Organizational Culture Change

Running Head: ORGANIZATIONAL CULTURE CHANGE

Creating a Process for Organizational Culture Change

Benjamin S Cheeks

International School of Management, Paris, France

Author Note

This paper was submitted to fulfill the requirements of 7028-LORN - Leadership,

Organizations & Networks. I would like to thank Dr. Marco Tulio Zanini and my fellow ISM

doctoral and MBA students for making the class an interactive and successful learning

environment.

Correspondence concerning this article should be addressed to Benjamin S. Cheeks.

Email: [email protected]

ORGANIZATIONAL CULTURE CHANGE

Cheeks, Benjamin S. 2

Abstract

Organizational culture has a powerful effect on the performance and long-term

effectiveness of organizations. Organizational culture has the power to influence employee

behaviors and increase employee commitment and productivity. Therefore, a clear

understanding of organizational culture and how to effect its change is important for

business leaders because it influences the way that organizations react to the changing

demands of the business environment. The goal of this paper is to explore what is meant by

organizational culture, why it is important, and how to change an established culture so that

it is better aligned with the organization’s strategy.

Keywords: organizational culture, culture change, change management



Introduction

Since the early 1980s, the subject of organizational culture has captured the interest

of managers, consultants, and scholars alike. The impetus of this attention is the belief that

organizational culture is an important social characteristic that influences organizational,

group, and individual behavior. Popular books (e.g., Peters & Waterman, 1982; Schein,

1985; Davis, 1984) hyped the promise of organizational culture as a way to understand how

organizations operate and succeed.

According to estimates by Hartnell, Ou, & Kinicki (2011), since 1980, over 4,600

articles have been written on organizational culture and nearly as many definitions. Despite

the wide variety of meanings for organizational culture, a few concepts are generally

accepted among researchers. First, organizational culture is a system of values, beliefs, and

assumptions shared among members that define what is important and norms that define

appropriate attitude and behaviors for organizational members (Schein, 2004; O’Reilly &

Chatman, 1996; Glisson & James, 2002). Second, a system of social control influencing

members’ focus of attention, behavior, and commitment (Smircich, 1983)

The ability of an organizations’ cultural power to influence behavior makes it a

powerful force. In their classic research at Western Electric Roethlisberger, Dickson, &

Wright (1939) showed that culture could shape behavior more than rewards or work

environment. Workers that deviated from production norms, either too high or too low,

were shunned by their fellow workers. Therefore, few workers deviated significantly from

the norm. People are so influenced by other’s expectations that they uphold social norms,

and they are willing and likely, to alter their behavior.

We assimilate because the consequences of violating strong norms—at best,

embarrassment, and, at worst, exclusion or alienation from the social group—threaten our

ability to survive in an interdependent world (Chatman & Cho, 2003).

In addition to culture’s influence on employee behavior, positive organization culture

can increase staff alignment, thereby increasing commitment, productivity, and profitability.

It can also increase employees understanding of organizational objectives and their



willingness to work toward these objectives, thereby increasing an organization’s ability to

attain valued goals by executing more efficiently on its strategy (O’Reilly & Tushman, 2004).

It is exactly this link between organizational culture and strategy execution that makes

understanding organizational culture one of the most important aspects of leadership.

Research by Charan & Colvin (1999) suggests that the number one reason that CEOs fail is

the inability to execute on their strategy. Therefore, a clear understanding of organizational

culture is important for all leaders because it influences the way organizations react to the

changing demands of the business environment.

Why Might an Organization Need to Change its Culture

The primary reason that an organization would look to change its culture is when it

finds that its strategy and business objectives and its organizational culture are not aligned.

When culture and strategy are not aligned, culture will beat strategy almost every time.

Peter Drucker is credited with saying, “culture eats strategy for breakfast”. There are several

reasons why this misalignment may occur. These are:

1. Mergers and acquisitions. According to a study by Towers & Perrin (2002), 57% of

mergers fail due to incompatible cultures between those companies coming together.

2. Strategic redirection. Deeply entrenched cultural behaviors tend to change far more

slowly than market forces and with a sudden change of direction, a company can find

its culture and strategy at odds.

3. Globalization. As companies globalize, many attempt to maintain a unified

organizational culture across all operations based upon the same set of core values.

National cultural differences and local laws can at times cause conflict forcing the

organization to customize the culture locally.

What is Involved in Changing Organizational Culture?

Changing a culture is a large undertaking and all the organizational tools for

changing minds need to be utilized. Before determining the changes required, a baseline of

the current culture needs to be assessed. There are several tools, models, and processes that

can used to accomplish this task. Once the organization’s culture has been assessed, a model



for the desire or future state culture must be established. From the resulting gap analysis

(between the current state and future state cultures), the proper interventions can then be

ascertained. The following sections will highlight each of these steps in more detail.

Assess the current culture

Dawson (2010) lists four basic approaches to assessing organizational culture. These

are:

1. Statistically valid and reliable tools

2. Checklists and information tools

3. Qualitative interviews

4. Large group dialogue

This paper will focus only on some of the more popular statistically valid tools. These are

those tools that were developed using psychometric techniques and has been statistically

validated over repeated administrations.

Assessment Tools. There is a multitude of organizational cultural models

available, however, only a few have been statically validated. A well-known tool that has

been in use for more than 20 years at more than 5,000 companies is the Denison

Organizational Culture Survey (DOCS). The Denison model looks at four key traits about an

organization. These are mission, adaptability, involvement, and consistency. Each of these

traits is then broken down into three indexes. These indexes describe specific behaviors in

business language to make the results both relevant and actionable. The DOCS

questionnaire is proprietary and can only be used with a license from Denison Consulting.

Another popular tool is Hofstede’s Multifocus Model, also called the Organizational

Cultural Model (Geert-Hofstede, 2015). The Organizational Cultural Model measures

culture across six autonomous dimensions and two semi-autonomous dimensions (Table 1).



Dimension Type Descriptions

Means vs. goal oriented Autonomous Are employees more focused on how

work is carried out (means) versus the

end result (goal)?

Internally vs. externally driven Autonomous Are employees more focused on the

customer and the world at large

(externally driven) or results (internally

driven)?

Easygoing vs. strict work

discipline

Autonomous Does the organization have little control

and discipline in their process

(easygoing) or a high amount of internal

structuring (strict)?

Local vs. professional Autonomous Do employees identify with the boss or

work unit (local) or by the profession or

content of the job (professional)?

Open vs. closed system Autonomous Are newcomers immediately made

welcome (open) or is acceptance of

newcomers slow (closed)?

Employee vs. work oriented Autonomous Does the organization feel responsible

for the welfare of its employees

(employee oriented) or is the focus on

results even at the expense of employees

(work oriented)?

Degree of acceptance of

leadership style

Semi-

autonomous

To what degree is the leadership style of

the employee’s direct boss in line with

the employee’s preference?



Degree of organizational

identification

Semi-

autonomous

To what degree does the employee

identify with the organization in its

entirety?

Table 1. Descriptions of the six autonomous dimensions and two semi-autonomous

dimensions in the Organizational Cultural Model/Hofstede’s Multifocus Model.

A third example of a statistically validated tool is the Organizational Culture

Assessment Instrument (OCAI), based upon the Competing Values Framework as described

by Cameron & Quin (1999). The Competing Values Framework has been found to have a

high degree of congruence with well-known and well-accepted schemes that organize the way

people think, their values and assumptions, and the ways they process information

(Cameron & Quin, 1999). This cultural model places organizations in a continuum of four

core values. These four core values represent opposite or competing assumptions. They are:

flexibility and discretion versus stability and control and integration and internal focus

versus differentiation and external focus. When these four competing values are

incorporated into the 2x2 matrix they create the four cultural types of adhocracy, clan,

hierarchical, and market (Figure 1).

Figure 1. The four cultural types in the Organizational Culture Assessment

Instrument.



Additionally, the OCAI matches key management theories about leadership and

management styles, strategic emphasis, success criteria, and the “glue that binds the

organizational together”.

An additional dimension of the assessment tools. The cultural assessment

tools reviewed above are sophisticated models that can lead to valuable insights. O’Reilly

(1989) highlights two key dimensions of culture not directly addressed in the tools above.

These are cultural intensity, or how forceful the culture is held by employees, and cultural

consensus or how widely employees share and agree on cultural norms. These two

dimensions are plotted on a 2x2 matrix shown in Figure 2. The lower left quadrant (low

intensity, low consensus) represents a weak culture. The upper right quadrant (high

intensity, high consensus) represents a strong culture. The upper left quadrant (low

intensity, high consensus) is called vacuous. In these cultures, everyone understands top

management values, but there is no strong approval or disapproval attached to the

behaviors. The lower right quadrant (high intensity, low consensus) is called the warring

culture. In these cultures, certain norms or behaviors are strongly valued by one group and

not valued by another. Understanding culture along these two continuums highlights

valuable information and an organizational view of the culture (O’Reilly, 1989).

Figure 2. Relationship and impact of organizational cultural intensity and cultural

consensus.



Once the current organizational structure has been assessed, the next step in the

process is to determine the desired culture. Tools such as the Denison Organizational

Culture Survey (DOCS) and the Organizational Culture Assessment Instrument (OCAI)

recommend completing the survey again thinking about the desired culture rather that the

current culture. In other words, when answering the survey questions, the participant

should not answer based upon the existing culture, but rather with the mindset of what is the

desired culture. The resulting analysis will deliver a future state culture using the same

framework as the current culture. This makes the gap analysis between current and future

states straight-forward.

Mallak & Lyth (2006) have designed a stand-alone process that they call the Desired

Culture Analysis (DCA) for use in the healthcare industry. For cultural assessments

performed with tools other than the surveys mentioned above, a process such as this would

be required.

What the Culture is not. In addition to determining the future state culture, it is

important for team members to determine what the changes to culture will and will not

mean. This step will remind individuals that many of the core competencies and aspects of

the organization that makes it unique must not be abandoned. For example, using the

Competing Values Framework terminology, an organization may want to increase their clan

focus and reduce their hierarchy focus. However, they do not want to lose their focus on

productivity. In this example, this could mean eliminating useless or restrictive rules, but it

does not mean the elimination of accountability and measurement.

Determine the Appropriate Interventions

Connors & Smith (2011) suggest using the following process when determining the

appropriate interventions to take.

• Defining the Results That Guide the Change. Given that culture should be aligned

with the business strategy, the change should be guided by the results the

organization’s strategy is looking to achieve.



• Taking Action That Produces Results. What actions and activities should the

organization be engaged in to produce the desired results? What should the

organization do more of, less of, start doing, stop doing?

• Identifying the Beliefs That Generate the Right Actions. What values and beliefs do

the organization and employees need to have to take the actions determined above?

• Providing Experiences That Instill the Right Beliefs. Once the desired values and

beliefs are determined, the organization can then design interventions around

instilling those within the employees.

Katzenbach, Steffen, & Kronley (2012) recommend first focusing on a few critical changes in

behavior. Focusing heavily on a few key behaviors, may improve the chances of the changes

being adopted. Ideally, these behaviors are already present in existing employees and their

examples can be leveraged. Katzenbach, Steffen, & Kronley (2012) also advocate

incorporating both formal and information interventions. Table 2 lists common change

management interventions.

Formal Interventions Informal Interventions

Changing or revising:

• Organizational structure

• Decision-making rules

• Management systems

• Rewards and consequence systems

• Mission and vision statements

• Organizational goals

• Communication strategies

• Training systems

• Creating communities of interest

• Increasing peer-to-peer interactions

• Creating stories, legends, and symbols

that represent the desired culture

• Redesigning physical space

Table 2. Formal and Informal Interventions, Katzenbach, Steffen, & Kronley (2012)

and authors experience.



Keys to Successful Organizational Culture Change

Changing an organizational culture requires a complete and comprehensive system of

change. The following sections describes key elements of such a system.

Communication, Communication, Communication. Just as the top three

most important things in real estate investing are location, location, location, the top three

things for a successful change is communication, communication, communication.

Communication is the means by which culture is created and shared. When changing

the culture, it is extremely important to communicate in new, and culturally appropriate

ways, to support the change. Communications must be credible, consistent, and prominent.

Successful communication strategies start before the change program begins and

continues as the culture evolves. Communication should be deliberate, frequent and use a

variety of mediums, from email messages to workshops. A communications plan is an

effective tool to facilitate the process of determining the most effective communication

strategies and capturing the information. Common elements included in a communication

plan include the following:

• Audience – consider if it is a company-wide message or specific to a select group,

level or department. Determine the communication messages that are relevant

for each group.

• Key message to communicate – dependent upon the stage of the project, the

message needs to be tailored in such a way that it meets the purpose.

• Purpose – the intended outcome or result of the message, such as to inform, or to

request action.

• Vehicle – how the message will be delivered. It may be through more traditional

channels of delivery, such as email, intranet, or newsletter. Informal channels

such as a conversation with a group delivered by a peer leader, or personal

communication one to one are effective. Other vehicles may be a video from the

CEO or planning forums for collaboration between leaders and employees and



holding workshops. These are intentionally designed to share new cultural

meanings and create the opportunity to stimulate group discussion.

• Sender – by whom will the message be sent. Choose the most effective messenger

to achieve the desired result.

Commitment to the change is crucial and it is important when designing the

communication plan to include multiple ways for employees to engage and contribute.

Create spaces, places, and reasons for people to come together. Make efforts to reach the

hard-to-reach. Listening tours and pulse surveys are useful to include in the communication

plan. These activities can solicit feedback to gauge the change effort and to improve the

communication plan.

Create a Team of Change Agents. In order to be successful, you need the

backing of formal and informal leaders within the organization; the people who are

influential and are the early adopters. Kotter (2006) states that "A strong guiding coalition is

always needed—one with the right composition, level of trust, and shared objective.

Identify a group of employees invested in improving the organization; people who are

willing to commit their time and energy. Build a system around them to develop and support

these change agents; especially those on the grassroots level. Train them in change

management skills in order to help them improve the attitudes and actions of others.

Successful change management efforts are more likely to be successful when the

process includes the means to produce new leaders over time. Do this by encouraging these

change agents to support each other first. Incorporate strong mentorship systems so that

they, in turn, can do the same for peers.

Finally, these change agents are also great sources of information. Listen to their

feedback and concerns as they can be used as an “early detection system” of conflict or

resistance.

Model the Change Process on the New Culture. Once the desired culture has

been determined, it is critical that from this point forward, the change needs to be made

within the context of the future state culture. This will help to demonstrate that the new



culture has already been embraced. The way that the change is communicated, designed,

and led must reflect the future state culture. Using the cultural quadrants and terminology

of the OCAI, if the current culture is primarily clan and the desired culture is more

hierarchical, the change process should be more formally organized, presented, and

managed. Simply put, if you cannot execute the cultural change strategy through the lens of

the desired culture, people will be less likely to believe the change is real.

Stories and Symbols. Organizational culture is best communicated and illustrated

by stories and symbols (Martin, Feldman, Hatch, and Sitkin, 1983; Martin and Powers,

1983). Cameron & Quinn (1999) states that “key values, desired orientations, and behavioral

principles that are to characterize the new organizational culture are usually more clearly

communicated through stories than in any other way.”

For example, Haley & Haley (2006) relate the story of the Haier sledgehammer.

Zhang Ruimin, Haier's CEO, was appointed by the Chinese government in 1985 to run SOE,

now the Haier Group Co, which manufactured refrigerators. "The real problem was that

workers had no faith in the company and didn't care. Quality didn't even enter into

anybody's mind," recalled Zhang. After a customer complained, Zhang arranged a colorful

demonstration. He gathered the workers in a yard outside the plant, and in front of them 76

substandard fridges were smashed to pieces with sledgehammers. He also smashed some

himself. "The message got through that there's no A, B, C, and D quality," he said. "There's

only acceptable and unacceptable". The sledgehammer that Zhang reportedly used currently

resides in China’s National Museum in Beijing

Thomas (2015) relates the story of the IDEO bell. IDEO is regarded as one of the

most innovative design firms in the world. In order to encourage innovation in its

employees, IDEO leads brainstorming sessions where they encourage their employees to

come up with wild and crazy ideas. The one rule is that no idea is to be criticized during this

initial phase. Any person found doing so “gets the bell”. The facilitator of the session will

give a light ding of the bell to remind the guilty person of the rule. “It is a gentle but very

powerful reminder that the foundations of IDEO’s business model are based on employees



discussing radically new ideas in an atmosphere of trust and encouragement” (Thomas,

2015).

Prepare for Resistance. Willpower alone does not lead to success. Change

leaders need to realize that there will be resistance along the way and be prepared to address

it. "Whenever you let up before the job is done, critical momentum can be lost and

regression may follow." (Kotter 1996, p. 133). When it comes to resistance, the current

culture can be the biggest culprit. Cultural inclinations are well entrenched and during times

of change, the culture can dig in and become unyielding. Change will also prove difficult for

some people individually. Most will quickly identify themselves and the resistance can be

addressed.

Dawson (2010) identified three causes of resistance and how to overcome them

(Figure 3). The three causes of resistance are misunderstandings, competence, and values

difference. Misunderstandings are overcome by communication and educating the resistor

on the case for change. If the resistance is due to skill competence, then the resistor is

provided the appropriate training and development to overcome the skill or meaning gap.

Finally, resistance due to value differences will likely end in confrontation. Mediation is

required to determine if the value difference can be bridged and a win-win situation created.

Those resistors that are unwilling or unable to change after the appropriate

interventions should be released from the organization or put into a position where the

impact of their resistance can be mitigated.



Figure 3. Causes of change resistance and how to overcome (Dawson, 2010).

With all three types of resistance, communication about and conversation around the

resistance are critical. It is vital that change leaders be alert to differences of opinion. People

are more likely to learn something from people who disagree with them than with people

who agree. At times, these resistors have ideas that might have been missed or can bring

deeper understanding to an issue.

Prepare for the Implementation Dip. Fullan (2001) defines the

implementation dip as the decrease in performance and confidence that ensues as the

cultural change requires new skills and understandings that may not be fully developed.

Providing the appropriate coaching and training at this point is important in order to regain

momentum and get the organization moving again.

Course Correction Assessments. Course correction assessments are regularly

scheduled reviews of your cultural change plan. The first goal of the assessment should be to

determine if the target culture is still aligned with the organizational strategy. Perhaps

external factors have forced a change of strategy and in so doing have shifted cultural



priorities. The second goal of a course correction assessment is to determine if the actions

taken to date are having the desired impact. Perhaps the new behaviors are not taking hold

or perhaps they have but are not delivering the expected results. The third goal is to evaluate

the progress to the vision. Is the project progressing at the desired rate? If not, do timelines

or resource requirements need to be revised? Perhaps the organization needs to be

reminded of the case for change and a new communications plan devised.

Properly Designed Incentive and Consequence Systems. Incentive systems

should address wages, benefits, assessments, raises, promotions, and bonuses. It must also

consider the level of freedom and participation required to conduct individual roles. And

most importantly the system must be perceived as fair and just by the employees.

Consequence systems must be in agreement with the moral content of top executives and

balance the handling of honest mistakes and the punishment of dishonest mistakes.

Internal Process Management. Management must ensure that internal

processes exist in order to support the organization’s desired culture and that these

processes are aligned across the organization. In order to increase trust, the management of

internal processes must also allow for open debate between the supervisors and employees to

regularly question the necessity, efficiency, and effectiveness of processes. This will help to

ensure processes are self-correcting and value producing.

Work With-in the Existing Culture. Organizational cultures don’t change very

quickly. Therefore, if you are seeking change in your company or institution, you are most

likely to succeed using your existing culture to help you change the behaviors that matter

most. Bit by bit, as these new behaviors prove their value through business results, the

culture you have can evolve into the culture you need.

Build a Foundation of Long-Term Success. The catalyst for culture change can

be many. A common finding is the desire to improve performance, increase the commitment

level of employees, and align the organization. In this attempt to achieve desired business

results, actions must be taken to ensure long-term success.



• Set targets. Culture supports meaningful business results and strategic intentions.

Setting targets for teams, departments, and individuals and tracking progress is

imperative. Holding managers accountable for communicating the status of goals,

reaching milestones and delivering results is essential.

• Build a process for learning and reflecting. Encourage managers and employees to

collectively examine their work practices and behaviors. Reflect on actions and their

alignment to impacting business goals. Allowing people to be honest about their

learnings helps to create a culture of trust and commitment and the opportunity to

modify behaviors.

• Integrate new leader development. Successful culture-building efforts are more likely

to occur when the process includes the means to produce new leaders over time.

• Nurturing and support values. Encourage workers to share stories of how they

embody the culture and values of the organization and promote the stories internally,

and possibly externally. In some organizations, this may mean encouraging

employees to experiment when innovation is a value and empowering local leaders to

take responsibility. At other organizations, it may mean managers being instructed

to achieve specific targets by specific dates at all costs.

• Celebrate wins. Acknowledge, validate and celebrate employee and team

performance that positively impact the goals and vision for the organization.

Aligning celebration and rewards with values of the company will promote desired

behaviors and attitudes. Honor and reward people who embody the values of the

organization in the way the organization values. For example, celebrating the

longevity of an employee at a company that values commitment. Celebrate a new

process or system at a company valuing creativity.



Conclusion

Organizational culture can be defined as a system of values, beliefs, and assumptions

shared among members that define what is important, and norms that define appropriate

attitude and behaviors for organizational members. Its importance in organizations is its

power to influence employee behavior. Organizational culture is too important to leave to

chance and organizations must use their culture effectively in order to execute their strategy.

Therefore, business leaders must understand organizational culture and how to effect its

change.

There are three steps that must be taken when attempting to change an

organization’s culture. The first is to assess the current culture. There are many different

tools and techniques that can be utilized to assess an organization’s current culture. Before

selecting a tool, an organization should understand the strength and weaknesses of each

approach and select an approach that balances involvement across all aspects of the

organization while minimizing the impact on people’s time. The second step is to determine

the future-state culture and the final step is to plan steps to bridge the gap and execute.

Eleven keys to successful organizational culture change were included in this paper.

Incorporating these elements into a culture change plan will assist in leading an organization

to achieving business results and make the overall change less jarring for all involved.

Organizational culture change is not easy. Charles Schultz of Starbucks described the

process as: “Like crafting the perfect cup of coffee, creating an engaging, respectful, trusting

workplace culture is not the result of any one thing. It’s a combination of intent, process, and

heart, a trio that must constantly be fine-tuned” (Schultz & Gordon, 2011).



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Organizational Culture Change

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