ORGANIZATIONAL CULTURE AND QUALITY MANAGEMENT ASSOC PROF DR

ORGANIZATIONAL CULTURE AND QUALITY MANAGEMENT ASSOC. PROF. DR. JEGAK ULI

Objective: After studying this unit, you should be able to understand: 1. 2. 3. 4. 5. the concept of organizational or corporate culture the elements of organizational culture the importance of organizational culture and change the method to determine the observable organizational culture among the employees the process of change in organizational culture

Introduction p p Change in the cultural contexts is inevitable in organizations. Changes in any system or subsystem would not be effective until the change is aligned with the organizational / corporate culture. Otherwise resistance to change may affect the planned change. For instance, the adoption of bureaucratic culture may not facilitate fast and effective change and to counter the frequency of organization change.

Fig. 1: Interaction between corporate culture, strategy, and change Culture Strategy

Introduction p p Any attempt to bring changes in organization usually involves changing the organization’s culture. If rapid changes were to take place, the basic assumptions and transformation of the current culture may be altered if it is to have a realistic opportunity to succeed. The potential areas of interdependence among organizational culture, strategies and the desired change ought to be noted. A deep understanding of organizational culture is vital in managing and implementing a change initiative.

Definition of Organizational Culture p p There are numerous scholarly definitions and opinions in defining culture in the context of organization. However, culture inevitably is described as an intangible asset in organizations (Itami, 1987)[1] which is shared, learnt, and transmitted (Beaumont, 1993)[2]. Schein (1985) [3] depicts organizational culture as the set of values, beliefs, and assumptions shared by the members of the organization. This is further supported by Morgan’s (1986) [4] definition of organizational culture as a vital tool in establishing ideas, values, norms, beliefs, and customs in creating an organization as a social unit. [1] Itami, H. (1987). Mobilizing Invisible Asset. Cambridge: Harvard University Press. [2] Beaumont, P. B. (1993). Human Resource Management: Key Concepts and Skills. London: Sage Publication. [3] Schein, H. E. (1985). Organizational Culture and Leadership. San Francisco: Jossey Bass. [4] Morgan, G. (1986). Images of Organizations. Beverly Hill: Sage Publication.

Definition of Organizational Culture p p Sackman (1991) [1] is of the opinion that culture acts as a control mechanism that can increase commitment towards the organization, achieving integration between firms and assist in adapting towards the desired change. A strong organizational culture acts as a compass, exhibits controlled guide, and serves as a balanced force among members of the organization. It can also act as a glue to bond people together in the organization. [1] Sackman, S. A. (1991). Cultural Knowledge in the Organization: Exploring Collective Mind. California: Newbury Park.

Definition of Organizational Culture p p Hofstede (1991)[1] defines culture as the collective programming of the mind which distinguishes the members of one human group from another. According to Flanagan (1995)[2], corporate culture demonstrates how practices are manifested and how problems are solved in an organization. Comprehensively, corporate culture is the pattern of basic assumptions created, discovered, and developed by an organization when confronted with problems of external adaptation and internal integration. These basic assumptions evolved into beliefs, artifacts and rituals / norms (Schein, Martin, and Meyerson, 1986)[3]. [1] Hofstede, G. (1991). Culture and Organizations: Software of The Mind. London: Mc. Graw Hill. [2] Flanagan, P. (1995). The ABCs of Changing Corporate Culture. Management Review, AMA, pp. 57 -61. [3] Schein, E. H. , Martin, J. , & Meyerson, D. (1986). Organizational Cultures and Denial Channeling, Acceptance of Ambiguity. Research Reports No. 807 R, Research Paper Series, Graduate School of Business, Stanford University, CA.

Definition of Organizational Culture Generally, culture can be defined as collection of beliefs, values, behavior, attitudes, and customs that characterize a community of people in an organization. p It is a conventional way to perpetuate how people think and act, in understanding reality, recognize and solve problems in an organization. p

Fig. 2: Elements of Organizational Culture Basic Assumptions Values Artifacts Norms

Elements of Corporate Culture Four elements of corporate culture include: 1. Basic assumptions 2. Artifacts 3. Values 4. Norms

Basic assumptions These are the basic precepts or principles that characterizes an organization in terms of what it is, what it stands for and what it is all about. p It is what drives the organization and determines how its members perceive, think, feel and behave. p It underlies the various aspects of organizational activity and represents the core ideology. p

Examples of Basic assumption emphasis on quality p customer-oriented p market oriented p risk taking and innovation p employee participation p open communication and safety p continuous improvement thinking p

More definitions of assumptions p “An assumption is an assertion about some characteristic of the future that underlies the current operations or plans of an organization”

Types of assumptions. There are multiple types of assumptions. p The most known derivation is between explicit and implicit assumptions. p

Explicit assumptions are assumptions of which the intention that is fully revealed or expressed without vagueness, implication or ambiguity. p Explicit assumptions are often not hard to find, since they are explicitly stated in the business plan. p Examples of parts in the business plan full of explicit assumptions are the financial forecast and the business system and organization. p

Callout 1: Deriving assumptions out of an explicit statement • “If we are later than 12 months, we will start losing opportunities”. If so… • The product will be available • The competitors have the capability to close the deals in 12 months • There must be an opportunity for us to lose, if so… • A customer is identified • The customer will feel a need to buy “If we are later than 12 months, we will lose the opportunity”. You can probably restate this statement, based on the underlying assumptions to “For each month delay in product availability, beyond the 12 th month, we will lose a market share of 3%”. This way you can calculate the financial impact of changes in the assumptions and start determining the criticality of the assumptions made.

Implicit assumptions are assumptions that are capable of being understood from something else though they are not expressed. p The problem is that some important implicit assumptions in a plan go undetected. p And if no precautions are taken for a scenario where implicit assumptions prove to be wrong, this might lead to unpleasant surprises. p

Callout 2: Some Dangerous Implicit Assumptions List copied from Mc. Grath & Mac. Millan (1995) 1. Customers will buy our product because we think it’s a good product 2. Customers will buy our product because it’s technically superior 3. Customers will agree with our perception that the product is “great” 4. The product will sell itself 5. Distributors are desperate to stock and service the product 6. We can develop the product on time and on budget 7. Competitors will respond rationally 8. We will be able to hold down prices while gaining share rapidly 9. We will have no trouble attracting the right staff 10. Customers will run no risk in buying from us instead of continuing to buy from. Mac. Millan (1995). Discovery-Driven Planning. Harvard Mc. Grath, R. G. and I. C. their past suppliers Business Review.

Artifacts The visible manifestation of culture as seen in the physical and social environment of the organization such as: n n p the structure, system, subsystem, symbols, plaques, etc. release of public documents, media reports and stories about the organization. rituals, norms, customs, rules and procedures. the observable behavior of its members (the way they talk, the jargons they use, the way they dress, etc. ) E. g. The 24 -hour hotline for customers

Values These are the social principles, goals, or standards held by members of an organization individually or collectively. p Values form the core of the culture, reflecting what is important in the organization and determining how the organization ought to be. p

Values p p p For instance, Boeing, characterized its product safety as its core values that form the basis of its policies and actions in safety standards, test and analyses to all its commercial flights. Identifying, communicating, and shaping organizational values is difficult as values relate to employee emotions and feelings (affective) than their rational thinking (cognitive) Values may not be observed directly but could be inferred from employee behavior and the stated reasons for the behavior.

Norms These are the significant elements of the organization’s social environment and evolve out of the organization’s value. p Unwritten rules of behavior, the informal rules of the game telling employees what they are supposed to be saying, believing and doing, and what is right and wrong. p

Norms For instance, IBM’s norms outlined that its employees need to listen actively and act accordingly to meet its customers’ needs, demands and rectify complaints. p Norms are generally passed on to new employees by word of mouth and enforced by the social approval or disapproval of one’s behavior in terms of its congruence or incongruence with prevalent norms. p

Forces for Change (When does change in organizational culture occur? ) Change in organizational culture is likely to result when: 1. The organization’s general environment has changed or is going to change due to the rapid technological, economic, and political changes; 2. Competitive environment in the industry exists; 3. An organization is experiencing expansion and development process;

Forces for Change (When does change in organizational culture occur? ) 4. 5. 6. A planned change to design and implement radical changes, fundamental or strategic transformations or recreational changes; The only alternative to ensure continual survival of the organization; Two or more organizations merge.

Steps of effective change in organizational culture (10 steps) 1. 2. 3. Formulate a clear picture of the firm’s new strategy and of the shared values, norms, and behaviors needed to make it work. Examine in depth the internal functioning of the organization and ascertain if cultural change is required. Identify aspects of the current culture that could be still be valid and other aspects that need to modified or changed.

Steps of effective change in organizational culture (10 steps) 4. 5. Identify the scope or depth of the cultural change needed. Maintain open communication during the change process by announcing those changes in terms of general objectives, specific activities and desired behaviors.

Steps of effective change in organizational culture (10 steps) 6. 7. Implement top-down change. Top management commitment has to be obviously seen and felt. Involve the employees in the change process.

Steps of effective change in organizational culture (10 steps) 8. 9. 10. Check on the leadership and support processes to overcome anxiety and resentful sentiments among managers and employees. Monitor the progress from time to time; build momentum in terms of initial success. Overcome or defuse resistance. Despite this, expect certain casualties to occur.

Approaches to increase supportive organizational culture among teamwork (based on Johari’s Window) 1. 2. 3. Check knowledge with each individual in the team on organizational culture and strengthen the situation. Identify aspects of organizational culture that are known by the team members, of which you do not know and learn from them. Identify and share aspects of organization culture that you know but not known by the team members.

Approaches to increase supportive organizational culture among teamwork (based on Johari’s Window) Coordinate and reinforce the obvious culture that you and your team know and yet to know with the management level. The objective is to involve, collaborate, and increase employee participation on: 4. n n the effect of basic assumptions, values and norms on organization; state all aspects of organizational culture including tradition and history, objective, policies and procedures, product and service, customer, technology, system and organizational control, success and failures.

Approaches to increase supportive organizational culture among teamwork (based on Johari’s Window) 5. Educate all the teams on organizational culture. Every employee needs to understand the breadth of areas in beliefs and basic values that influence and relevant to the organizational culture.

Approaches to increase supportive organizational culture among teamwork (based 0 n Johari’s Window) p Team members can use the Johari’s Window (Luft, 1961) [1] as an exercise to examine the extent to which realization of organizational culture exist and to strengthen the organizational culture. p [1] Luft, J. (1961). Of Human Interaction. Palo Alto, California: National Press Books.

Fig. 3: Johari’s Window on Organizational Culture Knowledge on Organizational Culture What I do not know What I know Aspects of organizational culture that I do not realized but known by others (What should I learn from others? ) Aspects of organizational culture that others and I do not know (not collectively known) What is known collectively on organizational culture (Organizational culture known by everyone) Aspects of organizational culture that I know but not known by others (What I should tell others) What others know What others do not know

Changing Organizational Culture p p p Changing organizational culture is not easy and time consuming for a cultural transformation to take effect. Changing the corporate culture requires systematic planning and careful implementation. There a few models that can be used to effect change in the corporate culture and one of them is that of Gonzales Model (1987)[1]. n [1] Gonzales, R. (1987). Corporate Culture Modification: A Guide for Managers. Manila. National Books Co.

There are five key steps involved: Step 1 1. Identify the reason the organization needs to change its corporate culture. -It is imperative to identify current culture and give reasons for the required change. -The change has to be from within the organization because the employees need to believe and to be tuned to its culture change.

There are five key steps involved: Step 2 2. Identify the main objectives of the change in corporate culture. -Establish the form of the new cultural change. -Involve as many employees as possible to develop a list of new beliefs, values, norms, rules and procedures, and corporate system to have a positive impact on organizational effectiveness.

There are five key steps involved: Step 3 3. Plan the approach or strategy to achieve the objectives of the change. -Identify cultural gaps between actual norms and those which would impact positively on the organization. How would the organization move towards the new directions? -The means to reinforce the new corporate culture has to be considered. -The transformation of the new corporate system to produce a conducive environment for the organization has to be communicated and enacted.

There are five key steps involved: Step 4 4. Implement the planned change of the corporate culture with various strategies.

There are five key steps involved: Step 5 5. Evaluate the progress of the corporate culture change through feedback from organization members. -Organization power tools are required such as information, support and resources for adapting to change and ensuring its success based on the stated objectives.