine in the late 1980s and early 1990s, and by electronic data exchange in the mid-1990s. Orders used to take a week; now they are placed instantaneously, and companies can and must be able to respond immediately, all because of changes in information processing and communication.12 Zappos.com can ship a pair of shoes in as little as eight minutes from receiving an order.13 Suppliers and end users in some industries now have the parts systems integrated so closely that new parts shipments sometimes are not even ordered; they just show up at the receiving dock when they are needed. Competition Although competition is not a new force for change, competition today has some significant new twists. First, most markets are global because of decreas-ing transportation and communication costs and the increasing export ori-entation of business.14 The adoption of trade agreements such as the North American Free Trade Agreement (NAFTA) and the presence of the World Trade Organization (WTO) have changed the way business operates. In the future, competition from industrialized countries such as Japan and Germany may take a back seat to competition from the booming industries of develop-ing nations such as China and India. The Internet is creating new competitors overnight in ways that could not have been imagined five years ago. Companies in developing nations may soon offer different, newer, cheaper, or higher-qual-ity products while enjoying the benefits of low labor costs, abundant supplies of raw materials, expertise in certain areas of production, and financial protection from their own governments that may not be available to firms in older indus-trialized states. Consider, for example, the market for cell phones or smartphones. Once consumers simply compared calling plans and phone costs and chose a phone available from a provider with the best deal and coverage in their primary area of usage. But now the choices are far more complex in terms platforms, manu-facturers, carriers, and service providers. For consumers the choices are seem-ingly endless and can be extremely confusing. Manufacturers have to develop new equipment and software combinations to work on various platforms for a variety of carriers. Carriers must decide which instruments and platform combinations to offer to subscribers. And platform developers must show that their platform can do more things, simpler and with fewer errors, with maximum flexibility. And every month there are new combinations of all three to further con-fuse consumers and industry experts. The global environment of business also compounds these challenges for managers. Our Global Issues fea-ture provides more detail about change in interna-tional organizations. PROCESSES FOR PLANNED ORGANIZATION CHANGE External forces may impose change on an organization. Ideally, however, the orga-nization will not only respond to change but will also anticipate it, prepare for it through planning, and incorporate it in the organization strategy. Organization change can be viewed from a static point of view, such as that of Lewin (see next section), or from a dynamic perspective. Lewin’s Process Mode Planned organization change requires a systematic process of movement from one condition to another. Kurt Lewin suggested that efforts to bring about planned change in organizations should approach change as a multistage pro-cess.15 His model of planned change is made up of three steps—unfreezing, change, and refreezing—as shown in Figure 16.1. Unfreezing is the process by which people become aware of the need for change. If people are satisfied with current practices and procedures, they may have little or no interest in making changes. The key factor in unfreezing is mak-ing employees understand the importance of a change and how their jobs will be affected by it. The employees who will be most affected by the change must be made aware of why it is needed, which in effect makes them dissatisfied enough with current operations to be motivated to change. Creating in employees the awareness of the need for change is the responsibility of the leadership of the organization.16 Following the 2009 recession with the high number of downsizings, layoffs,restructurings, and takeovers, employees may be weary of the constant pressure and uncertainties of their position and/or organization. Top managers and change agents are urged to make the effort to empathize with employees, acknowledge the difficulties of the past and uncertainties of the present, and provide forums for employees to vent a little, followed up with workshops for information shar-ing and training. After making the emotional connection with employees, top management can make the intellectual connection and make the business case by sharing economic and marketing data and the short-and long-term visions for the organization and by involving employees at all levels in translating organizational goals into division, department, and work unit goals.17 Change itself is the movement from the old way of doing things to a new way. Change may entail installing new equipment, restructuring the organization, or implementing a new perfor-mance appraisal system—anything that alters existing relationships or activities. Refreezing makes new behaviors relatively permanent and resistant to further change. Examples of refreezing techniques include repeating newly learned skills in a training ses-sion and then role playing to teach how the new skill can be used in a real-life work situation. Refreezing is necessary because without it, the old ways of doing things might soon reassert themselves while the new ways are forgotten. For example, many employees who attend special training sessions apply themselves diligently and resolve to change things in their organizations. But when they return to the workplace, they find it easier to conform to the old ways than to make waves. There usually are few, if any, rewards for trying to change the organizational status quo. In fact, the per-sonal sanctions against doing so may be difficult to tolerate. Learning theory and reinforcement theory (see Chapter 3) can play important roles in the freez-ing phase. The Continuous Change Process Model Perhaps because Lewin’s model is very simple and straightforward, virtually all models of organization change start with his approach. However, it does not deal with several important issues. A more complex, and more helpful, approach is illustrated in Figure 16.2. This approach treats planned change from the per-spective of top management and indicates that change is continuous. Although we discuss each step as if it were separate and distinct from the others, it is important to note that as change becomes continuous in organizations, different steps are probably occurring simultaneously throughout the organization. The model incorporates Lewin’s concept into the implementation phase. In this approach, top management perceives that certain forces or trends call change agent A person responsible for managing a change effort for change, and the issue is subjected to the organization’s usual problem-solv-ing and decision-making processes. Usually, top management defines its goals in terms of what the organization or certain processes or outputs will be like after the change. Alternatives for change are generated and evaluated, and an accept-able one is selected. Early in the process, the organization may seek the assistance of a change agent—a person who will be responsible for managing the change effort. Thechange agent may also help management recognize and define the problem or the need for the change and may be involved in generating and evaluating potential plans of action. The change agent may be a member of the organization, an out-sider such as a consultant, or even someone from headquarters whom employees view as an outsider. An internal change agent is likely to know the organiza-tion’s people, tasks, and political situations, which may be helpful in interpret-ing data and understanding the system, but an insider may also be too close to the situation to view it objectively. (In addition, a regular employee would have to be removed from his or her regular duties to concentrate on the transition.) An outsider, then, is often received better by all parties because of his or her assumed impartiality. Under the direction and management of the change agent, the organization implements the change through Lewin’s unfreeze, change, and refreeze process. The final step is measurement, evaluation, and control. The change agent and the top management group assess the degree to which the change is hav-ing the desired effect; that is, they measure progress toward the goals of the change and make appropriate changes if necessary. The more closely the change agent is involved in the change process, the less distinct the steps become. The change agent becomes a “collaborator” or “helper” to the organization as he or she is immersed in defining and solving the problem with members of the orga-nization. When this happens, the change agent may be working with many indi-viduals, groups, and departments within the organization on different phases of the change process. When the change process is moving along from one stage to another, it may not be readily available because of the total involvement of the change agent in every phase of the project. Throughout the process, however, the change agent brings in new ideas and viewpoints that help members look at old problems in new ways. Change often arises from the conflict that results when the change agent challenges the organization’s assumptions and generally accepted patterns of operation. Through the measurement, evaluation, and control phase, top management determines the effectiveness of the change process by evaluating various indi-cators of organizational productivity and effectiveness or employee morale. It is expected the organization will be better after the change than before. However, the uncertainties and rapid changes in all sectors of the environment make con-stant organization change a given for most organizations. Transition management is the process of systematically planning, orga-nizing, and implementing change, from the disassembly of the current state to the realization of a fully functional future state within an organization.18 No matter how much planning precedes the change and how well it is implemented, because people are involved there will always be unanticipated and unpredict-able things that happen along the way.19 One key role of transition management is to deal with these unintended consequences. Once change begins, the organization is in neither the old state nor the new state, yet business must go on. Transition management also ensures that business continues while the change is occurring; therefore, it must begin before the change occurs. The members of the regular management team must take on the role of transition managers and coordinate organizational activities with the change agent. An interim manage-ment structure or interim positions may be created to ensure continuity and con-trol of the business during the transition. Communication about the changes to all involved, from employees to customers and suppliers, plays a key role in tran-sition management.20 This chapter’s Case Study details a very effective change that was implemented using the continuous change model. ORGANIZATION DEVELOPMENT On one level, organization development is simply the way organizations change and evolve. Organization change can involve personnel, technology, competition, and other areas. Employee learning and formal training, transfers, promotions, terminations, and retirements are all examples of personnel-related changes. Thus, in the broadest sense, organization development means organization change.21 The term as used here, however, means something more specific. Over the past forty years, organization development has emerged as a distinct field of study and practice. Experts now substantially agree as to what constitutes orga-nization development in general, although arguments about details continue.22 Our definition of organization development is an attempt to describe a very com-plex process in a simple manner. It is also an attempt to capture the best points of several definitions offered by writers in the field. Organization Development Defined “Organization development (OD) is a system-wide application of behavioral science knowledge to the planned development and reinforcement of organi-zational strategies, structures, and processes for improving an organization’s ffectiveness.”23 Three points in this definition make it simple to remember and use. First, organization development involves attempts to plan organization changes, which excludes spontaneous, haphazard initiatives. Second, the specific intention of organization development is to improve organization effectiveness. This point excludes changes that merely imitate those of another organization, are forced on the organization by external pressures, or are undertaken merely for the sake of changing. Third, the planned improvement must be based on knowledge of the behavioral sciences such as organizational behavior, psychol-ogy, sociology, cultural anthropology, and related fields of study rather than on financial or technological considerations. Under this definition, the replacement of manual personnel records with a computerized system would not be considered an instance of organization devel-opment. Although such a change has behavioral effects, it is a technology-driven reform rather than a behavioral one. Likewise, alterations in record keeping nec-essary to support new government mandated reporting requirements are not a part of organization development because the change is obligatory and the result of an external force. The three most basic types of techniques for implementing organization development are system-wide, task and technological, and group and individual. Organization development was initially treated as a field of study and prac-ticed by specially trained OD professionals. However, as organization change became the order of the day in progressive organizations around the world, it became clear that all organizational leaders needed to become leaders and teach-ers of change throughout their organizations if their organizations were going to survive. Excellent examples of organizations that have embraced OD are the U.S. Army, General Electric, and Royal Dutch Shell.24 System-Wide Organization Development The most comprehensive type of organization change involves a major reori-entation or reorganization—usually referred to as a structural change or a system-wide rearrangement of task division and authority and reporting rela-tionships. A structural change affects performance appraisal and rewards, decision making, and communication and information-processing systems. Reengineering and rethinking the organization are two contemporary approaches to system-wide structural change. Reengineering can be a difficult process, but it has great potential for orga-nizational improvement. It requires that managers challenge long-held assump-tions about everything they do and set out-rageous goals and expect that they will be . met. An organization may change the way it divides tasks into jobs, combines jobs into departments and divisions, and arranges authority and reporting relation-ships among positions. It may move from functional departmentalization to a sys-tem based on products or geography, for example, or from a conventional linear design to a matrix or a team-based design. Other changes may include dividing large groups into smaller ones or merging small groups into larger ones. In addi-tion, the degree to which rules and procedures are written down and enforced, as well as the focus of decision-making authority, may be altered. Supervisors may become “coaches” or “facilitators” in a team-based organization. The organization will have transformed both the configurational and the operational aspects of its structure if all of these changes are made. No system-wide structural change is simple.25 A company president can-not just issue a memo notifying company personnel that on a certain date they will report to a different supervisor and be responsible for new tasks and expect everything to change overnight. Employees have months, years, and sometimes decades of experience in dealing with people and tasks in certain ways. When these patterns are disrupted, employees need time to learn the new tasks and to settle into the new relationships. Moreover, they may resist the change for a num-ber of reasons; we discuss resistance to change later in this chapter. Therefore, organizations must manage the change process. Ford Motor Company is pretty typical of organizations that have had to make major organization-wide and worldwide changes. Over the years, Ford had developed several regional fiefdoms, such as Ford of Europe, Ford United States, and Ford Australia, which all operated relatively independently. When Jacques Nasser was named CEO, he set out to tear down those regionally based organiza-tions and to create a truly globally integrated car manufacturer. As his plan was unfolding, however, Ford continued to lose market share, so Nasser was replaced as CEO by Ford family member William Clay (Bill) Ford Jr. Ford eventually turned over the reins to Alan Mulally, who oversaw Ford and made a stunning turnaround, in part by making several major organizational changes.26 Mulally then stepped aside and former COO Mark Fields assumed control and initiated a series of changes himself. But in 2017 Fields was forced out and replaced by Jim Hackett. The logic behind this move was that Fields was too much of an indus-try insider and was focusing too much on traditional competitors like General Motors and Toyota. Hackett was charged with focusing more on future competi-tors like Tesla, Uber, and Google. Another system-wide change is the introduction of quality-of-work-life pro-quality of work life grams, defined as the degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organiza-tion.27 Quality-of-work-life programs focus strongly on providing a work envi-ronment conducive to satisfying individual needs. The emphasis on improving life at work developed during the 1970s, a period of increasing inflation and deep-ening recession. The development was rather surprising because an expanding economy and substantially increased resources are the conditions that usually induce top management to begin people-oriented programs. However, top man-agement viewed improving life at work as a means of improving productivity. Any movement with broad and ambiguous goals tends to spawn diverse pro-grams, each claiming to be based on the movement’s goals, and the quality-of-work-life movement is no exception. These programs vary substantially, although most espouse a goal of “humanizing the workplace.” Richard Walton divided them into the eight categories shown in Figure 16.3.28 Obviously, many types of programs can be accommodated by the categories, from changing the pay system to establishing an employee bill of rights that guarantees workers the rights to resource exchange. The third gain follows directly from the first two: if employees have more posi-tive attitudes about the organization and their productivity increases, everything else being equal, the organization should be more effective. Task and Technological Change Another way to bring about system-wide organiza-tion development is through changes in the tasks involved in doing the work, the technology, or both. The direct alteration of jobs usually is called “task rede-sign.” Changing how inputs are transformed into outputs is called “technologi-cal change” and also usually results in task changes. Strictly speaking, changing the technology is typically not part of organization development whereas task redesign usually is. However, even with a typical technology-based change, OD techniques are often used to facilitate the technological changes. At the “New Chrysler,” for example, Fiat intends to enhance the product line by introduc-ing a number of new technologies, many of them essential to the development of smaller, more fuel-efficient cars. This long-range plan entails changes not only in the product line but also in the organization’s perception of consumer preferences.31 The structural changes discussed in the preceding section are explicitly sys-tem-wide in scope. Those we examine in this section are more narrowly focused and may not seem to have the same far-reaching consequences. It is important to remember, however, that their impact is felt throughout the organization. The discussion of job design in Chapter 6 focused on job definition and motivation and gave little attention to implementing changes in jobs. Here we discuss task redesign as a mode of organization change. Several approaches to introducing job changes in organizations have been proposed. One approach is an integrative framework of nine steps that reflect the complexities of the interfaces between individual jobs and the total organi-zation.32 The process, shown in Table 16.2, includes the steps usually associated with change, such as recognizing the need for a change, selecting the appropriate intervention, and evaluating the change. But this approach inserts four additional steps into the standard sequence: diagnosis of the overall work system and con-text, including examination of the jobs, workforce, technology, organization design, leadership, and group dynamics; evaluating the costs and benefits of the change; formulating a redesign strategy; and implementing supplemental changes. Diagnosis includes analysis of the total work environment within which the jobs exist. It is important to evaluate the organization structure, especially the work rules and decision-making authority within a department, when job changes are being considered.33 For example, if jobs are to be redesigned to give employees more freedom in choosing work methods or scheduling work activities, diagnosis of the present system must determine whether the rules will allow that to happen. Diagnosis must also include evaluation of the work group and teams, as well as the intragroup dynamics. Furthermore, it must determine whether works have or can easily obtain the new skills to perform the redesigned task. It is extremely important to recognize the full range of potential costs and benefits associated with a job redesign effort. Some are direct and quantifi-able; others are indirect and not quantifiable. Redesign may involve unexpected costs or benefits; although these cannot be predicted with certainty, they can be weighed as possibilities. Factors such as short-term role ambiguity, role conflict, and role overload can be major stumbling blocks to a job redesign effort. Implementing a redesign scheme takes careful planning, and developing a strategy for the intervention is the final planning step. Strategy formulation is a four-part process. First, the organization must decide who will design the changes. Depending on the circumstances, the planning team may consist of only upper-level management or may include line workers and supervisors. Next, the team undertakes the actual design of the changes based on job design theory and the needs, goals, and circumstances of the organization. Third, the team decides the timing of the implementation, which may require a formal transition period during which equipment is purchased and installed, job training takes place, new physical layouts are arranged, and the bugs in the new system are worked out. Fourth, strategy planners must consider whether the job changes require adjustments and supplemental changes in other organizational components such as reporting relationships and the compensation system. Group and Individual Change Groups and individuals can be involved in organization change in a vast number of ways. Retraining a single employee can be considered an organization change if the training affects the way the employee does his or her job. Familiarizing managers with the leadership grid or the Vroom decision tree (as discussed in Chapters 11 and 12) in order to improve the way they lead or involve subordinateparticipation in decision making is an attempt at change. In the first case, the goal is to balance management concerns for production and people; in the second, the goal is to increase the participation of rank-and-file employees in the organi-zation’s decision making. In this section, we present an overview of four popular types of people-oriented change techniques: training, management development, team building, and survey feedback. Training Training generally is designed to improve employees’ job skills. Employees may be trained to run certain machines, taught new mathematical skills, or acquainted with personal growth and development methods. Stress management programs are becoming popular for helping employees, particularly executives, understand organizational stress and develop ways to cope with it.34 Training may also be used in conjunction with other, more comprehensive organization changes. For instance, if an organization is implementing a management-by-objectives pro-gram, training in establishing goals and reviewing goal-oriented performance is probably needed. One important type of training that is becoming increasingly more common is training people to work in other countries. Companies such as Motorola give extensive training programs to employees at all levels before they start an international assignment. Training includes intensive language courses, cultural courses, and courses for the family. Among the many training methods, the most common are lecture, discus-sion, a lecture–discussion combination, experiential methods, case studies, films or videos, and online training modules. Training can take place in a standard classroom, either on company property or in a hotel, at a resort, at a conference center, or online from anywhere. On-the-job training provides a different type of experience in which the trainee learns from an experienced worker. Most train-ing programs use a combination of methods determined by the topic, the train-ees, the trainer, and the organization. A major problem of training programs is transferring employee learning to the workplace. Often an employee learns a new skill or a manager learns a new management technique, but upon returning to the normal work situation, he or she finds it easier to go back to the old way of doing things. As we discussed earlier, the process of refreezing is a vital part of the change process, and some way must be found to make the accomplishments of the training program permanent. Management Development Management development programs, like employee training programs, attempt to foster certain skills, abilities, and perspectives. Often, when a highly qualified technical person is promoted to manager of a work group, he or she needs training in how to manage or deal with people. In such cases, management development programs can be important to organizations, both for the new manager and for his or her subor-dinates. Typically, management development programs use the lecture–discussion method to some extent but rely most heavily on participative methods such as case studies and role playing. Participative and experiential methods allow the manager to experience the problems of being a manager as well as the feelings of frustration, doubt, and success that are part of the job. The subject matter of this type of training program is problematic, however, as management skills, including communication, problem diagnosis, problem solving, and performance appraisal, are not as easy to identify or to transfer from a classroom to the work-place as the skills required to operate a machine. In addition, rapid changes in the external environment can make certain managerial skills obsolete in a very short time. As a result, some companies are approaching the development of their management team as an ongoing, career-long process and require their managers to periodically attend refresher courses. Jack Welch was so committed to making cultural changes within GE that he created the now famous Crotonville, New York, training facility to develop an army of change leaders. GE put more than 10,000 managers a year through a three-step workshop series called the Change Acceleration Program (CAP). Leadership was redefined as a teaching activity in which leaders taught their direct reports how to change the way they did their jobs. In order to make the system-wide changes Welch thought were needed, he turned to individual OD.35 As corporate America invests hundreds of millions of dollars in management development, certain guiding principles are evolving: (1) management develop-ment is a multifaceted, complex, and long-term process to which there is no quick or simple approach; (2) organizations should carefully and systematically iden-tify their unique developmental needs and evaluate their programs accordingly; (3) management development objectives must be compatible with organizational objectives; and (4) the utility and value of management development remain more an article of faith than a proven fact.36 Team Building When interaction among group members is critical to group success and effec-tiveness, team development, or team building, may be useful. Team building emphasizes members working together in a spirit of cooperation and generally has one or more of the following goals: 1. To set team goals and priorities 2. To analyze or allocate the way work is performed 3. To examine how a group is working—that is, to examine processes such as norms, decision making, and communications 4. To examine relationships among the people doing the work.37 Total quality management efforts usually focus on teams, and the principles of team building must be applied to make them work. Team participation is espe-cially important in the data-gathering and evaluation phases of team develop-ment. In data gathering, the members share information on the functioning of the group. The opinions of the group thus form the foundation of the develop-ment process. In the evaluation phase, members are the source of information about the effectiveness of the development effort. Like total quality management and many other management techniques, team building should not be thought of as a one-time experience, perhaps some-thing undertaken on a retreat from the workplace; rather, it is a continuing pro-cess. It may take weeks, months, or years for a group to learn to pull together and function as a team. Team development can be a way to train the group to solve its own problems in the future. Research on the effectiveness of team building as an organization development tool so far is mixed and inconclusive. Survey Feedback Survey feedback techniques can form the basis for a change process. In this pro-cess, data are gathered, analyzed, summarized, and returned to those who gen-erated them to identify, discuss, and solve problems. A survey feedback process is often set in motion either by the organization’s top management or by a con-sultant to management. By providing information about employees’ beliefs and attitudes, a survey can help management diagnose and solve an organization’s problems. A consultant or change agent usually coordinates the process and is responsible for data gathering, analysis, and summary. The three-stage process is shown in Figure 16.4.39 The use of survey feedback techniques in an organization development pro-cess differs from their use in traditional attitude surveys. In an organization development process, data are (1) returned to employee groups at all levels in the organization and (2) used by all employees working together in their normal work groups to identify and solve problems. In traditional attitude surveys, top management reviews the data and may or may not initiate a new program to solve problems the survey has identified. In the datagathering stage, the change agent interviews selected personnel from appropriate levels to determine the key issues to be examined. Information from these interviews is used to develop a survey questionnaire, which is distrib-uted to a large sample of employees. The questionnaire may be a standardized instrument, an instrument developed specifically for the organization, or a com-bination of the two. The questionnaire data are analyzed and aggregated by group or department to ensure that respondents remain anonymous.40 Then the change agent prepares a summary of the results for the group feedback sessions. From this point on, the consultant is involved in the process as a resource person and expert. The feedback meetings generally involve only two or three levels of man-agement. Meetings are usually held serially, first with a meeting of the top management group, which is then followed by meetings of employees through-out the organization. The group manager rather than the change agent typically leads sessions to transfer “ownership” of the data from the change agent to the work group. The feedback consists primarily of profiles of the group’s attitudes toward the organization, the work, the leadership, and other topics on the ques-tionnaire. During the feedback sessions, participants discuss reasons for the scores and the problems that the data reveal. In the process analysis stage, the group examines the process of making deci-sions, communicating, and accomplishing work, usually with the help of the con-sultant. Unfortunately, groups often overlook this stage as they become absorbed in the survey data and the problems revealed during the feedback sessions. Occasionally, group managers simply fail to hold feedback and process analysis sessions. Change agents should ensure that managers hold these sessions and that they are rewarded for doing so. The process analysis stage is important because its purpose is to develop action plans to make improvements. Several sessions may be required to discuss the process issues fully and to settle on a strategy for improve-ments. Groups often find it useful to document the plans as they are discussed and to appoint a member to follow up on implementation. Generally, the follow-up assesses whether communication and communication processes have actually been improved. A follow-up survey can be administered several months to a year later to assess how much these processes have changed since they were first reported. The survey feedback method is probably one of the most widely used organiza-tion change and development interventions. If any of its stages are compromised or omitted, however, the technique becomes less useful. A primary responsibility of the consultant or change agent, then, is to ensure that the method is fully and faithfully carried through. RESISTANCE TO CHANGE Change is inevitable; so is resistance to change. Paradoxically, organizations both promote and resist change. As an agent for change, the organization asks prospec-tive customers or clients to change their current purchasing habits by switching to the company’s products or services, asks current customers to change by increas-ing their purchases, and asks suppliers to reduce the costs of raw materials. The organization resists change in that its structure and control systems protect the daily tasks of producing a product or service from uncertainties in the environ-ment. The organization must have some elements of permanence to avoid mir-roring the instability of the environment, yet it must also react to external shifts with internal change to maintain currency and relevance in the marketplace. A commonly held view is that all resistance to change needs to be overcome, but that is not always the case. Resistance to change can be used for the benefit of the organization and need not be eliminated entirely. By revealing a legitimate concern that a proposed change may harm the organization or that other alter-natives might be better, resistance may alert the organization to reexamine the change.41 For example, an organization may be considering acquiring a company in a completely different industry. Resistance to such a proposal may cause the organization to examine the advantages and disadvantages of the move more carefully. Without resistance, the decision might be made before the pros and cons have been sufficiently explored. Some have suggested that change agents may contribute to resistance through their mismanagement of the change pro-cess or miscommunication throughout the process. Resistance may come from the organization, the individual, or both. Determining the ultimate source is difficult, however, because organizations are composed of individuals. Table 16.3 summarizes various types of organizational and individ-ual sources of resistance. Our Improve Your Skills feature will also help you bet-ter assess your own aptitude toward change, especially as that change relates to innovation. Organizational Sources of Resistance Daniel Katz and Robert Kahn have identified six major organizational sources of resistance: overdetermination, narrow focus of change, group inertia, threat-ened expertise, threatened power, and changes in resource allocation.43 Of course, not every organization or every change situation displays all six sources. Overdetermination Organizations have several systems designed to maintain stanility. For example,consider how organizations control employees’ performance. Job candidates must have certain specific skills so that they can do the job the organization needs them to do. A new employee is given a job description, and the supervisor trains, coaches, and counsels the employee in job tasks. The new employee usually serves some type of probationary period that culminates in a performance review; there-after, the employee’s performance is regularly evaluated. Finally, rewards, pun-ishment, and discipline are administered, depending on the employee’s level of performance. Such a system is said to be characterized by overdetermination, or structural inertia,44 in that one could probably have the same effect on employee performance with fewer procedures and safeguards. In other words, the struc-ture of the organization produces resistance to change because it was designed to maintain stability. Another important source of overdetermination is the culture of the organization. As discussed in Chapter 15, the culture of an organization can have powerful and long-lasting effects on the behavior of its employees. Narrow Focus of Change Many efforts to create change in organizations adopt too narrow a focus. Any effort to force change in the tasks of individuals or groups must take into account the interdependence among organizational elements such as people, structure, tasks, and the information system. For example, some attempts at redesigning jobs fail because the organization structure within which the jobs must function is inappropriate for the redesigned jobs.45 Group Inertia When an employee attempts to change his or her work behavior, the group may resist by refusing to change other behaviors that are necessary complements to the individual’s altered behavior. In other words, group norms may act as a brake on individual attempts at behavior change. Threatened Expertise A change in the organization may threaten the specialized expertise that individuals and groups have developed over the years. A job redesign or a structural change may transfer responsibility for a specialized task from the current expert to someone else, threatening the specialist’s expertise and building his or her resistance to the change. Threatened Power Any redistribution of decision-making authority, such as with reengineering or team-based management, may threaten an individual’s power relationships with others. If an organization is decentralizing its decision making, managers who wielded their decision-making powers in return for special favors from others may resist the change because they do not want to lose their power base. Resource Allocation Groups that are satisfied with current resource allocation methods may resist any change they believe will threaten future allocations. Resources in this con-text can mean anything from monetary rewards and equipment to additional seasonal help to more computer time. These six sources explain most types of organization-based resistance to change. All are based on people and social relationships. Many of these sources of resistance can be traced to groups or individuals who are afraid of losing some-thing—resources, power, or comfort in a routine. Individual Sources of Resistance Individual sources of resistance to change are rooted in basic human character-istics such as needs and perceptions. Researchers have identified six reasons for individual resistance to change: habit, security, economic factors, fear of the unknown, lack of awareness, and social factors (see Table 16.3).4 Habit It is easier to do a job the same way every day if the steps in the job are repeated over and over. Learning an entirely new set of steps makes the job more difficult. For the same amount of return (pay), most people prefer to do easier rather than harder work. Security Some employees like the comfort and secu-rity of doing things the same old way. They gain a feeling of constancy and safety from knowing that some things stay the same despite all the change going on around them. People who believe their security is threatened by a change are likely to resist the change. Economic Factors Change may threaten employees’ steady paychecks. Workers may fear that change will make their jobs obsolete or reduce their opportunities for future pay increases. Fear of the Unknown Some people fear anything unfamiliar. Changes in reporting relationships and job duties create anxiety for such employees. Employees become familiar with their bosses and their jobs and develop relationships with others within the organization, such as contact people for various situations. These relationships and contacts help facilitate their work. Any disruption of familiar patterns may create fear because it can cause delays and foster the belief that nothing is get-ting accomplished. Lack of Awareness Because of perceptual limitations such as lack of attention or selective atten-tion, a person may not recognize a change in a rule or procedure and thus may not alter his or her behavior. People may pay attention only to things that sup-port their point of view. As an example, employees in an isolated regional sales office may not notice—or may ignore—directives from headquarters regarding a change in reporting procedures for expense accounts. They may therefore con-tinue the current practice as long as possible. Social Factors People may resist change for fear of what others will think. As we mentioned before, the group can be a powerful motivator of behavior. Employees may believe change will hurt their image, result in ostracism from the group, or sim-ply make them “different.” For example, an employee who agrees to conform to work rules established by management may be ridiculed by others who openly disobey the rules. MANAGING SUCCESSFUL ORGANIZATION CHANGE AND DEVELOPMENT In order to increase the chances of successful organization change and develop-ment, it is useful to consider seven keys to managing change in organizations. They relate directly to the problems identified earlier and to our view of the orga-nization as a comprehensive social system. Each can influence the elements of the social system and may help the organization avoid some of the major prob-lems in managing the change. Table 16.4 lists the points and their potential impacts. Consider Global Issues One factor to consider is how global issues dictate organization change. As we have already noted, the environment is a significant factor in bringing about organization change. Given the additional environment complexities multina-tional organizations face, it follows that organization change may be even more critical to them than it is to purely domestic organizations. Dell Computer, for example, owes much of its success to its original strategy of selling directly to consumers. Since 2006, however, it has expanded its distribution activities to include retail sales, and significant system-wide change has eased the company’s entry into some key foreign markets.47 A second point to remember is that acceptance of change varies widely around the globe. Change is a normal and accepted part of the organization life in some cultures. In other cultures, change causes many more problems. Managers should remember that techniques for managing change that have worked rou-tinely back home may not work at all and may even trigger negative responses if used indiscriminately in other cultures. Take a Holistic View Managers must take a holistic view of the organization and the change proj-ect. A limited view can endanger the change effort because the subsystems of the organization are interdependent. A holistic view encompasses the culture and dominant coalition as well as the people, tasks, structure, and information subsystems. Start Small Peter Senge claims that every truly successful, system-wide change in large orga-nizations starts small.49 He recommends that change start with one team, usually an executive team. One team can evaluate the change, make appropriate adjust-ments along the way, and, most importantly, show that the new system works and gets desired results. If the change makes sense, it begins to spread to other teams, groups, and divisions throughout the system. Senge described how signifi-cant changes at Shell and Ford started small, with one or two parallel teams, and then spread as others recognized the benefits of the change. When others see the benefits, they automatically drop their inherent resistance and join in. They can voluntarily join and be committed to the success of the change effort. Secure Top Management Support The support of top management is essential to the success of any change effort. As the organization’s probable dominant coalition, it is a powerful element of the social system, and its support is necessary to deal with control and power prob-lems. For example, a manager who plans a change in the ways in which tasks are assigned and responsibility is delegated in his or her department must notify top management and gain its support. Complications may arise if disgruntled employees complain to highlevel managers who have not been notified of the change or do not support it. The employees’ complaints may jeopardize the man-ager’s plan—and perhaps his or her job. Encourage Participation Problems related to resistance, control, and power can be overcome by broad participation in planning the change. Allowing people a voice in designing the change may give them a sense of power and control over their own destinies, which may help to win their support during implementation. Foster Open Communication Open communication is an important factor in managing resistance to change and overcoming information and control problems during transitions. Employees typically recognize the uncertainties and ambiguities that arise during a tran-sition and seek information on the change and their place in the new system. In the absence of information, the gap may be filled with inappropriate or false information, which may endanger the change process. Rumors tend to spread through the grapevine faster than accurate information can be disseminated through official channels. A manager should always be sensitive to the effects of uncertainty on employees, especially during a period of change; any news, even bad news, seems better than no news. Reward Contributors Although this last point is simple, it can easily be neglected. Employees who contribute to the change in any way need to be rewarded. Too often, the only people acknowledged after a change effort are those who tried to stop it. Those who quickly grasp new work assignments, work harder to cover what otherwise might not get done during the transition, or help others adjust to changes deserve special credit— perhaps a mention in a news release or the internal com-pany newspaper, special consideration in a performance appraisal, a merit raise, or a promotion. From a behavioral perspective, individuals need to benefit in some way if they are to willingly help change something that eliminates the old, comfortable way of doing the job. In the current dynamic environment, managers must anticipate the need for change and satisfy it with more responsive and competitive organization systems. These seven keys to managing organization change may also serve as general guidelines for managing organizational behavior because organizations must change or face elimination. ORGANIZATIONAL LEARNING As American capitalist icon and philanthropist Andrew Carnegie said, “The only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.” As Ray Stata, president and CEO of Analog Devices, said, “The rate at which organizations learn may become the only sustainable source of competitive advantage.”50 A learning organization is an organization that facilitates the learning of all its members and continually transforms itself.51 In a learning organiza-tion, continual learning and change become part of the culture. Wikis, blogs, and searchable databases are sometimes used to collect employees’ knowledge and make it available to others. To facilitate organizational learning, it is important that learning happen during a project and continue after the project ends. As one expert says, “You need to have some coaching or debriefing afterward, to make sure that people learn what you want them to learn. You need to get them to think through the experience. If things worked, why did they work? If they were screwed up, why did things get screwed up?” Without reflection, tasks may be completed, but learning does not occur.52 One of the best ways to encourage continual learning is through an after-action review, or a professional discussion of an event that enables discovery of what happened, why it happened, and how to sustain strengths and improve on weaknesses.53 After-action reviews are conducted for both successes and failures and occur after any identifiable event or milestone during a project or after the project is completed. The purpose is never to assign credit or blame, but to care-fully identify the circumstances that led to successful and less successful out-comes to enable learning. Learning from an after-action review is usually by the group and for the group, although individuals can also conduct such a review. The review is usually conducted fairly quickly using a simple process. In an open and honest meeting usually lasting twenty minutes or less, everyone who participated in the event or project discusses four simple questions: 1. What was supposed to happen? 2. What actually happened? 3. Why were there differences? 4. What did we learn? Building trust and team integrity are additional outcomes of after-ac-tion reviews. Another factor influencing an organization’s ability to learn is its approach to failure. Many organizations punish failures through lower-perfor-mance evaluations, lower bonuses, or even terminations. More learning-oriented firms recognize the learning opportunities presented by “intelligent failures,” that is, the failures of events or projects that had a good chance of working, did not work out, but provide a good learning opportunity. At the computer chipmaker Intel, one manager threw a big dinner every month—not for the group that had been most successful, but for the “failure of the month,” to honor the group that had made a valiant effort that just did not work out. That manager communi-cated to his people that failures were an inevitable accompaniment of risk tak-ing that should be talked about openly, not hidden, papered over, or blamed on others.54 High-quality relationships in which employees feel psychologically safe enable organizational members to engage in learning from failures.55 2. SUMMARY AND APPLICATION Change may be forced on an organization, or an organization may change in response to the environment or an internal need. Forces for change are interdependent and influence organizations in many ways. Currently, the areas in which the pressures for change seem most powerful involve people, technology, information processing and communication, competition, and social trends. Planned organization change involves anticipating change and preparing for it. Lewin described organization change in terms of unfreezing, the change itself, and refreezing. In the continuous change process model, top management recog-nizes forces encouraging change, engages in a problem-solving process to design the change, and implements and evaluates the change. Organization development is the process of planned change and improvement of organizations through the application of knowledge of the behavioral sciences. It is based on a systematic change process and focuses on managing the culture of the organization. The most comprehensive change involves altering the structure of the organization through reorganization of departments, reporting relationships, or authority systems. Quality-of-work-life programs focus on providing a work environment in which employees can satisfy individual needs. Task and technological changes alter the way the organization accomplishes its primary tasks. Along with the steps usually associated with change, task redesign entails diagnosis, cost–benefit analysis, for-mulation of a redesign strategy, and implementation of supplemental changes. Frequently used group and individual approaches to organization change are training and management development programs, team building, and survey feed-back techniques. Training programs are usually designed to improve employees’ job skills, to help employees adapt to other organization changes (such as a man-agement-by-objectives program), or to develop employees’ awareness and under-standing of problems such as workplace safety or stress. Management development programs attempt to foster in current or future managers the skills, abilities, and perspectives important to good management. Teambuilding programs are designed to help a work team or group develop into a mature, functioning team by helping it define its goals or priorities, analyze its tasks and the way they are performed, and examine relationships among the people doing the work. As used in the organization development process, survey feedback techniques involve gathering data, analyzing and summarizing them, and returning them to employees and groups for discussion and to identify and solve problems. Resistance to change may arise from several individual and organizational sources. Resistance may indicate a legitimate concern that the change is not good for the organization and may warrant a reexamination of plans. To manage change in organizations, international issues must be considered, and managers should take a holistic view of the organization and start small. Top management support is needed, and those most affected by the change must participate. Open communica-tion is important, and those who contribute to the change effort should be rewarded. A learning organization is an organization that facilitates the learning of all its members and continually transforms itself. In a learning organization, continual learning and change become part of the culture. To facilitate organizational learning, it is important that learning happen during a project and continue after the project ends. List and describe three different types of organizational cultures. When would each be most and least effective for a research and development company dependent on employee innovation? From the beginning, Asana founders Dustin Moskovitz and Justin Rosenstein believed that instead of looking at culture as something that “just happens,” it is something that should be carefully designed, tested, debugged, and iterated on, like any software product they released. Asana’s mission is to “help human-ity thrive by enabling all teams to work together effortlessly,”2 and its founders wanted the company to be the change that they are trying to create. Their goal was to create a clear and transparent workplace where employees feel ownership and take responsibility for their work, are inspired about the company’s mis-sion, and collaborate in as frictionless an environment as possible in a rapidly growing organization. Creating a culture that enabled greater agility would also help Asana execute its mission and compete effectively. What advice would you give Asana in creating and maintaining this type of organizational culture? After reading this chapter, you should have some good ideas. Organizational culture is essential to organizational performance. Not only does it influence the decisions and behaviors of employees, but it also explains what is happening in an organization and why it is happening. Just as organizational structure can be thought of as an organization’s skeleton, organizational culture can be thought of as its personality because it influences the way employees behave. Understanding and managing organizational culture is an important management role that can improve your own and your organi-zation’s performance. After reading this chapter, you should better understand organizational culture and how to manage it. THE MEANING AND DETERMINANTS OF ORGANIZATIONAL CULTURE When we say that an organization has a certain type of culture, what do we mean? Organizational culture is a system of shared values, norms, and assump-tions that guides members’ attitudes and behaviors3 and influences how they perceive and react to their environment. These assumptions are usually taken for granted by organizational members and are taught to new members as they are socialized into the group. An organization’s culture is reflected in how it gets work done and how employ-ees interact with each other. It takes a long time for a culture to evolve and a long time to change it. Trust is the foundation of cul-ture and is earned through repeated inter-actions over time. When a positive culture becomes strong enough, employee interac-tions become more efficient. Relationships improve, and employees cooperate to achieve common goals. When culture supports busi-ness strategy, the firm can become high per-forming. Common organizational culturethemes include ethics, innovation, being casual or formal, and collaboration.4 Of course, as important as it is to create and maintain the right culture, doing so is not necessarily easy. Cultures are made up of formal and informal practices, artifacts, espoused values and norms, and assumptions. Artifacts are physical manifestations of the culture including the myths and stories told about the organization or its founder, awards, ceremonies and rituals, decorations, office space allocations, the dress code, how people address each other, published lists of organizational values, and so on. When Lou Gerstner wanted to reinforce his culture change efforts at IBM, he abolished the firm’s famous white shirt and tie dress code.5 Steelmaker Nucor Corporation lists every single employee’s name on the front cover of its annual report as a symbolic gesture to build and reinforce its team culture.6 Espoused values and norms are those that are explicitly stated by the organization. For example, an organization might state that ethical behavior is a preferred value and norm, and it might hang signs in the office stating that ethical behavior is a driving principle of the company as an artifact of that cul-tural component. Nokia communicates its espoused values through videos, its intranet, and in its communications on company strategy. Enacted values and norms are those that employees exhibit based on their observations of what actually goes on in the organization. If a company’s top man-agers engage in illegal or unethical behavior, these are the enacted values and norms of the firm no matter what its formally stated ethics values are. If the com-pany has the espoused value that ethics are important, the difference between that espoused value and its enacted values creates a gap that can negatively affect employee attitudes and company performance.7 Performance management, feedback, and compensation systems all help align espoused and enacted values and norms. Global cloud-based public relations solutions company Cision gives quarterly awards of company swag, a $100 gift card, and a charitable donation of the winners’ choosing to individuals and teams that embody company values. Assumptions are those organizational values that have become so taken for granted over time that they become the core of the company’s culture.9 These basic assumptions are highly resistant to change and guide organizational behavior. For example, outdoor clothing company Patagonia is noted for its social responsibility and environmental awareness. Patagonia employees would be stunned to see their managers engage in environmentally irresponsible behavior. Figure 15.1 illustrates these four levels of culture. Formal practices that influence culture include compensation strategies like profit sharing, benefits, training and development programs, and even the use of teleconferencing to enable some employees to work from home. Informal prac-tices include “open-door management” to promote upward communication and the sharing of ideas, employees helping each other, and employees of different ranks eating lunch together to share ideas. Does Culture Matter? Does culture matter? One expert believes that “Organizational culture is the key to organizational excellence … and the function of leadership is the creation and management of culture.”12 Research has shown that by actively managing culture, your organization and its employees will be more likely to deliver on strategic objectives over the long run. In particular, culture boosts organizational performance when it (1) is strategically relevant, (2) is strong, and (3) emphasizes inno-vation and change to adapt to a changing environment.13 The effects of culture on a firm’s effectiveness are even stronger when employees have positive attitudes.14 A company’s culture should reinforce its business strategy, and can give a firm a competitive advantage. If a business strategy and corporate culture are pulling in two different directions, the culture will win no matter how good the strategy is. Culture is a source of competitive advantage. Creating a culture that sup-ports sharing and helping other employees can have positive performance results. Technology can make a sharing culture possible. For example, Xerox gave its 25,000 field-service engineers access to a knowledge-sharing system that they can consult during sales calls. The system led to a nearly 10 percent savings on parts and labor, worth $15–$20 million per year. Lowe’s Home Improvement leveraged technology to improve how its employees communicate and collabo-rate. Lowe’s hosts their own internal “social business” conferences and collabora-tion technology is now how many employees at Lowe’s do their everyday work. Organizational cultures can be strong or weak. Strong cultures clarify appro-priate behavior, are widely shared, and are internally consistent. Strong cultures can enhance organizational performance in two ways. First, they improve perfor-mance by energizing employees— appealing to their higher ideals and values, and rallying them around a set of meaningful, unified goals. Because they are engag-ing, these cultures stimulate employee commitment and effort.18 Culture is the center of JAMF Software’s then guide their behavior and decision making without impinging on employee autonomy like formal control systems do. This makes strong cultures particu-larly helpful for dealing with changing environments. Strong cultures are not always better than weak cultures, however—whether the culture is positive or negative also matters. A strong positive culture pro-motes employee commitment to the firm’s value system and helps to align employee and company values. An example of employee behaviors in a strong positive culture would be employees’ reaction to the arrival of the plant man-ager: “We’re proud to have our plant manager come onto the production floor to observe our ethical, high-performance, high-quality work behaviors. We work this way whether the manager is here or not.” In a strong negative culture, which means that employees have shared norms and values that are not consistent with what the organization wants or values, employee reactions to the plant manager’s arrival would be: “Heads up! The plant manager is coming onto the production floor—look busy!” Because strong cultures create stable and consistent employee values andbehaviors, they are slow to change. If a company needs to change its culture to adapt to changing competition or a new business strategy, a strong culture can create difficulty in its ability to evolve. A company with a weaker culture (but not too weak) should be able to more quickly adapt to different circumstances. Culture is like the glue that holds things together in an organization—if it is too weak, it does not effectively guide employees. Research has found that long-term financial performance is highest for organizations with an adaptive culture receptive to change and innovation. When a culture is strong, it pushes employees to engage in behaviors that rein-force the firm’s values and culture, whether good or bad. Strong ethical cultures are known to influence employees’ ethical behavior and commitment through formal and informal organizational structures and systems.22 An overall ethical environment that includes leadership, communication, reward systems, and a for-mal ethical behavior code of conduct decreases employees’ unethical conduct.23 What ruined Enron? Unethical conduct and misleading accounting are theeasy answers. But underlying many of its problems was a culture that pushed for visible results and individual performance above all else. An emphasis on consistent earnings growth and individual initiative, combined with the absence of the usual corporate checks and balances, tipped the culture to one that reinforced unethical corner cutting.24 During the housing crisis, ram-pant unethical corporate behavior led FBI Director Robert Mueller to call for a “culture of integrity” to combat the rampant mortgage fraud and other white-collar crime.25 A good example of how a company’s culture influences employee behaviors is seen in the way Acadian Ambulance Service in New Orleans responded after Hurricane Katrina hit in the fall of 2005. Employees from medics to mechanics, some of whom had lost their homes, quickly began delivering supplies, cooking, and keeping generators working. By the weekend, more than 5,000 patients and about 11,000 hospital staff and family members were evacuated. Ross Judice, M.D., Acadian Ambulance Service’s medical director, said, “Acadian’s culture has always been to ‘Get the job done.’ … Things happen because you have good people wanting to do good things who have the leadership and the motivation to do it. We saw a need and stepped up. That happened over and over again.” Culture matters to organizations because it influences employees’ discretion-ary behaviors, including what they do in situations when the rules and expecta-tions are unclear or when there is no direct supervision. This is critical because organizations cannot create procedures or policies covering every possible situation. One of the most important sources of employee motivation is the firm’s culture. Understanding your corporate culture can create a personal competitive advantage by reducing the chances of your offending superiors or making a social blunder. Phrasing your ideas in ways consistent with actual company values and with the way top management views the world also increases your influence. How Leaders Create and Maintain Culture An organization’s culture is influenced in part by its industry. Different indus-tries develop different cultures. For example, nuclear power plants have a very different culture than do Internet or biotech firms. Organizational culture is also influenced by the national culture in which the organization is embedded. Russian, Chinese, and American companies tend to differ due to the national cul-tures in which they are embedded. Company founders and leaders also influence a firm’s culture. Most managers’ training prepares them well to set the business strategy and ensure that the organization’s capabilities are in line with this strategy. Shaping an organization’s culture is harder to learn in school and takes personal involve-ment. A leader has to define the culture to support the business strategy, con-sistently behave in ways that demonstrate the culture, explain the culture to employees so they understand why it is critical, and then hold himself or her-self and others accountable for maintaining it. It can be very time-consuming to create and maintain an organizational culture. Nevertheless, organizations like Nordstrom, Southwest Airlines, and Nike did not earn their success by letting their cultures develop accidentally. An organization’s founder and early management team shape a firm’s cul-ture, which is then reinforced by management’s philosophy, values, vision, and goals. These cultural choices then influence the company’s structure, compensa-tion system, customer relations policies, human resource policies, and individual behavior and motivation, which reinforce the culture. At appliance manufacturer Whirlpool, senior leaders make an inclusive culture a top priority. A diversity council oversees the efforts of the corporate diversity network, and a diver-sity network mentoring program addresses the needs of new hires. The com-pany also hosted a diversity summit to discuss building a culture of inclusion.27 To involve busy senior leaders and middle management in the com-pany’s diversity efforts, it creates short five-to ten-minute podcasts that report on the com-pany’s diversity initiatives. Executives can also print them out as short, two-page papers. A diversity and inclusion “lunch and learn” series hosted by the employee-based diversity networks, offers a comfortable environment to generate discussion among peers. The engagement of Whirlpool’s leaders has stimulated positive change throughout the organization. When beverage giant Molson Coors’ new CEO Peter Swinburn took the reins after a series of ten acquisitions and joint ventures created a mishmash of workforces, he made it his top priority to forge a cohesive corporate culture.29 As Swinburn says, “If you spend five years developing a brand, why shouldn’t you spend five years developing a culture?”30 So how can leaders create, maintain, or change an organization’s culture? Table 15.1 highlights some tactics several experts recommend. Employment and staffing service provider Randstad wanted its new hire training program to include information about the company’s culture. What started as a oneweek on-site course for new hires has grown into a sixteen-week program that combines e-learning, in-class training, on-the-job learning, and mentoring. During their first week at Randstad, new hires receive a virtual call in which executives welcome them to the company. Participants then take an e-learning course about the culture and the history of the organization and receive classroom training from their district managers on the culture and val-ues of the company. Randstad believes that the training helps the business run more smoothly and gives employees a sense of having a career, not just a job. Changes in strategy, technology, and organizational structure all trigger a need for changes in employees’ attitudes, behaviors, values, and skills. This can require changes in the organization’s culture to reinforce these new employee behaviors and values. To assess important dimensions of their culture, compa-nies like Coca-Cola use surveys and focus groups to regularly evaluate employ-ees’ perceptions of the company’s support for diversity.33 Organizational culture has many layers. Outer layers of the culture, such as marketing strategies and customer service perceptions, can change quickly. Inner layers, including fundamental values and ideologies, are much slower to change. Organizations can also have different cultures in different areas. Different business units or subgroups of organizations can develop unique cultures sup-porting their unique business needs. This can actually mean that employees who belong to multiple subgroups simultaneously participate in several different organizational cultures. CULTURES OF CONFLICT AND CULTURES OF INCLUSION To better understand organizational culture, let’s now discuss two specific types of culture: cultures of conflict and cultures of inclusion. Cultures of Conflict Conflict cultures are one example of a specific type of culture. Firms develop distinct conflict cultures, or shared norms for managing conflict, which reflect different degrees of active versus passive and agreeable versus disagreeable conflict management norms.34 Active conflict management norms resolve conflict openly, whereas passive conflict management norms tend to avoid addressing conflict. Agreeable conflict management norms resolve con-flict in a cooperative manner, whereas disagreeable conflict management norms resolve conflict competitively. This results in four types of conflict cul-tures: dominating, collaborative, avoidant, and passive–aggressive, as shown in Figure 15.2 Dominating Conflict Cultures Dominating conflict cultures are active and disagreeable; open confrontations are accepted as well as heated arguments and threats.36 The Digital Equipment Corporation had a dominating conflict culture as described by a former employee: People at Digital seemed to fight a lot with one another. Shouting matches were a frequent occurrence, and I came to conclude that Digital people didn’t like one another. I was subsequently told by more senior members that it was okay to disagree with someone, because truth would ultimately prevail. … After one of these exchanges, one in which I almost came to blows with one of my peers, I was called in by my manager the next morning. Sensing that this time I had really exceeded the bounds of propriety, I thought about updating my resume. It was with great and pleasant surprise that I was told that my behavior the previous day had been admirable.37 Collaborative Conflict Cultures Collaborative conflict cultures are active and agreeable. Employees actively man-age and resolve conflicts cooperatively to find the best solution for all involved parties.38 Southwest Airlines has a collaborative conflict culture, as described by a chief pilot:Pilots and flight attendants—sometimes an interaction didn’t go right between them. [If] they are upset, then we get them together and work it out, in a teamwork approach. If you have a problem, the best thing is to deal with it yourself. If you can’t, then we take it to the next step—we call a meeting of all the parties. Avoidant Conflict Cultures Avoidant conflict cultures are passive and agreeable. This type of culture strives to preserve order and control and/or to maintain harmony and interpersonal relationships.4Typical behaviors include accommodating or giving in to the other’s point of view, changing the subject, or evading open discussion of the conflict issue. Avoidant conflict norms often start at the top. At Wang Laboratories, a once-successful computer company that eventually went bankrupt, the founder and director developed and sustained a conflict avoidant culture by sending a strong message that he did not want to hear any conflicts or disagreements with his policies and practices. Although he acted in ways he believed would benefit the entire organization, which worked for a while, everyone prospered only as long as his instincts and actions were correct. Passive–Aggressive Conflict Cultures Passive–aggressive conflict cultures are both passive and disagreeable. Rather than dealing openly with conflict, this culture develops norms to handle it via passive resistance such as refusing to participate in conflict-related discussions, giving the silent treatment, withholding information, or withdrawing from work and from interactions with coworkers.42 Hospitals often have passive–aggressive conflict cultures due to the many layers of authority and strong bureaucracy.43 National and regional culture can influence which type of conflict culture develops in an organization. This chapter’s Global Issues feature describes some of the cross-cultural influences on conflict cultures. Cultures of Inclusion Organizational culture is an important part of effective diversity manage-ment. An organization’s values and culture interact with its demographic com-position to influence social interaction, conflict, productivity, and creativity.49 Organizations that focus on collective interests better capitalize on the poten-tial benefits of demographic diversity. Research has supported the idea that pro-diversity cultures are related to lower turnover among blacks, whites, and Hispanics.50 Perceiving that the organization values diversity is also related to reduced absenteeism among black employees.51 An organization’s culture of inclusion reflects the extent to which major-ity members value efforts to increase minority representation, and whether the qualifications and abilities of minority members are questioned.52 These percep-tions may be affected by the firm’s diversity actions as well as by the extent to which diversity is salient to a particular individual.53 When home finance company Fannie Mae wanted a corporate culture that values and retains employees, they asked employees, “From your own per-spective, what could we do to improve the culture here?” They learned that Jewish, Muslim, and Hindu groups felt that the company always acknowledged Christmas but never acknowledged Rosh Hashanah, Ramadan, or Diwali. The issue came up again when Fannie Mae was rushing to complete a financial restatement. Working twelve hours a day, six days a week cuts into some peo-ple’s religious observances. As a result, the company created a multicultural calendar noting religious celebrations throughout the year. When holidays approach, an article about the holiday’s meaning and history written by an employee group is then posted on the company intranet; a note at the bottom directs managers on how to accommodate employees celebrating the holiday.54 This chapter’s Case Study feature describes how Whirlpool built an inclusive culture. Our Improve Your Skills feature also gives you some tips to better assess a company’s culture. EFFECTS OF TECHNOLOGY AND INNOVATION ON CULTURE Creating and maintaining a desired culture can be facilitated by technology, but at the same time can be made more difficult by the consequences of using technology to work remotely. Innovation and culture also have major impacts on each other. Using Intranets to Build and Maintain Culture By building and fostering a sense of community among employees, intranets can help reinforce an organization’s culture. An organization’s culture can vary across divisions and even across managers. Ask people who work in different parts of a large company to describe its culture, and you are likely to get differ-ent answers. Because workgroups develop their own subcultures, intranets can be used to build a common cultural foundation that can help unify employees in different units and locations around common company values. This keeps peo-ple connected to the broader organization and also promotes consistency in how employees behave and make decisions. The key issue for organizations is not about using the latest information technologies, but about leveraging the right technologies for creating and main-taining a culture of trust, openness, relationship building, and information shar-ing. Each intranet design reflects a different type of organizational culture, and in turn reinforces the firm’s culture by controlling the flow of information and establishing norms of behavior. Following are some of the ways intranets can both reflect and influence organizational culture: 1. Their scope. Intranets with a narrow scope can reinforce a culture of secrecy and information hoarding. Intranets that contain information on a variety of topics and links to other useful sites such as human resources, com-pany and industry news, blogs, wikis, interviews with company leaders, and performance indicators reflect a culture of openness and teamwork. 2. Their openness to employee feedback and contri-butions. Intranets that contain “like it or not?” feedback tools and features that allow employ-ees to contribute reflect a participative culture that values employee contributions. A more cen-tralized, heavily edited and filtered site reflects a culture in which information flows less freely and employee contributions are less valued. 3. The frequency with which they are updated. Intranets that are rarely updated are not likely to influence the company’s culture and can reflect a culture that does not value employee contri-butions, has poor internal communication, and has poor attention to detail. Lucent updates its intranet multiple times a day if appropriate. It also posts two weekly feature articles that reinforce the strategic vision and positioning of the company to entice employees to visit multiple times each week. 4. The number of intranets. This refers to whether there is just one company intranet, or several, each serving different groups of employees. For example, some organizations have one intranet for the sales force and another, com-pletely different looking one, for the R&D group. 5. The use of symbols, stories, and ceremonies. Because these express a com-pany’s culture, intranets can convey such information via news of events affecting the organization, messages from CEOs, and announcements of employees’ awards programs of importance to the organization. Building and Maintaining Culture with Remote Employees Being virtual challenges an organization’s identity and culture, particularly when the company relies on free agents or alliances with other firms that have their own cultures. Because they spend little time face-to-face with coworkers, it is harder for virtual employees to become familiar with an organization’s cul-ture. It is also harder for the organization to reinforce its cultural values among remote employees. This has important implications for employee identification with the organization and for the management of employee behaviors. Because they are not able to see and experience the culture firsthand,acclimating teleworking employees to a corporate culture can be challenging. Business research firm Dun & Bradstreet’s formal telework program requires employees to put in at least three months in an office before working remotely. This office time lets managers assess employees’ strengths, weaknesses, and work habits in person. Employees also experience the company’s unique corpo-rate culture and work ethic firsthand. Working in the same place also allows team members to get to know one another before embarking on an email and phone-based relationship.58 Innovation and Culture Innovation is the process of creating and doing new things that are introduced into the marketplace as products, processes, or services. Innovation involves every aspect of the organization, from research through development, manufacturing, and marketing. One of the organization’s biggest challenges is to bring innovative technology to the needs of the marketplace in the most cost-effective manner possible.59 Note that innovation does not just involve the technology to create new products: true organizational innovation is per-vasive throughout the organization. According to Fortune magazine, the most admired organi-zations are those that are the most innovative.60 Those companies are innovative in every way—staffing, strategy, research, and business processes. 3M has long been one of those companies known for its creativity and innovation. Many risks are associated with being an innova-tive company. The most basic is the risk that decisions innovation.The process of creating and doing new things that are introduced into the marketplace as products, processes, or services about new technology or innovation will backfire. As research proceeds, and engineers and scientists continue to develop new ideas or solutions to problems, there is always the possibility that innovations will fail to perform as expected. For this reason, organizations commit considerable resources to testing inno-vations.61 A second risk is the possibility that a competitor will make decisions enabling it to get an innovation to the market first. The marketplace has become a breeding ground for continuous innovation. In all fairness, some authors have suggested that the term, “innovation,” has become a cliché from overuse by companies and consultants. As companies create positions, such as chief innovation officer, and consultants sell their services for hundreds of thousands of dollars, some claim that creating new products barely different from old ones or increasing production by small percentages may not deserve to be called innovations. They call for the term to be reserved for major disruptive or radical shifts in products, services, or processes.62 While these criticisms may have some merit, organizations still need to be wary of simply maintaining the status quo and risk getting surpassed by more innovative practices by their competition or by new technological break-throughs. For evidence, one needs only to examine the demise of the BlackBerry by Research in Motion (RIM), which dominated the market for cell phone and email devices from 2003 to 2009. Apple’s iPhone and the Google Android devices, initially introduced in 2007 and 2008 and refined several times since then, along with thousands of applications (apps), have pushed RIM to the brink of collapse. Types of Innovation Innovation can be radical, systems, or incremental. A radical innovation (some-times disruptive innovation) is a major breakthrough that changes or creates whole industries. Examples include xerography (which was invented by Chester Carlson in 1935 and became the hallmark of Xerox Corporation), steam engines, and the internal combustion engine (which paved the way for today’s automobile industry). Systems innovation creates a new functionality by assembling parts in new ways. For example, the gasoline engine began as a radical innovation and became a sys-tems innovation when it was combined with bicycle and carriage technology to cre-ate automobiles. Incremental innovation continues the technical improvementand extends the applications of radical and systems innovations. There are many more incremental innovations than there are radical and systems innovations. In fact, several incremental innovations are often necessary to make radical and sys-tems innovations work properly. Incremental innovations force organizations to continuously improve their products and keep abreast or ahead of the competition. New Ventures New ventures based on innovations require entrepreneurship and good man-agement to work. The profile of the entrepren…