Strategic and Cultural Change at Chrysler Group Essay
Strategic and Cultural Change at Chrysler Group
1. What are the observable artifacts, espoused values, and basic assumptions associated with Chrysler’s culture. Explain
Observable artifacts, espoused values, and basic assumptions are vital components of an organization’s culture. The culture of an organization will guide the processes associated with an organization, from product innovation to employee perceptions of the workplace. According to Chen and Corritore (2008), many factors of organizational culture affect organizational performance. To be successful, an organization’s members should have a clear vision of these factors and the company’s overall culture. The most observable cultural factor is observable artifacts. Observable artifacts are the cultural values of the company that can be seen or heard through stories, the work space design, pictures, signs, awards, etc.
The next factor in an organizations culture is espoused values which are not as easily determined as the observable artifacts. Espoused values are the values created by the founder and spread to the remainder of the organization through management. The final factor in an organizations culture is basic assumptions. Basic assumptions are the unseen, unappreciated values that individuals believe about the company. Basic assumptions are the most difficult to change because changing basic assumptions requires a change of the mindset of individuals.
When Sergio Marchionne became CEO, he had to restore Chrysler’s culture. Chrysler had filed bankruptcy and was on the verge of failure when Marchionne took CEO position in 2009. Marchionne had to take extreme measures to change the old culture of Chrysler and align the new culture with his goals. Chrysler’s new culture is presented through new observable artifacts, espoused values, and basic assumptions. Chrysler’s most observable artifact is the story regarding Peter Fong matching rebates to the government incentives. This story is used to create a culture of what is not acceptable under Marchionne’s control.
While this was at one time acceptable, Marchionne now uses the story to support Chrysler’s new culture that profits involved in a sale are more important that making the sale. Another observable artifact representing Chrysler’s culture is the weekly team meetings created by Marchionne. Through meetings, Chrysler’s employees realize Marchionne is serious about the employees being involved through the sharing of ideas. Finally, Marchionne changed the physical workspace, which can be seen and analyzed by employees; therefore, changing the associated basic assumption that management is not involved in the processes.
The espoused values of Chrysler’s culture did not change much under Marchionne’s leadership. Rather, the espoused values of Chrysler still hold the founder’s original values to “design with purpose” (Chrysler History, n.d., para. 18). Under Marchionne, the espoused values of Chrysler continue to encompass innovation, creative design, quality, and affordable prices.
Along with observable artifacts, the basic assumptions of Chrysler had to be completed transformed in order to create a new culture and reorganize the company. Basic assumptions are the most difficult of the three to change because they are often unobservable, unappreciated, and highly resistant to change (Kreitner & Kinicki, 2013). Marchionne disposed of the basic assumption that it was acceptable to offer large incentives at the profit of the company. By firing many employees and managers for slashing prices, employees redefined their basic assumptions about how the organization operates. Through all of his actions, he changed the underlying basic assumptions; therefore, leading to a more productive and profitable organization. Under Marchionne’s control, innovation, employee productivity, and profitability focus became basic assumptions.
2. Use the competing values framework to diagnose Chrysler’s culture. To what extent does it possess characteristics associated with the clan, adhocracy, market, and hierarchy cultures? Discuss. The competing values framework is used to “understand, measure, and change organizational culture” (Kreitner & Kinicki, 2013). There are four cultures in the competing values framework, clan, adhocracy, market, and hierarchy cultures. The clan culture is the most flexible and inviting to employees. The clan culture focuses on the internal environment and allows for flexibility and innovation. The clan culture thrives on the commitment of happy employees. Employees in the clan culture are free to express their ideas and opinions for creative thinking solutions. The adhocracy culture allows for flexibility similar to the clan culture; however, it focuses on the external environment. Stakeholders, customers, and product design are more the focus of the adhocracy culture. The adhocracy culture thrives on innovation and consumer happiness. The hierarchy structure is opposite the adhocracy culture.
The hierarchy culture focuses on internal focus and a controlled structure. The hierarchy culture thrives on the efficiency of employees and smooth workflow. The final culture in the competing values framework is the market culture. The market culture focuses on the external environment and a controlled structure. The market structure is opposite of the clan culture. The market cultures main focus is profitability and market shares. Chrysler is most representative of the adhocracy culture. Chrysler focuses on the external environment by designing products that are “exciting, efficient, reliable, safe” (Chrysler History, n.d., para. 18). Chrysler creates customer value in each product design. In addition, Chrysler represents the adhocracy culture through its flexibility in design and innovation.
An adhocracy culture is represented by “growth, stimulation, variety, autonomy, and attention to detail” (Hartnell, Ou, & Kinicki, 2011). Each of the listed adhocracy values are presented in Chrysler’s culture. Chrysler’s culture allows for the constant development of new vehicles, with new features and designs. Chrysler allows employees to take risks, thinking-creatively to develop new innovative solutions. Through learning the goals, Marchionne believes employees will act accordingly on their own. Chrysler must continue its adhocracy culture to enhance growth through innovation.
While Chrysler does support its employees as represented in the clan and hierarchy cultures, its primary focus is on customer satisfaction rather than employee satisfaction. As with the internal versus external environment, Marchionne does have control as represented in the market and hierarchy cultures but the main focus is on flexibility and innovation which will guide profits. 3. Begin by looking up Chrysler’s mission or vision statement on the company’s website. Now answer the following question: To what extent is the culture type you identified in question 2 consistent with the accomplishment of this mission or vision?
Chrysler’s mission statement and vision are not clearly defined on its company website. Employees and customers should be able to find and understand a clearly defined mission statement. According to a study completed by Khandelwal and Mohendra (2010), “employees’ awareness of espoused values, vision, and CSR was moderate, very low, and fairly high, respectively“. Espoused values, the shared strategies and goals, are often reflected in the mission statement (Chen & Corritore, 2008). The mission statement is vital to guiding the organizational goals and cultural beliefs; therefore, this could become a problem within the culture of Chrysler.
Through research of Chrysler’s history on the company website, Chrysler’s mission seems to be “to build revolutionary new cars – affordable luxury vehicles known for their innovative, forward-thinking engineering” (Chrysler History, n.d., para. 18). According to Chrysler’s social media Facebook page, Chrysler’s mission appears to be “providing a direct line to the automotive capital of the world and the proving grounds of American design” (Chrysler, n.d.). Per Chrysler’s media product information specialist Mark (personal communication, September 12, 2014), “Chrysler Group LLC does not have an official mission statement”.
As you can see, the mission statement and vision of the company are not extremely clear. However, the statements above do support Chrysler’s adhocracy culture of customer satisfaction, innovation, and quality design. By being innovation, Chrysler can add value to customer satisfaction. Chrysler is thinking of the future in their product designs. By taking risk and being creative, Chrysler is able to engineer revolutionary new cars as expressed on their company’s website.
4. Which of the mechanisms for changing organizational culture did Marchionne use at Chrysler? Explain.
When becoming CEO of Chrysler in 2009, Sergio Marchionne quickly reacted to Chrysler’s crises and set out on a mission to change the culture of Chrysler. Chrysler was facing severe financial hardship that had to be changed in order to keep the company afloat. In order to regain financial stability, Marchionne had to change the culture of Chrysler by changing the basic assumptions and observable artifacts with dramatic measures that required perseverance. As stated by Peters and Waterman, successfully instilling values occurs “from obvious, sincere, sustained personal commitment to the value the leaders (have) sought to implant, coupled with extraordinary persistence in reinforcing those values” (as cited in Khandelwal and Mohendra, 2010, p. 21).
Because basic assumptions are engrained into a company’s culture, Marchionne had to be persistent in changing people’s basic assumptions about Chrysler’s culture, beginning with management. He had clear goals and a specific vision for the type of manager he wanted. He fired the leaders whose values did not represent the values of Chrysler’s new culture. Then, he recruited new managers whose values were aligned with Chrysler’s new culture and provided them significant training that they would provide to their employees. He also presented the story of Fong, which enforced activities that are not acceptable under the new culture. Without dramatically changing these basic assumptions, cultural change could not flourish.
In addition, Marchionne changed the physical workspace environment, an observable artifact. He changed the physical workspace of his office by downgrading his executive office from a suite to the technology room, where he worked alongside Chrysler’s engineers. He did this to show employees that focusing on vehicle design and creation was more important than a fancy suite. Changing his office location allowed for communication between employees and upper management; therefore, he could better understand the problems associated with vehicle designs and profitability by being involved. Additionally, he created a learning environment through weekly meetings. In the meeting, Marchionne discussed the problems he saw in product design and profitability margins. This created a learning environment and allowed for idea sharing. He set the bar for focus on activities and processes; therefore, passing on the need to focus on activities and processes to employees.
5. Based on your reading this week, what recommendations would you make to Marchionne that would aid in his success in cultural change?
Marchionne has done a great job of changing Chrysler’s culture by being involved, reinforcing innovation, and focusing on customer satisfaction. My first recommendation to Marchionne would be to develop a clear organizational mission statement and vision. If Chrysler has a mission statement, it is not clearly known by all employees, as can be seen in my communication with Chrysler’s media product information specialist Mark. Advising all employees of the mission statement would help employees understand and practice Chrysler’s culture.
Next, I would recommend that Marchionne not get so encompassed in customer satisfaction that he forgets employee satisfaction. There should be a balance between customer satisfaction and employee satisfaction. Employee satisfaction is essential within the workforce because employee satisfaction ultimately leads to higher customer satisfaction; employee satisfaction will lead to higher productivity and less turnover. Marchionne should continue being a mentor to managers who will in turn be mentors to employees. By being supportive and encouraging employees, they will gain self-confidence and self-efficacy that will improve their productivity.
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Chrysler. (n.d.). Facebook. Retrieved September 12, 2014, from https://www.facebook.com/Chrysler/info?ref=page_internal
Chrysler History. (n.d.). In Chrysler Group LLC. Retrieved September 12, 2014, from http://www.chrysler.com/en/this-is-chrysler/history/
Hartnell, C. A., Ou, A., & Kinicki, A. (2011). Organizational culture and organizational effectiveness: A meta-analytic investigation of the
competing values framework’s theoretical suppositions. Journal Of Applied Psychology, 96(4), 677-694. doi:10.1037/a0021987
Khandelwal, K., & Mohendra, N. (2010). Espoused organizational values, vision, and corporate social responsibility: Does it matter to organizational members? Vikalpa: The Journal For Decision Makers, 35(3), 19-35. Kreitner, R. & Kinicki, A. (2013). Organizational behavior: The quest for people-centered organizations and ethical conduct. In Organizational Behavior (10th ed., p. 9-24). New York, NY: McGraw-Hill/Irwin.
Alliance with Fiat. Pull from bankruptcy.