Organizational Culture and Development Issues

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Your Take

Understand organizational culture and how it influences the function of an organization

Understand how the national and internal cultures influence the organizational culture

Understand the steps which are necessary for cultural change in an organization

Understand different diagnostic mechanisms for identifying cultural constructs of an organization.

Understand the appropriate interventions strategy to bring cultural change in organizations

Understand how cultural change influences behavioural issues in an organization

Understand the use of Organizational Development tools for effecting cultural changes in organizations

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Introduction

Culture is the moral, social, and behavioural norms of an organization.

It creates impacts on beliefs, attitudes, and priorities of organizational members.

Building culture through continuous learning is now a global practice.

This is primarily more important for globalization and cross-border mergers and acquisitions.

The movement of people from one country to another renewed our attention on building organization-specific corporate cultures to bring order in behaviours and attitudes.

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Definition

Culture is the way organization works. Culture is now the major differentiator of an organization from another.

Every organization continuously interacts with its environment. This, therefore, requires an organization to strike a balance between the internal features and the characteristics of the external environment, which is part of the contingency theory in organizational science. The theory suggests that an organization has to understand the dynamics of its environment in order to be able to adapt to the changing demands of the outside and the inside (inside the organization).

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Concept

There is no consensus on definition of culture but most authors agree that it is something holistic, historically determined, related to the things, socially constructed, soft, and difficult to change. It is something an organization has, but can also be seen as something an organization is. Organizational culture should be distinguished from national culture. Organizational culture manifest s, from superficial to deep, in symbols, heroes, rituals, and values. National cultures differ mostly on the value levels; organization cultures mostly differ at the levels of symbols, heroes, and rituals. These together translate into organizational practices. Managing international business means handling both national and organizational culture differences at the same time. Organization itself is a culture (Bate, 1994). It is more a metaphor for study, through which meanings are constructed and expressed. More modern views, however, consider organizational culture a variable rather than a metaphor (Wilson, 2001 ). Variables are different organizational practices, such as, performance management (Deal and Kennedy, 1982 ), mechanism for effectiveness and control (Peters and Waterman, 1982), recruitment and selection (Guest, 1994), training and development (Schein, 1968, 1991; O'Reilly, 1989), knowledge management practices (Brown, 1995), reward systems (Kerr and Slocum, 1987 ), and overall human resource management practices.

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Org. Culture and Org. Behavioural Practices

The word culture has many dimensions; hence, defining it requires us to consider the term from different perspectives. Anthropologist James P Spradley defined ‘culture is the acquired knowledge people use to interpret experience and generate behaviour’.

Literally, culture is the abstract miniscule, which moves the organization. Culture is an ongoing process of reality construction, providing a pattern of understanding that helps members of the organizations to interpret events and to give meaning to their working worlds.

It is a shared understanding of the people (Schein, 1990; Schneider, 1988; Kotter and Heskett, 1992), and it frames the interactions and processes of the organizational environment. From organizational contexts, culture can be defined in terms of:

Overt organizational behaviour Organizational ideology and philosophy Group and organizational norms Espoused organizational values Policies, procedures, and rules of socialization Climate

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Organizational Culture and Organizational Climate

The very concept of organizational culture is born from early studies of organizational climate, intertwined with human resources and various sociological disciplines. The true definition is often a matter of perspective.

For some, the organization itself is a culture (Bate, 1994). Therefore, culture is a metaphor for study through which meanings are constructed and expressed through social interaction. Yet, a more modern view of organizational culture is that it is something that an organization has. Hence, it is more of a variable, rather than a metaphor (Wilson, 2001).

Whether it is a metaphor or a variable, organizational culture translates into organizational climate, and this organizational climate, per se, decides the organizational practices. Organizational practices on people related issues are classified under human resource management, which naturally governs organizational behaviour issues. Hence, culture issues encompass recruitment, selection, training, appraisal, and reward systems and so on.

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Organizational Culture from Global Perspective in the Context of Globalization

Corporate culture as ‘the act of developing intellectual and moral faculties, especially through education’.

The other definition of culture is ‘the moral, social, and behavioural norms of an organization based on the beliefs, attitudes, and priorities of its members’.

Even though the first definition dwells on building culture through the act of education, we find largely its relevance more in those corporate who have their unique system of emphasizing on continuous learning.

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Example : Culture of HP

HP’s culture is commitment to diversity inclusion, and non-discrimination. Since its formation, HP has demonstrated an ongoing commitment to people and to fair employment practices. HP’s overall commitment is reflected in their diversity and inclusion philosophy, which we can list as under:

A diverse, high-achieving workforce is the sustainable competitive advantage that differentiates HP. It is essential to win in the marketplaces, workplaces and communities around the world.

An inclusive, flexible work environment that values differences motivates employees to contribute their best.

To better serve customers, HP attracts, develops, promotes and retains a diverse workforce.

Trust, mutual respect and dignity are fundamental beliefs that are reflected in HP’s behaviour and actions.

Accountability for diversity and inclusion goals drives HP’s success.

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Example : GE

Similarly, Jack Welch, CEO, General Electric, created a new corporate culture. Key elements of GE’s corporate culture are as under:

Redesigning the role of the leader in the new economy: creating followers through communicating a vision, and establishing open, caring relations with every employee

Creating an open, collaborative workplace where everyone's opinion is welcome

Empowering senior executives to run far-flung businesses in entrepreneurial fashion

Liberating the workforce; making everybody a participant through improving vertical communication and employee empowerment.

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Merger and Acquisition impact on corporate culture

Merger and acquisition also bring major changes in the corporate culture. Across the globe, we have many examples. Before going for a detailed discussion of a case, here we can jot down certain cultural issues that were experienced by organizations throughout the world, during the post merger phase.

Disintegration of organizational value systems (Rent-to-own Store case) Low employee morale (results to poor productivity, conflicts) – Rent-to-own Store, Dell

cases) Benefits of Synergy require time (IOC and IBP Case) – IOC’s market share is 54% to POL

products but in retail business its share is 40%. With IBP, IOC gets 1540 outlets to its existing 7750 outlets (IBP’s market share is 8%).

HPCL, BPCL merger (together now enjoy 20%). Threat is from emerging new organizations like Reliance, etc.

Rationalization and relocation of manpower may encounter problem (Blue Star Case) Generation Gap may create conflict (CMC-TATA, Bank of Madura and ICICI case) Flying of Talents Different cultures (including cross country culture, AMD case discussed in our introductory

part). Rigidity to learn new things for the blue collar employees Sentimental attachment Anxieties for pink slip (as merger follows manpower rationalization) Difference in HR Style (Blue Star for example) Broken faith in management due the veil of secrecy in merger (India Foils acquisition by

Sterlite). Stalemate in managerial positions (one has to leave or compromise for the new group,

which is taking over). Reduces employee enthusiasms. To get a synergy of 2 + 2 > 4, it follows cost control, which may affect the executive pay.

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Effective mergers from org. structure and behaviour

perspectives

To make mergers effective, addressing the people related issues, require an organization to consider following aspects, which largely encompass interventions in streamlining organizational structure and behaviour. These are as under:

Ascertain the differences in basic culture and procedures. Pre-assess the cost implication to integrate manpower of merging organization. Plan for adopting voluntary retirement scheme (VRS) for people who are rendered

surplus Make provisions for increased HR cost for training and redeployment, relocation,

VRS benefits Accommodate employees (including executives) of merging organization in new

environment (Tata and VSNL case) Develop an integrated culture with inputs from two organizations (Tata and VSNL

case) Focus on training and learning process (TCS executives handle mostly international

projects while CMC executives handle mostly domestic projects, thus maintaining their individual identity, even though they have merged together.

Develop a new organization chart and make it transparent. Align the compensation package, if required even by redesigning (IMB and PwC

case).

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Applications for the Culture in the Workplace Some of the areas of application of culture in the workplace can be

listed as under. •    Mergers and Acquisitions •    Strategic Alliances and Partnerships •    Restructuring Issues •    Change Management •    Self development processes •    People Management Skills •    Executive Coaching •    Negotiation Skills •    Multi-national/remote/teambuilding •    Facilitating Top Teams •    Project Teams •    Expatriate / Inpatriate coaching/briefings •    Sales and Marketing skills •    General Management training and education •    Counseling •    Leadership •    Organizational Influencing

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Managing Cultural Change through Org.

Diagnostics Diagnostic Area : Attitudes towards workMeasures Issues of concern Sample question items

-Job Satisfaction

-Role Clarity

-Role Conflict

- Autonomy

-Participation in decision making

-Job Involvement

-Degree of workers’ satisfaction

-Knowledge about behavioural expectations from the assigned job- Degree of job pressure (simultaneously trying to achieve too many things)- Degree of employees’ freedom in scheduling their work - Degree of employees’ involvement in setting goals, objectives, and policies of the organization - Degree of employees’ commitment to the job

-I feel satisfied with my nature of job- I know my job responsibilities

- I need to go beyond policies to achieve my goal

- I enjoy autonomy in accomplishing my tasks- I participate in decision making, particularly in my work areas

- I do not become a clock watcher in accomplishing my task

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Managing Cultural Change through Org.

Diagnostics Diagnostic Area : Organisational CommitmentMeasures Issues of concern Sample question items

-Job Security

-Loyalty

-Trust in management

-Identification

- Alienation

- Helplessness

- Degree of stability in current iob

-Degree of attachment towards the organization

- Degree of confidence in actions and work of management- Degree of sense of belonging to the organization- Degree of employees’ disappointment in achieving their career goals and objectives- Degree of feeling helpless in the organizations

-My company believes in good work, hence, I do not feel threatened of losing my job as I am a good worker- My primary motivation for a job change is the scope of earning more in my same job- I believe in my management’s task and actions- I consider organizational problems as my problems- I lack a sense of pride in my current job

-I hardly have any option to leave the organization

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Issue for Managemnet to Verify:Organisational Climate

Measures Issues of concern Sample question items

Fairness

Safety

Support

Communication

Tolerance for Risk

Flexibility

Continuous Learning

- The extent to which employees perceive their workplace to be equitable and free of bias.- The extent to which employees perceive their workplace to be safe and free from physical dangers. - The amount of perceived emotional support employees feel from their organization.- The accuracy and openness of information exchange.- The degree to which the organization encourages bold actions, risks, and independence of thought from employees.- The degree of adaptability and tolerance for ambiguity in an organization.- Perceptions of training and development opportunities in one's organization.

- Employees in my workplace are treated fairly, regardless of race. - I am often in situations at work where I can easily get physically hurt. - Management here is interested in the welfare of its people.- I am kept informed about changes that affect my work.- Risk taking is a value supported by our corporate culture.- This organization adapts quickly to changes.- There are adequate opportunities to pursue professional development activities beyond the scope of my immediate job.

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Managing Cultural Change through Organization Development

Organization development (OD) is understood to mean planned change based on the paradigm of action research. OD can thus be described as a learning process. The active development of an organization towards its desired corporate identity succeeds only if this change process is undertaken holistically. A new approach to organizational transformation (OT) is beginning to gain acceptance in the literature. OT is a ‘harder’ concept, often associated with re-engineering, and there is some concern that this could be used, not as a contingency measure, but as a replacement for organizational development. Clearly, there are dangers in a widespread adoption of such an approach.

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Process of Organizational Development

Organizational Development is a strategy or an effort, which is planned and managed from the top, to bring about planned organizational changes for increasing organizational effectiveness through planned interventions based on social philosophy.The following statement amply clarifies the need for OD in an organization.‘Circumstances of an ever-changing market and an ever-changing product are capable of breaking any business organization if that organization is unprepared for change indeed, in my opinion, if it has not provided procedures for anticipating change

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Characteristics of OD

Planned Organization Change Planned Intervention Top Management Commitment to

OD Social Philosophy as a Norm of

Change

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Important goals of OD

OD emphasizes the need for changing from the closed system to the open system by inculcating various changes in the organization. Such changes inter alia, also include introduction of concepts of social philosophy in the organization, which makes the organization socially more responsible and transparent.

To supplement authority and hierarchical role with knowledge and skills, replacing traditional authority assigned role, which creates a more congenial work environment, we need to take following steps:

To build mutual trust and confidence in the organization for man managing and reducing conflict.

To change structure and roles in consistent with accomplishment of goals.

To encourage sense of ownership and pride in the organization. To decentralize decision making close to the source of activity. To emphasize on feedback, self-control, and self-direction. To develop the spirit of cooperation, mutual trust, and confidence. To develop reward system based on achievement of goals and

development of people.

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Steps in Organization Development

Identification and diagnosis of the problem

Development of strategy Development of structure Implementing the programme Reviewing the progress of the

programme

Leadership and organizational cultureAccording to Edgar H Schein, culture is a phenomenon which surrounds us all. It defines leadership. We can understand an organization through understanding its culture.

Schein defined organizational culture as customs and rights. It implies structural stability and patterning and integration, hence for organizations culture accumulates shared learning from the share history.

Based on Schein we can define culture as a pattern of shared basic assumptions that the group learns through external adaptation and internal integration. Based on Schein classification, we can list the following elements of culture:

Culture explains the incomprehensible, the irrational Organization with history has a culture Not every group develops a culture Once culture exists it determines the criteria of leadership Leaders should be conscious of culture otherwise the culture

will manage them

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