Organisational Culture- analysis of Oticon
Organisational Culture- analysis of Oticon
Oticon, a Danish company founded in 1904 was the first company in the world to invent an instrument to help the hearing impaired. In the 1970’s, Oticon was the world’s number one manufacturer of the “behind the ear” hearing aids. During the 1970’s and 1980’s as the market for “in the ear” hearing aid grew, Oticon’s fortune suddenly declined and they lost money and market share. The main problem for all of this was that Oticon was a very traditional, departmentalized and slow-moving company. Even though Oticon had 15 sites and 95 distributorships around the world, Oticon was operating in a market dominated by Siemens, Phillips, Sony, 3M and Panasonic and most importantly, Oticon manufactured the “behind the ear” hearing aid but its customers preferred the “in the ear” product. Oticon also specialized in analogue technology whilst its customers were moving towards digital technology.
In 1988, a new President of Oticon was appointed, Lars Kolind. With his appointment, he worked hard to turn the situation of Oticon around. Kolind implemented cost-cutting measures; he pared the company down, cut staff and increased efficiency, and reduced the price of a hearing aid by 20%. Nevertheless, this still did not achieve the results he wanted. He never gave up. He had been searching for a sustainable competitive advantage for Oticon. He wanted to create a new way of running a business. One that could be more creative, faster and cost effective and also compensate for technological excellence, capital and general resources which Oticon lacked.
Kolind believed that Oticon could no longer compete with its technologically advanced competitors. By reinventing itself, Oticon showed that it could. Oticon drastically changed its organizational structure, ways of working and culture to let loose the human potential of the company. Kolind created a vision of a service-based organization and pursued it to gain a competitive edge.
Employee involvement is crucial to successful change; especially in situations as Oticon’s that require attitudinal and cultural change. Planned and emergent perspectives stress that this is a slow, learning process. Rapid organizational transformations can only be successful if focus is on structural as well as cultural change. Kanter _et al_ emphasized that an organization’s structure can be changed relatively quickly through a ‘Bold Stroke’ but that cultural change can only be achieved by a ‘Long March’ requiring extensive participation over time.
Oticon’s transformation was that of a rapid organizational change, which was based on the vision imposed on the company in a directive fashion by the CEO. This lead to the widespread change of attitudes and behaviours. Kolind’s vision was the reason for this rapid change in attitudes across Oticon. A more planned approach, facilitated by this change in attitudes was used to achieve this rapid structural change. This was then followed by a period of emergent change where staff had to develop and adjust to new ways of working with and behaving towards each other.
Schmuck and Miles (1971) argue that the level of involvement required in a project is dependant on the impact of the change on people concerned. Building on earlier work by Harrison (1970), Huse (1980) developed this difference further. He categorized change interventions along with continuum based on the ‘depth of intervention, ranging from the ‘shallow level’ to the ‘deepest level’. The greater the depth of intervention, Huse argues, the more it becomes concerned with the psychological make-up and personality of the individual, and the greater the need for full involvement of individuals if they are to accept the changes. Therefore, linking levels of involvement to the types of change proposed is necessary. The key is that, the greater the effect on the individual, especially in terms of psychological constructs and values, the deeper the level of involvement required if successful behaviour change is to be achieved.
The theory of cognitive dissonance of Burnes and James (1995) helps in seeking to understand and explain why major rapid attitudinal changes at Oticon were successful without a great deal of initial involvement. The theory of cognitive dissonance states that people want to behave in accordance with their attitudes and usually will take corrective action to alleviate the dissonance and achieve balance. At Oticon, fundamental attitudinal change was achieved relatively quickly because management and employee recognized the need for change and saw why new vision is the only hope for the company’s survival.
ORGANIZATIONAL CULTURE, or CORPORATE CULTURE, comprises the attitudes, experiences, beliefs and 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.
An ORGANISATION’S CULTURE is affected by a number of factors including:
The ENVIRONMENT in which the organisation operates. Internally, this is often conveyed by its physical layout which can, foe example, reflect warm friendliness or cold efficiency.
The BELIEFS, VALUES AND NORMS of the employees within the organisation, particularly those communicated by top management.
The formal and informal LEADERS who personify the organisation’s culture.
The PROCEDURES that have to be followed and the behaviour expected of people within the organisation.
The network of COMMUNICATIONS which disseminates the corporate image and culture.
OTHER FACTORS could include the oeganisation’s size , history, ownership and technology.
MODEL OF CHANGE- SEQUENCE OF EVENTS
(SOURCE:MANAGEMENT. RICHARD L DAFT- 6TH ED.)
Corporate culture is something that is very hard to change and employees need time to get used to the new way of organizing. Many people are not willing to change unless they perceive a problem or a crisis. 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:
Formulate a clear strategic vision
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
Display Top-management commitment
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. 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 provide a framework with five different ways of thinking about change.
Model culture change at the highest level
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.
Modify the organization to support organizational change.
The fourth step is to modify the organization to support organizational change.
Select and socialize newcomers and terminate deviants
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
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.
FORCES CAUSING AND RESISTING CHANGE WITHIN AN ORGANISATION
(SOURCE: AN INTEGRATED APPROACH TO BUSINESS STUDIES- 3RD ED- BRUCE R JEWELL)
NEED/ REASONS FOR CHANGE.
In order to survive and prosper in a competitive and rapidly changing environment, organisations also need to change. This may be brought about by many influencing factors which may be internally within the organisation or in external environment of the organisation.
EXTERNAL FORCES originate in all environmental sectors, including customers, competitors, technology, economic forces and the international arena.
POLITICAL factors including legislation or other government measures. Organisations are forced to change in order to meet, for example, health and safety, environmental or consumer protection requirements.
ECONOMIC factors such as changes in levels of unemployment and interest rates which can have a major impact on demand.
SOCIAL factors including changes in life styles and environmental issues which organisations must respond to if they are not to lose out to competitors.
TECHNOLOGICAL progress such as word processing in the office or robots in the factory can change working materials, methods and practices and create the need for new skills.
TRADE UNIONS can influence wage rates, working conditions and other aspects of industrial relations.
COMPETITION and changes in consumer tastes and demand all impact on business organisations, making change necessary in order to respond.
MEDIA reports which can influence consumers’ and employees’ perceptions of an organisation and its goods and services.
INTERNAL FORCES for change arise from internal activities and decisions. If top managers select a goal of rapid company growth, internal actions will have to be made to meet that growth. New departments or technologies will be created. Demands by employees, labour unions and production inefficiencies all can generate a force to which management must respond with change.
NEW PRODUCTS OR SERVICES which require change in order to introduce them.
MANAGEMENT CHANGES, due perhaps to a merger, take over or the appointment of new staff. This may affect the management style and culture of the organisation.
QUALITY ASSURANCE SYSTEMS which are becoming increasingly important in organisations in order to meet changing customer expectations.
PRODUCTIVITY AND PROFITABILITY IMPROVEMENTS which often require change in systems or procedures in order to control or reduce costs and/or increase output.
CUSTOMER SERVICE is now more crucial than ever for organisations in competitive markets because they can only survive and prosper if they satisfy customers.
After the need for change has been perceived and communicated, change must be initiated. This is a crucial stage of change management- the stage where ideas that solve perceived needs are developed. Responses that an organisation can make are to search for or create a change to adopt.
One frustration for managers is that employees often seem to resist change for no apparent reason. To effectively manage the implementation process, managers should be aware of the reasons for employee resistance and e prepared to use techniques for obtaining employee cooperation.
Employees appear to resist change for several reasons and understanding them helps managers implement change more effectively.
SELF-INTEREST. Employees typically resist a change they believe will take away something of value. A proposed change in job design, structure, or technology may lead to a real or perceived loss of power, prestige, pay or company benefits. The fear of personal loss is perhaps the biggest obstacle to organisational change.
LACK OF UNDERSTANDING AND TRUST. Employees do not understand the intended purpose of a change or distrust the intentions behind it.
UNCERTAINTY. Uncertainty is the lack of information about future events. It represents a fear of the unknown. Uncertainty is especially threatening for employees who have a low tolerance for change and fear the novel and unusual. They do not know how a change will affect them and worry about whether they will be able to meet the demands of a new procedure or technology.
DIFFERENT ASSESSMENT AND GOALS. Another reason for resistance to change is that people who will be affected by innovation may assess the situation differently. Often critics voice legitimate disagreements over the proposed benefits of a change. Managers in each department pursue different goals, and an innovation may detract from performance and goal achievement for some departments.
These reasons for resistance are legitimate in the eyes of the employees affected by the change. The best procedure for managers is not to ignore resistance but diagnose the reasons and design strategies to gain acceptance by users. Strategies for overcoming resistance to change typically involve two approaches: the analysis of resistance through force-field technique and the use of selective implementation tactics to overcome resistance.