Change management: Culture and change

Section three of the Personnel Today Management Resources one stop guide on change management, which looks at the impact of change on workforce culture, defining role culture, task culture and power culture.  Other sections.

When organisations are subject to change, it is self-evident that people issues arise. In a real sense, people are the organisation. In the following two sections, we will examine how organisational change can be handled through understanding how people can be affected by and then influence changes.

The impact of change on people

So, what do we know about the impact of organisational change on people? The Chartered Institute of Personnel and Development (CIPD) published a survey in 2003, with the following relevant conclusions:

But of more interest are the results that focus on what managers believed they should do differently in future:

However, the ways in which people are affected by change are often more complicated than this reveals. We look at this question initially by considering a case study of a major financial institution going through major change. This we refer to as F Bank.

Case study: A major financial institution

FBank is a large financial institution with hundreds of branches in major towns and cities in its home country. It operates internationally. In recent years, it has been very successful, with growth in profitability and turnover. Yet it faces major challenges. Among these are deregulation, new technology, competition and growing complexity of the services it provides, to both private and corporate customers. The company is involved in a major programme of branch rationalisation.

Some branches are being closed, others remodelled to provide either private or corporate services, and some are being expanded as key branches. Early on in this programme of change, it became clear that the company's property management department needed attention. Its property management performance was poor and outmoded. Its capacity to plan and carry through the branch rationalisation programme seemed doubtful.

Property management was the responsibility of a central department employing 250 professional staff, mainly architects and surveyors, managed by a general manager. The general manager was drawn from the senior management team on a two-year posting. All general managers at that time had mainstream finance backgrounds. Indeed, the culture of company B powerfully sustained the belief that the only important work was finance. All other work, whether property, computing or marketing, was secondary. Career paths for non-finance people were limited, and departments being managed by people with finance backgrounds.

The extent to which non-finance staff were undervalued can be seen in the fact that in the property management department, no-one could remember anyone having any training and development since the day of their appointment. The morale of the property management department was low and the level of interdepartmental conflict (between the surveyors' group and the architects' group) was very high.

The company was organised into 12 regions, each managed by a regional director. Property management at regional level was uncoordinated. Regional directors took many of the decisions without being properly or formally accountable. Refurbishment decisions were under regional directors' control, yet the costs of refurbishment were a charge on a head office account, and were not on the region's books. Moreover, the lack of co-operation between architects and surveyors diffused any professional input into property decisions taken at regional level.

Role culture

FBank typifies the 'role culture' under significant external and internal pressures. Often stereotyped as bureaucracy, this culture is characterised by stability, prescription, rules and standards. Functional departments are clearly specified. This can be a very efficient culture in stable environments. Role cultures emphasise high levels of commitment by individuals, either to a department or, in a professional role culture, to a particular profession. In this culture, position power is a predominant form of power. But in this case, the stability of the 1960s and 1970s had been replaced by the turbulence of the 1980s. Property management expertise was now essential if the branch rationalisation programme was to proceed.

Deciding changes

To detail briefly the organisational changes decided upon, a property management professional was brought in to take charge and develop a modern property management strategy. This was only the second time in the history of FBank that a non-finance manager had been appointed to this level and the first time such an appointment had been made from outside. Under his control, property management was decentralised to regional teams, and managed by regional managers. Small teams, closer to the regions, would be more likely to develop improved working relationships, both within teams and between the property management team and region.

Task culture

Training and development was initiated for the professional staff. A career path was now opening up for them. All this was moving property management towards a task culture. Here, influence is based on expertise - the expertise needed to carry out the task. Teams of people work together to achieve objectives and tasks. This culture places demands on people but it also provides for the merging of individual and organisational objectives in changing circumstances. It is an adaptable culture in which the needs of the task, rather than systems and procedures, predominate. In this case, architects and surveyors now work together more closely and manage the regional teams.

For professional purposes, there is a professional development role played by a deputy general manager in the now small head office property management function. Arguably, FBank has moved towards a culture that is more appropriate to the challenge that it faces.

Achieving a more adaptable culture

Organisational issues, which must be faced if more adaptable organisational cultures are to be achieved, are outlined by the following criteria:

Power culture

Other organisational cultures have been identified. The power culture is worth a moment's thought. It is frequently found in small, growing companies, including property and finance. These organisations are highly dependent on one or more strong leaders. Control is exercised from the centre, and decisions are largely made on the outcome of a balance of influence rather than on rational grounds, which the uncertainties of our changing world will rarely allow in any event. An organisation with this culture can react well to change but the quality of its top people is crucial. Individuals who are power-orientated, risk-taking and politically-skilled will do well in this culture wherein accountability is personal and direct.

Managing in different cultures

We have discussed the links between organisational culture, the tasks to be performed and the rate of environmental change, but culture is a broader part of our affairs. At home and abroad, we often find ourselves working with people from different occupational, local and national cultures. Effective management therefore demands the capacity to deal with cross-cultural issues and influences.

The important skill here is that of empathy. Managing change involves the need to influence people. Empathy, sensitivity to cultural differences, and the struggle to understand them and to communicate in an intelligible fashion are essential.

The property management professional brought this skill to bear in his work with the professional staff involved in the change process described in the FBank case study. While these boundaries cannot easily be crossed, people responded to the attempt, and change programmes were all the more feasible and relevant for a leavening of the cultural sensitivity.

The key issue of organisational culture emerges clearly. To achieve a more effective, professional, yet adaptable organisation, it is necessary to move towards a task culture. This demands openness, learning, good communication and the recognition of people's needs. Relating this to business needs is also important to give a clear sense of objectives and contribution.

Implementation

The important thing about the implementation of the change detailed in the case study is that it was carried out in two phases. Full consultation was undertaken over the issue of assigning people to regional teams. No-one was given any guarantees, but all were asked to indicate preferences. For most people, relocation was involved. Various factors had to be considered in creating teams: the correct mix of skills and people, regional team managers designate, as well as people's preferences for particular teams (and, therefore, particular parts of the country) were all relevant. What this consultation phase allowed was a careful explanation of the proposed changes so that people understood what was involved.

The second phase was actually to form the regional teams. Originally, this was to be done gradually, when office space was available in the various regions.

In the event, the teams were formed overnight at head office. Doing it quickly had the advantage of creating a clear break with the past. Also, it meant that the teams could form and settle down in the secure head office environment. Relocation could then be more effectively handled by the regional team.

The process took three to five weeks to settle down. Over the year, the regional teams were all well established in the regions. Regional directors who originally had said that no space would be available for two years, now seemed to jump at the chance of getting the new cohesive and more effective regional property management teams in their regions.

The management of change is often a matter of the management of image. Create the image of success and it is surprising how quickly stereotyped attitudes can be changed.