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Organizational Psychology (PSY510)

LESSON 09

CHANGINGORGANIZATIONAL CULTURE

An organization's current customs, traditions andgeneral way of doing things are largely due to what it has

done before and the degree of success it has had with thoseendeavors. The originalsource of an

organization's culture usually reflects the vision or mission of the organization's founders. Because the

founders have the original idea, they may also exhibit biases in how to carry out the idea. They are not

constrained by previous customs or approaches. The founders establish the early culture by projecting an

image of what the organization should be. Thesmall size of most new organization also helps the founder

instilltheir vision in all organization members. However, it is notonly the organizational culture thatplays a

significant role. The organization, if considered as an open system, it interacts withits environment as it

takes in inputs and distributes outputs. The external environment refers to forcesand institutionsoutside

the organization that potentially can affect the organization's performance.

The external environment is made up of twocomponents, the specific environmentand the general

environment.

Thespecific environment includesthose constituencies thathave a direct and immediateimpact on

manager'sdecisions and actions andare directly relevant to the achievement of the organization's goals. It

includes the customers, suppliers, publicpressure groups etc.

Thegeneral environment includes the broad economic, political, legal, socio-cultural, demographic,

technological and global conditions thatmay affect the organization. This brings us to the fact that if the

external environment undergoes a change, it impacts the organization. In order to adapt to the external

change, the organization must undergo a change in terms of its culture as well. Further, if there is a change

in the internal environment of the organization, it also needs to undergo a change in terms of the culture of

the organization.

Whychange theculture?

Organizational culture needs to be changed since it has a direct impact on managerialdecision making.

Because it constrains what they can and cannot do, an organization's culture is particularly relevant to

managers.These constraints are rarelyexplicit. They are notwritten down. It is unlikelythat they will even

be spoken. But they are there,and all managers quicklylearn what to do and what not to do in their

organizations.

Change is specifically required in an organization due to the following reasons:

· Mergersand acquisitionshappen

Merger is a tool used by companiesfor the purpose of expanding their operations often aiming at an

increase of their long term profitability. Evidence on the success of mergers andacquisitions however is

mixed: 50-75% of all mergers andacquisitions deals are found to fail adding value.

Usually mergers occur in a consensualsetting where executivesfrom the target company helpthose from

the purchaser in a due diligenceprocess to ensure that the deal is beneficial to bothparties.

Acquisitions can also happen through a hostile takeover by purchasing the majority of outstanding shares of

a company in the open market against the wishes of the target's board. In the United States, businesslaws

vary from state to state wherebysome companies have limitedprotection against hostile takeovers.One

form of protection against a hostile takeover is the shareholder rights plan, otherwise known as the "poison

pill".

Mergersand acquisitions affect the culture of the organization since it either completely changesnorms and

values of the organization or partially amendsthem.

· Rapidly changing external environment

The external environment of organizations is also in a process of change. This can be best understood by

considering the impact of the globalization on organizations.

Globalizationrefers to the greater international movement of commodities, money, information,and

people;and the development of technology, organizations,legal systems, andinfrastructures to allow this

movement.The effects thatGlobalization has had on the modern day living of mankind are as follows:

· InternationalCultural exchange

· Multiculturalism

· Diversity

· Greater international travel and tourism

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Organizational Psychology (PSY510)

Greater immigration, including illegal immigration

Spread of local consumer products (e.g., food) to other countries (oftenadapted to their culture)

World-widefads and fashions

Formation or development of a set of universalvalues

Development of a global telecommunications infrastructure

Increase in the number of standards applied globally; e.g.copyright laws, patents andworld trade

agreements.

· Corporate Imperialism: Dominance of MNCs

· CulturalImperialism

· Emergence of virtual organizations require change in organizational culture, a global alliance is required

in trust, communications, negotiating, etc.

A Virtual Organization is an organization existing as a corporate, educational, or otherwiseproductive

entitythat does not have a central geographical locationand exists solely through telecommunication

tools. It comprises a set of (legally) independent organizations that shareresources and skills to achieve

itsmission / goal, but that is not limited to an alliance of for profit enterprises. Theinteraction among

members of the virtual organization is mainly done through computer networks. A Virtual

Organization is a manifestation of CollaborativeNetworks.

OrganizationalCulture Must Change In TermsOf:

o Change in organizational structure

Organizational structure is the arrangement of variousjobs levels of managementwithin the

organization. It may be flat, i.e. fewerlayers of management or it may be vertical, i.e. large

number of managerial layers. Therefore, in an organization, whenever there needs to be

incorporated a change in terms of its culture; the structure needs to be revised.For example,

organizationsare moving away fromcentralized decision making towardsdecentralized

decisionmaking. This requires a change in the organizational structure which has to have lesser

number of layers than before.

o Change in organizational politics

Politics is the art of gaining and sharing power.Every organization has itsset of politics. In

order to change the culture, the politics of the organization need to be reviewed andadjusted

according to the requirement of the new culture.

o Change in organizational emotions

The emotions of the organization refer to the feelingswhich are possessed within the

organization by the employees. They also need to be manipulated according to the

requirements of the changing culture.

How to Change OrganizationalCulture

Followingare the steps in changing the organizational culture:

Assesscurrent culture

Thefirst step in changing organizational culture is to assess the current culture and the requirements, i.e.

whyand what needs to be changed?

Setchange goals, bottom line

Thesecond step in the changeprocess is to set goals andtargets, i.e. to define what shall be the ultimate

motivebehind a cultural changeeffort.

Recruit experienced people

Thethird step is to involve people to carry out the changeprocess. It is imperative to involveexperienced

people from within and fromoutside the organization to carry out the change.

Makechanges and include employees in changes

Once the changes are made,employees need to be made a part of the change since they shall be the first

ones to get affected.

Expect problems, be ready to tackle

Once the culture is changed, the problems mayarise in terms of non-compliance from the employees.

These should be expected and plansalready in place to help sort out such problems.

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Organizational Psychology (PSY510)

Movedecisively, defuseresistance

The cultural change should be enforced withrigor and the resistanceshall be countered withtactful

measures.

Persist,get feedback

Thechange should not be rolledback since it wasmeticulously designed in the beginning. Feedback may be

takenfrom the employees to ensurethat the change causes the desired results.

Do no abandon roots

An important consideration in making the change is to not to abandon the cultural roots of the

organization. This means that the change should be congruent with the mission statementand the original

culture of the organization.

REFERENCES

· Mejia,Gomez. Balkin, David & Cardy, Rober. (2006). ManagingHuman Resources (FourthEdition). India:

Dorling Kidersley Pvt. Ltd., licensee of Pearson Education in South Asia.

· Changing Culture in Organizations.www.managementhelp.org/org_perf/culture.htm

· Changing Organizational Cultures.

http://www.valuebasedmanagement.net/methods_trice_beyer_changing_organizational_cultures.html

· KrisKrug `Change, Culture, Creativity,Communication'Thoughts.http//www.kriskrug.com/

· Changing Culture & Managing Change. Bringing about significant change in the way an organization

works,... An Example of "Managed" CultureChange.http://www.thedelphigroup.com/change.html

FURTHERREADING

· Changing culture and change stories.http://www.idea-

knowledge.gov.uk/idk/core/page.do?pageId=76273

· Mergers Articles. http://www.articleon.com/mergers-articles.html

· Mergersand acquisitions - Wikipedia, the freeencyclopedia.http://en.wikipedia.org/wiki/Merger

· A Case Study - Changing culture. http://

www.mercerdelta.com/organizational_consulting/change_culture_study.html -