Organizational Culture and Change

1. Organizational Culture and
Change
Prepared by: Hayat Farag

2. Contents
• Organizational Culture
• Organizational Culture &
Performance
• Organizational Culture & Innovation
• Organizational Change
• Change, Information Sharing and
Trust
• Commitment to Organizational
Change
• Communication and Change Success
• Case Study

3. Organizational Culture
• The underlying values, beliefs, and principles that serve as a foundation for an
organization’s management system as well as the set of management practices and
behaviors that reinforce those basic principles.
• The routine activities taking place in an organization.
• The shared set of values and behaviors inside an organization.
• OC can be seen as a source for competitive advantage for the company, especially since
it is hard to copy.
• OC has a close relationship with organizational overall effectiveness.

4. • Creation & Innovation
• Risk-taking
• Autonomy
• Detail orientation
Adhocracy Culture
• Collaboration & cooperation
• Trust and Support
• Team work
• Open communication
• Involvement and engagement
Clan Culture
• Competition
• Communication
• Goal setting, Planning, Result-oriented
Market Culture
• Control, stability
• Routines, formalization
• Internal orientation
• Inhibits innovation
Hierarchy Culture
Flexibility
Stability

5. Organizational Culture and Performance
• Previous studies have found an existing relationship between performance and
culture.
• Kim and Chang (2019) found that adhocracy, clan and market cultures are
positively associated with performance.
• Strong organizational culture positively affects organizational commitment.
• The higher the employees’ commitment, the higher the organizational
performance.

6. Organizational Culture and Innovation
• Culture can encourage innovation among employees, because it drives them
toward accepting innovation as a philosophy of the organization.
• Examples of these cultural values:
• Creativity and Initiative
• Entrepreneurial mindset
• Flexibility
• Freedom and Autonomy
• Risk taking
• Teamwork

7. Behavior-related
relates to the speed, at which the
organizational system is ready to
adopt new ideas relative to
competitors.
Technology-related
tendency of the organization to adopt new technologies
and processes internally
Product-related
the ability of an organization to
generate new ideas, products,
services and processes, or to buy
them.
Innovation
new products, services, processes or technologies that
require acceptance, adoption and implementation

8. Innovation and Performance
• Organizations able to innovate are more capable to deliver new products and
services, improve processes in a faster way to fit the market’s needs and capitalize
on opportunities better than non-innovative organizations.
• Innovation is seen as one of the critical factors for achieving organizational
success and sustaining competitive advantage.
• Previous studies provide evidence that innovation can positively affect
Performance, Levels of Growth and Profitability.
• One of the factors that have an impact on innovation is the Organizational
Culture.

9. Organizational Change
• Refers to alterations to existing work routines and strategies that affect the entire
organization.
• It’s important for organizational survival and growth.
• Deployment of organizational change reduce costs, develop competitive
advantage and adjust organizations to changing market conditions.
• Organizational changes work practices variation in employees’ attitudes
(organizational commitment, job satisfaction and extra-role participation).
• Perceptions and attitudes toward change have been found to play a major role in the
success of such change as well as in job attitudes and organizational commitment.

10. Examples of Organizational Changes
Radical
Organizational
Changes
• Mergers
• Acquisitions
• Change of ownership
Small-scale
Changes
• Adoption of new technologies
• Adjustment in the organizational structure
• Introduction of new personnel policy and benefits

11. Information Sharing / Knowledge Sharing
• The exchange of work-related information between employees within an
organization.
• Sharing leads to positive outcomes, whereas withholding of information tend to
have negative outcomes.
• Increased Sharing Positive Organizational Culture Trust
• Trust refers to the confidence in the “other party’s goodwill” and reflects the
“faith in the integrity of the other party”.

12. Change and Trust
• When employees experience changes positively and find such changes to be
aligned with their personal goals and interests, their trust in the management of
the organization strengthens --- Positive Perception of Change.
• Positive Perception of Change enhances job satisfaction, job commitment
and employee well-being.
• Trust in management is important for information sharing because management
decisions that protect employees’ interests enhance employees’ commitment and
motivation to get involved in extra-role activities.

13. • Trust flourishes in an Organizational Culture built on strong interpersonal bonds,
collaboration, and teamwork.
• Personal trust among employees and between employees and managers is
necessary before employees will agree to try new things and explore new avenues
with unpredictable outcomes.
• The level of trust is a critical factor that influences how employees think, feel and
act with respect to organizational change. By contrast, skepticism about
organizational change contributes to intentions to resist.
• Eccles et al. (2012) Study: Sustainable organizations effectively implement
change and have cultures based on innovation and trust.

14. Commitment to Organizational Change
• Psychological condition or mindset that characterizes the employee’s relationship with the
organization and is decisive for the employee’s intention to remain in the organization.
Commitment
to
Change
Affective Change Commitment
emotional attachment, one believes in and sees the value of the change
loyal, dedicated, committed and willing to provide more than what is required
Normative Change Commitment
employee’s support of the change is a result of perceived duty
not being forced to support the change, he supports it because he feels he should do
so, simply because he is part of the organization
not do more than is required
Continuance Change Commitment
supports the change because he is familiar with the perceived (negative) consequences
of not being supportive of the change
economic (i.e. loss of salary and other financial benefits) and social (i.e. loss of
colleagues, reputation or status)

15. Individual Readiness for Change and Commitment to Change
• The success of organizational change largely depends on the organizations’ employees.
• IRFC reflects the extent to which an individual is cognitively and emotionally inclined to accept,
embrace and adopt a particular plan to alter the status quo.
• When employees believe that they can benefit from a change initiative and cope with it easily,
they are more likely to be committed to it.
• Employees who believe that they have the necessary skills and expertise to cope with the
change are more likely to commit to the change in a positive manner (i.e. Affective and
Normative commitment to change).
• Employees who lack the skills necessary to adapt to the change are more likely to commit to
the change in a negative manner (i.e. Continuance commitment).

16. Communication and Change Success
• Organizational Communication is “the process by which information is
exchanged and understood by two or more people, usually with the intent to
motivate or influence behavior”.
• Communication during organizational change help employees
understand the reasons behind change and its implications, such that confusion
and misunderstanding can be avoided.
• Communication can lead to positive change responses, lower levels of anxiety
and uncertainty, increased trust in management, and decreased turnover
intentions.

17. Change Success
Individual
Dimension
“what’s in there for me?”
if the outcome of such
change positively affects
that employee-----
change initiative would
be considered successful
Organizational
Dimension
meets the overall
objectives of the
organization

19. Problem
• “FinoTechno” is a highly reputed North American organization with a successful
history of investing in infrastructure projects.
• Due to its increasing involvement in infrastructure projects, the organization created
an exclusive subsidiary “EngiInfra”, which will be involved in the development of major
public infrastructure, locally and globally.
• In 2015, the government suggested that “FinoTechno” undertake the development of
a major integrated transportation system through its subsidiary “EngiInfra”.
• A new team is needed to manage both infrastructure investments as well as project
ownership and development.
• As a result, one team from the investment management department of “FinoTechno”
needs to integrate with the team of “EngiInfra” to form one new integrated team.

20. • The two teams work in related areas, share the same leadership, and operate in a
similar location; however, they have totally different expertise and backgrounds
and rarely interact with each other.
• Challenge
• Five hypotheses were identified:
H1. Transformational leadership positively affects employees’ commitment to
organizational change.
H2. Regular formal and informal, vertical and horizontal communication positively
affects employees’ commitment to organizational change by reducing uncertainty.
manage the upcoming organizational change for a smooth
integration of the two teams and their successful performance

21. H3. Strong organizational culture positively affects employees’
commitment to change.
H4. Adaptive organizational systems positively affect employees’
commitment to change.
H5. Employee satisfaction levels positively affect employees’ commitment
to change.

22. The Methodology
• Initial interviews with key people involved in the change process.
• A survey designed to evaluate the existing nature of leadership, communication practices, organizational culture,
and employee satisfaction levels.
Recommendations
• Step 1: Establish a Sense of Urgency through a Guiding Coalition
• Leaders create a sense of urgency by communicating, not only the new information about the change, but also
the rationale behind it.
• Employees know that there will be a new project and new team will be formed; however, they do not know if they
will be a part of it.
• The employees moving into the new subsidiary should feel proud of being a part of it.
• People in the organization who have position, power, expertise, credibility, and leadership should be selected to
act as “Change Agents”.

23. Step 2: Develop and Communicate the Change Vision
• The survey analysis indicated that communication, as perceived by the
employees, is an area of concern.
• The formulated vision and the first steps required to get started on the
change journey need to be clearly articulated and conveyed to all concerned
employees.
• This communication should take place not only between management and
employees, but also between teammates themselves.

24. Step 3: Remove Obstacles from Achieving the New Vision and
Generate Short-term Wins
• All the efforts to build the buy-in from all the levels of the employees will be
useless if management does not seek feedback from the employees to identify
any concerns they are facing in realizing the change.
• Celebrating the small wins will create a sense of victory, motivate the people
to achieve more and also reassure them that they are on the right track.

25. Step 4: Consolidate Gain, Produce more Change and Anchor New
Approaches in the Corporate Culture
• Leaders have to maintain the organizational structure and systems to be
coherent with the parent organization, so that the integrated teams feel secure
and see the growth potential that the new opportunity offers.
• During the interviews, managers emphasized that, even though they are
creating a new team, they recognize the importance not to create a “Monster”
or a new alien culture.
• Leaders must make sure that all new behaviors required for the integration
become part of the existing culture of “FinoTechno.”