PART

Managing Dynamic Processes

CHAPTER 11
ORGANIZATIONAL CULTURE ANE
ETHICAL VALUES
 Organizational Culture

 Organizational culture is the set of values, norms, guiding

beliefs and understandings that is shared by members of an
organization and is taught to new members.
- It represents the largely unwritten, feeling part of the
organization.
 Organizational culture exists at two levels:
- Observable symbols
- Underlying values
Levels of Corporate Culture
 Emergence and Purpose of Culture
 Culture provides a sense of organizational identity.
 Two critical functions in organizations:
- To integrate members so they know how to relate to one
another.
- To help organization adapt to external environment.
 Internal integration means that members develop a
collective identity and know-how to work together
effectively.
 External integration refers to how the organization
meets goals and deals with outsiders.
 Interpreting Culture
 Rites and ceremonies – special occasions that reinforce specific
values, and create a bond among people.
- Rites of passage, rites of enhancement, rites of renewal and
rites of integration.
 Stories are narratives based on true events that are frequently
shared among employees.
- Some stories are myths.
 A Symbol – something that represents another thing.
 Language – many companies use a specific saying, slogan or
other form of language to convey special meaning to
employees.
 Organization Design
and Culture
 Managers want a corporate culture that reinforces the
strategy and structural design that the organization needs to
be effective within environment.
 Culture can be assessed along many dimensions.
 Two specific dimensions are:
(1) The extent to which the competitive environment requires
flexibility or stability.
(2) The extent to which the organization’s strategic focus and
strength are internal or external.
Environment and Strategy to Corporate
Culture
 Organizational Design
and Culture
 Adaptability culture – focuses on external environment
through flexibility and change to meet customer needs.
- Not only reacts quickly to change, it actively create change.
 Mission culture – emphasis on a clear vision of the
organization’s purpose and on the achievement of goals.
 Clan culture – focuses on the involvement and participation
of the employees and on external expectations.
 Bureaucratic culture – an internal focus and a consistency
orientation for a stable environment.

Can you give an example of each category?

 Culture Strength and Organizational
Subcultures

 Culture strength refers to the degree of agreement among

members of an organization about the importance of specific
values.
 Culture is not always uniform throughout the organization,
particularly in large organizations.
 Subcultures develop to reflect the common problems, goals
and experiences that members of a team or department
share.
 Organizational Culture, Learning and
Performance
 Culture is important to learning and innovation during
challenging times.
 The right culture can drive high performance.
 Non-adaptive cultures encourage rigidity and stability.
 Strong adaptive cultures often incorporate the following
values:
(1) The whole is more important than the parts.
(2) Equality and trust are primary values.
(3) The culture encourages risk taking, change, and
improvement.
 Ethical Values and Social Responsibility
 Source of individual ethical principles
- Ethics refer to the code of moral principles and values that
governs the behaviours of a person or group with respect to
what is right or wrong.
- Ethics are personal and unique to each individual.
 Managerial ethics and social responsibility
- Ethical decisions go far beyond behaviours governed by law.
- Managerial ethics guide the decisions and behaviours of
managers.
- Social responsibility refers to management’s obligation to
make choices and take action to that the organization
contributes to the welfare and interest of all organizational
stakeholders.
Sources of Individual Ethical Principles and
Actions
Relationship Between the Rule of Law
and Ethical Standards
 Does It Pay to Be Good?

 Customers and the public are paying closer attention to what

organizations do.
 Social responsibility can enhance a firm’s reputation.
 Companies that adopt high ethical standards tend to win out in
the longer term.
How to allign with the environment?

#climate #democracy
#metoo
#positivedisrimination
#inclusion

#globalization
#developingcountries
 Source of Ethical Values in
Organizations
 Personal ethics
- Every individual brings a set of personal beliefs and values into
the workplace.
 Organizational culture
- Companies should make ethics an integral part of the
organization’s culture.
 Organizational systems
- Formal organizational system can reinforce ethical values that
exist in the informal culture.
 External stakeholders
- Organizations are part of a larger community.
- Important external stakeholders are government agencies,
customers and special-interest groups.
 How Leaders Shape
Culture and Ethics

 Values-based leadership
- A relationship between a leader and followers based on
shared, strongly internalized values that are advocated and
acted upon by the leader.
- Organizational values are developed and strengthened
primarily through values-based leadership.
 Managers play a key role in providing leadership and examples
of ethical behaviour.
 Values-based leaders engender a high level of trust and respect
from employees.
 Formal Structure and Systems
 Structure
- Ethics committee.
- Chief ethics officer.
- Ethics hotline.
 Disclosure mechanisms
- Whistle-blowing.
 Code of ethics
- A formal statement of the company’s values concerning ethics
and social responsibility.
 Training programmes
 These formal structures and systems alone are not sufficient to
build and sustain an ethical company.
 Ethics should be integrated into the organizational culture.
 Corporate Culture and Ethics in a Global
Environment
 The global environment presents tough ethical challenges.
 Countries have varied attitudes and beliefs.
 Components that characterize a global culture:
 Multicultural rather than national values.
 Basing status on merit rather than nationality.
 Managers must think broadly about ethics.
 Social audits measure and report ethical, social and
environmental impact of a company’s operation.
 Summary and Interpretation
 The right cultural and ethical values can contribute to
organizational success.
 Culture is the key values, beliefs, and norms shared by
members of an organization.
 Organizational culture reinforces strategy and structure.
 Four types of cultures may exist in organizations.
 Strong cultures can be adaptive or non-adaptive.
 Managerial ethics is a critical issue for organizations.
 Ethical decision making is shaped by many factors.
 Leaders influence culture and ethical values.
 The global environment presents new ethical challenges.
CHAPTER 12
INNOVATION AND CHANGE
 The Strategic Role of Change
 Today’s organizations must poise themselves to innovate and
change, not only to prosper but merely to survive in a world of
increasing competition.
 Environmental forces drive major organizational change:
• Technology.
• International economic integration.
• Maturing domestic markets.
• Globalization.
 To manage threats and opportunities, organizations must
change.
Forces Driving the Need for Major
Organizational Change
 Incremental versus Radical Change
 Incremental change represents a series of continual
progressions that maintain the organization’s general
equilibrium and often affect only one organizational part.
- It occurs through the established structure and management
process.
 Radical change breaks the frame of reference for the
organization, often transforming the entire organization.
-Involves the creation of a new structure and new
management processes.
 Two forms of change are sometimes needed at the
same time.
 Strategic Types of Change
 Four types of change are: products and service, strategy and
structure, culture and technology.
 Production and service change involve the product or service
outputs of an organization.
 Strategy and structure change are usually a top-down process.
 Culture change refers to changes in the values, attitudes,
expectation and behaviour of employees.
 Technology change is designed to make production more
efficient or to produce greater volume.
Strategic Types of Change
 Elements for Successful Change
 Ideas
- Ideas can come from within or from outside the organization.
- Internal creativity is a key element of organizational change.
 Need – Ideas are generally not seriously considered unless
there is a perceived need for change.
 Adoption occurs when decision makers choose to go ahead
with a proposed idea.
 Implementation occurs when organization members actually
use a new idea, technique or behaviour.
 Resources – Change requires time, resources and energy.
Elements for Successful Change
 Technology Change
 Managers implement an ambidextrous approach to be both
organic and mechanistic.
 Division of labour in the ambidextrous organization.
 Techniques for Encouraging Technology
Change
 Switching structures
- e.g. A mechanistic organization creates an organic structure.
 Creative departments
- The initiation of innovation is assigned to separate creative
departments.
 Venture teams are a technique used to give free rein to
creativity within organizations.
- Skunkworks, new-venture funds
 Corporate entrepreneurship promote entrepreneurial spirit
that will produce a higher-than-average amount of innovation.
- Idea, technical and management champions.
 New Products and Services
 New product success rate
- Approximately 80% of new products fail upon introduction
and another 10% disappear within 5 years.
 Reasons for new product success
- Innovating companies understand customers.
- Innovating companies successfully use technology.
- Top management supports innovation.
 Horizontal coordination model
- Specialization.
- Boundary spanning.
- Horizontal coordination.
 Achieving Competitive Advantage: The
Need for Speed
 Rapid development of new products and services is becoming a
strategic weapon in a changing marketplace.
 Regardless of the approach to innovation, the key point is the
same – get people working together simultaneously on a
project rather than in sequence.
 Time-based competition means delivering products and
services faster than competitors, giving companies a
competitive edge.
 Many new product development teams today are global teams
because products are expected to meet diverse needs
worldwide.
 Strategy and Structure Change
 The dual-core approach – administrative and technology.
- Administrative changes affect the design and structure of the
organization itself.
- Technical change is concerned with the transformation of raw
materials into organizational products and services and involves
the environmental sectors of customers and technology.
 The importance of the dual-core approach
- Organizations must adopt frequent administrative changes
and need to be structured differently from organizations that
rely on frequent technical and product changes for competitive
advantages.
 Dual Core Change

https://www.linkedin.com/pulse/digital-transformation-managing-dual-approach-business-ohr/
Dual-Core Approach to
Organization Change
 Organization Design for Implementing
Administrative Change
 Organizations that successfully adopt many administrative
changes have/are:
- A mechanistic organization structure.
- Larger administrative ration.
- Larger in size.
- More bureaucratic.
- More formalized.
- More centralized.
 Culture Change
 Changing culture often leads to a number of consequences:
- How work is done in an organization.
- Renewed commitment and empowerment of employees.
- A stronger bond between the company and its customers.
 Forces for culture change
- Reengineering and horizontal organization
- Diversity
- The learning organization
 Changing to a learning organization involves more fundamental
changes in the structure, procedures and decision making
process.
 Culture Change
 Organization development (OD) culture change
interventions
- OD is one method of quickly bringing about culture change.
- It emphasizes the values of human development and
openness.
- It is a process of fundamental change in the human and
social systems of the organization.
 Techniques of OD:
- Large group intervention
- Team building
- Interdepartmental activities
 Leadership for Change
 Implementing complex changes requires strong and persistent
leadership.
 Transformational leadership is particularly suited
– enhances organizational innovation both directly and
indirectly.
 Three stage of the change commitment process:
- Preparation
- Acceptance
- Commitment
 Leaders must develop the skills and methods needed to help
their organization remain competitive.
The Change Curve
 Barriers to Change

 Many barriers to change exist at the individual and

organizational levels:
- Excessive focus on costs.
- Failure to perceive benefits.
- Lack of coordination and cooperation.
- Uncertainty avoidance.
- Fear of loss.
 Techniques for Implementation
 Establish a sense of urgency for change.
 Establish a coalition to guide the change.
 Create a vision and strategy for change.
 Find an idea that fits the need.
 Develop plans to overcome resistance:
- Alignment with needs and goals of users.
- Communication and training.
- An environment that affords psychological safety.
- Participation and involvement.
- Forcing and coercion.
 Create change teams.
 Foster idea champions.
 Summary and Interpretation
 Change, not stability, is natural in today’s global environment.
 Organizations need to build in change and stability.
 Incremental and radical change.
 There are four types of change: technology, products and
services, strategy and structure, and culture change.
 Organic structures foster technical innovation.
 A top-down approach is best for changes in structure and
strategy.
 Top managers must foster culture change.
 The implementation of change can be difficult.
 Strong leadership is needed.
 Barriers to change exist, but many techniques can be used to
facilitate implementation.