Understanding Cross-cultural Management

Slide 10.1

CHAPTER 10 CULTURAL CHANGE IN ORGANIZATIONS

• Concept 10.1: Organizational change as a cultural process • Concept 10.2

: Organizational change in a global environment Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.2

Organizational change as a cultural process

Success of an organization has to do with

• External factors – responding to rapid technological change, changes in industries and markets, new deregulation policies, increased competition, the ongoing development of the global economy • Internal factors – successful change has to do with maintaining both continuity and change, retaining the cultural foundation on which the company rests while changing its strategies and practices as response to environment Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The process of change

Slide 10.3

Two differing concepts of change, shift versus transformation

• In ‘doing’ cultures people and groups are mostly defined in terms of what they do, what they achieve – organizational change is perceived more in linear fashion, a question of putting the past state of affairs behind and pushing on with the new • In ‘being’ cultures people and groups are defined more in terms of affiliation, the relationships they have with others in the organization – the past state of affairs gradually transforms to become a new state of affairs Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The process of change (Continued)

Slide 10.4

According to Laurent, both the

instrumental

and

social

nature of the organization must be considered: • Managing change involves ensuring the on-going running of the organization, re-assigning tasks, maintaining overall stability, but this is not enough • Inspirational guidance also needed: a leader who engages people’s minds through vision • Minds cannot be managed, but they can be transformed through inspiring leaders who spread new visions which advocate new meanings and lines of thinking Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The process of change (Continued)

Slide 10.5

According to Deal and Kennedy (2000), many company managers may go about dealing with tangible factors involved in change, do not pay attention to the cultural issues involved: • To become, for example, more marketing-oriented involves subjecting the company to a fundamental cultural change which involves everyone in the organization • The change is not just changing routines but also identifying with role-models who embody a new purpose or goal • Such fundamental change is often a gradual and sometimes painful transformation Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The mechanisms of change (Schein)

Slide 10.6

Primary mechanisms for changing culture

• What a leader considers important and pays attention to, what must be measured and controlled • The way a leader react to difficult situations ands crises: shows others how to react in similar situations • The priorities set by a leader when allocating resources • The examples set by a leader: these deliberately teach and reinforce the desired values and behaviours • The criteria which a leader uses to allocate rewards and status as well as to reinforce desired behaviours • The criteria used for recruitment, promotion and dismissal Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.7

The mechanisms of change (Schein) (Continued)

Secondary mechanisms

for shaping the culture (only effective if consistent with primary mechanisms): • The design and structure of the organization • The systems and procedures used • The ‘rites and rituals’ used • The design and layout of the organization’s physical space • Stories of important events and people • Formal statements of the organization’s philosophy Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.8

The mechanisms of change (Schein) (Continued)

For Schein, culture plays an important role in determining: • how environmental developments are perceived by members of organizations • how members of the organization react to the strategies designed to respond to those environmental developments Schein describes: • the major culture issues predominating at each phase of a company’s growth • the different change mechanisms which could be operating during each phase of growth Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The mechanisms of change (Schein) (Continued)

Growth stage

I Birth & early growth

Function of culture Source of identity, commitment: the ‘glue’ Succession phase Status quo vs. change: keep or change culture?

II Organizational mid life

(expansion)

III Organizational maturity

Transformation option Destruction option (bankruptcy, takeover) Integration declines> sub-cultures Loss of goals, values: crisis identity Chance to manage direction of cultural change Culture a constraint on innovation Culture a source of self-esteem Managed cultural change needed, but essential elements preserved Fundamental cultural change Change through replacement of people Table 10.1 Growth States, Functions of Culture and Mechanisms of Change

Source:

Schein (1989) p.66, Figure 4-3, adapted Slide 10.9

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

The mechanisms of change (Schein) (Continued)

Natural evolution Self-guided evolution (therapy) Managed evolution (hybrids) Planned change and organizational development Technological seduction Change through scandal, explosion, myth Incrementalism Coercive persuasion Turnaround Re-organization and rebirth

A culture of what works best as organization grows (without too much stress) ‘unfreeze’ organizational culture > allow changes where needed changes made by insiders in key positions, thus meeting less resistance reduce conflict between sub-cultures resulting from expansion technology changes force cultural changes (different behaviour patterns) discrepancies between values and actual practices> culture must be revised Change realized gradually (e.g. recruitment and selection policies changed) Change agents put forward new assumptions, reward managers who take them on board Turnaround individual or team knows where org. must go: uses some or all of above mechanisms Group bearing the old culture is replaced Table 10.2 Mechanisms of cultural change

Source:

Schein (1989) p.66, Figure 4-3, adapted Slide 10.10

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Can organizational culture really be changed?

Slide 10.11

• Deal and Kennedy (2000) argue that a culture which has developed along with the organization will be difficult to change. • If the external factors have a strong influence on the organizational culture, then it is unlikely to change unless the external environment changes in line with desired changes. • If organizational culture depends on internal factors, then culture can be directed and changed – focus on the leader as instigator of changes, OR – focus more on how to initiate change at the three levels off corporate culture as defined by Schein Browaeys and Price,

Understanding Cross-cultural Management

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‘Weak’ cultures v ‘Strong’ cultures

Slide 10.12

Is cultural change easier to implement in an organization with a ‘weak’ culture rather than a ‘strong’ culture?

• Laurent (1989) considers that both are in a way doomed to extinction: – The organization with a weak culture may eventually crash since it is poorly coordinated, lacks direction and consistency – The organization with a strong culture may be throttled by rigid norms and behaviour and the resulting lack of innovation.

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.13

Knowing your company culture

• Laurent advocates a more conceptual differentiation which

– takes account of the extent to which an organization knows itself – the environment in which it operates

• The higher the degree of awareness, both internally and externally, the better an organization can interpret its environment and deal with it

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.14

Cultural change in organizations

Concept 10.2

Organizational change in a global environment

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Tension between organizational & national cultures

Slide 10.15

Do organizational values push aside or dilute the national culture of an organization’s environment?

• Laurent’s conclusions drawn from his research: – cultural differences among managers working within a multinational company were significantly greater than those cultural differences among managers working for companies in their own (native) country – ‘nationally bounded’ collective perceptions of organizations did not appear to be diminished in any way through international business – on the contrary these perceptions appear to be reinforced through the international exposure Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.16

Tension between organizational & national cultures (Continued)

• The different national companies of multinationals probably prefer different ways of bringing about the changes which HQ wishes to implement • The transformation of an organization from A to B may involve following a different path in one part of the multinational than in another, even if the end result (B) is the same • The outset of the transformation to B will depend on how the national organization interprets its own present situation (A) Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Does an international corporate culture exist?

Slide 10.17

• It is argued that more and more international companies, including their national constituents, share a management culture which has no roots in any particular national culture: – international managers increasingly homogeneous – business practices increasingly convergent • A true multinational, however, does not subordinate national cultures: – regards them as a source of learning – increases synergy within the company Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Mapping corporate culture change

Flexibility & Discretion

Hierarchy

Internal Focus and Integration

Market Clan Adhocracy

External Focus and Differ entiation Stability & Control

Figure 10.1

The Competing Values Framework

Source:

Cameron and Quinn (1999), p. 32, Figure 3.1

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009 Slide 10.18

The CV framework

The Hierarchy Culture

values tradition, continuity, rationalization and regulation. It focuses more on internal than external (market) issues and values stability and control over flexibility and discretion.

This is the traditional ‘command and control’ model of organizations, which can work effectively if the goal is efficiency and the organizational environment is stable and simple

The Market Culture The Clan Culture

also values stability and control but is more focused on external rather than internal issues. This culture values profit, productivity, competitive advantage and achievement focuses on internal issues and flexibility and discretion rather than seeking stability and control. It values team-spirit, participation, consensus and mutual support

The Adhocracy Culture

focuses on external issues and values flexibility. Its key values are adaptability, innovation Table 10.3

The characteristics of the CV framework quadrants

Source:

based on Cameron & Quinn (1999) Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009 Slide 10.19

Using the CV framework

Slide 10.20

The framework serves as a basis for – diagnosing the predominant culture of an organization – assessing whether it is responding appropriately to the challenges and changes in the environment – helping to diagnose and manage the interrelationships, congruencies and contradictions in the organization Altogether, the framework helps leaders to improve in a comprehensive way the organizations’ performance and value creation.

Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009

Slide 10.21

Conclusion

• One crucial factor in any change process is the extent to which a company is aware of its culture and of the operational environment • Even if the culture of a multinational organization needs to be changed, any transformation carried out will need to

– reflect the national culture – ensure that the subsidiaries involved remain integral parts of the whole multinational Browaeys and Price,

Understanding Cross-cultural Management

, 1 st Edition, © Pearson Education Limited 2009