Change the Culture of an Organisation Essay

The culture of an organization can be defined by the ‘way they do things’, this means the way they make decisions, operate and how they choose and achieve their objectives. As culture is a set of values and practices, changing it may be difficult and a long process, especially if the change is organized by a new chief executive. Changing the culture of an organization may not be easy especially if the new chief executive does not fully understand the previous culture and therefore does not embrace it in the change. This lack of knowledge may result in an inappropriate culture being chosen that could limit the company’s performance as productivity reduces. An example of a badly imposed culture can been seen with the Chrysler and Damier-Benz merge in 1998. Damier-Benz imposed their traditional and structured German culture on the free-spirited American car company Chrysler. The extremely different cultures created tension that later affected their efficiency as decision-making took longer and the workforce were not happy. The inappropriate culture resulted in a loss of $1.5 billon by 2006. In 2011, the new chief executive of Tesco, Phillip Clarke, also made a cultural change which proved unsuccessful. He proposed a strategy to change Tesco’s brand image to be known for â€Å"highly valued brands† as opposed to their cheaper â€Å"Value† products. The decrease in popular promotion deals such as vouchers and meal deals reduced their sales revenue and share value which fell by 15% by the end of 2011. This suggests that Clarke failed to identify Tesco’s main source of competitively. Therefore, both examples show that cultural changes may be difficult as the new chief executives lack knowledge and experience in the company. Culture change also takes a long time, especially as traditions and values are set. A prime example of this is with Sony. Sony is a Japan-based company who prides themselves in adopting a traditional Japanese business culture. Examples of their culture can be seen with their clear line of authority and their strong belief in respect. However, Sony’s reducing performance and the fast changing world alarmed the new chief executive, Howard Stringer, to change the culture to one that embraces change. Although proposals to change the culture were made in 2007, Sony’s culture has still not fully transformed which is reflected in their still low competitively. Therefore, it may still take some time for Sony to fully embrace an innovative culture as their Japanese culture has largely influenced the organization. It also took a long time for Marks & Spencer to introduce higher levels of technology, such as a stock control system, as they are said to have a ‘backward culture’. This is because they don’t embrace change and are led by system and procedures. These examples provide evidence that change in a business’s culture may not be done quickly as the organization is accustomed to the previous culture. However, changing a company’s culture can be easy if the new chief executive conducts the change in an appropriate manner. As culture change will have a direct impact on stakeholders, it is important for the new chief executive to inform all stakeholders of the changes and to also encourage feedback. The loss of the innovative leader of Apple, Steve Jobbs created much anxiety about the new CEO Tim Cook. Stakeholders feared Cook would change the company and reject all Jobbs practices especially as the two leaders have different personalities. The media worsened the situation with continuous negative press coverage which resulted in a decrease in consumer confidence as well as Apple’s share price. Although Jobbs had planned to make some strategic changes to the company’s practices, he reassured stakeholders by stating that â€Å"Apple will not change†. He also identified these new strategies and their benefits in a press release which justified his decisions and satisfied stakeholders. The newfound trust of stakeholders will enable Apple’s cultural change to be easier and happen more quickly. In view of the above, I believe that it is not easy to change the culture of a business, as the current practices are custom to the organization; this also suggests that the change will be quite a process and therefore won’t be done quickly. This situation is worsened as the chief executive is new and won’t have the necessary knowledge and understanding of the business to enable a smooth and quick transition. However, the ability for the new chief executive to change the business’s culture quickly and easily is highly dependant upon the reaction of the stakeholders. For example, BP’s customers may react positively as the new culture will increase the company’s responsiveness to customers. Shareholders may also react positively as the increase of innovation should increase BP’s competitive advantage which could increase the company’s value and share price. However, the increase in innovation may pose a threat the employees as management will expect higher quality and the need for more qualified personnel may be necessary. Therefore, support from stakeholders will encourage an easier and quickly transformation whereas negativity will not. The skills of the workforce is also important as if they are innovative the cultural change will happen faster. However, Sony is in a creative industry and their strategy to increase innovation still took a long time. This suggests that attitudes and beliefs of the workforce are also important. An easy change is also depend upon the new executives approach, is it forceful or flexible? Damier-Benz’s forceful approach result in a large amount of tension that slowed the change and resulted in a financial loss.