EZGV201: Organisational Behaviour - Chapter 16: Organisational Culture and Change
Defining Organisational Culture: Shared Meanings and Descriptive Filters
Organisational culture is defined as a system of shared meaning held by members that distinguishes the organisation from other entities. This system includes the values, beliefs, and assumptions that uniquely characterise the organisation. A key insight for understanding this concept is that culture is descriptive rather than evaluative. This means it refers to how employees perceive the characteristics of the organisation—what it is actually like—rather than whether they like those characteristics or find them pleasant.
Culture serves several cognitive and structural purposes. First, it acts as a filter for attention, shaping what employees notice and prioritise within their work environments. It is also manifested physically through material symbols, which include things like uniforms, logos, office layouts, and the sharing of organisational stories. Ultimately, this shared meaning forms the foundation for how members make sense of their organisation and their roles within it.
The Competing Values Framework: Typologies of Organisational Culture
The Competing Values Framework categorises organisational cultures along two axes: flexibility versus stability and internal focus versus external focus. This results in four distinct culture types: Clan, Adhocracy, Hierarchy, and Market. Each type emphasizes different values and operational priorities.
Clan culture is characterized by an internal focus and high flexibility. It is rooted in human affiliation, where employees value attachment, collaboration, trust, and mutual support. Adhocracy culture also emphasizes flexibility but maintains an external focus. It is based on change and adaptability, with employees valuing growth, variety, stimulation, and professional autonomy. Hierarchy culture is defined by an internal focus combined with stability. It is based on rigid control, where employees value formalisation, clear communication protocols, and routine. Market culture takes an external focus with a drive for stability and achievement. In this environment, employees value competence, competition, and goal-directed communication.
Strategic matches are often identified between these culture types and specific organisational goals. According to the framework provided, Innovation is linked to the Clan culture, while Customer and Quality focuses are linked to the Market culture. Attitudes and Performance are associated with the Adhocracy culture, and Profitability is most closely aligned with the Hierarchy culture.
Strong versus Weak Cultures and the Role of Subcultures
The strength of an organisational culture is determined by the intensity and spread of its core values. In a strong culture, core values are intensely held and widely shared across the workforce. There is a high level of agreement regarding what the organisation represents, which builds cohesiveness, loyalty, and commitment. Strong cultures are known to reduce turnover and are often linked to superior financial performance. In contrast, a weak culture is one where opinions about values vary widely among employees. There is limited agreement on the organisation's identity, providing less guidance for behavior and acting as a "looser social glue" that is more likely to break apart during a crisis.
Most large organisations possess one dominant culture and numerous subcultures. The dominant culture expresses the core values shared by the majority, giving the organisation its distinct personality. Subcultures develop in response to common problems or specific experiences shared by a department, team, or geographic location. While subcultures are common, a challenge arises when they grow strong enough to subtly reject the official culture; in such cases, the influence of the dominant culture weakens.
Mechanisms of Cultural Transmission
Culture is transmitted to employees through four primary channels: stories, rituals, material symbols, and language. Stories serve as narratives about the founders, instances of rule-breaking, rags-to-riches successes, past mistakes, and general accounts of how individuals "fit" into the firm. These stories anchor the present in the past. For example, at Nike, the story of Bill Bowerman pouring rubber into a waffle iron is told to embody the "spirit of innovation."
Rituals are repetitive activities that express and reinforce the organisation's key values. They serve to reduce anxiety and signal who and what is truly important. An example is the "Housekeeping Olympics" held by Kimpton Hotels, featuring blindfolded bedmaking and vacuum races to reinforce a focus on customer service. Material symbols include physical cues like office layouts, executive cars, dress codes, perks, and social media presence. These signal status, hierarchy, and acceptable behavior. For instance, the company Threadless holds meetings in an Airstream camper inside a converted warehouse to signal an anti-formal, creative culture.
Finally, language is used to identify and bind members together. The use of acronyms, jargon, and unique terms creates boundaries between insiders and outsiders. While this binds the group, it can also confuse or exclude others and sometimes even hide unethical behavior. The U.S. government is cited as a notable example, having so much jargon that a librarian created a "GovSpeak" dictionary to decode it.
The Origin and Sustenance of Organisational Culture
Culture typically begins with the vision of the founder, known as the "Founder Effect." This vision persists through a three-part process: founders hire and retain employees who think like them, they socialise those employees to their specific way of thinking, and the founders' own behavior serves as a model that employees internalise.
Beyond the founders, three forces sustain culture over time: selection, top management, and socialisation. Selection acts as a filter to bring in candidates whose values align with the organisation. For example, W. L. Gore utilizes extensive team interviews to test applicants for their ability to handle uncertainty and flexibility. Top management sustains culture because senior leaders set norms through their words and actions, defining expectations for risk-taking and even dress codes. At Wegmans, top management has paid over in scholarships to approximately employees since , which sustains a culture of care. Socialisation involves onboarding and training that helps new hires adapt, as seen at Netflix and Quora, which use peer coaches and personalised orientation.
The Three-Stage Process of Socialisation
Socialisation is a progressive three-stage process that turns an outsider into a productive insider. The first stage is Pre-arrival, which occurs before the employee's first day. New hires arrive with values and expectations already formed by prior experiences or business school. The second stage is the Encounter, a "reality check" where the hire sees what the organisation is truly like and confronts any gaps between their expectations and the ground reality. If socialisation is poor at this stage, it leads to "reality shock," disengagement, and early exit.
The third stage is Metamorphosis, during which the employee adapts, internalises norms, and works through the changes required to fit in. Successful metamorphosis leads to outcomes such as higher productivity, stronger commitment, and lower turnover. Selection processes help both the employer and applicant test for fit before this process even begins.
Functional and Dysfunctional Effects of Organisational Culture
Culture serves several positive functions: it is boundary-defining (distinguishing one firm from another), provides identity and meaning to members, generates commitment to something larger than self-interest, acts as social glue, and aids in sense-making and control. However, culture can also become dysfunctional. Institutionalisation occurs when a culture outlives its original purpose and resists adaptation. Culture can also be a barrier to change or a barrier to diversity if strong norms suppress different perspectives.
Toxicity in culture can manifest as "sink-or-swim" mentalities, abuse, or results-only pressure that ignores ethics and safety. Research into "Conflict Cultures" involving a study of approximately bank branches suggests that a "Dominating" style (active confrontation) leads to reduced cohesion and lower customer service. Conversely, a "Collaborative" style leads to higher satisfaction and less burnout, while an "Avoidance" style reduces creativity. Branch managers typically model the conflict style for the entire branch.
Designing Positive, Ethical, and Innovative Cultures
Creating specific types of cultures requires adherence to key principles while avoiding common pitfalls. A Positive Culture is built on employee strengths, focuses on rewarding more than punishing, and encourages vitality and growth. However, leaders must avoid "toxic positivity," which pressures employees to be perfect and often backfires.
An Ethical Culture requires leaders to be visible role models, communicate clear ethical expectations, provide training, reward ethical behavior, and create protective mechanisms for reporting. Pressure from leaders to act unethically significantly increases unethical intent among staff. An Innovative Culture is supported by organic structures with low formalisation, slack resources, high inter-unit communication, and the use of "idea champions." It is noted that strict national norms can sometimes stifle these innovative efforts.
Forces Driving Organisational Change
Change is driven by six major forces. The first is the nature of the workforce, influenced by cultural diversity, an ageing population, and increased outsourcing. Technology is a second force, seen in faster mobile devices, social media influence, and advances like the deciphering of the human genetic code. Economic shocks, such as global recessions or the collapse of the financial sector, also necessitate change.
Competition is a fourth force, driven by global competitors and government regulation. Social trends, such as environmental awareness and changing attitudes toward connectivity, shift organisational needs. Finally, world politics, including rising healthcare costs and the opening of new global markets, act as a catalyst for change. Planned change is a proactive, goal-oriented effort to improve adaptability and change employee behavior, led by "change agents." These agents can be managers, consultants, or even new employees, with different types of agents needed at different stages of the change process.
Understanding Resistance to Change: Individual and Organisational Sources
Resistance to change stems from both individual and organisational sources. Individuals resist due to habit (relying on programmed responses), security needs (change feels threatening), and economic factors (fear of lower performance or pay). Fear of the unknown and selective information processing (ignoring data that contradicts their worldview) also play major roles.
Organisational resistance is rooted in structural inertia, where existing rules and selection processes are designed for stability rather than change. Limited focus of change is also a factor, as changes in one subsystem might be dampened by other interdependent systems. Group inertia (norms constraining individuals), threats to the expertise of specialised groups, and threats to established power relationships further entrench organisational resistance.
Strategies for Overcoming Resistance to Change
There are eight primary tactics for managing and overcoming resistance. Communication is essential to frame change as a challenge rather than a threat. Participation involves including employees in the decision-making process, making it harder for them to resist. Building support and commitment through counseling or training can ease anxiety, while developing positive relationships ensures employees accept change from leaders they trust.
Implementing change fairly through procedural transparency is another tactic. Manipulation and co-optation involve twisting facts or "buying off" resistance—though this is considered risky. Selecting people who accept change involves hiring individuals with high core self-evaluations (CSE) and emotional stability. Finally, coercion through threats or blocked promotions exists as a tactic but almost always backfires.
Lewin’s Three-Step Model for Change
Kurt Lewin proposed a foundational three-step model for change. The first step is Unfreezing, which involves breaking the equilibrium by increasing driving forces or decreasing restraining forces to create motivation for change. The second step is Movement, where the organisation moves toward the new state. Speed is critical here, as gradual transitions can allow resistance to regroup. The third step is Refreezing, where the new equilibrium is locked in to prevent employees from reverting to old habits.
Critiques of this model suggest that it is too sequential and progressive for modern, dynamic environments. It assumes managers have more agency and knowledge than they might actually possess, and the concept of "freezing" is viewed as problematic in a world where change is constant and uninterrupted.
Kotter’s Eight-Step Plan for Implementing Change
John Kotter expanded Lewin's model into a more detailed eight-step plan. Steps through correspond to Unfreezing: establishing urgency, forming a powerful coalition, creating a vision, and communicating that vision. Steps through represent Movement: empowering action by removing barriers, planning for and rewarding short-term wins, and consolidating improvements to adjust programs. Step represents Refreezing, which involves anchoring the new behaviors in the culture by linking them explicitly to organisational success.
Action Research and Organisational Development (OD)
Action Research is a data-driven, participative cycle for change consisting of five steps: Diagnosis (gathering info), Analysis (identifying patterns), Feedback (sharing finds), Action (implementation), and Evaluation (measuring effectiveness).
Organisational Development (OD) is a collection of change interventions that value human growth and collaboration. Key OD techniques include Process Consultation, where outside consultants help managers diagnose workflows; Team Building to increase trust; and Intergroup Development to reduce conflict between departments. Appreciative Inquiry is a specific OD approach that focuses on strengths through four stages: Discovery, Dreaming, Design, and Destiny. Unlike other methods, it builds on what is working rather than trying to fix what is broken.
The Change Paradox and Final Synthesis
The "Change Paradox" posits that there is no final, optimal state for an organisation. Because change is constant and driven by shifting external forces, leaders must find a "dynamic equilibrium" rather than a permanent destination. Cultural transformation is viewed as "unfinished business," and the role of leadership is to navigate this ongoing process rather than simply attempting to arrive at a fixed end-point.
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