A&B Company A Case Study in Organizational Diagnosis: Culture vs. Climate Week 1: Organization Culture & Climate Lecture 1: We will use this as our case study to examine the culture, climate and communication of an organization that is attempting to make significant changes. The organization, which I will refer to as A&B Company, is a composite of several high tech manufacturing companies. 1. This is a case study in the diagnosis of organizational culture and climate. 2. It’s important to understand the difference between these two organizational constructs. They are distinctly different from one another and you will need to attend to this when you create your communication plan. A Comprehensive Organizational Assessment: The Organizational Concepts 1. There are five organizational concepts that are important to understand and vital in the development of a communication plan. 2. These are: Organizational Culture, Organizational Climate, Organizational Effectiveness, Product/Service Outcomes and Organizational Mission. 3. It is very important to understand these constructs with clarity and detail and how they relate to one another in order for the company to be successful and produce high levels of outcomes like innovation in the case A&B Company. Diagnosing Organizations: Alignment 1. In order for an organization to produce successful outcomes it is important for Climate, Culture, Effectiveness and Mission to be in alignment 2. If they are not in alignment then it is difficult to achieve success. 3. So for example if the goal of the mission is to offer customers the most innovative products on the market in their industry niche and the culture of the company does not support the behaviors necessary to produce this level of innovation then the company will most likely fail to achieve their goal. 4. This is what was happening in A&B Company that we are examining in this case study. Week 2: Organization Culture & Climate Lecture 2: We examined the results of the culture diagnosis of A&B Company and found that the culture was characterized as very hierarchical. 1. This lecture will describe the methodology used to measure the organization’s climate at A&B Company. Organizational Culture Drives Organizational Climate 1. There are many ways to measure the climate of organizations: qualitative and quantitative. The methodology that I will be describing was used in A&B Company as well the majority companies with whom I have consulted. It is a methodology that produces quantitative and qualitative data for analysis. 2. Remember that the culture of the organization DRIVES the climate. It any change effort it ALWAYS goes back to the culture. Survey Measures 1. When this methodology was implemented in A&B Company we identified 30 organizational attributes or constructs that were defining the organization. These are the attributes that employees interact with every day in their work environment. Their level of satisfaction with these attributes will be measured with the survey that is developed. 2. In addition to the attributes that define the organization we also wanted to measure innovation and 5 additional outcomes. Remember, the levels of successful “outcomes” are a determined by the culture and climate. 3. Employee Engagement is a very important outcome in any organization Attributes that Define the A&B Company Climate 1. So these are the specific attributes that define the climate of A&B Company. 2. The survey was designed to measure each one of these attributes AND each of the six outcomes. Each attribute or construct is composed of multiple items (on average 5-8) to establish high reliability. 3. Look at the attributes in the blue box. Can you predict which ones will be low in A&B Company? Remember, we know that this is a hierarchical culture and that the culture drives the climate. Which one of these organizational attributes would be low based on the goals of a hierarchical culture? Lecture 3: The Diagnosis of Organizational Climate: Descriptive Results Descriptive Results 1. Let’s review the structure of the charts that I will present now. These are the results of employee opinions for each of the 30 constructs that define the organization’s climate. The results are displayed as % favorable and they are listed in descending order for the total population (Total % Fav.). I have also listed the opinions of management separately in the last column (Mngt. % Fav.). You will want to examine the differences between management and employees throughout because they will be important in the development of your communication plan. 2. Let’s look at an example result. “Satisfaction With Work-Life Balance” has a high % favorable for the total population (90% favorable) as well as for the management. (85% favorable). I won’t review every single construct but you should spend some time reviewing these next few slides in detail so you understand how the climate is being characterized by employees. As you can see these constructs exist at fairly high levels of satisfaction in this organization – at least in the chart. One additional thing. Some of the constructs contain a double ** asterix. This means that this construct is typically found at high levels of satisfaction in high performance innovative teams. Make note of these constructs especially. There are two on this slide. Descriptive Results 1. The opinions of employees are still fairly high for the constructs reported here. 2. And note that there are two more “high performance constructs” that are evaluated high……Challenge of Work and Quality of Technical Advice. Descriptive Results 1. Now we are beginning to see that some negative opinions are entering the diagnosis. For example, Performance Evaluation is indicated at 66% favorable by employees. This means that about 1/3 of employee have either a negative opinion or they indicate that they are not sure. Descriptive Results 1. Opinions continue to fall. Less than half of the employee population expresses favorable opinions about Intergroup Cooperation and Management Consideration. 2. And we are starting to see that the opinions that management express are dramatically different from the employee population. There is a 20% difference in favorable opinions regarding Trust and Openness. On the next slide I will show you the individual items that compose the construct “Management of Information Flow” and their results. Note: this is an important category for you to consider in your communication plan Descriptive Results 1. So now instead of constructs that appear on the left column you will see the actual survey items that compose one construct – Management of Information Flow. 2. Note each survey item and its corresponding favorable scores for the total population and the management carefully. I have highlighted some of the important results for you. Note also the difference between management and employees on these items. It will be important for you to take this data into consideration when developing your communication plan. Descriptive Results 1. I have highlighted this one item from the survey for an important reason. Can you guess what this reason is? It directly supports the findings of the cultural analysis I showed earlier. It is a measure of perceived control in the work environment. Descriptive Results 1. Finally this is the last of the 33 constructs that define the company’s climate. 2. Notice that the least favorable construct in the entire survey is “Support For Risk-Taking In My Department”. Did you predict that this would be low? Why is it low? Think about the kind of organizational culture we found in this company in the culture diagnosis. A&B Outcomes 1. We also measured 6 outcomes. 2. Let’s look at those data results. A&B Outcomes 1. Note the low Morale and especially the low Readiness for Change. Consider these as you begin to put your communication plan together. Creativity & Innovation 1. Finally, we measured the outcome Innovation. This is the verification that Innovation is only average in A&B company. Remember that this company believed that their innovation was too low. This result in the diagnosis validates that in fact there is lower innovation. 2. Here is the Organizational Climate of A&B Company. 3. Green indicates strengths; red indicates weaknesses and yellow is somewhere in between. Lecture 4: The Diagnosis of Organizational Climate: Descriptive Results 1. Now we will examine the relationships between variables using inferential statistics. This is how we will identify the drivers of innovation and other outcomes in the company. What We Know So Far 1. What so we know so far? We know the baseline scores of A&B Company for the total population and for the management. 2. We also have an understanding of the basic climate of A&B Company as defined by its strengths and challenges. What We Do Not Know 1. We do not know what constructs in the climate are driving innovation and the other five outcomes such that if they were improved so would the outcomes. 2. And we do know what role does the culture of the organization plays in understanding and improving outcomes. Drivers of Innovation 1. Now you can see that the results of this Driver Analysis identifies the attributes or constructs in the organization that are driving the outcome Innovation. This means that there is “Average Innovation in Company A&B as a result of Support for Risk Taking, Challenge of Work, Management of Information Flow, Decision-Making Autonomy, and Trust & Openness. Remember, all 30 of the constructs we measured were tested in their ability to predict the outcome, Innovation. The most significant drivers are the one listed here. 2. In the world of research we refer to the drivers as the Independent Variables (IVs) and the outcomes as the criterion or dependent variable (DV) 3. So what does this chart tell us practically? Well, we know that if we want to improve innovation which has been measured at average levels then we can do so by increasing each of these five drivers – Support for Risk Taking, Challenge of Work, Management of Information Flow, Decision- Making Autonomy, and Trust/Openness. 4. We also know that Support for Risk-Taking is the most powerful of all the drivers with respect to changing Innovation (that's what the “power” in the chart is indicating). So if we were to choose only one driver to change it would be Support for Risk Taking. 5. And finally we know that two of the drivers, Challenge of Work and DecisionMaking Autonomy are already at acceptable favorable levels (81% and 95% favorable ratings respectively) and don't need to be changed. The other three drivers are at unacceptable favorable levels and need improvement if innovation is going to improve. 6. Finally, we know that if these drivers do not change, then probably innovation will not change and if these drivers decrease in favorability then innovation will decrease. 7. Bottom line is – A&B Company needs to improve the weaker drivers and maintain the stronger drivers of the five listed in the analysis What Inhibits Risk-Taking? 1. Now, let’s use the same methodology but this time lets try and see if we can better understand why Support for Risk-Taking is so low (23% favorable). We know that this is a hierarchical culture but how does that culture manifest itself within the climate of the organization such that Risk- Taking is not supported at acceptable levels? 2. When we conduct the driver analysis using Risk-Taking as the “outcome” or DV and we again test every organizational attribute that we measured as a potential driver we find that three organizational constructs of the original 30 drive RiskTaking. They are Management of Information, Trust and Openness in the Company and Rule Orientation. 3. And we find that Management of Information Flow and Trust/Openness are highly correlated. 4. Note the conclusions that I draw on the chart itself. 5. What does all this have to do with putting together a Communication Plan for Change? The Current State of A&B Company 1. A&B Company operates from within a very strong Hierarchical Organizational Culture. 2. This culture is producing (or demanding) a stable and predictable Organizational Climate. 3. The stable and predictable climate is maintained by efficiency, consistency and uniformity that is producing risk aversion, poor communication and poor cooperation & collaboration flow. 4. The mission/goal/objective of the company is high innovative products. 5. The culture, climate, effectiveness and mission are not in alignment. – Desired State of A&B Company 1. The desired state of A&B Company is to produce innovative products. In order to accomplish this the culture, climate, effectiveness and mission must be aligned. 2. And the organizational culture that supports this mission the best is an innovative organizational culture. 3. You goal is to create a communication plan that initiates this change. 4. This will be your opportunity to utilize your readings from Cameron & Quinn, Schein, and Kotter and the Communication Plan guidelines. Highlights of Your Communication Plan IMPORTANT INSTRUCITONS from INSTRUCTOR Communication Plan Template Students sometimes ask if they must follow the Communications Plan Template. You do not have to follow the Template word for word. The template provides you with all of the major topics that need to be addressed in the plan. Some students use the template provided as a recipe where all of the ingredients are listed. This is the most common approach and if constructed and written well this approach is a path to an “A” rated final paper. Some students choose to write the paper from a non-traditional perspective. They get creative and go beyond the recipe but they still address all of the major topics that I have listed in the Communication Plan Forums throughout the course. You have all of the major topics that need to be discussed. These are the topics that compose a good communications plan whether it is accomplished by using the Communications Template or some other means. If you have a different way to present the plan then go for it. I do look for the following in every paper however: • • • • • • Have all of the major topics been presented in the plan. These are the list of topics that I provided in the first week: Communications Plan Final Paper: Overall Structure Is evidence presented for the aspects of the paper in which change is recommended/discussed. What is that evidence? What is the source of this evidence. To receive a grade of "A" there must be at least 5 sources that provide evidence for what you are proposing. These sources must be cited properly (per APA format) in the paper and listed properly at the end in a list of references. Is the paper supported by the work that has been read in class through quotes/paraphrases from other work. It is important to show me that you have read the material and that you understand how to support your opinions. You have been doing this in the answers to the weekly Discussion Questions. Now just extend it to the final paper. Do you present your own opinions and analysis. I am not just looking for what others would do. I want to know what you would propose/do. Are there tables and charts presented that help summarize the information. These are often very helpful. Accompanying charts, illustrations, tables, etc. are always a good way to help communicate information in an organization. Is everything presented in APA format (references, citations, cover page) Also, feel free to add charts from my power point and/or illustrations that may help the reader absorb the information that you are presenting. EMPLOYEE ENGAGEMENT & CHANGE MANAGEMENT Colin Dicke, American Express Graduate Research Assistant to CAHRS Many companies in search of new competitive advantages in today’s fast-paced global economy are exploring the concepts of change management and employee engagement. This paper provides background information on the two concepts; relates the two concepts to each other; introduces findings on the relationship between organizational commitment and change management; discusses types, key functions, and strategies of change management; and presents barriers as well as success stories to engagement during change management initiatives. Multiple research sources consider employee engagement to be a primary antecedent to successfully implementing an organizational change initiative. Inherently, people are wary of change and reluctant to change. If organizations are not implementing change for the sake of change then it is fair to assume that the intention of their change initiative is to improve some business component that will have an overall positive affect on organizational operations and business success. Therefore, it is understandable why researchers believe that increasing employee engagement, or translating “employee potential into employee performance and business success,” is so important to the success of change management (Shaw, 2005). Background Employee engagement. Employee engagement has a relatively short historical timeline. It can be theorized that changes to the global market in the 1980s and 1990s increased interest in concepts such as employee engagement. Proactive companies searching for new avenues to achieve competitive advantages were looking ‘outside of the box’ for answers. The Gallup Organization conducted studies on employee engagement from the mid to late 1980s and published their results in a very popular book, “First, Break All the Rules” (Ferguson). Gallup feels their research proves that engaged employees are more productive, profitable, customer-focused, safer, and more likely to stay with an organization (Gallup). Gallup’s book arguably introduced the concept to the global market. In 1990, W.A. Kahn was one of the first in the field of psychology to discuss employee engagement and related it to the concept of disengagement. Since the early 1990s other consulting firms and research organizations have followed suit doing research and creating their own hypotheses concerning employee engagement. While employee engagement has been present for approximately twenty years relatively little research has been completed to truly qualify or quantify the concept’s distinct existence. Employee engagement has a very broad reaching scope such that, “there are potentially thousands of different individual actions, attitudes, and processes that affect engagement.” What engages a new recruit out of college can be very different from what engages a senior level manager (Shaw, 2005). As a result, employee engagement lacks a distinct definition and process for measurement. In addition, employee engagement is potentially interchangeable with other concepts such as organizational commitment and organizational citizenship behavior. Currently, these issues compounded are causing the concept of employee engagement to become vague or diluted and threaten the concepts credibility and very existence (ibid). Change management. From a theoretical perspective, the concept of organizational change has a close alignment with the theory of social change and conflict theory (Price & Chahal, 2005). From a historical perspective, the growing interest in change management began when there was a fundamental shift in the organizational structure of factories operating within the U.S. economy. 49 In the nineteenth century factories were lean, flexible, and adaptive to change in headcount, work, and financing. Top managers were owners focused mainly on sales and distribution, subcontractors made up as much as 50 percent of the workforce, outsourcing was widespread, and middle managers were virtually non-existent. As sub-contractors profits grew factory owners began to change their organizational structures such that foremen, with their autocratic leadership style, and employees replaced most subcontractors (Ogilvie & Stork, 2003). In the late nineteenth century large immigration populations began entering the United States adding levels to organizational hierarchy, difficulty to employee management, and thus complexity to change management (ibid). For more than 50 years before “human resources” (HR) was coined as a phrase by P. Druker in 1954, individuals interested in or responsible for HR have been involved with the design and implementation of change management (Ogilvie & Stork, 2003). Fast forward to the 1980’s and 1990’s: Global competition begins to replace local and regional competition. Advances in technology speed up processes and improve an organization’s ability to imitate, thus eliminating many companies’ ability to find competitive advantages and exploit them for extended periods of time. The responses to these changes were widespread and included large-scale M&A’s, downsizing, and realignments (Ogilvie & Stork, 2003). As a result, interest in change management experienced tremendous growth to reach its current level. Employee Engagement and Change Management relationship While there is not a single clear definition of employee engagement, there are themes we can extract for the purposes of understanding a relationship to change management. Melcrum completed a recent study, which reviewed much of the current material on employee engagement and combined summaries of this material with research of their own. For the purposes of their research they defined employee engagement based on a very broadly consensual view extracted from other definitions they uncovered. Melcrum’s definition states, “employee engagement is about translating employee potential into employee performance and business success” and expounds, “changing the way employees perform by utilizing the tools in the armory of internal communication professionals” (Shaw, 2005). Vance (2006) also completed a report for the Society of Human Resource Management (SHRM) in which he highlights common themes across compiled definitions. Vance states, “The greater an employee’s engagement, the more likely he or she is to ‘go the extra mile’ and deliver excellent on-the-job performance.” Therefore, if employees are engaged during a change management initiative they are likely to have increased “buyin” and better performance thus, supporting business success. In much of the research concerning change management strategies, employee engagement is listed as a primary function to the success of properly implementing a change management initiative. Schmidt & Jackson (2005) state the fourth step to a balanced culture, communication, is “where engagement, ownership, and empowerment are built.” Goodman & Rousseau (2004) detail the reasoning behind the second step of linkage analysis, mapping the change pathway in order to identify obstacles, as a way to provide a, “positive feedback system where knowledge sharing improves engagement performance, which leads to more knowledge sharing, which, in turn, accelerates knowledge sharing and the subsequent cycle.” Price & Chahal (2005) list “communications and workforce engagement” as step number four in their six-step process. Finally, Guy & Beauman (2005) highlight “engagement and alignment” as one of the three main categories for successful change management. 50 Guy & Beauman (2005) also list commitment as the leading component of engagement and alignment, thus, drawing attention to an on-going issue concerning the crossover between the concepts of engagement and commitment and highlighting a need to research the relationship between organizational commitment and change management. Organizational Commitment & Change Management Due to employee engagement’s close relationship to organizational commitment, understanding organizational commitment’s relationship to change management may provide some valuable insight. Fedor, et al., (2006) recently completed a study on organizational change and its impact on employee commitment. Their study investigated thirty-two different public and private organizations. They divided commitment into two parts: commitment to the change initiative and commitment to the organization. Results indicated that both commitment types were impacted by a three-way interaction of the overall favorableness (positive/negative) of the change for the work unit members, the extent of the change in the work unit, and the impact of the change on the individual's job. The most important overall findings were that, “commitment to the change and the organization are not impacted in the same way by organizational change and individuals' reactions to change based on a complex calculus reflecting different aspects of the change and its consequences.” The implication of these results is that focusing on a change initiative’s impact on either of these two types of change, by themselves, is not satisfactory (Fedor et al, 2006). More specifically, commitment to the change reached its highest level when; the change demands occurred primarily at the unit level, change demands at the individual level were low, and the change was deemed favorable. If the change was seen as generally unfavorable commitment dropped. For commitment to the organization, the highest level was reached when the change was deemed favorable and when it occurred primarily at the unit level. Interestingly, the lowest commitment to the organization level occurred when the change was deemed favorable but the change demands on the individual were high and low at the unit level. It seems that if the employees felt they carried the burden of the change on their shoulders, commitment dropped (ibid). Fedor et al’s findings may have implications for the relationship between employee engagement and change management. As an organization designing a change initiative, consider how; overall favorableness (positive/negative) of the change for the work unit members, the extent of the change in the work unit, and the impact of the change on the individual's job affect engagement to the change initiative as well as the organization. Chawla & Kelloway (2004) completed a study of 164 employees to determine variables that predicted an individual’s commitment to an organizational change. Their results highlight the impact perceptions of procedural justice have on understanding organizational commitment. Chawla & Kelloway (2004) determined that communication and job security were both direct and indirect predictors of trust and openness (i.e. commitment). Participation (i.e. employee involvement) was a direct and indirect predictor of trust but only an indirect predictor of openness. Finally, trust and openness negatively predicted an employee’s intention to leave the company and turnover intentions predicted neglect. If organizational commitment and employee engagement are closely related then Chawla & Kelloway’s results highlight communication and trust as potential key functions of employee engagement. In addition, these functions are two of the same key functions found in the studies mentioned earlier by Guy & Beaman and Porras & Hoffer concerning effective change management. Chawla & Kelloway’s results also highlight the importance of employee involvement to commitment, thus, engagement. This could 51 also be considered another key function shared with change management if you consider collaboration, information flow, and effective problem solving to be under the umbrella of employee involvement. Konrad (2006) supports the notion that employee involvement is key to employee engagement by stating, “employees who conceive, design and implement workforce and process changes are engaged employees.” Effective Change Management As is true with many concepts used by strategic HR professionals, the components of effective change management are not terribly difficult to comprehend rather the difficulty lies more within implementation. Types of change management. As an organization begins the process of developing a change management strategy it is important to recognize that research has determined that there are different types of change. Price & Chahal (2005) discuss Johnson and Scholes’ research on change. Johnson and Scholes’ describe two main types of change: crisis change and chosen change. Crisis change is typically a reactive response to some type of external factor or fear of failure. Chosen change describes a more proactive approach taken by employees within an organization that are trying to drive success (ibid). Price & Chahal (2005) also highlight Pritchett and Pound’s research on three primary components of organizational change: developmental change, transitional change, and transformational change. Developmental is defined as “doing more of, or better than, what currently exists.” Transitional is, “implementation of a new desired state requiring dismantling existing new ways.” Transformational is, “implementing an evolutionary new state, requiring major and ongoing shifts in organizational strategy and vision.” When designing a change management initiative research suggests that how different types of change are defined is not as important as considering the complexity level of the change in your initiative. Effective change functions. Upon reviewing research on how to implement effective change management it is clear that different functions have been highlighted over the years. Schmidt and Jackson (2005) highlight leadership functions in their study that are needed to successfully navigate the paradoxical opposites faced during everyday organizational change. The functions they list are as follows: • Ability to balance short-term and long-term focus. • Ability to increase quality and lower costs. • Ability to improve speed and accuracy. • Ability to be adaptable and be consistent. • Ability to secure individual engagement and hold fast to a larger company vision. • Ability to balance the competing needs of employees and customers and stockholders. Guy & Beaman (2005) believe the main component of effective change management is creating an initiative that is sustainable. Functions they list for sustainability are: • The ability to identify resistance, redundancies, and inefficiencies as well as knowledge of the best approaches to alleviate these issues. • The ability to set clear steps for the change process and facilitate the process to make certain every step is taken. • The ability to build and maintain relationships among employees impacted by the change initiative to ensure their engagement in the process. 52 The question then becomes, are there any common ‘function’ themes that span across research? Guy & Beaman (2005) highlight effective communication and the ability to clarify as the primary functions of successful change implementation, followed by the ability to build trust and achieve collaboration. Porras and Hoffer also list communication, collaboration, respect (which typically goes hand-in-hand with trust) and information flow, which relates to ability to clarify. In addition, Porras and Hoffer list factors including responsibility, leadership and shared vision, effective problem solving, support and developing others, participation, and strategic management (Price & Chahal, 2005). Jimmieson, et al., (2004) completed a longitudinal study in which they looked at the effect of change-related information and change-related self-efficacy on organizational change. Change-related information is a form of communication and change-related self-efficacy can be seen as effective problem solving. Jimmieson et al., (2004) found direct and indirect relationships between information and efficacy and positive forms of adjustment to change such as psychological well-being, client engagement, and job satisfaction. Of these functions, good communication seems to be the most common articulated competency. J.P. Kotter, a Harvard professor and change specialist, supports the theory that communication is key and believes, “Transformation is impossible unless … people are willing to help, often to the point of making short-term sacrifices. Employees will not make sacrifices if they are happy with the status quo, unless they believe that useful change is possible. Without credible communication, and a lot of it, the hearts and minds of the troops are never captured” (Smith, 2006). Within these studies mentioned above communication seems to be followed by collaboration, information flow, trust, and effective problem solving. The key functions associated with change management also share a strong relationship to employee engagement. Saks (2006) believes employee engagement is, “a series of actions and steps that require the input and involvement of organizational members and consistent, continuous, and clear communications.” Communication seems to be paramount to both concepts and employee involvement requires information flow, trust, and arguably effective problem solving. Research on organizational commitment can also be seen as support for a strong relationship between the functions of communication and trust and the concept of employee engagement. Therefore, if an organization is proficient in the functions required for successful change management, they are proficient in functions strongly associated with employee engagement. Change management strategies. It is difficult to create a change management strategy that grows or maintains employee engagement in today’s fast paced global economy. Contrary to what many change management consultants want us to believe there are no ‘silver bullet’ strategies that apply to all firms. In 1992 Roberts and Brown’s designed a composite model for organizational culture change that stemmed from the earlier work of Lewin, Beyer & Trice, and Isabella. In this model change was broken down into three phases: unfreezing mechanisms; experimentation; and refreezing mechanisms. Then Robert’s & Brown took these phases and mapped them against social behaviors and cognitive states (Price & Chahal, 2005). Guy & Beauman’s (2005) research led them to believe the secrets to successful change management fall into three main categories: organizational competency; alignment and engagement; and competitive pressure. Under organizational competency: (1) knowledge and competency of leadership, (2) capability or competence, (3) the resources. Alignment and engagement has an extensive list of factors with the top three being: (1) commitment, (2) employee involvement, and (3) a tie between sponsorship and link to mission and values. Finally, competitive pressure is split between: (1) burning platform and (2) market pressure. Hypothetically, by focusing a change management initiative in accordance to the ranking of these factors an organization should improve their chances for success. 53 Goodman & Rousseau (2004) have a different focus for what they believe will provide successful organizational change. They believe that there is a paradox where, “organizational changes are expected to lead to performance benefits for a unit as well as for the firm as a whole, but benefits occur only for the unit.” To counter problems associated with this paradox Goodman & Rousseau (2004) go into detail concerning how to use a linkage analysis to, “detail critical change pathways that otherwise go unrecognized and unmanaged.” First, a linkage analysis identifies organizational features that may be obstacles by asking: (1) How is the firm organized? (2) Are the performance metrics similar? (3) What is a units’ functional contribution to overall firm success? (4) What are the time lags between the change and observable results? Second, a linkage analysis maps the change pathway in order to identify obstacles. Third, the analysis introduces mechanisms that will build stronger linkages. Three main mechanisms are: Multilevel Motivation Systems, problem-solving mechanisms, and a mechanism to coordinate your efforts vertically and horizontally. The idea behind a linkage analysis is it assists managers in visualizing the change initiative so that they are able to identify critical change pathways that may otherwise go unnoticed (ibid). Price & Chahal (2005) developed a strategy for change management based off literature review, case studies, interviews, and personal experience. Their strategy incorporates six steps: (1) Prepare the organization, (2) Develop the vision and implementation plan, (3) Check or review, (4) Communicate and build workforce engagement, (5) Implement, (6) Evaluate. Price and Chahal (2005) recognize that the process made need adjustment and feel that adjustment can occur at the local level. They also see the whole process as a continuing circle that eventually becomes the driver for a new change. Schmidt & Jackson’s (2005) feel a balance culture is key to managing change. They define culture as, “how you get things done” and include examples such as, “Execute and operationalize your vision and strategy; Communicate internally and externally; Solve problems and make decisions; and Launch and support teams and run meetings.” Building a balanced culture is broken down into six key steps: (1) Create urgency – address points of pain, (2) Establish direction, (3) Charter a change team, (4) communicate, (5) Align and empower leaders and employees, (6) Align infrastructure and increase accountability. Schmidt and Jackson (2005) believe that once leaders are educated in the process of balancing culture they can use that culture as a “rocket booster of change.” Managing organizational change is difficult due to the fact that it is an ongoing process rather than an event (Price & Chahal, 2005). In addition, factors such as individual organization characteristics, industries, economic forces, and competitive climates can impact organizational change. Successful strategies seem to be those customized according to the unique qualities and competitive environment of a firm and may incorporate different components of other successful strategies. Barriers to Engagement during Change Increasing employee engagement is a difficult process. Saks (2006) states, “managers should understand that employee engagement is a long-term and on-going process that requires continued interactions over time in order to generate obligations and a state of reciprocal interdependence.” Saks (2006) also stresses the point that, “engagement is a broad organizational and cultural strategy that involves all levels of the organization.” As stated earlier, strong communication, collaboration, information flow, trust, and effective problem solving all seem to be common key functions of both engagement and change. If employee engagement is a primary antecedent to successfully implementing an organizational change initiative then deficiencies in these key functions form a potential a barrier to employee engagement as well as the change initiative. 54 Referring back to Schmidt and Jackson’s (2005) work on change and a balanced culture they list five common ways to fail a culture change initiative: (1) Believing culture is the easy work, (2) Underestimating senior leadership support required to create momentum, (3) Attempting it with the same people who created the current reality, (4) Underestimating resistance, (5) Unwilling to change yourself. Of these five, Schmidt and Jackson (2005) indicate “believing culture is the easy work” has a significant impact on employee engagement during change. Depending on the organization, cultural work can be very daunting. An organization with strong communication, collaboration, information flow, trust, and effective problem solving will have a higher potential for success in implementing a successful change initiative than an organization lacking this proengagement culture. In addition, organizations without an established engagement culture cannot simply go to their friendly HR market and pick up a ‘employee engagement for dummies’ manual expecting to have an engagement culture up and running in a relatively short period of time. They must place immediate focus on creating and maintaining key functions for a culture that promotes employee engagement. Success Stories While it is difficult to obtain and maintain employee engagement during change initiatives it is far from impossible. Guy & Beaman’s (2005) site multiple examples of success across industries: Motorola went about the challenge of linking its change acceleration strategy and its Digital Six Sigma Management System to produce a high-performance system for executing business strategy effectively and efficiently. Motorola focused on translating commitment into momentum and divided the process into “digestible” parts to support a quick transition. Training was supplied to all stakeholders on topics such as overcoming resistance, business acumen (for HR practitioners), and relationship management. Motorola also designed a “change acceleration Web portal” to support communication and act as a central depository for all information relevant to the initiative. Stakeholders were frequently informed of the importance of their role in the change initiative and feedback was constantly solicited. Motorola listed three primary contributors to its success: creating its own “change language,” having a high level champion, and linking training to key initiatives. AT&T, after having already downsized 50% in staff and budget went about instituting an outsourcing initiative that would transfer roughly 500 members of its HR team to the outsourcing provider. AT&T implemented a change initiative that incorporated seven key components: visible leaders, project teams, effective communication, alignment and coordination, minimal adequate resources (to stimulate creativity), measuring and monitoring, and rewards. Post initiative, AT&T stressed tenets (mutually agreed upon foundation), teamwork, and tenacity as primary drivers of its success. In January of 2000 General Motors (GM) launched “GoFast!,” a change initiative to create a fast, focused and fearless culture. GM came away with six lessons it found attributable to the success of its initiative. Integrate the change into everyday work. Gain buy-in and leadership engagement as results are delivered while recognizing not everyone will engage. Build both flexibility and firmness into the initiative. Constantly increase change capabilities. Finally, constantly celebrate success and “communicate, communicate, communicate.” As you can see, each company took a customized approach to implementing successful change management initiatives and each example highlights at least one of the key functions discussed earlier for engaging employees and implementing change. 55 Summary Employees who are engaged during a change management initiative are likely to have increased “buy-in” and better performance. Considerable research concerning change management strategies lists employee engagement as a primary function for successfully implementing a change management initiative. The key functions associated with successful change management also share a strong relationship with employee engagement. Communication is most common of these functions followed by collaboration, information flow, trust, and effective problem solving. If an organization is proficient in the functions required for successful change management, they are proficient in functions strongly associated with employee engagement. Contrary to the statements of many change management consultants there are no ‘silver bullet’ strategies that apply to all firms. Research has determined that there are different types of change, so as an organization begins the process of developing a change management strategy it is important that they adjust accordingly. Organizational commitment is a closely related concept to employee engagement but holds a longer history; therefore research on its relationship with change management can provide valuable insight. Successful change management strategies seem to be customized according to the unique qualities and competitive environment of an organization and may incorporate different components of other successful strategies. Finally, the largest barrier to employee engagement during change seems to be an organizational culture lacking experience with or support for the primary functions required for engagement and change management. Conclusion Interest in change management and employee engagement evolved from the emergence of the global economy in the 1980s and 1990s. There are numerous studies offering different strategies for successful change management but most share the common theme that successful employee engagement is considered a primary antecedent to successful change management. In addition, it seems that employee engagement and change management share many of the same functions deemed a requirement for successful implementation. Finally, research on organizational commitment and change management was more readily available and provided potential support for the relationship between engagement and change. Going forward, more extensive research must be conducted on the relationship between engagement and change management in order to gain additional insights on how to use these concepts to improve sustainability and profitability within organizations. 56 Works Cited Anuradha Chawla, E. Kevin Kelloway, (2004). Predicting openness and commitment to change. Leadership & Organization Development Journal, Emerald Group Publishing, 25, 6, 485-498. Employee engagement, The Employee Side of the HumanSigma Equation. Gallup Consulting. http://www.gallupconsulting.com/content/?ci=52&pg=1 Fedor, D.B., Caldwell, S., & Herold, D.M. (2006). The effects of organizational changes on employee commitment: a multilevel investigation. Personnel Psychology, 59, 1, 1-30. Ferguson, A. Employee engagement: does it exist, and if so, how does it relate to performance, other constructs and individual differences. Macquarie University, www.lifethatworks.com/Employee-Engagement.prn.pdf. Goodman, P.S. & Rousseau, D.M. (2004). Organizational change that produces results: The linkage approach. Academy of Management Executive, 18, 3. Guy, G.R. & Beaman, K.V. (2005). Effecting change in business enterprises: Current trends in change management. The Conference Board. Jimmieson, N.L., Terry, D.J., & Callan, V.J. (2004). A longitudinal study of employee adaptation to organizational change: The role of change-related information and change-related self-efficacy. Educational Publishing Foundation-Journal of Occupational Health Psychology, 9, 1, 11-27. Kahn, W.A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33, 4, 692-724. Konrad, A.M. (2006). Engaging employees through high-involvement work practices. Ivey Business Journal, #9B06TB08. Ogilvie, J.R. & Stork, D. (2003). Starting the HR and change conversation with history. Journal of Organizational Change Management, 16, 3, 254-271. Price, A.D.F & Chahal, K. (2006). A strategic framework for change management. Loughborough University-Construction Management and Economics, 24, 237–251. Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21, 7, 600-619. Schmidt, G. & Jackson, L. (2005). Managing paradoxes in change: Six steps for building a balanced culture. The Conference Board-Executive Action Series, No. 162. Smith, I. (2006). Continuing professional development and workplace learning – communicating in times of change. Emerald Group Publishing Limited, Library Management, 27, ½, 108-113. 57 Annotated Works Cited Chawla, A. & Kelloway, K.E. (2004). Predicting openness and commitment to change. Leadership & Organization Development Journal, Emerald Group Publishing, 25, 6, 485-498. Abstract: Based on a sample of 164 employees, a partially and a fully mediated model were compared with the former providing the best fit to the data. Communication and job security predicted openness and trust both directly and indirectly, via procedural justice. Participation predicted trust directly and indirectly, but predicted openness to change only indirectly, via procedural justice. Turnover intentions were negatively predicted by openness and trust. Finally, turnover intentions predicted neglect. Employee engagement, The Employee Side of the HumanSigma Equation. Gallup Consulting. http://www.gallupconsulting.com/content/?ci=52&pg=1 Abstract: This article provides a brief overview of a Gallup Consulting concept referred to as HumanSigma (a combination of customer and employee engagement) as well as research conducted by the Gallup Organization on employee engagement. Fedor, D.B., Caldwell, S., & Herold, D.M. (2006). The effects of organizational changes on employee commitment: a multilevel investigation. Personnel Psychology, 59, 1, 1-30. Abstract: This study investigated how organizational changes in 32 different organizations (public and private) affected individuals' commitment to the specific change and their broader commitment to the organization. Ferguson, A. Employee engagement: does it exist, and if so, how does it relate to performance, other constructs and individual differences. Macquarie University, www.lifethatworks.com/Employee-Engagement.prn.pdf. Abstract: This paper takes a critical look at the concept of employee engagement and its origins including various definitions and models of engagement available in psychological and business literature. Goodman, P.S. & Rousseau, D.M. (2004). Organizational change that produces linkage approach. Academy of Management Executive, 18, 3. results: The Abstract: This article provides a tool for creating change that produces observable results in complex organizations. The tool detailed is referred to as a ‘linkage analysis’ and it helps managers map, evaluate, and overcome barriers that underlie the organizational improvement paradox. Guy, G.R. & Beaman, K.V. (2005). Effecting change in business enterprises: in change management. The Conference Board. Current trends Abstract: This Executive Summary is based on The Conference Board’s Effecting Change in Business Enterprises: Current Trends in Change Management Research Report. The report examines the expanding demands for effective change management and introduces a concept referred to as the Three Faces of Change Working Group. 58 Jimmieson, N.L., Terry, D.J., & Callan, V.J. (2004). A longitudinal study of employee adaptation to organizational change: The role of change-related information and change-related selfefficacy. Educational Publishing Foundation-Journal of Occupational Health Psychology, 9, 1, 11-27. Abstract: This study examined the role of information, efficacy, and three stressors (psychological wellbeing, client engagement, and job satisfaction) in predicting adjustment to organizational change. Participants were 589 government employees undergoing an 18-month process of regionalization. Kahn, W.A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33, 4, 692-724. Abstract: This article describes and illustrates three psychological conditions—meaningfulness, safety, and availability— and their individual and contextual sources. These psychological conditions are linked to existing theoretical concepts, and directions for future research are described. Konrad, A.M. (2006). Engaging employees through high-involvement work practices. Ivey Business Journal, #9B06TB08. Abstract: Recent research suggests that employees who conceive, design and implement workplace and process changes are engaged employees. This article focuses on what managers can do to achieve a high level of employee engagement. Ogilvie, J.R. & Stork, D. (2003). Starting the HR and change conversation with history. Journal of Organizational Change Management, 16, 3, 254-271. Abstract: This paper provides an historical context to today's conversation about HR and organizational change. The early footings of HR focusing on issues of change for whom, on whom, and for what purpose. Three subsequent eras, important to the history of HR, are also discussed. Price, A.D.F & Chahal, K. (2006). A strategic framework for change management. Loughborough University-Construction Management and Economics, 24, 237– 251. Abstract: The main aim of this research is to identify the key steps that could improve the management of change. Literature relating to organizational culture, the need for change, types of change and resistance to change was used. The research has demonstrated how well-planned change helps to ensure that change is successfully implemented. Critical to successful change is the alignment of organizational culture to support these new processes. Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21, 7, 600-619. Abstract: The purpose of this study was to test a model of the antecedents and consequences of job and organization engagements based on social exchange theory. Results indicate that there is a meaningful difference between job and organization engagements and that perceived organizational support predicts both job and organization engagement. 59 Schmidt, G. & Jackson, L. (2005). Managing paradoxes in change: Six steps for building a balanced culture. The Conference Board-Executive Action Series, No. 162. Abstract: The authors of this paper report that the key to managing change is through a balanced culture. In order to achieve a balanced culture companies should follow six steps. The body of the paper presents these steps and describes how and why these steps achieve their intended goal. Smith, I. (2006). Continuing professional development and workplace learning – communicating in times of change. Emerald Group Publishing Limited, Library Management, 27, ½, 108-113. Abstract: This paper discusses the “people” aspects of organizational change and examines the important role of communication during periods of change. Five key rules for organizational communication are outlined along with a suggested four-phase framework for communicating effectively during times of change. 60 Questions for Discussion: Does your organization follow a standard change management strategy? Has your organization achieved success using this strategy? If so, please describe. How do you measure success in change management? Is an employee engagement measurement included as an indicator of change management success? If so, please describe. Do you feel employee engagement plays an integral part in implementing a successful change management initiative? If not, why not? If yes, how? Do you feel research results concerning the relationship between organizational commitment and change management are helpful in understanding the relationship between organizational commitment and employee engagement? Why, why not? 61 CMN 6090 Organizational Culture, Climate and Communication Cover Slide – Northeastern Logo 1. Hello everyone, Welcome to CMN 6090 Organizational Culture, Climate and Communication. I am Rich Petronio and I will be your instructor for this class. 2. I am an Organizational Psychologist that has been consulting with organizations all over the world for over 25 years. I have consulted in every industry globally. 3. This is the first of a series of lectures describing an organization with challenges. We will use this as our case study to examine the culture, climate and communication of an organization that is attempting to make significant changes. The organization, which I will refer to as A&B Company, is a composite of several high tech manufacturing companies with whom I have consulted from approximately 1995 - 2000. I am referring to the composite organization as A&B to protect their confidentiality. Even though this is a fictitious company of a composite of several companies the challenges that they face are very real. 4. In Week 6 you will use the information from these lectures and your readings to create a communication plan. CMN 6090 Organizational Culture, Climate and Communication Slide 1 – A Case Study In Organizational Diagnosis: Culture vs. Climate 1. This is a case study in the diagnosis of organizational culture and climate. 2. It’s important to understand the difference between these two organizational constructs. They are distinctly different from one another and you will need to attend to this when you create your communication plan. 3. This entire lecture series is devoted to these two organizational constructs. CMN 6090 Organizational Culture, Climate and Communication Slide 2 – Lecture 1a - The elements of a comprehensive organizational analysis 1. The first lecture is devoted entirely to an explanation of the most significant elements in organizations that one must understand to write an effective communication plan. CMN 6090 Organizational Culture, Climate and Communication Slide 3 – Organizational Issue 1. As with most organizations that seek out the help of a consultant, a problem or challenge existed within this company that was contributing to lower outcomes than the company desired. 2. In this organization the challenge was a decrease in market share and they suspected that this was the result of a decrease in the level of innovation in the company. 3. They believed that lower levels of innovation were the result of some internal issues within the company but did not know how to identify or address those issues. 4. They were unable to solve this problem by themselves so they hired my company to help. CMN 6090 Organizational Culture, Climate and Communication Slide 4 – A Comprehensive Organizational Assessment: The Organizational Concepts 1. There are five organizational concepts that are important to understand and vital in the development of a communication plan. 2. These are: Organizational Culture, Organizational Climate, Organizational Effectiveness, Product/Service Outcomes and Organizational Mission. 3. It is very important to understand these constructs with clarity and detail and how they relate to one another in order for the company to be successful and produce high levels of outcomes like innovation in the case A&B Company. CMN 6090 Organizational Culture, Climate and Communication Slide 5 – Diagnosing Organizations: Alignment 1. In order for an organization to produce successful outcomes it is important for Climate, Culture, Effectiveness and Mission to be in alignment 2. If they are not in alignment then it is difficult to achieve success. 3. So for example if the goal of the mission is to offer customers the most innovative products on the market in their industry niche and the culture of the company does not support the behaviors necessary to produce this level of innovation then the company will most likely fail to achieve their goal. 4. This is what was happening in A&B Company that we are examining in this case study. CMN 6090 Organizational Culture, Climate and Communication Slide 6 – Foundations: Force Field Theory 1. Let's take a moment and lay out the theoretical foundations of the work that I will be explaining in this organizational analysis. 2. The foundation that supports this work is Force Field theory developed by Kurt Lewin and published in 1936. It was fairly revolutionary at that time because prior to the introduction of this theory all behavior was evaluated from the perspective of Freudian Theory. Freud believed that behavior was a function of the historical context in which the individual grew from childhood to adult. 3. Lewin believed that human behavior was a function of the interaction of the individual with their environment. B=f(P.E.) 4. This theory is fundamental to the study of organizations. The person or employee interacts with their environment or organization and the result is behavior or outcomes in the organization. CMN 6090 Organizational Culture, Climate and Communication Slide 7 – Chain of Events 1. There are four significant events that occur in an organizational diagnosis. 2. Research is conducted in the first phase. In this phase the culture and the climate are measured. The culture is measure via a standard survey and the climate via a custom survey. Then the data collected is analyzed and the drivers of the outcomes are identified. 3. In phase 2 interventions are developed from the evidence collected in the first phase. 4. In phase 3 the interventions are implemented and then sometime later (perhaps 1-2 years later) the organizational interventions are evaluated to determine their success in producing change. 5. This process falls along a Scientist – Practitioner continuum. The scientist collects the evidence that substantiates or validates a problem exists and identifies the path that solves the problem and the practitioner develops interventions to treat and eradicate the problem from the evidence that is collected by the scientist. CMN 6090 Organizational Culture, Climate and Communication Slide 8 – Next 1. In the next lecture I will discuss the actual diagnosis of the organizational culture. 2. I will be showing you the methodology to evaluate an organization’s culture and the means by which the culture of A&B Company is characterized. CMN 6090 Organizational Culture, Climate and Communication 1. Recap 2. In the last lecture we examined a methodology to diagnose organizational cultures. 3. We examined the results of the culture diagnosis of A&B Company and found that the culture was characterized as very hierarchical. 4. The potential problems for changing this culture were then suggested. CMN 6090 Organizational Culture, Climate and Communication Slide 2– The Diagnosis of Organizational Climate: The Methodology 1. This lecture will describe the methodology used to measure the organization’s climate at A&B Company. I will present the results of the climate diagnosis in the next lecture. CMN 6090 Organizational Culture, Climate and Communication Slide 3 – Organizational Culture Drives Organizational Climate 1. There are many ways to measure the climate of organizations: qualitative and quantitative. The methodology that I will be describing was used in A&B Company as well the majority companies with whom I have consulted. It is a methodology that produces quantitative and qualitative data for analysis. 2. Remember that the culture of the organization DRIVES the climate. It any change effort it ALWAYS goes back to the culture. CMN 6090 Organizational Culture, Climate and Communication Slide 4 – Organizational Complexity 1. Organizations are extremely complex. Most CEOs that I have met with do not realize how complex their organization is. They instead think of it in very simplistic ways. 2. So part of the process of analyzing an organization is education; educating the management on the complexity of their company. You want to keep this in mind when you are developing your communication plans for this company. 3. Most organizations contain 25 to 40 different attributes that define their climate. So each one of these circles in the slide are attributes or constructs of the climate. Each attribute interacts in some way with every other attribute so the complexity changes somewhat from day to day thus increasing the complexity. 4. Subsets of these attributes drive Organizational Outcomes. The goal of the climate analysis is to identify what subsets of attributes drive each outcome that is measured. In the case of this company we are most interested in the outcome innovation. CMN 6090 Organizational Culture, Climate and Communication Slide 5 – Organizational Climate Diagnosis 1. This slide represents the phases that take place in the diagnosis of an organization. There are three phases. 2. In Phase 1, the customized survey is developed to measure the attributes of the company that they share with other companies (like compensation and co-worker relations) and the attributes that are unique to this organization and may not be as common in other organizations (like rule orientation and conflict management) 3. In Phase 2, the survey is administered to employees and then analyzed to identify the drivers of outcomes. 4. In Phase 3, the results are reported back to management and employees, refinement of the drivers is conducted, strategies to improve employee challenges are developed and implemented. 5. In most organizations this process takes 4-6 months to complete. CMN 6090 Organizational Culture, Climate and Communication Slide 6 – Survey Measures 1. When this methodology was implemented in A&B Company we identified 30 organizational attributes or constructs that were defining the organization. These are the attributes that employees interact with every day in their work environment. Their level of satisfaction with these attributes will be measured with the survey that is developed. 2. In addition to the attributes that define the organization we also wanted to measure innovation and 5 additional outcomes. Remember, the levels of successful “outcomes” are a determined by the culture and climate. 3. Employee Engagement is a very important outcome in any organization CMN 6090 Organizational Culture, Climate and Communication Slide 7 – Attributes that Define the A&B Company Climate 1. So these are the specific attributes that define the climate of A&B Company. 2. The survey was designed to measure each one of these attributes AND each of the six outcomes. Each attribute or construct is composed of multiple items (on average 5-8) to establish high reliability. 3. Look at the attributes in the blue box. Can you predict which ones will be low in A&B Company? Remember, we know that this is a hierarchical culture and that the culture drives the climate. Which one of these organizational attributes would be low based on the goals of a hierarchical culture? CMN 6090 Organizational Culture, Climate and Communication Slide 8 – Diagnosing Organizations 1. So, let’s re-cap the relationships between Organizational Culture and Organizational Climate. I like to think of the relationship this way. 2. Organizational Climate describes the working environment. The attitudes that employees express regarding these attributes will vary depending on the Organizational Culture. So, Risk-Taking, for example, may be an attribute in the organization but it will most likely be evaluated low in a hierarchical culture but high in an innovative culture. 3. So, the climate describes what is happening in the work environment. The culture is the reason why it is evaluated as low or high. CMN 6090 Organizational Culture, Climate and Communication Slide 9 – Next 1. In the next lecture I will present the results of the organizational climate diagnosis for A&B Company. CMN 6090 Organizational Culture, Climate and Communication 1. Recap 2. In the previous lecture we examined a methodology to diagnose organizational climates. 3. We found that a custom survey is a good tool to measure organizational climates. CMN 6090 Organizational Culture, Climate and Communication Slide 2– The Diagnosis of Organizational Climate: Descriptive Results 1. Now we get to the results of the organizational climate analysis. In this lecture I will describe the descriptive results and in the next lecture I will describe the inferential results. 2. There is a lot of data that is presented in this lecture. I will not review all of the data with you but I recommend that everyone study all of the results when you have some time to devote to it. CMN 6090 Organizational Culture, Climate and Communication Slide 3 – Descriptive Results 1. Let’s review the structure of the charts that I will present now. These are the results of employee opinions for each of the 30 constructs that define the organization’s climate. The results are displayed as % favorable and they are listed in descending order for the total population (Total % Fav.). I have also listed the opinions of management separately in the last column (Mngt. % Fav.). You will want to examine the differences between management and employees throughout because they will be important in the development of your communication plan. 2. Let’s look at an example result. “Satisfaction With Work-Life Balance” has a high % favorable for the total population (90% favorable) as well as for the management. (85% favorable). I won’t review every single construct but you should spend some time reviewing these next few slides in detail so you understand how the climate is being characterized by employees. As you can see these constructs exist at fairly high levels of satisfaction in this organization – at least in the chart. 3. One additional thing. Some of the constructs contain a double ** asterix. This means that this construct is typically found at high levels of satisfaction in high performance innovative teams. Make note of these constructs especially. There are two on this slide. CMN 6090 Organizational Culture, Climate and Communication Slide 4 – Descriptive Results 1. The opinions of employees are still fairly high for the constructs reported here. 2. And note that there are two more “high performance constructs” that are evaluated high……Challenge of Work and Quality of Technical Advice. CMN 6090 Organizational Culture, Climate and Communication Slide 5 – Descriptive Results 1. Now we are beginning to see that some negative opinions are entering the diagnosis. For example, Performance Evaluation is indicated at 66% favorable by employees. This means that about 1/3 of employee have either a negative opinion or they indicate that they are not sure. CMN 6090 Organizational Culture, Climate and Communication Slide 6 – Descriptive Results 1. Opinions continue to fall. Less than half of the employee population expresses favorable opinions about Intergroup Cooperation and Management Consideration. 2. And we are starting to see that the opinions that management express are dramatically different from the employee population. There is a 20% difference in favorable opinions regarding Trust and Openness. 3. On the next slide I will show you the individual items that compose the construct “Management of Information Flow” and their results. Note: this is an important category for you to consider in your communication plan. CMN 6090 Organizational Culture, Climate and Communication Slide 7 – Descriptive Results 1. So now instead of constructs that appear on the left column you will see the actual survey items that compose one construct – Management of Information Flow. 2. Note each survey item and its corresponding favorable scores for the total population and the management carefully. I have highlighted some of the important results for you. Note also the difference between management and employees on these items. It will be important for you to take this data into consideration when developing your communication plan. CMN 6090 Organizational Culture, Climate and Communication Slide 8 – Descriptive Results 1. I have highlighted this one item from the survey for an important reason. Can you guess what this reason is? It directly supports the findings of the cultural analysis I showed earlier. It is a measure of perceived control in the work environment. CMN 6090 Organizational Culture, Climate and Communication Slide 9 – Descriptive Results 1. Finally this is the last of the 33 constructs that define the company’s climate. 2. Notice that the least favorable construct in the entire survey is “Support For Risk-Taking In My Department”. Did you predict that this would be low? Why is it low? Think about the kind of organizational culture we found in this company in the culture diagnosis. CMN 6090 Organizational Culture, Climate and Communication Slide 10 – A&B Outcomes 1. We also measured 6 outcomes. 2. Let’s look at those data results. CMN 6090 Organizational Culture, Climate and Communication Slide 11 – A&B Outcomes 1. Note the low Morale and especially the low Readiness for Change. Consider these as you begin to put your communication plan together. CMN 6090 Organizational Culture, Climate and Communication Slide 12 – Creativity & Innovation 1. Finally, we measured the outcome Innovation. This is the verification that Innovation is only average in A&B company. Remember that this company believed that their innovation was too low. This result in the diagnosis validates that in fact there is lower innovation. CMN 6090 Organizational Culture, Climate and Communication Slide 13 – Creativity & Innovation 1. Here is the Organizational Climate of A&B Company. 2. Green indicates strengths; red indicates weaknesses and yellow is somewhere in between. CMN 6090 Organizational Culture, Climate and Communication Slide 14 – Next 1. This is only half of the story. In the next lecture I will finish the story. Organizational Culture, Climate and Communication 1. Recap 2. In the last lecture we examined what the Organizational Climate of A&B Company looks like. CMN 6090 Organizational Culture, Climate and Communication Slide 2– The Diagnosis of Organizational Climate: Descriptive Results 1. Now we will examine the relationships between variables using inferential statistics. This is how we will identify the drivers of innovation and other outcomes in the company. CMN 6090 Organizational Culture, Climate and Communication Slide 3 – What We Know So Far 1. What so we know so far? We know the baseline scores of A&B Company for the total population and for the management. 2. We also have an understanding of the basic climate of A&B Company as defined by its strengths and challenges. CMN 6090 Organizational Culture, Climate and Communication Slide 4 – What We Do Not Know 1. We do not know what constructs in the climate are driving innovation and the other five outcomes such that if they were improved so would the outcomes. 2. And we do know what role does the culture of the organization plays in understanding and improving outcomes. CMN 6090 Organizational Culture, Climate and Communication Slide 5 – Methodology to Identify Drivers of Outcomes 1. Our goal now is to identify the subsets of attributes within the 30 that we measured that drive each of the six outcomes. We start by measuring every one of the 30 attributes to see if they are able to predict the each outcome. 2. Every organizational attribute that was measured has an equal chance of being a driver but as you will see in this analysis the 30 potential attributes that could be related to the outcome are reduced to 5-6 attributes. CMN 6090 Organizational Culture, Climate and Communication Slide 6 – Methodology to identify Drivers of Outcomes 1. This is how the analysis will be presented. There will be an outcome in the green box at the bottom and there will be 5-6 blue boxes that indicate an organizational attribute or construct that is driving the outcome. 2. This means that the outcomes will change as a result of the drivers changing. If the drivers improve (that is, employee opinions increase) then there is a high probability that the outcomes will increase. 3. This graphical depiction is the result of a linear regression statistical analysis. It is quite robust and I have used it for over 25 years to identify with tremendous reliability drivers of outcomes in companies. CMN 6090 Organizational Culture, Climate and Communication Slide 7 – Drivers of Innovation 1. Now you can see that the results of this Driver Analysis identifies the attributes or constructs in the organization that are driving the outcome Innovation. This means that there is “Average Innovation in Company A&B as a result of Support for Risk Taking, Challenge of Work, Management of Information Flow, Decision-Making Autonomy, and Trust & Openness. Remember, all 30 of the constructs we measured were tested in their ability to predict the outcome, Innovation. The most significant drivers are the one listed here. 2. In the world of research we refer to the drivers as the Independent Variables (IVs) and the outcomes as the criterion or dependent variable (DV) 3. So what does this chart tell us practically? Well, we know that if we want to improve innovation which has been measured at average levels then we can do so by increasing each of these five drivers – Support for Risk Taking, Challenge of Work, Management of Information Flow, DecisionMaking Autonomy, and Trust/Openness. 4. We also know that Support for Risk-Taking is the most powerful of all the drivers with respect to changing Innovation (that's what the “power” in the chart is indicating). So if we were to choose only one driver to change it would be Support for Risk Taking. 5. And finally we know that two of the drivers, Challenge of Work and Decision-Making Autonomy are already at acceptable favorable levels (81% and 95% favorable ratings respectively) and don't need to be changed. The other three drivers are at unacceptable favorable levels and need improvement if innovation is going to improve. 6. Finally, we know that if these drivers do not change, then probably innovation will not change and if these drivers decrease in favorability then innovation will decrease. 7. Bottom line is – A&B Company needs to improve the weaker drivers and maintain the stronger drivers of the five listed in the analysis CMN 6090 Organizational Culture, Climate and Communication Slide 8 – What Inhibits Risk-Taking? 1. Now, lets use the same methodology but this time lets try and see if we can better understand why Support for Risk-Taking is so low (23% favorable). We know that this is a hierarchical culture but how does that culture manifest itself within the climate of the organization such that RiskTaking is not supported at acceptable levels? 2. When we conduct the driver analysis using Risk-Taking as the “outcome” or DV and we again test every organizational attribute that we measured as a potential driver we find that three organizational constructs of the original 30 drive Risk-Taking. They are Management of Information, Trust and Openness in the Company and Rule Orientation. 3. And we find that Management of Information Flow and Trust/Openness are highly correlated. 4. Note the conclusions that I draw on the chart itself. 5. What does all this have to do with putting together a Communication Plan for Change? CMN 6090 Organizational Culture, Climate and Communication Slide 9 – Next 1. In the last lecture I will bring everything we have discussed to this point together. CMN 6090 Organizational Culture, Climate and Communication 1. Recap 2. This concludes the major portion of this lecture series describing the analysis of culture and climate in this organization. CMN 6090 Organizational Culture, Climate and Communication Slide 2– The Diagnosis of Organizational Climate: Descriptive Results 1. We have been operating from inside the forest moving from tree to tree….now I’m going to move up to 10,000 feet and look at the forest through the trees. Seat belts please! CMN 6090 Organizational Culture, Climate and Communication Slide 3 – The Current State of A&B Company 1. A&B Company operates from within a very strong Hierarchical Organizational Culture. 2. This culture is producing (or demanding) a stable and predictable Organizational Climate. 3. The stable and predictable climate is maintained by efficiency, consistency and uniformity that is producing risk aversion, poor communication and poor cooperation & collaboration flow. 4. The mission/goal/objective of the company is high innovative products. 5. The culture, climate, effectiveness and mission are not in alignment. CMN 6090 Organizational Culture, Climate and Communication Slide 4 – Desired State of A&B Company 1. The desired state of A&B Company is to produce innovative products. In order to accomplish this the culture, climate, effectiveness and mission must be aligned. 2. And the organizational culture that supports this mission the best is an innovative organizational culture. 3. You goal is to create a communication plan that initiates this change. 4. This will be your opportunity to utilize your readings from Cameron & Quinn, Schein, and Kotter and the Communication Plan guidelines. CMN 6090 Organizational Culture, Climate and Communication Slide 5 – Highlights of Your Communication Plan 1. These are several important things to remember in the production of your communication plan. 2. Good Luck! Organizational Culture and Leadership Third Edition Organizational Culture and Leadership Edgar H. Schein Organizational Culture and Leadership Third Edition Copyright © 2004 by John Wiley & Sons, Inc. All rights reserved. Published by Jossey-Bass A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741 www.josseybass.com No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-750-4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, e-mail: permcoordinator@wiley.com. Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986 or fax 317-572-4002. Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Library of Congress Cataloging-in-Publication Data Schein, Edgar H. Organizational culture and leadership / Edgar H. Schein.—3rd ed. p. cm.—(The Jossey-Bass business & management series) Includes bibliographical references and index. ISBN 0-7879-6845-5 (alk. paper) 1. Corporate culture. 2. Culture. 3. Leadership. I. Title. II. Series. HD58.7.S33 2004 302.3'5—dc22 2004002764 Printed in the United States of America THIRD EDITION HB Printing 10 9 8 7 6 5 4 3 2 1 The Jossey-Bass Business & Management Series Contents Preface xi The Author xv Part One: Organizational Culture and Leadership Defined 1. The Concept of Organizational Culture: Why Bother? 1 3 2. The Levels of Culture 25 3. Cultures in Organizations: Two Case Examples 39 4. How Culture Emerges in New Groups 63 Part Two: The Dimensions of Culture 5. Assumptions About External Adaptation Issues 85 87 6. Assumptions About Managing Internal Integration 111 7. Deeper Cultural Assumptions About Reality and Truth 137 8. Assumptions About the Nature of Time and Space 151 9. Assumptions About Human Nature, Activity, and Relationships 171 10. Cultural Typologies 189 11. Deciphering Culture 203 ix x CONTENTS Part Three: The Leadership Role in Culture Building, Embedding, and Evolving 223 12. How Leaders Begin Culture Creation 225 13. How Leaders Embed and Transmit Culture 245 14. The Changing Role of Leadership in Organizational “Midlife” 273 15. What Leaders Need to Know About How Culture Changes 291 16. A Conceptual Model for Managed Culture Change 319 17. Assessing Cultural Dimensions: A Ten-Step Intervention 337 18. A Case of Organizational (Cultural?) Change 365 19. The Learning Culture and the Learning Leader 393 References 419 Index 429 Preface Organizational culture has come of age. Not only did the concept have staying power but it is even being broadened to occupational cultures and community cultures. Culture at the national level is more important than ever in helping us to understand intergroup conflict. As it turns out, culture is essential to understanding intergroup conflict at the organizational level as well. My years of consulting experience with Digital Equipment Corporation (DEC) provided useful case material (as the Action Company) in my previous editions, but it was only through my attempt to fully understand why DEC initially succeeded—and, in the end, failed as a business—that I came to realize the true importance of organizational culture as an explanatory concept. What happens in organizations is fairly easy to observe; for example, leadership failures, marketing myopia, arrogance based on past success, and so on; but in the effort to understand why such things happen, culture as a concept comes into its own (Schein, 2003). In an age in which leadership is touted over and over again as a critical variable in defining the success or failure of organizations, it becomes all the more important to look at the other side of the leadership coin—how leaders create culture and how culture defines and creates leaders. The first and second editions of this book attempted to show this connection, and I hope that I have been able to strengthen the connection even more in this third edition. The conceptual models of how to think about the structure and functioning of organizational culture, and the role that leadership plays in the creation and management of culture have remained xi xii P R E FA C E more or less the same in this third edition. However, I have been able to add material based on more recent clinical research and to make the concepts more vivid by identifying more of the organizations with whom I have worked over the years. All of the chapters have been redone and edited. Some have been shortened; more have been lengthened with additional case material that I was able to incorporate. In addition, I have selectively incorporated relevant material from a great many other books and papers that have been written about organizational culture since the last edition. It is clear that there are still different models available to scholars and practitioners on how to think about culture. I have not reviewed all of them in detail but have tried to show, wherever possible, variations in point of view. I apologize to those colleagues whose work I may have overlooked or chosen not to include, but my purpose is not to write the definitive textbook on culture; rather, it is to explore a way of thinking about culture that I believe best suits our efforts to understand groups, organizations, and occupations. This edition is organized into three parts. Part One focuses on organizational and occupational cultures—how to think about them, how to define them, and how to analyze them. Leadership is referred to throughout and leadership issues are highlighted, but the focus is clearly on getting a better feel for what culture is and does. Part Two focuses on the content of culture. In a sense, culture covers all of a given group’s life; hence the content is, in principle, endless and vast. Yet we need categories for analysis, and here we can draw on anthropology and group dynamics to develop a set of dimensions that are most likely to be useful in making some conceptual sense of the cultural landscape as applied to organizations. In Part Three the focus shifts to the leader as founder, manager, and, ultimately, a victim of culture if the leader does not understand how to manage culture. A crucial element in this analysis is to understand how culture coevolves with the organization as success P R E FA C E xiii brings growth and aging. The issues that leaders face at each of these different organizational growth stages are completely different, partly because the role that culture plays at each stage is completely different. This aspect of leadership is almost completely ignored in most leadership books. Acknowledgments My most profound gratitude is to the readers of the first and second edition. Were it not for their positive and critical feedback, and their use of this book in their courses and their consulting work, I would not have had the energy to write a third edition. Support and stimulation from colleagues again played a key role, especially the feedback from John Van Maanen, Otto Scharmer, Joanne Martin, Mary Jo Hatch, Majken Schultz, and Peter Frost. The publisher, Jossey-Bass, has always been totally encouraging and their editorial staff, especially Byron Schneider, urged me on relentlessly but in a positive and supportive way. The reviews they provided were essential to gaining perspective on a book that was first published in 1985. I got many good ideas about what was working and should be preserved, what needed to be cut out, and what needed to be added or enhanced. I thank each of them. I think it is also important to acknowledge the tremendous positive impact of word processing technology. Work on this edition was launched with a set of chapters scanned in from the second edition, permitting immediate on-line editing. Material from the first edition that I decided to bring back in the third edition could be scanned and immediately incorporated where it belonged. Feedback from readers could be incorporated into the text directly and used or not used, without additional retyping. Final copy could be sent to the publisher directly on discs or electronically. Once errors were corrected they stayed corrected. All of this is a most unusual and pleasant experience for an author who can remember what writing was like with carbons, ditto paper, and endless retyping. xiv P R E FA C E Last but not least I thank my wife, Mary, for sitting by patiently while I disappeared to work at the computer from time to time. But she too has gotten hooked on the power of e-mail and other electronic marvels, so she is now more understanding of how screens capture our attention. May 2004 Cambridge, Massachusetts Edgar H. Schein The Author Edgar H. Schein was educated at the University of Chicago; at Stanford University, where he received a master’s degree in psychology in 1949; and at Harvard University, where he received his Ph.D. in social psychology in 1952. He was chief of the Social Psychology Section of the Walter Reed Army Institute of Research while serving in the U.S. Army as a captain from 1952 to 1956. He joined the Sloan School of Management at the Massachusetts Institute of Technology (MIT) in 1956 and was made a professor of organizational psychology and management in 1964. From 1968 to 1971 Schein was the undergraduate planning professor for MIT, and in 1972 he became the chairman of the Organization Studies Group at the Sloan School, a position he held until 1982. He was honored in 1978 when he was named the Sloan Fellows Professor of Management, a chair he held until 1990. At present he is Sloan Fellows Professor of Management Emeritus and continues at the Sloan School part time as a senior lecturer. He is also the founding editor of Reflections, the journal of the Society for Organizational Learning, which is devoted to connecting academics, consultants, and practitioners around the issues of knowledge creation, dissemination, and utilization. Schein has been a prolific researcher, writer, teacher, and consultant. Besides his numerous articles in professional journals, he has authored fourteen books, including Organizational Psychology (third edition, 1980), Career Dynamics (1978), Organizational Culture and Leadership (1985, 1992), Process Consultation Vol. 1 and Vol. 2 xv xvi THE AUTHOR (1969, 1987, 1988), Process Consultation Revisited (1999), and The Corporate Culture Survival Guide (1999). Schein wrote a cultural analysis of the Singapore Economic Development Board, entitled Strategic Pragmatism (MIT Press, 1997), and he has published an extended case analysis of the rise and fall of Digital Equipment Corporation, entitled DEC Is Dead; Long Live DEC: The Lasting Legacy of Digital Equipment Corporation (BerrettKoehler, 2003). He was coeditor with the late Richard Beckhard of the Addison Wesley Series on Organization Development, which has published over thirty titles since its inception in 1969. His consultation focuses on organizational culture, organization development, process consultation, and career dynamics; among his past and current clients are major corporations both in the U.S. and overseas, such as Digital Equipment Corporation (DEC), CibaGeigy, Apple, Citibank, General Foods, Procter & Gamble, Imperial Chemical Industries (ICI), Saab Combitech, Steinbergs, Alcoa, Motorola, Hewlett-Packard, Exxon, Shell, Amoco, Con Edison, the Economic Development Board of Singapore, and the International Atomic Energy Agency (on the subject of “safety culture”). Schein has received many honors and awards for his writing, most recently the Lifetime Achievement Award in Workplace Learning and Performance of the American Society of Training Directors, February 3, 2000; the Everett Cherrington Hughes Award for Career Scholarship from the Careers Division of the Academy of Management, August 8, 2000; and the Marion Gislason Award for Leadership in Executive Development from the Boston University School of Management Executive Development Roundtable, December 11, 2002. He is a Fellow of the American Psychological Association and the Academy of Management. Schein is married and has three children and seven grandchildren. He and his wife, Mary, live in Cambridge, Massachusetts. Organizational Culture and Leadership Part One ORGANIZATIONAL CULTURE AND LEADERSHIP DEFINED In this section of the book I will define the concept of culture and show its relationship to leadership. Culture is both a dynamic phenomenon that surrounds us at all times, being constantly enacted and created by our interactions with others and shaped by leadership behavior, and a set of structures, routines, rules, and norms that guide and constrain behavior. When one brings culture to the level of the organization and even down to groups within the organization, one can see clearly how culture is created, embedded, evolved, and ultimately manipulated, and, at the same time, how culture constrains, stabilizes, and provides structure and meaning to the group members. These dynamic processes of culture creation and management are the essence of leadership and make one realize that leadership and culture are two sides of the same coin. Leadership has been studied in far greater detail than organizational culture, leading to a frustrating diffusion of concepts and ideas of what leadership is really all about, whether one is born or 1 2 O R G A N I Z AT I O N A L C U LT U R E A N D L E A D E R S H I P made as a leader, whether one can train people to be leaders, and what characteristics successful leaders possess. I will not review this literature, focusing instead on what I consider to be uniquely associated with leadership—the creation and management of culture. As we will see, this requires an evolutionary perspective. I believe that cultures begin with leaders who impose their own values and assumptions on a group. If that group is successful and the assumptions come to be taken for granted, we then have a culture that will define for later generations of members what kinds of leadership are acceptable. The culture now defines leadership. But as the group runs into adaptive difficulties, as its environment changes to the point where some of its assumptions are no longer valid, leadership comes into play once more. Leadership is now the ability to step outside the culture that created the leader and to start evolutionary change processes that are more adaptive. This ability to perceive the limitations of one’s own culture and to evolve the culture adaptively is the essence and ultimate challenge of leadership. If leaders are to fulfill this challenge, they must first understand the dynamics of culture, so our journey begins with a focus on definitions, case illustrations, and a suggested way of thinking about organizational culture. In this part, I begin in Chapter One with some brief illustrations and a definition. Chapter Two expands the concept and argues for a multilevel conception of culture. In Chapter Three, I examine in some detail two cases that illustrate well the complexity of culture and will be used throughout the rest of the book. And in Chapter Four, I show how culture arises in the process of human interaction. At this point, the most important message for leaders is this: “try to understand culture, give it its due, and ask yourself how well you can begin to understand the culture in which you are embedded. In Part Two of this book we turn to the content of culture, and in Part Three, to the dynamic processes involved in the interaction of leadership and culture. 1 THE CONCEPT OF O R G A N I Z AT I O N A L C U LT U R E : WHY BOTHER? Culture is an abstraction, yet the forces that are created in social and organizational situations that derive from culture are powerful. If we don’t understand the operation of these forces, we become victim to them. To illustrate how the concept of culture helps to illuminate organizational situations, I will begin by describing several situations I have encountered in my experience as a consultant. Four Brief Examples In the first case, that of Digital Equipment Corporation (DEC), I was called in to help a management group improve its communication, interpersonal relationships, and decision making. After sitting in on a number of meetings, I observed, among other things, (1) high levels of interrupting, confrontation, and debate; (2) excessive emotionality about proposed courses of action; (3) great frustration over the difficulty of getting a point of view across; and (4) a sense that every member of the group wanted to win all the time. Over a period of several months, I made many suggestions about better listening, less interrupting, more orderly processing of the agenda, the potential negative effects of high emotionality and conflict, and the need to reduce the frustration level. The group members said that the suggestions were helpful, and they modified certain aspects of their procedure; for example, they scheduled more time for some of their meetings. However, the basic pattern did not change. No matter what kind of intervention I attempted, the basic style of the group remained the same. 3 4 O R G A N I Z AT I O N A L C U LT U R E A N D L E A D E R S H I P In the second case, that of the Ciba-Geigy Company—a large multinational chemical and pharmaceutical company located in Basel, Switzerland—I was asked, as part of a broader consultation project, to help create a climate for innovation in an organization that felt a need to become more flexible in order to respond to its increasingly dynamic business environment. The organization consisted of many different business units, geographical units, and functional groups. As I got to know more about these units and their problems, I observed that some very innovative things were going on in many places in the company. I wrote several memos that described these innovations and presented other ideas from my own experience. I gave the memos to my contact person in the company with the request that he distr...
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