WEEK #9 OVERVIEW

In Part A this week, we investigate organizational culture and change, along with approaches a manager or leader could use to implement change. Major topics include the nature and consequences of organizational culture, why people resist change and how to gain support for change, and strategies for bringing about organizational change. We also investigate organizational development and managing change at a personal level.

Part B provides information about one of the major new developments in organizations: the emphasis on knowledge management (KM). Information is also presented about the learning organization because a learning organization sets the stage for knowledge management. First, we take a look at the most relevant portions of a theoretical framework for a learning organization. Second, is a presentation of the building blocks, or key characteristics of, a learning organization. Third, is a description of various aspects of knowledge management: organizational conditions favorable to KM; strategies and techniques for knowledge management; methods for sharing information (perhaps the most important part of KM).

PART A (DuBrin, Chapter 13)
ORGANIZATIONAL CULTURE AND CHANGE

The Determinants of Organizational Culture

Often the origin of culture lies in the values, administrative practices, and personality of the founder or founders. Culture responds to and mirrors the conscious and unconscious choices, behavior patterns, and prejudices of top-level managers. The societal culture also helps determine the culture of the firm. The industry a firm belongs to helps shape its culture, such as household goods carriers having a culture different from a consulting firm. A firm's code of conduct, such as fairness, is another determinant of culture.

Dimensions of Organizational Culture

The dimensions, or elements, of a culture help explain the nature of the subtle forces that influence employee actions.

Values. The foundation of any organizational culture is based on values that
guide behavior.

Organizational stories that have underlying meanings. Stories that circulate
through the organization convey a message about shared values.

Myths. Myths are dramatic narratives or imagined events about the firm's history. These myths can spur employees toward high levels of achievement.

Degree of stability. A fast-paced dynamic organization has a different culture than a slow-paced, stable one.

Resource allocation and rewards. The investment of resources sends a message about what the firm values.

Rites and rituals. Part of an organization's culture is its traditions, or rites and rituals.

A sense of ownership. An ownership culture based on stock purchases includes increased loyalty, improved work effort, and worker interests aligned with those of the company.

Corporate spiritualism and organizational spirituality. Spiritualism takes place when management cares as much about nurturing employee well-being as about profits. Spirituality refers to workers at all levels believing in something bigger than themselves in addition to religion.

In addition to the dominant culture of a firm, the subculture also influences behavior. A subculture is a pocket in which the organizational culture differs from that of other pockets and the dominant culture.

How Workers Learn the Culture

Employees learn the organizational culture primarily through socialization, the process of coming to understand the values, norms, and customs essential for adapting to the organization. Socialization is carried out formally and informally. Employees also learn the culture through the teachings of leaders. Organizational members learn the culture to some extent by observing what leaders pay attention to, measure, and control.

Consequences and Implications of Organizational Culture

A strong organizational culture can have a pervasive impact on organizational effectiveness. The major consequences and implications of organizational culture are described next.

Competitive advantage and financial success. The right organizational
culture contributes to gaining competitive advantage.

Productivity, quality, and morale. A culture that emphasizes productivity
including high quality, encourages workers to be productive. A culture that values the dignity of human beings fosters high morale and job satisfaction.

Innovation. A corporate culture that encourages creative behavior is a major
contributor to innovation.

Compatibility of mergers and acquisitions. A reliable predictor of success
in merging two or more firms is compatibility of their respective cultures.

Person-organization fit. An important success factor for the individual is
finding an organization that fits his or her personality.

Direction of leadership activity. A key leadership role is to establish what
type of culture is needed for the firm and then shaping the existing culture to
match that ideal.

To meet their objectives, managers and leaders must manage change effectively on almost a daily basis. The types of changes include changes in organization structure, technology, and the people with whom one works.

Models of the Change Process

The two models of change described here explain change from the organizational and individual perspectives.

#1 The growth curve model of change in organizations. The growth change model traces the inevitability of change through a firm's life cycle. First is the formative stage, which is characterized by a lack of structure, trial and error, and entrepreneurial risk taking. Second is the normative phase, in which stability occurs. Third is the integrative phase, in which the organization redefines itself and finds a new direction. During the integrative phase there is a pulling and tugging between forces for and against change. According to the force-field theory, an organization simultaneously faces force for change and forces for maintaining the status quo.

Another observation about change is that the ability to change is somewhat related to size: large organizations are more resistant to change than small or medium-size organizations.

#2 The unfreezing-changing-refreezing model. Lewin's unfreezing-changing-refreezing model is useful in bringing about constructive change. Unfreezing includes pointing out the success of change and looking for ways to reward people involved in the change.

Why People Resist Change

People resist change for reasons they think are important. The most general reason for resisting change is the perception of an adverse outcome. Even when people do not view change as potentially damaging, they may sometimes resist it because they fear the unknown. The Power Point slides for week #9 include additional detail about people's reaction to change. Included are suggestions about how leaders might respond to these reactions. See week9.ppt to download the slides. Pay particular attention to the slides 20-28.

Gaining Support for Change

Managers often have to overcome resistance to change and gain support. Eight useful techniques are (1) allow for discussion and negotiation; (2) allow for participation; (3) point out the financial benefits; (4) avoid change overload; (5) educate with relevant information; (6) use manipulation and cooptation; (7) avoid citing poor performance as the reason for change; and (8) use explicit and implicit coercion.

Downsizing and Restructuring as a Change Strategy

Downsizing is the most often used deliberate organization change in recent years. Downsizing can sometimes make a firm more competitive by lowering costs, but at the same time causes enormous confusion and resentment. It can also leave a firm so understaffed that it cannot capitalize on new opportunities. Also, downsizing depletes human assets and interferes with organizational learning because so much information stored in people's memories leaves the firm. Considerable attention must be paid to the human element before and after downsizing.

Information Technology and Organization Change

Advances in information technology have facilitated a variety of profound changes in organizations. Electronic access to information has made delayering possible. Organizations have become more democratic because more people have access to information, and to leaders. The Internet is changing the nature of many businesses, such as companies interacting more directly with customers and suppliers. E-commerce eliminates many sales positions. Enterprise software also eliminates many jobs. Information technology has created substantial changes in where and how people work, such as being wired to the office.

Disruptive Technology and Organizational Change

Disruptive technology refers to large, successful companies losing sight of small emerging markets being served by a company with new technologies. Disruptive technologies create an entirely new market by introducing a new kind of product or service. The new technology introduced by a business startup can create havoc for the established firm. One recommendation is for the larger firm to create new organization structures within the existing corporation in which new processes can be developed. Another recommendation is to spin out a unit to work with a new technology.

Transition from Carrying Out a Job to Performing Work

A subtle workplace change is that traditional job descriptions are becoming too rigid to fit the flexible work roles carried out by many workers. An emerging trend is for companies to hire people to "work" rather than fill a specific job slot. The sea of change in work design can be overwhelming for people whose paradigm is to think of work as occupying a particular job.

Organization development (OD) is any strategy, method, or technique for making organizations more effective by bringing about constructive, planned change. In its ideal form, organization development attempts to change the culture toward being more democratic and humanistic. Exhibit 13-5 in DuBrin's text lists a group of OD techniques according to whether they deal primarily with individuals, small groups, or the total organization.

Process Model of Organization Development

According to this generic OD model, the OD professional and staff members are involved in bringing about constructive change. The model comprises eight steps:

Step 1: Preliminary problem identification.

Step 2: Managerial commitment to change.

Step 3: Data collection and analysis. (Interviews and written surveys may be used here.)

Step 4: Data feedback. (The data collected in Step 3 are shared with the manager.)

Step 5: Identification of specific problem areas.

Step 6: Development of change strategies. (Identify root problems and develop action steps.)

Step 7: Initiation of behavior. (An action step is implemented.)

Step 8: Evaluation. (Have behavior and work results improved?)

Process Consultation

In process consultation, the OD specialist examines the pattern of a work unit's communications. The process consultant directly observes team meetings, and often confronts people with what they are doing wrong. The "emperor's new clothes" analogy is useful for class discussion.

Large-Scale Organization Change

Large-scale organization change is the method used to accomplish a major change in the firm's strategy and culture. To accomplish such a far-reaching change, a large proportion of the workforce must be involved and committed. Certain warning signs suggest the need for large-scale change or a turnaround: micromanagement by top-level managers; high turnover; ineffective communication; a misdirected compensation system; and a loss of established business and the failure to obtain new business. Large-scale changes include the shift to a team-based organization, and to a more nimble, entrepreneurial-style firm.

Total Quality Management and Six Sigma as Organization Development

Organization development can take the form of a shift to a more quality-conscious firm. Total quality management (TQM) is a management system for improving performance throughout a firm by maximizing customer satisfaction, making continuous improvements, and relying heavily on employee involvement. Despite the diminution of interest in TQM, the quest for high-quality remains even just to compete effectively.

As a quality standard, six sigma refers to 3.4 errors in one million opportunities. As a philosophy or a program Six Sigma refers to driving out waste, improving quality and the cost and time performance of a company. The emphasis is on preventing problems.

A major factor in managing change is coping well with change yourself.

Empirical Research About Coping with Organizational Change

A multinational study involving over 500 workers demonstrated that personality factors are related to coping with change. A key result was that having a positive self-concept and a tolerance for risk were positively related to coping with change as indicated by self-reports and supervisory ratings. The specific traits most related to coping well with change were tolerance for ambiguity and positive affectivity.

Suggestions for Coping with Change

Look for the personal value that could be imbedded in a forced change, such as making a good career move. When faced with significant change, ask "What if?" questions such as "What if my company is sold tomorrow?" Force yourself to enjoy at least some small aspect of the change. Recognize that change is inevitable. Change before you have to so you can get a better deal. Also, stop trying to be in control all the time.

To manage organizational culture one must first understand the culture of the firm and then use that knowledge to guide behavior. The biggest challenge in implementing workplace innovations is to bring about cultural change. An effective vehicle for bringing about such change is for leaders and others to exchange ideas. Learning to deal effectively with change yourself is a major part of managing change.

One of the major developments in organizations in recent years is finding a way to manage knowledge so that useful information can be shared among workers at all levels. Being a learning organization sets the stage for managing knowledge well and making optimum use of human capital.

An effective organization engages in continuous learning by proactively adapting to the external environment. A learning organization is one that is skilled at creating, acquiring, and transferring knowledge, and at modifying behavior to reflect new insights. As Peter Senge puts it, a learning organization is a group of people working together to enhance their capacities to create results they value.

4I Framework of a Learning Organization

The 4I framework describes the processes that are involved with a firm making systematic use of information. To result in renewal, learning must encompass the entire organization. Also, the organization is an open system -- a system that adapts, changes and grows as a result of influences internal and external to the organization.

The four processes of organizational learning are:

intuiting - interpreting - integrating - institutionalization

The four processes work together to link the individual, group, and organizational levels.

Intuiting and interpreting take place at the individual level. Integrating takes place at the group level. Integrating leads to shared understanding among individuals and taking coordinated action. Institutionalization takes place at the organizational level, as tasks become defined and actions specified.

An implication of the 4I framework is that for organizational learning to take place, individuals should be encouraged to share their intuition and insights with other individuals and the group. This leads to practices becoming institutionalized.

Building Blocks of a Learning Organization

To become and remain a learning organization, certain characteristics and behaviors are required of organizational members.

Double-loop learning. An in-depth, non-defensive type of learning takes place in a learning organization. Double-loop learning occurs when people use feedback to confront the validity of the goal or the values implicit in the situation.

Action learning. Learning while working on real problems, or action learning, is a fundamental part of a learning organization. Participants in action learning are asked to work in teams to attack a significant organizational problem.

Systems thinking. In the learning organization, members regard the organization as a system in which everybody's work affects the activities of everybody else. Workers keep the big picture in mind, and focus on the external environment.

Shared vision. If the organizational vision inspires enough people, they will keep working to make the vision come true. Developing a shared vision is contingent upon effective leadership.

The challenging of mental models. Organization members must unearth the powerful assumptions that prevent people from working together. Challenge mental models by asking "Why?" and "Why not?"

Team learning. A learning organization emphasizes collective problem solving.

Personal mastery of the job. For continuous learning to take place, each
organizational member must develop expertise. Individuals are still the building blocks of an organization.

Translation of new knowledge into new ways of behaving. A true learning
organization translates knowledge into action. Doing must following knowing.

Systematic investigation and problem solving. A key building block of a
learning organization is the widespread use of systematic investigation and problem solving based on the scientific method.

Experimentation. Most successful companies continuously experiment
with new ways of improving their manufacturing or services. Experimentation requires a risk-taking attitude characteristics of the entrepreneurial mindset.

Learning from other organizations. Some of the best insights an organization can acquire stem from studying competitors and other firms. Substantial learning can take place in copying the practices of firms not directly in your line of business.

Healthy disrespect for the status quo. A general characteristic of a learning organization is to challenge whatever exists and see if anything can be improved in any way. ("Fix it, even if it is not broken.")

High impact learning. The more significant the learning, the more likely it will move the firm forward and prevent substantial problems. According to one team of researchers, learning capability is demonstrated only if the ideas have impact or add value for the firm's stakeholders for a long time.

A major consequence of a learning organization is that knowledge is managed more effectively. Knowledge management (KM) is the systematic sharing of information to achieve such goals as innovation, non-duplication of effort, and competitive advantage. The justification for knowledge management is that intellectual capital is a resource that allows for survival and competitive advantage.

Organizational Conditions Favoring Knowledge Management

Being a learning organization facilitates KM because the learning organization creates the conditions for making good use of information. The organizational culture should emphasize information sharing. Good knowledge sharers might be rewarded, but workers should also develop a social obligation to share.

Leadership should be provided for making knowledge management a reality: "Organizations that succeed with knowledge management always have high-level support." The value of knowledge management should be demonstrated to encourage commitment. For example, show how KM leads to new products, increased sales, cost savings, and higher salaries.

Knowledge Management Strategies and Techniques

Various strategies and techniques have been developed to foster knowledge
management, and they are similar to the building blocks of a learning organization.

Hire the right persons. Hiring people who are good at learning and
teaching makes a substantial difference in the effectiveness of knowledge management. The right people for KM are most likely to be those who have demonstrated intelligence, accumulation of knowledge, and intellectual curiosity in the past.

Create knowledge. Knowledge must be created before it can be managed.
Knowledge is the raw material that allows people to innovate new products, services, and processes and management methods.

Competitive knowledge management. Develop mechanisms for enabling
workers to track knowledge and expertise from outside the company (much like competitive intelligence).

Codification versus Personalizing knowledge. Companies dealing with
standardized products and services have a different approach to knowledge
management than companies that provide highly customized solutions to
problems. Companies with standardized products use the codification
strategy of codifying knowledge and storing it in databases. Companies
that provide highly customized solutions, share knowledge primarily
through interpersonal contacts, the personalization strategy.

Appointing a chief knowledge officer. Employed by many large firms, a
chief knowledge officer is in charge of systematically collecting
information and connecting people who need information with others who
might have the information. Responsibilities of the CKO include
assimilating databases of company knowledge and teaching people how to
learn at a deeper level.

Closing the gap between knowing and doing. Pfeffer and Sutton believe
that companies have fallen into the knowing-doing gap because doing
something requires the hard work of making something happen. Managing
knowledge is not enough: it must be converted into action. The challenge
is to build a culture of action.

Methods for Sharing Information

A major goal of the learning organization and knowledge management is for
organizational members to share relevant information. Here are a few specific
techniques:

(1) In-house Yellow pages. Compile a directory of the skills,
talents, and special knowledge of employees throughout the firm.

(2) Intranet communication systems. A growing number of firms use intranets and online forums to spread and share knowledge.

(3) Personal explanations of success factors. Using this method, key people teach others what they know through explanations of success factors.

(4) Foster dialogue among organizational members. Leaders should converse about the importance of intellectual capital and the development of core competencies.

(5) Shared physical facilities and informal learning. People learn and share information while interacting.

In your leadership roles, make a systematic effort to ensure that information is shared in the total organization or your unit. Establish both formal mechanisms, such as an Intranet, and informal methods. To better develop intellectual capital, recruit and retain knowledgeable and intelligent workers.

End of notes for Week #9