CH 8

Unit 8 Managing Change: Culture and Performance Strategic Management of Human Resources
CH 8
Evaluate the role of organisational and employee culture in
relation to organisational performance.
ORGANISATIONAL
CULTURE
ORGANISATIONAL
CLIMATE
IMPROVED
ORGANISAT IONAL
PERFORMANCE
MANAGEMENT
DEVELOPMENT
MANAGEMENT
OF CHANGE
EMPLOYEE
COMMITMENT
ORGANISATIONAL
CONFLICT
Employee climate
This can be described as the intersection of people to organisations and
employee to the manager relationship. This is made up of several interactions
personal and organisational goals, formal structure and its impact on behaviour,
the process of management decision making, conflict resolution and
communication in terms of securing commitment and goal alignment, leadership
style, etc.
Employee Commitment
Figure 8.2 Three pillar model of commitment (Martin P, Nicholls J: Creating a Committed Workforce).
Organisations still need to build on loyalty despite the

difficulties of markets that still push organisations to greater
workforce instability through such measures as flexible
outsourcing and divesting activities as we saw earlier in the
module, takeovers and mergers, etc. Each impacting on the
sense of identity of employees and the sense of willingness to
contribute to the organisation and its improvement so prized
as flexible learning, performance and quality orientated
behaviours. Drennan (1989 'How to get your employees
committed', Management Today, October pp1219) suggests
several prerequisites to this including clear goals and
direction, clear focus on team work, management time on
developmental activity, visible and continuous
communication of goals and feedback on progress. All factors
that integrate our performance and learning models of
organisations introduced in this module.
Strategic Management of Human Resources
Unit 8 Managing Change: Culture and Performance
Organisational conflict
There are contrasting views of conflict. Mostly organisations determine conflict as
destructive and seek to minimise or suppress conflict as damaging. This could,
from an employee relations perspective be seen as a unitary view whereby
common interests prevail. Alternatively organisations can view conflict more
positively as a creative and innovatory force. Organisations subscribing to a
stakeholder viewpoint (i.e. inclusive of different internal and external interests)
and actively promoting diversity might see different viewpoints as a good basis
for learning and change. Organisations are often criticised for creating cultures
that exclude certain types of people or viewpoints. How organisations view
grievances raised by staff is often a good indicator of this culture. Those
organisations that create the impression in staff that to use a grievance
procedure suggests failure and is not the done thing' may find it difficult to
surface real attitudinal views as a basis for change. Those that are able to have a
healthy engagement with grievance procedures and have managers skilled in
surfacing and dealing with conflict are now regarded as possessing advanced
skills for organisational change as we shall see below. The identification of
sources of conflict and the confrontation through problem solving and high
involvement strategies are important change management skills. The rationale
being that organisations should focus less on performance reducing compromises
and avoidance, but focus on diligent processes of resolving through evaluation of
information and involvement of staff in the outcomes. Employees may not always
like the outcome but the objectivity of the process may go a long way to
improving commitment to the result and reduce resistance. Confidence in
organisational governance procedures is an important element in building trust
and commitment a key commodity in effective organisational change.
Management development
In the previous units we have discussed the important role of the manager in
SHRM. Indeed it has been seen as a critical role in embedding SHRM practice. In
Unit 6 we introduced the role in terms of learning. In Unit 3 the role pivoted
around the performance enhancing relationship. The manager is able to bring
about and or consolidate change is becoming ever more important. Such
managers have to move beyond relying on positional or traditional professional
expert models to manage effectively in the 21st Century. Becoming a leader as
opposed to the more administratively geared person (i.e. making existing
procedures work ) to providing a wider and longer term view a set of vision,
values and missions and to be able to sustain the organisation around these. To
be able to create an environment that encourages and promotes flexibility,
organisational capability growth and creativity accords well with the resource
based view of SHRM we introduced in Unit 1. The manager as coach and
counsellor are also important functions to get the best from staff and build their
trust, confidence, capability and commitment. The manager is now expected to
be skilled in the art of facilitation whereby he / she can move the organisation
forward through continuous improvement. The skills behind Total
Quality Management, Business Process ReEngineering, EFQM
At a highlevel the role of HR in organisational development will include:
Working with the business to align the OD strategy with key corporate
objectives.
Promoting (communicating, inspiring and

performance people management culture.
Designing OD frameworks such as PMS and rewards system to help

deliver changes.
University of Sunderland
motivating)
high-
Integrating OD into employee communications, HR development, teamworking, collaboration and other aspects of highperformance working.
HR planning to build appropriate organisations skills, competencies and

capacity.
Assisting the business in establishing priorities for learning and

development (refer to Unit 6 also).
Managing knowledge about OD activities across the organisation, and

managing
relationships
across
functional/divisonal/businessunit
boundaries to share development activities.
Let us now take the example of a rapidly expanding global corporation one that
is growing organically as well as by mergers and acquisitions. Some of the
specific areas where HR may play a strategic role (in line with the broad
objectives identified above), in partnership with the business are:
Encouragement and facilitation of discussion and development of

competencies as they relate to present and future of the organisation
(noting rapid expansion and hence probable mix of diverse working
cultures).
Organisational structuring to promote projectbased work and teamwork
Learning and Development to foster crossfunctional and crosscultural

teaming and knowledgeworking.
Promoting workforce diversity perhaps in newly acquired companies.
HR planning to attract, retain and develop talent, Attainment of

Employer of Choice status.
Reshaping HR capability to fit organisational competence by attracting

and retaining appropriate staff, and achieving the right balance
between new recruits (with core, 'indemand' skills) and existing staff.
Integration following mergers and acquisitions (in the context of

globalisation and expansion).
Management of restructuring and downsizing.
PMS and Appraisal schemes that measure not only

performance but also teamwork and customer satisfaction.
Promotion of collaboration and teamwork through appropriate rewards

and recognition programmes.
Professional development to develop and extend core competencies and

organisational competence.
Flexibility in working practices and improvement of worklife balance.
Promotion of effective and efficient working practices with greater

empowerment.
Leadership in ethics and corporate social responsibility.
individual
Employer of Choice organisations

With the shift in labour trends, every business needs to examine how to attract
and retain good employees. A key part of HR's strategy must therefore be to
have an organisation designated as, what is termed, an
Employer of Choice. This is a goal pursued by many strategicallythinking
companies as they seek to attract and retain talent in the context of OD. The
term Employer of Choice is used for organisations with the status and reputation
as a leading choice employer amongst worldclass candidates. 'Employer of
choice' organisations are designated as such, because of their positive working
environment characterised by compensation, corporate culture, benefits and
training. 'Employer of choice' organisations attract talent and retain key
employees. They provide employees with an attractive and fulfilling working
environment that balances work life with personal life (worklife balance), they
provide an environment where employees feel valued and respected. Perceptions
of a positive environment is also greatly influenced by an organisation's track
record in the area of ethical standards and corporate social responsibility.
Ethical dimensions
Organisational development also has an ethical dimension. It requires ethical
sensitivities in issues relating to equality, diversity management, flexible labour,
voluntary and involuntary employee separations resulting from restructuring and
downsizing, performance management and rewards. The pull from the business
may often be in conflict with employee welfare, and HR's role is in fairly
balancing the conflicts and taking an ethical stance. HR also plays a vital role in
establishing an ethical organisational culture by communicating codes of ethical
conduct, providing training in ethics, monitoring compliance to ethical standards
and managing compliance.
Workforce diversity
An important role for HR in organisational development is the promotion of
workforce diversity. Leading organisations are now focusing on diversity as an
asset to be leveraged, and not as something to be managed or paid lip service
to. Such organisations view workforce diversity as adding richness, synergy, and,
most of all, business value. Accepting this point, and gaining its acceptance in
others, is perhaps the most essential leadership competency for leveraging
diversity. It is a key part of organisational development. Without this
competency, no organizational diversity effort can have a lasting positive impact.
Corporate social responsibility

Today corporate social responsibility is another key part of organisational
development, and a key leadership area for HR. According to the Department of
Trade and Industry (DTI), an increasing number of companies of all sizes are
finding that there are real business benefits from being socially responsible.
Being socially responsible can improve financial performance and access to
capital, enhance brand image and sales, attract and retain a quality workforce,
improve decisionmaking on critical issues, help organisations manage risks more
efficiently and reduce longterm costs. There are real business benefits, and CSR
initiatives must be aligned to and embedded in organisational strategic goals and
objectives. The relationship a business has with both the government and the
wider community is integral to its success, reputation and daytoday working. HR
has a clear role in demonstrating the business case and leading the organisation
in CSR initiatives.
Diagnose and
organisations.
evaluate
the
need
for
culture
change
in
Culture and organisational performance

Let us start with a definition. At its most general level, culture is frequently
described as a set of shared meanings that influence or determine behaviour. For
example: how decisions are taken how rules are made how, and the extent to
which, information is shared what is right and what is a shared view as to the
right way to view work, authority, and so on. Examples of views are that work is
good and developmental, authority is necessary and legitimate, or is the
opposite and is to be resisted.
These meanings can be those prescribed by organisations in terms of say, their
mission statements, or might be the informal ways individuals and groups
develop ways of thinking about work behaviour and doing things. This is
important because we are at once faced with an important distinction between
the socalled managementled corporate culture, and organisational culture that
grows over time in response to organisational events. This is often described as
the collection of individual subcultures within organisations.
The possibility that managers can design and develop an effective corporate
culture is often at the heart of the strategic implementation debate. For example,
it presupposes that organisations can in some way align individual and group
values within the organisation, which will positively influence commitment to the
organisation. In this sense, the potential impact on organisational performance is
enormous. The idea that culture can be owned and managed is a contestable
factor, but certainly as an idea, it sits at the heart of current organisational
thinking about how to enhance performance. The argument for organisational
analysis is that all organisations have cultures, culture builds consensus and
unity of purpose, which can motivate staff. Therefore:
Individual and group performance will increase through consensus.
Managers should attempt to manage culture.
We shall look at these ideas more closely in due course.

Interest in culture emerges mainly from two traditions in managerial studies:
One stems from the increasing investment of Japanese organisations and

their particular styles of managing. This involves team working,
continuous improvement, consensus decision making, multiskilling and
high emphasis on development and empowerment are some of the key
features.
The second stream of thinking was American in origin, emerging from the
widely popular Peters & Waterman (1982) literature, In Search of
Excellence and subsequent updates. The key features here are the
authors promotion of key values and behaviours in staff, loosely linked
with an idealised view of American frontier development of the last
century. These values include individualism, self reliance, family values
within organisations, accountability, entrepreneurship, emphasis on
informal client and committed action, and keeping things simple in
decision making, communication and tasks.
Bates model of culture

Items 1 to 6 in the previous activity are directly mapped onto the first
six of Bates (1992) criteria to offer you a view on your attitude toward
organisation life and how you might respond. You might like to try out
the activity with one or two people you know who work in
organisations, to see if you can develop different profiling on cultural
maps for, say, a public sector organisation and a smaller, private
sector, commercial organisation
Hofstedes (1980) model of culture

The questions in the activity also serve to highlight a second framework for
diagnosing culture. Gert Hofstede (1980) produced his seminal research based
on surveys of 160,000 employees of IBM, drawing up a profile for analysing
international culture. The original four indices, which have subsequently been
updated, were based upon the attitude and beliefs towards:
Power distance.
Uncertainty avoidance.
Individualism.
Masculinity.
Power distance (PDI)

This is the extent to which members of society and organisations accept or
highlight the distribution of power and authority, for example, clear status and
hierarchy as opposed to equality and empowerment.
Uncertainty avoidance (UAI)
This the degree to which members of society and organisations feel threatened
by change and ambiguous situations, and set up planning systems to avoid
uncertainty, for example, rulebased procedures and careful planning as opposed
to flexible, responsive, risktaking behaviour.
Individualism (IDV)
This is the extent to which people believe that the wellbeing of the family
(organisation family) is more important than their own interests.
Masculinity (MAS)
This is the extent to which achievement through successful acquisition of
possessions, money and promotion prevail over the caring and nurturing values
of social relations. For example, performance related pay, individualism and the
success of individual objectives as opposed to teams, learning and organisationbased reward.
Hofstedes index produced some interesting results highlighted by some stark
international differences. For example employees in the USA show:
Low power distance egalitarianism.
Low uncertainty avoidance, willingness to take risks.
Very high individuality individual accountability.
High masculinity, with performance/individual/ competitive orientation.
On the other hand, Far East and East Asian employees demonstrated a tendency
towards:
High power distance hierarchy and seniority.
Higher uncertainty avoidance, for example, with an emphasis on low risk

taking.
Low individuality importance of the family and extended family networks.
Low masculinity, emphasising low individuality, where caring values,

sharing of information and decision making were seen as more important
than visible, individual success.
The nature of culture: strong and weak cultures

What we need to do now is establish the meaning of the strength of culture. It
relates to the stability of the employee group membership and cohesiveness of
their thinking and beliefs about work and wider value systems. It also relates to
the length of these socalled learned, shared and consensual values and beliefs.
Strong culture often results from a stable group or organisational membership, or
very clearly defined ways of working that can be taught to new members, where
this group has learnt to cope with and possibly survive some difficult working
problems. The group, in other words, has a strong sense of history that binds the
members together. Of course, this might be the achievement of a key
organisational event or something of greater importance to the group than the
wider organisations.
Culture change: an assessment of opportunity and

difficulties
Creating and shaping positive organisational culture is a central activity within
SHRM. Culture is closely related with attitude, behaviour and values, which form
an important platform for developing commitment. Culture and competence are
both integrating factors within a HR strategy.
We have already noted the difficulty of changing fundamental beliefs and values.
In other words we may change the outcomes, manifestations or surface level
behaviours, but it is less clear how effective organisations can be in changing
those deeply held beliefs that are at the heart of the commitment and
psychological contract.
Etzioni (1988) made the point that there were three employee cultural
orientations to employment achieved through structural design:
Coercion: I have to work for the organisation.
Economic: I work at a transactional level wages for jobdefined

output.
Personal involvement: I value the work I do and the organisations

product or service. I am committed to going beyond contract to
achieve personal and organisational goals.
These motivations are important, and the aim of SHRM is to move employees
towards the third model personal involvement orientation, where employees
bring to bear their full engagement.
Organisations face conceptual and empirical difficulties in creating strong
corporate cultures.
Conceptual problems include the following:
Ideologically, corporate culture is viewed as the enhancement of

management control at the expense of employees, which promotes
resistance and can reduce the cooperative and consensual outcomes.
Corporate culture can deny stakeholder interests if they deviate from

the management view. Management needs to unlearn (Unit 5).
Culture is formed primarily through social interaction, adaptation

(Schien) and not exclusively through management prescription of
ways to perform and behaviours to adopt. Managers can, as we saw
in Unit 5, design learning activities that influence employee
behaviours and perception, but often employees learn to respond to
the organisation as an external face to be dealt with rather than
aligned to.
Employees nationally become members of separate subcultures or

interact with groups that will hold separate identities for example,
engineers, accountants, shopfloor and administrative grades,
production, design and marketing.
Culture is not a product but an insecure outcome of a continuous

process of social interaction.
Empirically, the evidence of effective change is difficult to find. Maybe employees

have been coerced into doing different things, for example, training in customer
service values and the McDonaldsstyle standardisation of employee behaviour.
Retail staff are frequently trained to say and perform routinised behaviour to
please customers. Superficially this will enhance service but without deeper
level attitude changes, organisations may not achieve performance change. For
example, employees need to actively own improvement to service provision or
they may react to programmed responses only.
Most of us can visualise what a positive organisational culture is. Thus far, we
have learnt about ways of defining it. The basic issues and challenges HR need to
consider are:
How do we develop committed employees?
How do we develop their potential and identity with enhancing

personal and organisational improvement?
What forms of job design, organisational structures, leadership style

and HR practices will secure change in culture?
Culture is about identity and beliefs. Focusing these on organisational

values will affect performance, therefore cultural outcomes
management is important.
However, attempts to manipulate culture can have negative effects

upon employees, who believe organisations are attempting to
brainwash them, and in turn resist such management attempts.
The challenge is how do we build willing alignment of individual and

organisational goals when cost and wider stakeholder pressures
militate against this.
We now consider ways of attempting to manage change whilst accepting that

complete change in a short timescale is impossible.
Change Management
In this section we will look at:
Change management strategies and their impact.
The organisational development process.
The lessons to be learnt from change management.
The role of change agents.
The role of the HR specialist

Ulrich (1997) designated a key role for HR as Change Champions. The reality is
often less clear with HR giving way to outside change consultants, OD specialists.
Should this be so? As we will see, HR policies are often at the heart of culture
change.
Evaluate the nature of different change strategies to suit

different strategic business contexts.
Change management assumptions
Assumptions about intentions of change
Is change
Exceptional or endemic?
Threatening or desirable?
Deviant or normal?
Implications
Arrangements made for scanning, filtering

and responding to signals for change
Behavioural readiness to do things

differently
Cultural responsiveness to do things

differently
Assumptions about implementing change

Is change
Controllable or controlling?
Rational or relational?
Discrete or multifaceted?
Implications
Perceptions about the rightness, speed,

scope and pace of change strategy
Attention given to historical, cultural and

political (internal and external) contexts
Arrangements made to cater for systemic

repercussions
Assumptions about interpretation of change

Is change
Directional or reciprocal?
Managing people or managing meaning?
Problem-solving or pattern-seeking?
Implications
Allowances made for differing versions of

change process
Credence given to different choices and

evaluation of change outcomes
Extent
to
which
differing
views,
predispositions, ideologies explored and
understood
Types of change and their impact on strategy

We have considered the complexity of change from the employees side. Let us
now consider variations of change from the employers side. Change can be
faster and more fundamental or incremental. This will, of course, reflect the
degree of culture change and resistance.
Three generic types of change have been defined. They will influence the scope
and choice of interactions that we will consider later:
Incremental. Adapting and improving existing practice. For example,

Business Process Reengineering and new team based structures may
require skills and attitudinal change based on revised jobs and
employee networks.
Transitional. This suggests wider ranging restructuring of the

organisation, even the breaking up of the organisation into smaller
business units or decentralising the organisation and the break up of
specialist central departments. Such initiatives create new job
structures and new patterns of accountability and power within
organisations.
Transformational. Under this condition all aspects of the

organisation are changed: core values, leadership, decisionmaking
and power redistribution. The implication of this is fundamental
review of the
knowledge learning process and culture of the organisation.
Explain the managerial and employee assumptions that

support change management processes and relate these to
selected strategies for change.
The role of change agents

We have choices. We can use internal agents or we can use a combination of
internal and external change consultants. The mix will depend on the capability
of internal management and the scope of the change challenge. You will
remember the challenge for HR practitioners to become Change Champions
(Ulrich, 1997). Here we discuss the possibility of this proposition.
So far we have implied that to be able to gain trust at all levels of the
organisation, an external facilitator may be necessary. We have also implied that
an external facilitator may also be critical in helping the organisation, including
its senior managers, to understand fully the complexity and nature of the change
required, the unlearning that we discussed in Unit 5. Indeed, the ability to give
feedback and alert senior managers to their need to change behaviour can only
be done from outside the organisation. In most change situations such as
introducing new budget systems, introducing new capital equipment or a
marketing campaign, the project sponsor and the expertise are clear. This is not
so with culture change where management may equally be part of the barriers to
change.
Design a planned framework of organisational change.

Determine the future state: where do we want to be? Agree organisational
purpose and mission: step 1
The first stage, agreeing the organisational purpose and mission, is determined
by the trigger for change. The following activity might help us determine this,
and the type of change we require.
Internal triggers for change could be:
10
Restructuring of business units and job structure.
Quality improvements.
Revised service levels.
Development change.
Product innovation.
External triggers for change could be:
Internationalisation.
Market driven triggers: product, cost and customer technology driven.
Competitive restructuring, joint ventures, mergers and so on.
There is a clear relationship of strategy, employee role behaviours and SHRM

policies to match. You will recall the components of SHRM in Units 1 and 2 of an
integrated response to organisational strategy as a key component of a strategic
integration. This serves to illustrate the relationship of business strategy,
culture/competence and SHRM, which might be a starting base for the analysis of
the present state with an indication of the contribution of the HR policies can
make to assist the change.
Diagnosing the present state: where are we now? Steps 24
There are three steps within this diagnosis: assessing the outer and inner
context, gathering data and gaining involvement.
Step 2: Assess the outer and inner context
What sort of information do we need to understand the present state? The
following is a checklist of data to be collected and evaluated in order to assess
the extent to which we need to change now or in the future:
Outer context forecasting the impact on internal activities
The economy.
Suppliers availability/quality.
Government policy.
Competition existing/new entrants.
Customer needs/expectations.
Shareholder perspective.
Public opinion.
Legal environment.
Media concerns and values.
Technology.
Market and product innovation.
Inner context
11
Skills and knowledge of people and their adaptability.
Culture and relationships.
Learning ability.
Flexibility and work methods.
Business process efficiency.
Structures and job design.
Competence.
Step 3: Gathering data
NOW
FUTURE
STRATEGY
TASKS
RELATIONSHIPS
( up, down and across
the organisation)
DO
WAYS OF
WORKING
FEEL
THINK
Figure 8.4: Data collection cube
Price (1987) introduces an interesting way of ordering the data gathering

process. The data collection cube (Figure 8.4) suggests that we need to
understand strategic pressures, emerging and core tasks that add value, and the
association of attitudes and culture that will achieve these. In other words, it
addresses the what and how aspects of employee contribution.
An example is as follows:
Now
Future
Strategy
Well structured or
dynamic
Target change
Level of response
(Pugh); System
change, for example,
Business
Process Review
Formal
management style
or informal and
open
Target change
12
ng
Mechanistic/
prescriptive or
organic and flexible
Target change
The OD process demands that understanding peoples perceptions and feelings

will help us to judge their likely reaction to our intended change, which will
inform us of the likely issues we need to address in the strategy.
Also, we should not forget that in order to achieve the full benefit of this analysis,
we are not dealing with facts and information alone. The degree to which we
involve staff in this process sends other messages about our intentions and
perhaps signals our management approval to change our style. Step 4, gaining
involvement through the investigation, demonstrates this point.
Step 4: Gaining involvement
The OD approach, as we saw in the unit on learning organisations, is to advocate
a participative approach where the speed of change permits. Therefore, how we
conduct the diagnosis will, it is argued, affect the overall outcome of the change
itself and commitment of staff to the outcomes. In itself the process of
involvement and participation is likely to send cultural signals about what the
organisation wants from its staff and how it wants them to behave and perform.
So how can we best maximise the involvement of staff in the diagnosis of the
present state?
Pugh (1993) identifies six rules for maximising involvement in the change
process:
Rule 1: Work hard at establishing the need for change as a basis for
building commitment and acceptability.
Rule 2: Think out and think through the change, looking at the
change from the recipients point of view, for example, the impact
upon relationships, power, resources, job content/interest, job
autonomy/authority.
Rule 3: Invite change through informal discussions to get feedback

and participation.
Rule 4: Positively encourage those concerned to give their objections.

Surfacing problems early enables organisations to deal with them
before they start to hinder the change strategy in progress.
Rule 5: Be prepared to change yourself. This is another take on

unlearning by managers and avoidance of groupthink that we
came across before.
Rule 6: Monitor the change and reinforce it. Part of this relates to the
communication we came across earlier. Communication of successes
and using HR policies to reinforce or stabilise the change are critical,
for example, new development appraisal and performance systems
can reinforce learning based cultures.
Pugh (1993) recognises implicitly the role of subculture and interest groups and
the need to focus on reaction and sources of resistance. Pugh (1993) assumes
that employees only partly align their votes with the corporate goal. The whole
change process is about surfacing noncorporate views and attempting to resolve
them to the mutual benefit of the individual and the organisation. The gathering
13
of data, surfacing these issues and including them in the diagnosis, is critical to
the success of the change process.
Managing the transition: Steps 57
This is a vital part of the OD process and includes steps 5 to 7, the targets for
change, the implementation of change and its evaluation and reinforcement. We
also include a word of caution about change programmes.
We shall first examine a useful framework for explaining and evaluating choices
about levels of change intervention in the OD matrix, developed by Derek Pugh
(1983). See Table 8.3 which illustrates the OD matrix together with possible
change interventions in italics.
Behaviour
Structure
Context
(What is happening now?)
(What is the required

system?)
(What is the setting?)
Organisationa
l level
General climate of poor

morale, pressure, anxiety,
suspicion, lack of
awareness of, or response
to environmental changes
survey feedback,
organisational mirroring
Systems goals poorly

defined or inappropriate;
strategy inappropriate
and misunderstood;
organisation structure
inappropriate centralisation,
divisionalisation or
standardisation;
inadequacy of
environmental
monitoring mechanisms.
change the structure
Geographical setting,
market pressures, labour
market, physical
condition, basic
technology change
strategy,
location,
physical set-up; culture
Inter-group
level
Lack of effective cooperation between

subunits, conflict,
excessive competition,
limited war, failure to
confront differences in
priorities, unresolved
feelings intergroup
confrontation (with
third party as
consultant), role
negotiation
Lack of integrated
task perspective;
subunit optimisation,
required interaction
difficult to achieve
redefine
responsibilities,
change reporting
relationships, improve
co-ordination and liaison
mechanisms
Different subunit values,

life style; physical
distance reduce
psychological and physical
distance; exchange roles,
attachments, crossfunctional groups
Group level
Inappropriate working
relationships,
atmosphere,
participation, poor
understanding and
acceptance of goals,
avoidance, inappropriate
leadership style, leader
not trusted, respected;
leader in conflict with
peers and superiors
process consultation,
teambuilding
Task requirements poorly

defined; role
relationships unclear or
inappropriate; leaders
role overloaded,
inappropriate reporting
procedures redesign
work relationships
(socio-technical
systems), self-directed
working groups
Insufficient resources,
poor group composition
for cohesion, inadequate
physical setup,
personality clashes
change technology, layout,
group composition
Table 8.3: Pugh OD matrix with possible change interventions (in italics)
14
The matrix is a useful audit tool to meet the inner/outer context for change. It
can also be used as a blueprint for planning the levels and orientations of a
change strategy.
Change can be effected in one of three ways:
Top down
University of
Sunderland
Bottom up
Horizontal/sideways.
The first two approaches are

selfexplanatory.
The third,
horizontal/sideways change, relates to change initiated and promoted by teams
of people at different levels of the organisation.
The approaches are characterised by the following strengths and weaknesses:
Strengths
Weaknesses
nge
control power and resources

fast pace
clarity of objectives
ange
ownership
high commitment
able to cope and adapt
drive objectives
empowerment/learning capacity
new style of managing
eways change
broader commitment
new teams/fresh start
power at all levels

symbolises new partnership and
style of managing
non-ownership
resistance
low commitment
may not have best answer
stakeholder interests
slow pace
dilution of objectives
inappropriate compromises in
major change
shareholder and external
interacts ignored
seen as peripheral groups

by-passes existing managers
and power structures
staff isolated/alienated from
colleagues
Before outlining steps 57, a word of caution. Many well intentioned change
programmes have not produced change. Why? The most common reasons for
failure are:
Over reliance on programmes how flexible are they?
Reliance on forward training.
Paradox of topdown directive change versus creating the climate and

conditions for change.
15
Problem of overly corporate cultural view.
Failure to address fully issues of coordination, competence development

and building commitment.
Not sticking to one programme, but initiating a series of confusing

different (ad hoc) programmes that produce frustration and fatigue, for
example, an organisation running with IiP Business Excellence, TQM and
BPR simultaneously.
Let us now review the strategic stages in the transition state. (Refer again to
Figure 8.3).
Steps 56: The targets for change and implementing change and developmental
activities
The targets can be framed around the choice and levels we discussed earlier in
the unit.
Two models illustrate the generic approach for these steps. Remember that in
organisationwide strategic change, we are likely to employ a range of techniques
directed toward different levels and groups, depending upon such factors as
recognition of the need for change, resistance and support for change. Sequence
and timing of interventions is important.
For example, we might start from either a directive, top down, or bottom up
change position, gradually embracing broader techniques as the change
programme progresses. Similarly, some features of change will be used more
widely than others. For example, most change specialists advocate
communication and education as being a high level content throughout.
Negotiation and more cohesive action might be more selective and shortterm to
reduce or overcome resistance in parts of the organisation.
Generic model 1
Bate (1990) provides our first generic model towards a change strategy.
Please refer to Table 8.4.
University of
Sunderland
Approach
Characteristics
It can ...
16
But It usually ...
(A) Aggressive
(B) Conciliative
(C) Corrosive
(D) Indoctrinative
Rapid change
Dismantles traditional
values
New culture is noncomplex
Top-down, monitored
Detailed plans/actions
lead to a strong,
integrated culture suit
a situation where
simple source of
authority
lead to a common
Reasonable, quiet
sense welcoming of the
Slow grafting onto new
new culture disarm
values
opposition
Deals with means not end
Collusion, not
confrontation
Continuous development
Based on power and

control
Uses informal networks
Unseen manipulation
High participation
Act first, legitimise later
lead to genuine and

large-scale change
initiated by smallscale network
lead to widescale
Planned, programmed
changes at an
Explicit learning process
informational, technical
level
Socialising
Unified, logical framework
Advocates one world view
mobilises dissent is
politically naive lacks
skills, breadth of
support leads to crisis
or change
loses sight of its

radical intent gets
seduced back to
status quo
is used to defend existing

order and oppose change
initiators
does not succeed in

bringing about
fundamental
cultural change
Table 8.4 : Generic Model 1, Approaches to Cultural Change, Adapted from Bate 1990 in Open
University (1992) B884 Human Resource Strategy, Unit 5 P140 141.
Bate (1990) identifies some possible advantages of change

approaches. In fact, change strategies will need to employ a
mix of approaches to deal with different employee responses
and particularly with respect to the pace and direction of
change.
Generic model 2
Moving from a meaning and values based interpretation of
change and its outcomes to a more specific model of change
strategy we have Kotter and Schlesingers (1979) model,
which we have termed Generic Model 2. Refer to Table 8.5.
University of
Sunderland
Approach
Commonly used when ...
17
Advantages
Disadvantages
1 Education and
communication
there is a lack of
information or
inaccurate information
and analysis
2 Participation and
involvement
Once persuaded, people

will often help
implement the change
Can be very
time-consuming if many
people are involved
the initiators do not

have all the information
they need to design the
change, and others
have considerable
power to
resist
People who participate

will be committed to
implementing the
change, and any
relevant information
they have will be
integrated into the
change plan
Can be very timeconsuming if

participators design
an inappropriate
change
3 Facilitation and
support
people are resisting

because of adjustment
problems
No other approach works

as well with adjustment
problems
Can be time-consuming,
expensive, yet still fail
4 Negotiation and
agreement
some person or group

with considerable
power to resist will
clearly lose out in a
change
Sometimes it is a
relatively easy way to
avoid major resistance
Can be too expensive if

it alerts others to
negotiate for compliance
It can be a relatively
quick and inexpensive
solution to resistance
problems
Can lead to future

problems if people
feel manipulated
It is speedy and can

overcome any kind of
resistance
Can be risky if it leaves

people angry with the
initiators
other tactics will not

5 Manipulation
work, or are too
and co-optation
expensive
6 Explicit and
implicit
coercion
speed is essential,
and the change
initiators possess
considerable power
Table 8.5: Generic Model 2, Change Strategies, Source: Kotter and Schlesinger, 1979
Step 7: Evaluate and reinforce change

You may have gathered already that however problematic culture change may be
in organisations, success is likely to emerge from two important factors:
Carefully planned design of strategy.
Importance of the process how we implement to secure involvement and

commitment to change, and to promote the individual and collective need
to change.
What distinguishes HRled change from projectbased change is the OD philosophy

that supports change. It assumes that change is not only technically complex,
but requires a high degree of emotional involvement in the process. It also
assumes that the problems are complex and unbounded. Bounded problems
tend to involve:
Clear priorities.
A clear problem.
18
Available data.
Limited people involvement.
Limited timescale.
Clear issues.
Unbounded problems however tend to involve:
Varied interests.
Unclear problems or no clear solutions.
Not knowing what needs to be known.
Uncertainty.
Complicated and contextual issues.
HR issues and problems tend towards the unbounded.

To address the complex issues of problem resolution, how we implement change
becomes as critical to the success as the selection of strategies. Returning to the
Pugh matrix, we can look at the planned activities again.
Mabey and Pugh (1997) identify five characteristics of OD:
1.
It is a broad, sustained, medium to longterm approach. It is multimethod, linking

environmental factors with internal change.
2.
It draws on the findings and methods of behavioural success, utilising a range of

sociological and psychological techniques that underpin organisational behaviour
to form the core of OD consultancy skills.
3.
It is processorientated, rather than goalorientated. How OD is carried out is likely

to have a critical influence on success it is not just a means to an end.
4.
Due to its complexity an enabling facilitator is normally required, either from

outside the organisational social system or a HR specialist. It is imperative, as we
saw in Unit 2, that HR specialists display a range of social skills to be able to
diagnose and draw out underlying behavioural/cultural issues that can be then
confronted by individuals and groups.
5.
It is participative. It is not formulaic, and due to the emotional engagement

required of staff and the scope for resistance to and impact upon organisational
outcomes of low commitment, imposed solutions rarely achieve success.
OD is designed to address the employee reaction to change.
Figure 8.5 illustrates how people might go through the cycle of coping with
change:
19
Stage 1
denial
Stage 2
defence
Stage 3
discarding
Stage 4
adaptation
Stage 5
internalisation
performance
self-esteem
Figure 8.5: Cycle of coping with change (Source: Carnall, 1982)
From an organisational point of view, failure to manage change, or indeed

employees capability to deal with the change, has significant implications. At
first, performance will deteriorate more than would normally be associated with
changing peoples level of skill or learning a job. Selfesteem and commitment will
also deteriorate and, indeed, as we see above, resistance or alienation through
denial and defence may magnify this effect. The decline in the level of
performance is going to be much less in terms of amount and timescale where
an employee feels supported and is committed to trying to change.
Examples are:
Using symbolic actions and policy changes to unfreeze or create the

ambitions to think the unthinkable for example, dress codes, new
basis of reward performance incentives and so on.
Building a critical mass of support for change and minimising or

isolating resistance to change.
Building new management behaviours into the process for example,

learning principles.
Evaluate and design effective SHRM interaction to support

organisational change strategies.
Explain the components of organisational cultures and relate
them to organisation competence and capability.
OD involves:
1.
Individual intervention
Coaching and counselling approaches to performance and development are

likely to engage staff in reviewing their own needs and reflecting more on
how others see them. Jointly explaining learning objectives becomes an
important process issue.
2.
Group activities
The process of teamwork is critical to understand internal communication

patterns, processes of decision making and member satisfaction with this.
20
Leader/member roles, methods of conflict resolution, cooperation, concerns

for member welfare, all require analysis.
3.
Intergroup activities
These involve, as we saw from the Hampshire Council example, enabling

teams to be able to confront perceptions and differences. Mabey & Pugh
(1997) describe how the HR facilitation must help the groups to go through a
number of phases:
opening out, working outside of normal roles together
common goal phase of joint problem solving of common issues

that require broad expertise
confrontation phase where each group considers issues and

problems between the groups from each perspective
negotiation phase, establishing a blueprint for revising the

relationship or service relationship.
4. Organisational activities
These are normally associated with attitude surveys based upon a number of
criteria, for example, work design, work satisfaction, satisfaction with
communication, decision making, leadership and so on. This is increasingly
being extended to include feedback from outside the organisation via
customer/supplier service feedback techniques that seek to give a view of
the customer perception. Clearly 360degree appraisal is an exercise that can
be incorporated into this wider view of survey feedback techniques. Business
Excellence and the European Foundation for Quality (EFQM) offers a useful
framework for evaluating an organisational internal perspective against
criteria which gives a holistic view of the effectiveness of the organisations
strategy.
21

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Unit 8 Managing Change: Culture and Performance Strategic Management of Human Resources

Organisations still need to build on loyalty despite the

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

Promoting (communicating, inspiring and

Designing OD frameworks such as PMS and rewards system to help

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

HR planning to build appropriate organisations skills, competencies and

Assisting the business in establishing priorities for learning and

Managing knowledge about OD activities across the organisation, and

Encouragement and facilitation of discussion and development of

Organisational structuring to promote projectbased work and teamwork

Learning and Development to foster crossfunctional and crosscultural

Promoting workforce diversity perhaps in newly acquired companies.

HR planning to attract, retain and develop talent, Attainment of

Reshaping HR capability to fit organisational competence by attracting

Integration following mergers and acquisitions (in the context of

Management of restructuring and downsizing.

PMS and Appraisal schemes that measure not only

Promotion of collaboration and teamwork through appropriate rewards

Professional development to develop and extend core competencies and

Flexibility in working practices and improvement of worklife balance.

Promotion of effective and efficient working practices with greater

Leadership in ethics and corporate social responsibility.

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

Employer of Choice organisations

Corporate social responsibility

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

Culture and organisational performance

Individual and group performance will increase through consensus.

Managers should attempt to manage culture.

We shall look at these ideas more closely in due course.

One stems from the increasing investment of Japanese organisations and

Bates model of culture

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

Hofstedes (1980) model of culture

Power distance (PDI)

Low power distance egalitarianism.

Low uncertainty avoidance, willingness to take risks.

Very high individuality individual accountability.

High masculinity, with performance/individual/ competitive orientation.

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

High power distance hierarchy and seniority.

Higher uncertainty avoidance, for example, with an emphasis on low risk

Low individuality importance of the family and extended family networks.

Low masculinity, emphasising low individuality, where caring values,

The nature of culture: strong and weak cultures

Culture change: an assessment of opportunity and

Coercion: I have to work for the organisation.

Economic: I work at a transactional level wages for jobdefined

Personal involvement: I value the work I do and the organisations

Strategic Management of Human Resources

Unit 8 Managing Change: Culture and Performance

Conceptual problems include the following:

Ideologically, corporate culture is viewed as the enhancement of

Corporate culture can deny stakeholder interests if they deviate from

Culture is formed primarily through social interaction, adaptation

Employees nationally become members of separate subcultures or

Culture is not a product but an insecure outcome of a continuous