Strategic Management: Formulation and Implementation

Changing Corporate Culture

Change is essential if organizations are to remain competitive. The external environment, for example, technological advancements, international competition, may undergo drastic change and the organization must either adapt to these new conditions or it may not survive.

New strategies based on quality require special cultural change because the old culture may have throughput and schedules. However, changing an organization's culture takes enormous time and effort because it often involves changing basic beliefs and values. Predictable obstacles include entrenched skills, staffs, relationships, roles, and structures that work together to reinforce traditional cultural patterns, and powerfully stakeholders such as unions, management, or even customers may support the existing culture.

Problems arise when the cultures of two firms involved in a merger are incongruent. Corporate cultures tend to be enduring: they change slowly with great effort.

John P. Kotter and Leonard A. Schlesinger have identified the following reasons for resistance:

Despite the significant barriers and resistance to change, cultures can be managed and changed over time. This process of changing involves the use of variety techniques including socialization, training, motivational programs, new structures, new systems, crossfunctional groups, and new stories or symbols spread by management.

Richard Pascale suggests that organizational socialization is necessary for organizational effectiveness. Organizational socialization is the process of conveying the organization's goals, norms, and proffered ways of doing things to the new employee. Pascale suggests a seven step approach to successful organizational socialization:

  1. selection
  2. humility inducing experiences
  3. training
  4. meticulous attention to systems for measuring operational results and rewarding individual performance
  5. careful adherence to the firm's transcendent values
  6. reinforement folklore
  7. consistent role models

These seven steps suggest that how people are brought into the organization can have a major impact on their future relationship and subsequent productivity.

A report issued by the Business Rountable discussed ethics, policy in one hundred companies. In the experience of the served companies, the single most important factor in ethical decision making was the role of top management in providing commitment.

Schein advocates five "primary embedding mechanisms" for altering culture by leader and other top management:

  1. The first mechanism is systematically paying attention to certain areas of the business.
  2. The second mechanism involves the leaders's reactions to critical incidents and organizational crises.
  3. The third mechanism is to serve as a deliberate role model, teacher, or coach.
  4. The way top management allocates rewards and status is fourth mechanism for influencing culture.
  5. The fifth mechanism involves the procedure through which an organization recruits, selects, and promotes employees and the ways it dismisses them.