Title: TQM Implementation and Organisational Development

among Indian Industries

Authors:

1. MostafaMoballeghi, M.Tech.,

Research scholar, B.N.Bahadur Institute of Management

Sciences, University of Mysore, Manasagangotri, Mysore-06

E-mail: m_moballeghi@yahoo.com

Mobile: 9986219511

2. Dr. B.Shivaraj, MBA, Phd.,

Professor, B.N.Bahadur Institute of Management Sciences,

University of Mysore, Manasagangotri, Mysore-06

Abstract
Total Quality Management (TQM) is an integrated management

approach that originated in the 1950's and has steadily gained acceptance

all over the corporate sector. In India, TQM initiatives were first set by

the Confederation of Indian Industries (CII) in the early 1980s. However,

quality management is still a new development for many Indian

corporations. Most companies are aware only of the ISO 9000 series

standards, largely because of it requirement in export market penetration.

This article is based on a study of TQM implementation in some Indian

companies over the last two decades. The article attempts to trace the

transition of Indian companies in the era of quality.

Introduction

Total Quality is a description of the philosophy, culture and attitude

of a company that strives to provide customers (both internal and

external) with products and services that satisfy their needs. TQM

philosophy expect quality in all aspects of the company's operations, with

processes being done right the first time and defects and waste eradicated

from operations. It is a method by which management and employees can

become involved in the continuous improvement of quality production of

goods and services. It is a combination of quality and management tools

aimed at increasing business and reducing losses due to wasteful

practices.

For more than four decades after independence the companies in

India enjoyed a protected market with virtually no competition, and some

of them even monopolised the market , with customers having little or no

choice. As a result, complacency set in and no pressure existed for

improvement or change. However, the policy of economic liberalization

adopted by the Indian Government since late 1980s, has thrown open new

avenues and challenges to companies in India. The new policy has

resulted in open doors through which global corporate players have

entered the Indian markets, and are threatening the domestic

manufacturers and suppliers, using quality as a weapon. This has

compelled the managements of domestic companies to look for those tools

and techniques, proven and tested, which would help them to maintain and

improve their strategies and positions in the market. One such policy or

philosophy that has captured the attention of industry and the business

community is TQM. Particularly, in the recent years TQM is even

regarded as absolutely essential for growth, stability, and prosperity.

Quality Journey in India

Quality is defined and measured differently, largely dependent on

one’s viewpoint. Juran, foremost of the quality gurus, defined quality as

fitness for use. A very concise definition indeed, for a term that has so

many dimensions. Quality of a product or service in simple terms is its

suitability for use by the customer. Quality has to be perceived by the

customer. Perception of the supplier is also important, but the customer

experience of quality of a product or service is more important. Quality

does not mean an expensive product; on the contrary, it is fitness for use

of the customer.
International Organization for Standardization (ISO), the world

body for standards formulation was founded in the year 1946 and has its

headquarters in Geneva, Switzerland. Most countries in the world are

members of ISO. The national standardization bodies of various countries

represent their countries in ISO. ISO is known all over the world because

of its path breaking standard ISO 9000, released for the first time in the

year 1987. The definition of quality as per the ISO 9000 standard is: “The

totality of features and characteristics of a product or service, that bear on

its ability to satisfy a given or implied need”.

Quality is one the most leading issue almost in all organizations

around the world. Organizations every where are growing increasingly

conscious of the competitive potential of quality. India has a long

tradition of achieving high standards in several fields. Architectural

wonders like the “TajMahal” and the “Konark temple” are testimony to

the rich cultural heritage that imbibed quality in its output. Similarly

many other products like jewelry, textiles, artistic and ornamental articles

exhibited high quality and as a result were the highly traded merchandise

with other countries of the world. For several centuries Indian trade

flourished on these products. Engineering industries that were set up and

run under the colonial rule quickly established a name for quality. As

reported by Piramal (1997) business families like Tata, Birla, Godrej, and

Sarabhai, to name a few, started and operated several industries which

have now become conglomerates and household names in India. In fact

some of these names are synonymous with high quality products and trust

worthiness.

However, the post-independent era did not witness any spectacular

improvement regarding the quality of goods and services produced in the

country. According to Agrawal (1993) due to protected business

environment many positive attributes of the Indian industry have been lost

and weaknesses have surfaced. These weaknesses based on the study are:

lack of trust and credibility in the working system, lack of

clarity/seriousness for achieving target, lack of precise observance of

rules and norms, low quality of supplies and components, lack of

consciousness of time as money, viewing only short term benefits ahead

of long term goals, politicalization of labor unions, lack of accountability 3

for actions, lack of management commitment, lack of national quality

policy, inadequate economic resources, lack of indigenous technology,

inadequate infrastructure, preferring quantity to quality, lack of team

spirit, cartel formation, and sellers’ market. Besides, lack of

consumerism, Government control on everything, bureaucratic delays,

quick profit making attitudes by the companies, all resulted in quality

getting a low priority and consequently Indian products were constrained

to serve only the domestic market being not able to compete in the

international markets. Further, the factors mentioned before, clearly

proved to be obstacles in the path to progress, and India in spite of

possessing good resources and rich scientific and technical manpower,

could not produce world-class products acceptable in the international

markets.

TQM: The Concept

TQM is a leadership philosophy and strategy that is based on

continuous improvement of every process, empowerment of people,

continuous learning, all creating transformations towards an organisation

that is providing excellent products and services.

TQM is the outgrowth of a long line of developments seeking to

evaluate and improve the quality of manufactured goods. The idea behind

TQM is that much can be achieved by innovation, but competitive

advantage is largely affected by continuous process improvement. Total

quality management is an established field of study where academics,

consultants, engineers and quality practitioners have contributed their

ideas towards its advancement.

Deming provides an operational definition of TQM which gives a

motivational meaning to the concept. Sink states that TQM can be

successful only if the operational definition is translated into strategies by

the leadership of the organization and which are crystallized into actions

and communicated to all the people with conviction and clarity.

However, TQM may also be viewed functionally as an integration of

two basic functions, i.e. total quality control and quality management.

Total quality control is a long-term success strategy for organizations.

Customer satisfaction, employee satisfaction, product quality assurance in

all its stages, and continuous improvement and innovation, are the main

ingredients of total quality control; whereas quality management is a way

of planning, organizing and directing that will facilitate and integrate the

capabilities of all employees for continuous improvement of anything and

everything in an organization to attain excellence. Thus, TQM in an

organization brings all the people together to ensure and improve product-

process quality, the work environment and working culture.

4
Formation of TQM in India

The TQM initiatives were first set by the Confederation of Indian

Industries (CII) in the early 1980s, in its pioneering effort in promoting

awareness about quality among Indian industries. In 1982, quality circles

took birth in India, and some of the companies to launch quality circles

first were Bharat Electronics Limited, Bangalore, and Bharat Heavy

Electricals Limited, Trichy. In 1986 the CII then known as CEI

(Confederation of Engineering Industries), invited Professor Ishikawa to

India, to address industry people about quality. Later in 1987, a TQM

division was set up by the CII. This division owes its foundation to 21

companies who agreed to support the cause by pooling resources and

pledging to start the journey to TQM. Chief executives of these companies

formed the National Committee on Quality, and quality month was

declared to be an annual event. CII also launched the first newsletter on

quality.

In 1987 and 1988, the CII invited the Juran Institute to India to

conduct three training workshops, and then in 1989 a team from India

attended the Deming Seminar in London. Study teams organized by the

CII were taken to Japan and the USA to study quality practices. During

1990, the CII consolidated and focused on training, and in February 1991,

an Indian company with the assistance of the CII, obtained the first ISO

9000 certification in India. The CII organized the launch of the National

Quality Campaign led by the Prime Minister of India in May 1992. It is

around this time, the process of globalization and liberalization was

started in the country, bringing a new dimension to the business and

industrial sectors. From then on, a new line of thinking in terms of

quality, productivity, and competitiveness has begun.

Since 1993, the CII has been organizing The Quality Summit every

year. This provides an opportunity for all business leaders, and higher

level managers of member and non-member organizations of the CII to

network, learn, and contribute through experience sharing, and listening

to the experts who gather there. The National Productivity Council (NPC)

has set up a TQM and Benchmarking Division in New Delhi, and offers

TQM implementation services, which include modular training programs

and consultancy services.

In 1996, the Government of India announced the setting up of the

Quality Council of India, (QCI) with the Industry Ministry bringing in

half the seed capital of Rs. 1.5 crores. The rest of the seed capital will be

contributed by the corporate sector. The setting up of a national agency

for quality certification is part of the World Trade Organization (WTO)

agreements, under which member countries will not trade in non-certified

products two years down the line. The corporate sector too was demanding

the setting up of an internationally recognized quality council as it found

the certification process from foreign agencies too expensive. Besides, it

would save vital foreign exchange for the country. The QCI will be 5

entrusted with monitoring and administering of the National Quality

Campaign and will also oversee the effective functioning of the National

Information and Enquiry Services.

TQM Implementation in Indian Organisations: A review

Many TQM activities in Asia were started in private companies as

Total Quality Control (TQC). These were mainly Japanese companies with

investments in manufacturing plants throughout Asia. The principles of

TQC were expounded by Feigenbaum (1961) who suggested that high-

quality products are more likely to be produced by total quality control

rather than by manufacturing working alone. These principles gave way to

Total Quality Management when management of companies realised that

responsibilities for quality are company-wide, and resided with the

management hierarchy.

Chan and Quazi (2000), have conducted a comparative study of

quality management practices at a national level in nine Asian countries

including India, from 1960 onwards. Quality Control Circles (QCCs),

which worked well in Japan, were first adopted as the quality

improvement practice. Between 1970s and 1980s, these countries had very

active QCC activities. As more complete quality management systems

were developed, TQM (late 1980s) and ISO 9000 (1992) widely accepted

in these countries. The development and adoption of a comprehensive

quality management system were slower in certain countries. Singapore

and South Korea were ahead in the implementation of quality management

practices with the adoption of global and world-class standards. Malaysia

was quite close behind. Philippines had a few years of experience with its

national quality award and were moving towards world-class very soon.

Thailand had yet to form such an award but like the other countries, had

already ISO 14000 in place. Indonesia and India have yet to move on to

world-class quality standards while Bangladesh and Brunei were the

furthest behind in the implementation of quality management practices.

For the quality management system to permeate the industries, the

mobilization of national quality or productivity bodies is required to

promote and advance quality management practices. South Korea,

Singapore, Malaysia and Philippines had done that very well.

India also had National Productivity Council as early as 1958 and

the country has one of the oldest standards institute in Asia. Although

product quality was important, QCC was not a major quality initiative in

India.

Misra (2003), had another study on the effectiveness of TQM

initiatives in Indian organizations with attention to Agfa-Gevaert

company’s success in total quality. The multinational company, Agfa-

Gevaert, with it’s branch in India, has a firm belief that "total quality

management" (TQM) aimed at continuous efforts to control and improve

their services, company processes. 6

The company recognizes total quality as a major component of its

worldwide strategy. Dedication to the customer, wide-ranging know-how,

innovation and quality are the hallmarks of Agfa. Quality at Agfa is total,

covering not only the products but also the service and administration that

support them.

Similar success stories of TQM implementation are many - Xerox,

Motorola, Milliken, Nucor Steel, to name a few. But sadly, there are only

a few Indian companies successfully implementing TQM. Why are Indian

companies not able to replicate the success of these Western Corporates?

In order to find reasons for this poor show in quality, the TQM Cell

of SRF Ltd. conducted a study on the effectiveness of TQM initiatives in

Indian organizations. At least 26 companies were researched and some

interesting findings emerged.

All the organizations started their TQM initiatives in their

factories. It seems to be the most logical place to start from. But most
organizations do not get much benefit out of this approach. One FMCG

Company started their TQM effort in their manufacturing unit. Two years

later they found that there was no significant impact on their market share

due to the initiative. Why? Because manufacturing is not the key to

competitive advantage for an FMCG. A concentrated effort in marketing

as this is the key differentiating function. Organizations need to

understand the key business processes in their industry and then adopt the

tools of TQM that suits them best.

Nath, et al. (2003), has been conducted a study regarding the cost

of quality (COQ) and TQM implementation among Indian industries. The

analysis showed that COQ implementation in Indian industries is a recent

and growing phenomenon. There is a lack of awareness among companies

about the use of COQ in other companies at the national level.

Iyer and Seshadri (2004), illustrate quality improvement by

focusing on one company in India, Rane Brake Linings (RBL). RBL is a

division of the Rane group, an automotive components company with a

sales turnover of $131 million and 4600 employees. In 2002, RBL won the

prestigious Deming prize. The Deming prize, awarded by the Japan Union

of Scientists and Engineers (JUSE), was the culmination of a three-year

journey for RBL, which began with a visit by professor Tsuda from Japan.

RBL’s TQM journey began with the choice of professor Tsuda as their

coach in 1999.

RBL decided to focus on Policy Deployment and Daily Routine

Management (DRM) to achieve their TQM implementation. As a result,

RBL redefined its management of processes for New Product Development

System, Manufacturing Quality, Supplier Quality and Customer Quality.

TQM implementation created tangible and intangible benefits for

RBL. Intangible benefits included role clarity so that each person 7

understood their role in the organization, their suppliers and customers,

and their metrics.

Plant in process rejections at RBL decreased from 2.1 per cent of

total pieces to 0.85 per cent of total pieces produced. Sales per employee

went up from $22000 to $40000. Number of employee suggestions went

from 280 to 7500 during the period. In other words, TQM represented a

dramatic and measurable improvement across many specific metrics that

would impact the company.

A full implementation of TQM, represent a significant change in the

culture and political economy of an organization, and a comprehensive

change strategy is therefore required. Implementing TQM essentially

involves organizational transformation: beginning to operate in new ways,

developing a new culture. This also includes redesigning other systems.

Leadership is a key element in successful implementation of large scale

change. The leader shows the need and sets the vision, defining the basic

purpose, goals, and parameters or requirements of TQM.

TQM as a tool for OD:

In recent years the literature on change management and leadership

has grown steadily, and applications based on research findings will be

more likely to succeed. Use of tested principles will also enable the

change agent to avoid reinventing the proverbial wheel. Implementation

principles will be followed by a review of steps in managing the transition

to the new system and ways of helping institutionalize the process as part

of the organization's culture.

Members of any organization have stories to tell of the introduction

of new programs, techniques, systems, or even, in current terminology,

paradigms. Usually the employee, who can be anywhere from the line

worker to the executive level, describes such an incident with a

combination of cynicism and disappointment: some manager went to a

conference or in some other way got a "great idea" (or did it based on

threat or desperation such as an urgent need to cut costs) and came back

to work to enthusiastically present it, usually mandating its

implementation. The "program" probably raised people's expectations that

this time things would improve, that management would listen to their

ideas. Such a program usually is introduced with fanfare, plans are made,

and things slowly return to normal. The manager blames unresponsive

employees, line workers blame executives interested only in looking good,

and all complain about the resistant middle managers. Unfortunately, the

program itself is usually seen as worthless: "we tried team building (or

organization development or quality circles or what have you) and it

didn't work; neither will TQM". Planned change processes often work, if

conceptualized and implemented properly; but, unfortunately, every

organization is different, and the processes are often adopted "off the

shelf" "the 'appliance model of organizational change': buy a complete 8

program, like a 'quality circle package, ' from a dealer, plug it in, and hope

that it runs by itself" (Kanter, 1983).

Hyde 1992, Chaudron 1992 and others have noted that TQM results

in a radical change in the culture and the way of work in an organization.

A fundamental factor is leadership, including philosophy, style, and

behavior. These must be congruent as they are presented by a leader.

Many so called enlightened leaders of today espouse a participative style

which is not, in fact, practiced to any appreciable degree. Any manager

serious about embarking on a culture change such as TQM should reflect

seriously on how she or he feels and behaves regarding these factors. For

many managers, a personal program of leadership development may be a

prerequisite to effective functioning as an internal change agent

advocating TQM.

Other key considerations have to do with alignment among various

organizational systems (Chaudron, 1992; Hyde, 1992). For example,

human resource systems, including job design, selection processes,

compensation and rewards, performance appraisal, and training and

development must align with and support the new TQM culture. Less

obvious but no less important will be changes required in other systems.

Information systems will need to be redesigned to measure and track new

things such as service quality. Financial management processes may also

need attention through the realignment of budgeting and resource

allocation systems. Organizational structure and design will be different

under TQM: layers of management may be reduced and organizational

roles will certainly change. In particular, middle management and first

line supervisors will be operating in new ways. To deal with fears of

layoffs, all employees should be assured that no one will lose employment

as a result of TQM changes: jobs may change, perhaps radically, but no

one will be laid off. Hyde (1992) has recommended that we "disperse and

transform, not replace, midlevel managers." This no layoff principle has

been a common one in joint labor management change processes such as

quality of working life projects for many years.

TQM should be purpose oriented: it should be used because an

organization's leaders feel a need to make the organization more effective.

It should be driven by results and not be seen as an end in itself. If TQM

is introduced without consideration of real organizational needs and

conditions, it will be met by skepticism on the part of both managers and

workers.

Conclusion

While Total Quality Management has proven to be a necessary

philosophy for improving organizational functioning, its value can only be

assured through a comprehensive and well thought out implementation

process. TQM has been applied widely in developed countries, and now 9

appears to many as a precursor of the broader concept of business

excellence. By contrast, in developing countries ISO 9000 series

standards have been the focus of quality management development, and

TQM is a new and challenging concept.

Quality management is a new development for many Indian

organizations too. Most companies are aware only of the ISO 9000 series

standards, largely because of their significance to export market

penetration. With the advent of the ISO 9000 standard, concepts such as

process orientation and improvement, which were previously considered

part of a TQM approach, have become requirements of the standard. This

is intended to promote TQM-like practices and it is likely to lead to an

increase in interest in these topics. TQM can be a powerful technique for

unleashing employee creativity and potential, reducing bureaucracy and

costs, and improving service to clients and the community. TQM is

focused on quality, presumably a concern of both management and

workers, and methods improvements should eliminate wasteful

bureaucratic activities, save money, and make more human resources

available for core activities, specifically client service.

10

References

Agrawal, S.K. (1993), "ISO 9000 implementation in Indian

industry", Proceedings of the Eighth ISME Conference in Mechanical

Engineering, New Delhi, India, pp.638-44.

Chan, TengHeng and Hesan A. Quazi (2000) “Quality Management

Practices in Selected Asian Countries: A Comparative Study” Avaialble

at: [http://www.poms.org/POMSWebsite/Meeting2000/SC8F1.doc.]

Chaudron, D. (1992). "How OD can help TQM." OD Practitioner.

24(1), 1418.

Hyde, A. (1992). "The Proverbs of Total Quality Management:

Recharting the Path to Quality Improvement in the Public Sector," Public

Productivity and Management Review.16(1), 2537.

Iyer, Ananth V. and Sridhar Seshadri (2004)” Transforming an

Indian Manufacturing Company: The Rane Brake Linings Case” Available

at:

http://www.mgmt.purdue.edu/centers/ciber/publications/pdf/IyerIndian_M

anufacturing_The_Rane_Case.pdf

Jagadeesh, R. (1999) “Total quality management in India -

perspective and analysis” The TQM Magazine, Vol. 11, No. 5, pp. 321-3

Kanter, R. (1983). The Change Masters. New York: Simon &

Schuster. 27.

Misra, Sanjeev (2003) “Right Goal, Wrong Rout” Available at:

[http://www.themanagementor.com/index.asp]

Nath, T; Naikan, V.N.A. and B. Mahanty (2003) “Implementation of

Cost of Quality among Indian Industries: A survey” International Journal

of Manufacturing Technology and Management , Vol. 5, No. 5/6, 2003.

Piramal, G. (1997), "Legends of the Maharajas", Business Today,

pp.10-15.
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Organizational culture
From Wikipedia, the free encyclopedia
Jump to: navigation, search
Organizational culture is an idea in the field of Organizational studies and management which
describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values)
of an organization. It has been defined as "the specific collection of values and norms that are
shared by people and groups in an organization and that control the way they interact with each
other and with stakeholders outside the organization."[1]
This definition continues to explain organizational values, also known as "beliefs and ideas
about what kinds of goals members of an organization should pursue and ideas about the
appropriate kinds or standards of behavior organizational members should use to achieve these
goals. From organizational values develop organizational norms, guidelines, or expectations that
prescribe appropriate kinds of behavior by employees in particular situations and control the
behavior of organizational members towards one another."[1]
Organizational culture is not the same as corporate culture. It is wider and deeper concepts,
something that an organization 'is' rather than what it 'has'. Corporate culture is the total sum of
the values, customs, traditions, and meanings that make a company unique. Corporate culture is
often called "the character of an organization", since it embodies the vision of the company’s
founders. The values of a corporate culture influence the ethical standards within a corporation,
as well as managerial behavior.[2]
Senior management may try to determine a corporate culture. They may wish to impose
corporate values and standards of behavior that specifically reflect the objectives of the
organization. In addition, there will also be an extant internal culture within the workforce.
Work-groups within the organization have their own behavioral quirks and interactions which, to
an extent, affect the whole system. Roger Harrison's four-culture typology, and adapted by
Charles Handy, suggests that unlike organizational culture, corporate culture can be 'imported'.
For example, computer technicians will have expertise, language and behaviors gained
independently of the organization, but their presence can influence the culture of the organization
as a whole.
Contents
[hide]
• 1 Strong/weak cultures
• 2 Typologies of organizational cultures
○ 2.1 Deal and Kennedy
○ 2.2 Charles Handy
○ 2.3 Edgar Schein
○ 2.4 Arthur F. Carmazzi
○ 2.5 Robert A. Cooke
 2.5.1 The Constructive Cluster
 2.5.2 The Passive/Defensive Cluster
 2.5.3 The Aggressive/Defensive Cluster
• 3 Elements
• 4 Organizational Culture Assessment Instrument
• 5 Organizational culture and change
• 6 Entrepreneurial culture
○ 6.1 Elements of Entrepreneurial Culture
• 7 Critical views
• 8 Organizational communication perspective on culture
○ 8.1 Schema
• 9 Mergers, organizational culture, and cultural leadership
• 10 See also
• 11 Notes
• 12 References
• 13 External links

[edit] Strong/weak cultures

Strong culture is said to exist where staff respond to stimulus because of their alignment to
organizational values. In such environments, strong cultures help firms operate like well-oiled
machines, cruising along with outstanding execution and perhaps minor tweaking of existing
procedures here and there.
Conversely, there is weak culture where there is little alignment with organizational values and
control must be exercised through extensive procedures and bureaucracy.
Where culture is strong—people do things because they believe it is the right thing to do—there
is a risk of another phenomenon, Groupthink. "Groupthink" was described by Irving L. Janis. He
defined it as "...a quick and easy way to refer to a mode of thinking that people engage when
they are deeply involved in a cohesive ingroup, when members' strivings for unanimity override
their motivation to realistically appraise alternatives of action." This is a state where people, even
if they have different ideas, do not challenge organizational thinking, and therefore there is a
reduced capacity for innovative thoughts. This could occur, for example, where there is heavy
reliance on a central charismatic figure in the organization, or where there is an evangelical
belief in the organization’s values, or also in groups where a friendly climate is at the base of
their identity (avoidance of conflict). In fact group think is very common, it happens all the time,
in almost every group. Members that are defiant are often turned down or seen as a negative
influence by the rest of the group, because they bring conflict.
Innovative organizations need individuals who are prepared to challenge the status quo—be it
groupthink or bureaucracy, and also need procedures to implement new ideas effectively.
[edit] Typologies of organizational cultures
Several methods have been used to classify organizational culture. Some are described below:
Hofstede (1980[3]) demonstrated that there are national and regional cultural groupings that affect
the behavior of organizations.
Hofstede looked for national differences between over 100,000 of IBM's employees in different
parts of the world, in an attempt to find aspects of culture that might influence business behavior.
Hofstede identified five dimensions of culture in his study of national influences:
• Power distance - The degree to which a society expects there to be differences in the
levels of power. A high score suggests that there is an expectation that some individuals
wield larger amounts of power than others. A low score reflects the view that all people
should have equal rights.
• Uncertainty avoidance reflects the extent to which a society accepts uncertainty and risk.
• Individualism vs. collectivism - individualism is contrasted with collectivism, and refers
to the extent to which people are expected to stand up for themselves, or alternatively act
predominantly as a member of the group or organization. However, recent researches
have shown that high individualism may not necessarily mean low collectivism, and vice
versa[citation needed]. Research indicates that the two concepts are actually unrelated. Some
people and cultures might have both high individualism and high collectivism, for
example. Someone who highly values duty to his or her group does not necessarily give a
low priority to personal freedom and self-sufficiency
• Masculinity vs. femininity - refers to the value placed on traditionally male or female
values. Male values for example include competitiveness, assertiveness, ambition, and
the accumulation of wealth and material possessions.
[edit] Deal and Kennedy
Deal and Kennedy[4] defined organizational culture as the way things get done around here. They
measured organizations in respect of:
• Feedback - quick feedback means an instant response. This could be in monetary terms,
but could also be seen in other ways, such as the impact of a great save in a soccer match.
• Risk - represents the degree of uncertainty in the organization’s activities.
Using these parameters, they were able to suggest four classifications of organizational culture:
 • The Tough-Guy Macho Culture. Feedback is quick and the rewards are high. This
often applies to fast moving financial activities such as brokerage, but could also apply to
a police force, or athletes competing in team sports. This can be a very stressful culture in
which to operate.
• The Work Hard/Play Hard Culture is characterized by few risks being taken, all with
rapid feedback. This is typical in large organizations, which strive for high quality
customer service. It is often characterized by team meetings, jargon and buzzwords.
• The Bet your Company Culture, where big stakes decisions are taken, but it may be
years before the results are known. Typically, these might involve development or
exploration projects, which take years to come to fruition, such as oil prospecting or
military aviation.
• The Process Culture occurs in organizations where there is little or no feedback. People
become bogged down with how things are done not with what is to be achieved. This is
often associated with bureaucracies. While it is easy to criticize these cultures for being
overly cautious or bogged down in red tape, they do produce consistent results, which is
ideal in, for example, public services.
[edit] Charles Handy
Charles Handy[5] (1985) popularized the 1972 work of Roger Harrison of looking at culture
which some scholars have used to link organizational structure to organizational culture. He
describes Harrison's four types thus:
• aPower Culture which concentrates power among a few. Control radiates from the
center like a web. Power and influence spread out from a central figure or group. Power
desires from the top person and personal relationships with that individual matters more
than any formal title of position. Power Cultures have few rules and little bureaucracy;
swift decisions can ensue.
• In a Role Culture, people have clearly delegated authorities within a highly defined
structure. Typically, these organizations form hierarchical bureaucracies. Power derives
from a person's position and little scope exists for expert power. Controlled by
procedures, roles descriptions and authority definitions. Predictable and consistent
systems and procedures are highly valued.
• By contrast, in a Task Culture, teams are formed to solve particular problems. Power
derives from expertise as long as a team requires expertise. These cultures often feature
the multiple reporting lines of a matrix structure. It is all a small team approach, who are
highly skilled and specialist in their own markets of experience.
• A Person Culture exists where all individuals believe themselves superior to the
organization. Survival can become difficult for such organizations, since the concept of
an organization suggests that a group of like-minded individuals pursue the
organizational goals. Some professional partnerships can operate as person cultures,
because each partner brings a particular expertise and clientele to the firm.
[edit] Edgar Schein
Edgar Schein,[6] an MIT Sloan School of Management professor, defines organizational culture
as:
"A pattern of shared basic assumptions that the group learned as it solved its problems of
external adaptation and internal integration, that has worked well enough to be considered valid
and, therefore, to be taught to new members as the correct way you perceive, think, and feel in
relation to those problems".
According to Schein, culture is the most difficult organizational attribute to change, outlasting
organizational products, services, founders and leadership and all other physical attributes of the
organization. His organizational model illuminates culture from the standpoint of the observer,
described by three cognitive levels of organizational culture.
At the first and most cursory level of Schein's model is organizational attributes that can be seen,
felt and heard by the uninitiated observer - collectively known as artifacts. Included are the
facilities, offices, furnishings, visible awards and recognition, the way that its members dress,
how each person visibly interacts with each other and with organizational outsiders, and even
company slogans, mission statements and other operational creeds.
The next level deals with the professed culture of an organization's members - the values. At this
level, local and personal values are widely expressed within the organization. Organizational
behavior at this level usually can be studied by interviewing the organization's membership and
using questionnaires to gather attitudes about organizational membership.
At the third and deepest level, the organization's tacit assumptions are found. These are the
elements of culture that are unseen and not cognitively identified in everyday interactions
between organizational members. Additionally, these are the elements of culture which are often
taboo to discuss inside the organization. Many of these 'unspoken rules' exist without the
conscious knowledge of the membership. Those with sufficient experience to understand this
deepest level of organizational culture usually become acclimatized to its attributes over time,
thus reinforcing the invisibility of their existence. Surveys and casual interviews with
organizational members cannot draw out these attributes--rather much more in-depth means is
required to first identify then understand organizational culture at this level. Notably, culture at
this level is the underlying and driving element often missed by organizational behaviorists.
Using Schein's model, understanding paradoxical organizational behaviors becomes more
apparent. For instance, an organization can profess highly aesthetic and moral standards at the
second level of Schein's model while simultaneously displaying curiously opposing behavior at
the third and deepest level of culture. Superficially, organizational rewards can imply one
organizational norm but at the deepest level imply something completely different. This insight
offers an understanding of the difficulty that organizational newcomers have in assimilating
organizational culture and why it takes time to become acclimatized. It also explains why
organizational change agents usually fail to achieve their goals: underlying tacit cultural norms
are generally not understood before would-be change agents begin their actions. Merely
understanding culture at the deepest level may be insufficient to institute cultural change because
the dynamics of interpersonal relationships (often under threatening conditions) are added to the
dynamics of organizational culture while attempts are made to institute desired change.
[edit] Arthur F. Carmazzi
Main article: Arthur F. Carmazzi
From "Lessons from the Monkey King - Leading Change to Create Gorilla Sized Results" -
Veritas Publishing, 2007

The Blame culture This culture cultivates distrust and fear, people blame each other to avoid
being reprimanded or put down, this results in no new ideas or personal initiative because people
don’t want to risk being wrong.
Multi-directional cultureThis culture cultivates minimized cross-department communication
and cooperation. Loyalty is only to specific groups (departments). Each department becomes a
clique and is often critical of other departments which in turn creates lots of gossip. The lack of
cooperation and Multi-Direction is manifested in the organization's inefficiency.
Live and let live cultureThis culture is Complacency, it manifests Mental Stagnation and Low
Creativity. People here have little future vision and have given up their passion. There is average
cooperation and communication, and things do work, but they do not grow. People have
developed their personal relationships and decided who to stay away from, there is not much left
to learn.
Brand congruent culture People in this culture believe in the product or service of the
organization, they feel good about what their company is trying to achieve and cooperate to
achieve it. People here are passionate and seem to have similar goals in the organisation. They
use personal resources to actively solve problems and while they don’t always accept the actions
of management or others around them, they see their job as important. Most everyone in this
culture is operating at the level of Group.
Leadership enriched culture People view the organization as an extension of themselves, they
feel good about what they personally achieve through the organization and have exceptional
Cooperation. Individual goals are aligned with the goals of the organization and people will do
what it takes to make things happen. As a group, the organization is more like family providing
personal fulfillment which often transcends ego so people are consistently bringing out the best
in each other. In this culture, Leaders do not develop followers, but develop other leaders. Most
everyone in this culture is operating at the level of Organization.
Carmazzi's model requires application of his Directive Communication psychology to evolve the
culture. While the idea of having a Leadership Enriched organization is inspirational, it would
require substantial Leadership resources to develop. The concept of Evolving the culture
assumes that "Every Individual in the organization wants to do a good job", and the behaviours
that result in poor performance are manifestations of psychology the group or organization has
created through policies, leadership and poor communication.
[edit] Robert A. Cooke
The Organizational Culture Inventory: Culture Clusters
Robert A. Cooke, PhD, defines culture as the behaviors that members believe are required to fit
in and meet expectations within their organization. The Organizational Culture Inventory
measures twelve behavioral of norms that are grouped into three general types of cultures:
•Constructive Cultures, in which members are encouraged to interact with people and approach
tasks in ways that help them meet their higher-order satisfaction needs.
•Passive/Defensive Cultures, in which members believe they must interact with people in ways
that will not threaten their own security.
•Aggressive/Defensive Cultures, in which members are expected to approach tasks in forceful
ways to protect their status and security.
[edit] The Constructive Cluster
The Constructive Cluster includes cultural norms that reflect expectations for members to
interact with others and approach tasks in ways that will help them meet their higher order
satisfaction needs for affiliation, esteem, and self-actualization.
The four cultural norms in this cluster are:
•Achievement
•Self-Actualizing
•Humanistic-Encouraging
•Affiliative
Organizations with Constructive cultures encourage members to work to their full potential,
resulting in high levels of motivation, satisfaction, teamwork, service quality, and sales growth.
Constructive norms are evident in environments where quality is valued over quantity, creativity
is valued over conformity, cooperation is believed to lead to better results than competition, and
effectiveness is judged at the system level rather than the component level. These types of
cultural norms are consistent with (and supportive of) the objectives behind empowerment, total
quality management, transformational leadership, continuous improvement, reengineering, and
learning organizations.
[edit] The Passive/Defensive Cluster
Norms that reflect expectations for members to interact with people in ways that will not threaten
their own security are in the Passive/Defensive Cluster.
The four Passive/Defensive cultural norms are:
•Approval
•Conventional
•Dependent
•Avoidance
In organizations with Passive/Defensive cultures, members feel pressured to think and behave in
ways that are inconsistent with the way they believe they should in order to be effective. People
are expected to please others (particularly superiors) and avoid interpersonal conflict. Rules,
procedures, and orders are more important than personal beliefs, ideas, and judgment.
Passive/Defensive cultures experience a lot of unresolved conflict and turnover, and
organizational members report lower levels of motivation and satisfaction.
[edit] The Aggressive/Defensive Cluster
The Aggressive/Defensive Cluster includes cultural norms that reflect expectations for members
to approach tasks in ways that protect their status and security.
The Aggressive/Defensive cultural norms are:
•Oppositional
•Power
•Competitive
•Perfectionistic
Organizations with Aggressive/Defensive cultures encourage or require members to appear
competent, controlled, and superior. Members who seek assistance, admit shortcomings, or
concede their position are viewed as incompetent or weak. These organizations emphasize
finding errors, weeding out “mistakes,” and encouraging members to compete against each other
rather than competitors. The short-term gains associated with these strategies are often at the
expense of long-term growth.
[edit] Elements
G. Johnson[7] described a cultural web, identifying a number of elements that can be used to
describe or influence Organizational Culture:
• The Paradigm: What the organization is about; what it does; its mission; its values.
• Control Systems: The processes in place to monitor what is going on. Role cultures
would have vast rulebooks. There would be more reliance on individualism in a power
culture.
• Organizational Structures: Reporting lines, hierarchies, and the way that work flows
through the business.
• Power Structures: Who makes the decisions, how widely spread is power, and on what
is power based?
• Symbols: These include organizational logos and designs, but also extend to symbols of
power such as parking spaces and executive washrooms.
• Rituals and Routines: Management meetings, board reports and so on may become
more habitual than necessary.
• Stories and Myths: build up about people and events, and convey a message about what
is valued within the organization.
These elements may overlap. Power structures may depend on control systems, which may
exploit the very rituals that generate stories which may not be true.
[edit] Organizational Culture Assessment Instrument
Robert Quinn and Kim Cameron researched what makes organizations effective and successful.
Based on the Competing Values Framework, they developed the Organizational Culture
Assessment Instrument that distinguishes four culture types. See their book: Diagnosing and
Changing Organizational Culture.
Competing values produce polarities like: flexibility versus stability and internal versus external
focus. These two polarities were found to be most important in defining organizational success.
The polarities construct a quadrant with four types of culture: Clan Culture - internal focus and
flexible A friendly workplace where leaders act like father figures. Adhocracy Culture - external
focus and flexible A dynamic workplace with leaders that stimulate innovation. Market Culture -
external focus and controlled A competitive workplace with leaders like hard drivers Hierarchy
Culture - internal focus and controlled A structured and formalized workplace where leaders act
like coordinators.
Cameron & Quinn found six key aspects that will make up a culture. These can be assessed in
the Organizational Culture Assessment Instrument (OCAI) thus producing a mix of these four
archetypes of culture. Each organization or team will have its unique mix of culture types. By
assessing the current organizational culture as well as the preferred situation, the gap and
direction to change can be made visible. This can be the first step to changing organizational
culture.
[edit] Organizational culture and change
There are a number of methodologies specifically dedicated to organizational culture change
such as Peter Senge’sFifth Discipline and Arthur F Carmazzi'sDirective Communication. These
are also a variety of psychological approaches that have been developed into a system for
specific outcomes such as the Fifth Discipline’s “learning organization” or Directive
Communication’s “corporate culture evolution.” Ideas and strategies, on the other hand, seem to
vary according to particular influences that affect culture.
Burman and Evans (2008) argue that it is 'leadership' that affects culture rather than
'management', and describe the difference[8]. When one wants to change an aspect of the culture
of an organization one has to keep in consideration that this is a long term project. Corporate
culture is something that is very hard to change and employees need time to get used to the new
way of organizing. For companies with a very strong and specific culture it will be even harder
to change.
Cummings & Worley (2005, p. 491 – 492) give the following six guidelines for cultural change,
these changes are in line with the eight distinct stages mentioned by Kotter (1995, p. 2)3:
1. Formulate a clear strategic vision (stage 1,2& 3 of Kotter, 1995, p. 2)
In order to make a cultural change effective a clear vision of the firm’s new strategy, shared
values and behaviours is needed. This vision provides the intention and direction for the culture
change (Cummings & Worley, 2005, p.490).
2. Display Top-management commitment (stage 4 of Kotter, 1995, p. 2)
It is very important to keep in mind that culture change must be managed from the top of the
organization, as willingness to change of the senior management is an important indicator
(Cummings & Worley, 2005, page 490). The top of the organization should be very much in
favour of the change in order to actually implement the change in the rest of the organization. De
Caluwé&Vermaak (2004, p 9) provide a framework with five different ways of thinking about
change.
3. Model culture change at the highest level (stage 5 of Kotter, 1995, p. 2)
In order to show that the management team is in favour of the change, the change has to be
notable at first at this level. The behaviour of the management needs to symbolize the kinds of
values and behaviours that should be realized in the rest of the company. It is important that the
management shows the strengths of the current culture as well, it must be made clear that the
current organizational does not need radical changes, but just a few adjustments. (See for more:
(Deal & Kennedy, 1982; Sathe, 1983; Schall; 1983; Weick, 1985; DiTomaso, 1987)
4. Modify the organization to support organizational change
The fourth step is to modify the organization to support organizational change.
5. Select and socialize newcomers and terminate deviants (stage 7 & 8 of Kotter, 1995, p.
2)
A way to implement a culture is to connect it to organizational membership, people can be
selected and terminate in terms of their fit with the new culture (Cummings & Worley, 2005, p.
491).
6. Develop ethical and legal sensitivity
Changes in culture can lead to tensions between organizational and individual interests, which
can result in ethical and legal problems for practitioners. This is particularly relevant for changes
in employee integrity, control, equitable treatment and job security (Cummings & Worley, 2005,
p. 491).
Change of culture in the organizations is very important and inevitable. Culture innovations is
bound to be because it entails introducing something new and substantially different from what
prevails in existing cultures. Cultural innovation[9] is bound to be more difficult than cultural
maintenance. People often resist changes hence it is the duty of the management to convince
people that likely gain will outweigh the losses. Besides institutionalization, deification is
another process that tends to occur in strongly developed organizational cultures. The
organization itself may come to be regarded as precious in itself, as a source of pride, and in
some sense unique. Organizational members begin to feel a strong bond with it that transcends
material returns given by the organization, and they begin to identify with in. The organization
turns into a sort of clan.
[edit] Entrepreneurial culture
Stephen McGuire[10] defined and validated a model of organizational culture that predicts
revenue from new sources. An Entrepreneurial Organizational Culture (EOC) is a system of
shared values, beliefs and norms of members of an organization, including valuing creativity and
tolerance of creative people, believing that innovating and seizing market opportunities are
appropriate behaviors to deal with problems of survival and prosperity, environmental
uncertainty, and competitors’ threats, and expecting organizational members to behave
accordingly.
[edit] Elements of Entrepreneurial Culture
• People and enpowerment focused
• Value creation through innovation and change
• Attention to the basics
• Hands-on management
• Doing the right thing
• Freedom to grow and to fail
• Commitment and personal responsibility
• Emphasis on the future[11]
[edit] Critical views
Writers from Critical management studies have tended to express skepticism about the
functionalist and unitarist views of culture put forward by mainstream management thinkers.
Whilst not necessarily denying that organizations are cultural phenomena, they would stress the
ways in which cultural assumptions can stifle dissent and reproduce management propaganda
and ideology. After all, it would be naive to believe that a single culture exists in all
organizations, or that cultural engineering will reflect the interests of all stakeholders within an
organization. In any case, Parker[12] has suggested that many of the assumptions of those putting
forward theories of organizational culture are not new. They reflect a long-standing tension
between cultural and structural (or informal and formal) versions of what organizations are.
Further, it is perfectly reasonable to suggest that complex organizations might have many
cultures, and that such sub-cultures might overlap and contradict each other. The neat typologies
of cultural forms found in textbooks rarely acknowledge such complexities, or the various
economic contradictions that exist in capitalist organizations.
One of the strongest and widely recognised criticisms of theories that attempt to categorize or
'pigeonhole' organizational culture is that put forward by Linda Smircich. She uses the metaphor
of a plant root to represent culture, describing that it drives organizations rather than vice versa.
Organizations are the product of organizational culture, we are unaware of how it shapes
behaviour and interaction (also recognised through Scheins (2002) underlying assumptions) and
so how can we categorize it and define what it is?
[edit] Organizational communication perspective on culture
The organizational communication perspective on culture is divided into three areas:
• Traditionalism: Views culture through objective things such as stories, rituals, and
symbols
• Interpretivism: Views culture through a network of shared meanings (organization
members sharing subjective meanings)
• Critical-Interpretivism: Views culture through a network of shared meanings as well as
the power struggles created by a similar network of competing meanings
There are many different types of communication that contribute in creating an organizational
culture:
• Metaphors such as comparing an organization to a machine or a family reveal
employees’ shared meanings of experiences at the organization.
• Stories can provide examples for employees of how to or not to act in certain situations.
• Rites and ceremonies combine stories, metaphors, and symbols into one. Several
different kinds of rites that affect organizational culture:
○ Rites of passage: employees move into new roles
○ Rites of degradation: employees have power taken away from them
○ Rites of enhancement: public recognition for an employee’s accomplishments
○ Rites of renewal: improve existing social structures
○ Rites of conflict reduction: resolve arguments between certain members or
groups
○ Rites of integration: reawaken feelings of membership in the organization
• Reflexive comments are explanations, justifications, and criticisms of our own actions.
This includes:
○ Plans: comments about anticipated actions
○ Commentaries: comments about action in the present
○ Accounts: comments about an action or event that has already occurred
Such comments reveal interpretive meanings held by the speaker as well as the social
rules they follow.
 • Fantasy Themes are common creative interpretations of events that reflect beliefs,
values, and goals of the organization. They lead to rhetorical visions, or views of the
organization and its environment held by organization members.
[edit] Schema
Schemata (plural of schema) are knowledge structures a person forms from past experiences,
allowing the person to respond to similar events more efficiently in the future by guiding the
processing of information. A person's schemata are created through interaction with others, and
thus inherently involve communication.
Stanley G. Harris argues that five categories of in-organization schemata are necessary for
organizational culture:
• Self-in-organization schemata: a person’s concept of themselves within the context of
the organization, including her/his personality, roles, and behavior.
• Person-in-organization schemata: a person’s memories, impressions. and expectations
of other individuals within the organization.
• Organization schemata: subset of person schemata, a person’s generalized perspective
on others as a whole in the organization.
• Object/concept-in-organization schemata: knowledge an individual has of organization
aspects other than of other persons.
• Event-in-organization schemata: a person’s knowledge of social events within an
organization.
All of these categories together represent a person’s knowledge of an organization.
Organizational culture is created when the schematas (schematic structures) of differing
individuals across and within an organization come to resemble each other (when any one
person's schemata come to resemble aby other person's schemata because of mutual
organizational involvement). This is primarily done through organizational communication, as
individuals directly or indirectly share knowledge and meanings.
[edit] Mergers, organizational culture, and cultural
leadership
One of the biggest obstacles in the way of the merging of two organizations is organizational
culture. Each organization has its own unique culture and most often, when brought together,
these cultures clash. When mergers fail employees point to issues such as identity,
communication problems, human resources problems, ego clashes, and inter-group conflicts,
which all fall under the category of “cultural differences”. One way to combat such difficulties is
through cultural leadership. Organizational leaders must also be cultural leaders and help
facilitate the change from the two old cultures into the one new culture. This is done through
cultural innovation followed by cultural maintenance.
• Cultural innovation includes:
○ Creating a new culture: recognizing past cultural differences and setting realistic
expectations for change
○ Changing the culture: weakening and replacing the old cultures
• Cultural maintenance includes:
 ○ Integrating the new culture: reconciling the differences between the old cultures
and the new one
○ Embodying the new culture: Establishing, affirming, and keeping the new culture

[edit] See also

• Human fit
• Institutional memory
• Integrated Marketing
• Organizational climate
• Organizational learning
• Prometheus Process
[edit] Notes
1. ^ ab Charles W. L. Hill, and Gareth R. Jones, (2001) Strategic Management. Houghton Mifflin.
2. ^ Montana, P., and Charnov, B. (2008) Management (4th ed.), Barrons Educational Series,
Hauppauge:NY
3. ^Hofstede, G. (1980) Culture's Consequences: International Differences in Work Related Values,
Beverly Hills, CA, Sage Publications
4. ^ Deal T. E. and Kennedy, A. A. (1982) Corporate Cultures: The Rites and Rituals of Corporate
Life, Harmondsworth, Penguin Books.
5. ^ Handy, C.B. (1985) Understanding Organizations, 3rd Edn, Harmondsworth, Penguin Books
6. ^ Schein, E.H. (1985-2005) Organizational Culture and Leadership, 3rd Ed., Jossey-Bass ISBN
0-7879-7597-4
7. ^ Johnson, G. (1988) "Rethinking Incrementalism", Strategic Management JournalVol 9 pp75-91
8. ^Burman, R. & Evans, A.J. (2008) Target Zero: A Culture of safety, Defence Aviation Safety
Centre Journal 2008, 22-27. http://www.mod.uk/NR/rdonlyres/849892B2-D6D2-4DFD-B5BD-
9A4F288A9B18/0/DASCJournal2008.pdf
9. ^http://www.oracle.com/oramag/profit/07-feb/p17andrew.html
10.^ McGuire, Stephen J.J. (2003). Entrepreneurial Organizational Culture: Construct Definition and
Instrument Development and Validation, Ph.D. Dissertation, The George Washington University,
Washington, DC.
11.^http://www.csus.edu/indiv/h/hattonl/MGMT%20196/Entrepreneurial%20Culture
%20%E2%80%93%20Chapter%2013.ppt#261,6,Elements of an Entrepreneurial Culture
12.^ Parker, M. (2000) Organizational Culture and Identity, London: Sage.

[edit] References
• Black, Richard J. (2003) Organisational Culture: Creating the Influence Needed for
Strategic Success, London UK, ISBN 1-58112-211-X
• Bligh, Michelle C. (2006) "Surviving Post-merger ‘Culture Clash’: Can Cultural
Leadership Lessen the Casualties?" Leadership, vol. 2: pp. 395 - 426.
 • Cummings, Thomas G. & Worley, Christopher G. (2005), Organization Development
and Change, 8th Ed., Thomson South-Western, USA, ISBN 0324260601
• Harris, Stanley G. (1994) "Organizational Culture and Individual Sensemaking: A
Schema-Based Perspective." Organization Science, Vol. 5,(3): pp. 309-321
• Kotter, John. 1992 Corporate Culture and Performance, Free Press; (April 7, 1992)
ISBN 0-02-918467-3
• Markus, Hazel. (1977) "Self-schemata and processing information about the self."
Journal of Personality and Social Psychology, Vol 35(2): pp. 63-78.
• O'Donovan, Gabrielle (2006). The Corporate Culture Handbook: How to Plan,
Implement and Measure a Successful Culture Change Programme, The Liffey Press,
ISBN 1-904148-97-2
• Papa, Michael J., et al. (2008). Organizational Communication Perspectives and
Trends(4th Ed.). Sage Publications.
• Phegan, B. (1996-2000) Developing Your Company Culture, A Handbook for Leaders
and Managers, Context Press, ISBN 0-9642205-0-4
• Stoykov, Lubomir. 1995 Corporate culture and communication, Stopanstvo , Sofia.
[edit] External links
• Organizational Culture and Institutional Transformation - From the Education Resources
Information Center Clearinghouse on Higher Education Washington, DC.
• What is Organisational Culture and how can you change it? - From iProCon HCM
InsightLondon, UK.
• http://www.companyculture.comAn practical informational website for managers, with
articles on the theory and principles for understanding company culture and how to
change it.
• Tool for measuring organisation culture by Geert Hofstede and Bob Waisfisz
Retrieved from "http://en.wikipedia.org/wiki/Organizational_culture"
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Eravandi

December 21, 2009

Change Management In Tata Motors
DRIVING CHANGE

Change is the only constant thing in life. Tata motors went through a period of significant
transition in 2001. A number of changes were worked out during that phase with respect to
customer expectations, innovation strategy, and regulations governing safety and environmental
protection and continual competitiveness in terms of cost. These changes were and are brought
about by the company systematically driving its processes ahead through a high level of product
and process innovations. Tata Motors has a long history of investment in R & D. It is a statement
that has been corroborated by a very large number of business successes. The road treaded by
Tata motors in 2001 required them to take lots of crucial decisions. At that point of time the
company showed willingness to take risks and drive itself aggressively ahead.

There is no doubt that Tata Motors will be at the forefront of the changes that will be evident in
the automobile industry of the future.

Change Management
Change management or change control is defined as the process during which the changes of a
system are implemented in a controlled manner by following a pre-defined framework/model
with, to some extent, reasonable modifications .Change management in individual and
organizational perspective

Can be defined as “Change management is a structured approach to transitioning individuals,

teams, and organizations from a current state to a desired future state “.

Individual change management

Change management entails thoughtful planning and sensitive implementation, and above all,
consultation with, and involvement of, the people affected by the changes. If you force change
on people normally problems arise. Change such as new structures, policies, targets, acquisitions,
disposals, re-locations, etc., all create new systems and environments, which need to be
explained to people as early as possible, so that people's involvement in validating and refining
the changes themselves can be obtained .Change must be realistic, achievable and measurable.
These aspects are especially relevant to managing personal change. Furthermore, before
proposing changes, it is important that leaders ask for the opinions and reactions of their
subordinates to the proposals, to make the changes beneficial to all of the members of a
particular corporation or organization.

There are many models in understanding the transitioning of individuals through the phases of
change management and strengthening organizational development initiative in both government
and corporate sectors. They are

<!--[if !supportLists]-->1.<!--[endif]-->ADKAR Model

<!--[if !supportLists]-->2.<!--[endif]-->Unfreeze-Change-Refreeze
<!--[if !supportLists]-->3.<!--[endif]-->Kübler-Ross
<!--[if !supportLists]-->4.<!--[endif]-->Formula for Change
<!--[if !supportLists]-->5.<!--[endif]-->PCI (People Centered Implementation)

Organizational Change Management.

Organizational change management includes processes and tools for managing the people side of
the change at an organizational level. These tools include a structured approach that can be used
to effectively transition groups or organizations through change.

These are some of three models that help us in managing and understanding the change

<!--[if !supportLists]-->1.<!--[endif]-->Dynamic conservatism

<!--[if !supportLists]-->2.<!--[endif]-->John P Kotter's 'eight steps to successful change'

TATA MOTORS
Tata Motors, division of one of the largest business houses in India has grown significantly over
the last 64 years since its establishment in 1945. Tata Motors Ltd is India’s largest automobile
company with revenue of about 14 billion dollars. It is the first company from India’s
engineering sector to be listed in the New York stock exchange. Tata motors presence indeed
cuts across the length and breadth of India. Over 4 million Tata vehicles ply on the Indian roads
since the first rolled out in 1954. The company is going strong with its 23000 employees guided
by the vision to be “the best in the manner in which we operate, best in the products we deliver
and best in our value systems and ethics.” The Tatas are known and are always sought to be a
value driven organization. The 5 core Tata values being Integrity, understanding, excellence,
unity and responsibility.

The TELCO saga started off with Tatas acquiring an Eastern railway workshop to build boilers
and steam locomotives for railways. Then they ventured into commercial vehicles in 1954
having entered into a partnership with Daimler-Benz in Germany. In global context it caters to
three main market segments: Passenger cars, utility vehicles and commercial vehicles.

They followed the strategy of acquisition and joint ventures in its mid-stage and launched new
products at a rapid pace in different market segments. Through subsidiaries and associate
companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among
them is Jaguar Land Rover, a business comprising the two iconic British brands that was
acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South
Korea's second largest truck maker.
Tata Motors is also expanding its international footprint, established through exports since 1961.
The company's commercial and passenger vehicles are already being marketed in several
countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It
has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and
Senegal.
A significant breakthrough for the company was the development and commercialization of the
truly Indian cars – Tata Indica and Tata Indigo. Within 2 years of the launch, Indica became the
India’s largest selling car in its segment. Ratan Tata had always been keen on entering the lower-
end of the market as he believed the big market lay there. He initiated steps to develop the
Indica. Billed as India's first indigenous car and kept as a secret for a long period of time, the
Indica promised much.

Unfortunately for the Tatas, the development of the Indica coincided with one of the worst
phases in the company’s history. During the period 1995-1998, the commercial vehicle business
had been doing well and Tata Motors grew at 30-40 per cent. Then came the downturn in the
economy and the market for commercial vehicles suddenly shrank by 40%. The lost sales
compounded by the heavy investment for its entry into passenger car business, the cost of
complying with new emission standards and increasing threat from overseas competitors caused
Tata motors to shock the market by 5 billion rupees loss for the year 2001. Realizing the urgent
need to cut costs, the Tatas embarked on a major restructuring exercise

Change Management in Tata Motors

Tata Motors marks the biggest turnarounds in the history of Indian automobile manufacturing
industry which happened in 2001. This success story of Tata Motors can be entirely attributed to
the timely change adopted by the Tatas and the then M.D Ravi Kant who led the change.

Drastic action was required. Over the next two years, the company shaved around 8 billion
rupees from its cost base and nursed itself back to corporate health. Even while keeping a tight
grip on costs, Tata Motors moved to the offensive by refocusing its investments on less cyclical
products, including light commercial vehicles, buses, and spare parts; making a successful entry
into passenger cars; and responding to opportunities presented by favourable social and
economic trends. These included the new mobility of young Indians, the government’s
substantial road-building program, and generally buoyant GDP growth.

Today Tata Motors ranks as the world’s fifth-largest manufacturer of medium and heavy trucks
—it has a 61 percent domestic market share in this segment—and has taken the number-two
position for sales of passenger vehicles in the Indian market. It has also built a significant global
presence, both through sales efforts in overseas markets (such as the former Soviet republics, the
Middle East, South Africa, South Asia, and Turkey) and through acquisitions such as the
takeover of Daewoo’s commercial-vehicle business in South Korea and the purchase of a 21
percent stake in the Spanish bus manufacturer Hispano Carrocera. In addition, Tata Motors has
formed a joint venture with Marcopolo, the Brazilian bus manufacturer. With an agreement in
early 2006 to distribute Fiat cars in the Indian market and a more recent memorandum of
understanding with Fiat to establish a joint manufacturing facility near the Indian city of Pune,
Tata Motors has embarked on a wide-ranging global partnership with the Italian group—an
arrangement that both sides expect to flourish.

Tata Motors was predominantly a manufacturer of commercial vehicles, and that is a very
cyclical business. The commercial-vehicle market in India shrank by more than 40 percent, with
massive consequences for both the top and, more particularly, the bottom lines of the company.
The 5 billion rupee loss in 2001 was the first time something on this scale had happened in the
company’s history, and it really shook everybody within the organization.

They tried to understand what had gone wrong and wanted to create a path for the future to
ensure that they never got into such a situation again. So in 2001 they decided on a recovery
strategy that had three distinct phases, each of which was intended to last for around two years—
six years in all.

Phase one was intended to stem the bleeding. Costs had to be reduced in a big way, and that was
going to be a huge challenge for a company that was not only the market leader but had been
used to operating in a seller’s market and employing a cost-plus approach to pricing. Phase two
was to be about consolidating their position in India, and phase three was to involve going
outside India and expanding our operations internationally.

Phase 1:
The key objectives were to move to a system of market pricing and to reduce their break-even
point, both of which called for major reductions in costs—variable costs, fixed costs, and interest
costs. They used many approaches to cost reduction, including bench-marking our rivals. For
example, they took apart vehicles to see what they could do to modify the products and to lower
costs. They went in for e-sourcing, and today they are the largest company doing e-sourcing in
India and one of the leading ones in the automobile industry worldwide. In two and a half years,
they reduced the break-even from nearly two-thirds of capacity utilization to around one-third,
which meant that even if the market shrank by close to 60 percent, they would still be in the
black. The whole organization really got together to ensure that the bleeding stopped.
One of the major drivers of success at Tata Motors Ltd. (TML) was its ability to fully exploit
information technology to drive business goals and reduce cost. The company was an early
adopter of CAD and CAM systems. The company also uses Siebel Systems to manage its vast
customer relationship network and SAP® for all critical business services, such as logistics,
supplier relations management, customer relationship management, human resources (HR), and
finance.A remote training network was utilized to deliver audio-video feeds for training, thus
saving costs on network and bandwidth.In order to support growth and globalization, effectively
manage its dealers, and gain downstream visibility, Tata Motors launched a customer and dealer
management (CRM-DMS) program in 2003. It is this type of demand network, one that senses
and shapes demand based on regional differences, which differentiates the leaders from the
laggards. Throughout its transformation effort, the company partnered with Tata Consultancy
Services (TCS) for consulting and IT services.

Phase 2:

The concentration in phase one was indeed on cost reduction, but while this was going on they
thought about taking action in areas that would have an impact during the other phases. For
phase two, the concentration was on improving product quality and upgrading product features
so as to make the products more competitive. They also started work on new products that would
be required by the market after three to five years and strengthened the position in the
marketplace by setting up a new sales-planning process, tightening credit norms, improving the
liquidity and profitability of the dealers, reorienting toward customer satisfaction, and extending
the reach of the distribution network. For phase three, the concentration was on starting work on
international markets by identifying key markets and segments and developing a comprehensive
plan to improve our competitive position so as to get a respectable market share. They also
started looking at opportunities for inorganic growth.

Phase 3:

In phase the concentration was on starting work on international markets by identifying key
markets and segments and developing a comprehensive plan to improve Tata Motor’s
competitive position so as to get a respectable market share. They also started looking at
opportunities for inorganic growth. International diversification was such a key part of the
transformation strategy. It was all part of first, reducing the impact of domestic cyclicity –
cyclicity is present across the world but in different phases in different places - and, second,
seeking new geographies for growth in the face of the limitations of the domestic market,
especially in commercial vehicles, where we enjoy a very high market share of over 60 percent.
Tata Motors wanted to leverage the market-leading products internationally. By identifying
about 12 countries as priority markets, rather than the 60 to 70 countries they tried to tap
previously. They grew international sales to some 50,000 vehicles, against 7,000 to 8,000 four
years earlier.

To facilitate globalisation, Ratan Tata reorganised the company. The previously independent
export division was merged into the passenger car and commercial vehicle divisions. The
independent international division that looked after exports and overseas business was
dismantled. In the early 2000s, Tata Motors made several important moves in its efforts to
expand and consolidate its global presence. In October 2003, Tata Motors forged a tie up with
MG Rover of UK for supplying petrol-powered cars with the Rover badge and styling, labelled
as the City Rover. A major step in Tata Motors’ globalization efforts was a bid for Daewoo
Commercial Vehicles Ltd (DCVL), South Korea. Tata Motors had started exploring the South
African market under a taxi recapitalisationprogramme, which aimed at replacing 120,000 of the
country's 16-seater buses by 2006 with close to 80,000 buses in the 18-35-seater range. The
Tatas were also setting up an assembly unit in Thailand which had emerged as the largest
manufacturer of pickup trucks in the Asian region and the second-largest market in the world.
The Tatas tied up with Khodro of Iran for passenger cars, which promised a potential off take of
around 20,000 vehicles per year. The Tatas also had a presence in Ukraine, Malaysia and
Bangladesh.

Changes:

Generally, people with greater experience, especially in a successful company, are often resistant
to change because they have been successful doing things the way they have been used to, not
realizing that the context has changed.

The people were very dedicated, but the organization had become very inward looking. The trick
was how to expose people to the outside world to allow them to see what is happening there
rather than drilling change into them through speeches and letters. They felt that would be very
artificial and would upset intelligent people. The most effective way to sustain change is to make
those involved internalize it rather than just getting somebody to come and talk about it. For
example, they had people listen to customers talk about the problems they were facing and the
suggestions they had for product improvement. They exposed people to products of competitors
by tearing those products apart and analyzing the good and bad and comparing them with their
own, thereby making people see why customers buy someone else’s products rather than theirs.

Youth playing a major role in change management:

The most frozen layer in any organization is the people with experience who think they know
best; who believe that nothing can be changed. When they started to connect with the younger
high performers, it was very different. They used to have breakfast meetings with a dozen of
them, and would invite them to give very frank views. They soon realized that they were
suffocated and that they wanted change. So they started picking out some of these individuals
and giving them challenges.

In fact, the whole cost initiative came from one of the breakfast meetings at an operation in Pune.
Everyone had been talking about cost reductions and thinking in terms of one-half of a percent or
1 percent, but these young employees indicated that they thought a target of 10 percent was
possible they made the senior people sit in front of the presentation, and it quickly became clear
that 10 percent target was indeed achievable. After this, the young employees to put together a
bigger team from Jamshedpur and Lucknow, to include representatives from sales and
marketing, and spend ten days working on the plan. That was the defining moment because if
they had tried to go only through the top, they might not have succeeded as well, and the
transformation might have taken much longer.
Despite initial hiccups, they succeeded in establishing a strong presence in the car market
through the launch of the Indica hatchback, followed by the Indigo sedan and the station wagon.
Today they are the second-largest manufacturer of passenger vehicles in India. This has been
achieved in an environment of intense competition with most well-known brands in the world.