CH-8 Social Influence, Socialization, and Organizational Culture – Organizational Behaviour: Understanding and Managing Life at Work: Book Guide

CHAPTER 8 SOCIAL INFLUENCE, SOCIALIZATION, AND ORGANIZATIONAL CULTURE SAMPLE ANSWERS TO DISCUSSION QUESTIONS 1. Compare and contrast information dependence with effect dependence. Under which conditions should people be especially information-dependent? Under which conditions should people be especially effect-dependent? Answer: Information dependence is our reliance on others for advice and guidance about how to think or act. We gain this information by comparing our ideas and behaviours with those of peers or experts who are deemed good sources. Effect dependence is our reliance on the effects our behaviour provokes as mediated by others. These effects include praise, material rewards, and various forms of social and material punishment. Both forms of dependence show that our behaviour is susceptible to considerable influence by others. People are especially information dependent in confusing, novel, and threatening situations -- they have “a need to know.” People are especially effect dependent when they are interacting with powerful others who have a strong stake in getting them to behave in a particular way. 2. Describe an instance of social conformity that you have observed in an organizational setting. Did compliance, identification, or internalization motivate this incident? Were the results beneficial for the organization? Were they beneficial to the individual involved? Answer: Sara, Al, and Jane worked in the forecasting department of the head office of a large bank. At certain times of the year (before board meetings and before budgets were finalized) their workload was very heavy, and they frequently worked much overtime without additional pay. Although none was convinced that this overtime was necessary, each reported going along with it because of admiration for Mona, the forecasting manager. If Mona felt overtime was necessary, that was good enough for them. Within two years Sara, Al, and Jane were promoted to more responsible positions in the bank, much to their surprise. The forecasting staff evidently conformed to the overtime requirements because they identified strongly with their boss, Mona. She served as an important source of information for them, and they conformed not simply out of fear (compliance), promise of reward (compliance), or because they personally believed that the overtime was necessary (internalization). In this instance, conformity was useful for both the forecasting staff (they all received promotions) and the bank. 3. Consider how you were socialized into the college or university where you are taking your organizational behaviour course. Did you have some unrealistic expectations? Where did your expectations come from? What outside experiences prepared you for college or university? Did you experience institutionalized or individualized socialization? What proactive socialization behaviours did you employ to facilitate your socialization? Answer: Some expectations about the academic demands of college and university are acquired in high school. Expectations about college/university social life are often acquired by television and movie portrayals. The former expectations are probably more realistic than the latter, although high school may not prepare students adequately for studying independently without close supervision. Having spent time working often provides valuable practical experience that makes college subjects seem more relevant. However, some students who attend college/university after a period in the working world report that they underestimated the time and energy their studies would require (“I haven’t been to school for ten years”). College/university classes provide institutionalized socialization (e.g., collective and formal), although directed study and independent graduate research involve individualized socialization (e.g., individual and informal) by one’s academic supervisor. Most colleges/universities tolerate a fair degree of individuality and do not socialize students to an extreme extent. Students can facilitate their own socialization in college or university by using a number of proactive socialization behaviours such as information and feedback seeking, networking, general socializing, building relationships with other students, and seeking help when needed from any number of resource persons available at colleges and universities. 4. What are the pros and cons of providing realistic job previews for a job that is objectively pretty bad? What about for a job that is pretty good? Answer: Realistic job previews have been shown to reduce initial expectations to a sensible level and thus result in less reality shock, better adjustment, and less early turnover. Also, the honesty promoted in a preview may have good public relations value for those who don’t accept the job as well as those who do. Cons include the possibility that few will want to accept the job, although research has shown that this is not always the case but it could increase recruiting costs. Also, it is possible that a realistic preview could “backfire” and sensitize new employees to job aspects that they would not otherwise view so negatively. For jobs that are pretty good, a realistic job preview can help to reduce the applicant pool to the extent that applicants who do not perceive a good fit will drop out of the selection process. Given that there will probably be many more applicants than positions for good jobs this will be a good thing. Regardless of whether a job is good or bad, realistic job previews will be most effective for more complex jobs that applicants are not as familiar with as say more routine and visible jobs. 5. Imagine that you are starting a new business in the retail trade. You are strongly oriented toward providing excellent customer service. What would you do to nurture a strong organizational culture that would support such a mission? Answer: The founder’s role is often critical in shaping a culture. Therefore, you would want to make clear from day one by your words and behaviour that you support customer service. If you support good service, your managers will support good service. It won’t hurt if some good stories that are illustrative or symbolic of your concern with service emerge. Symbolically, you might adopt a motto that stresses service. Ritualistically, you might have public ceremonies to reward employees who have done things to provide extraordinary service. Finally, the formal socialization process (beginning with recruitment) should be tailored to promote and reward a strong service orientation. For a good example of a culture with a service orientation, see the Applied Focus: Culture and Customer Service at Print Audit (page 283). 6. Discuss the advantages and disadvantages of developing a strong organizational culture and some socialization practices that you would recommend for building a strong organizational culture. Answer: A strong culture can lead to organizational effectiveness when the culture supports the mission, goals, and strategy of the organization. The culture eases communication and coordination, and provides a common ground of agreement under which conflict may be resolved. Also, such cultures generally promote member loyalty and true identity with the organization and its products or services. In addition, strong cultures socialize members’ transition into the organization and promote role clarity. There are also cons to strong cultures. They can be difficult to change when missions, goals, and strategies change. Also, strong cultures do not blend well when mergers or acquisitions occur. Finally, the strong culture may be a negative culture based on backstabbing, paranoia, and other pursuits that damage organizational effectiveness. Here, the culture is out of synchronization with organizational goals and strategies. Socialization practices for building a strong culture should include rigorous selection practices, “training in the trenches,” exposure to the culture’s beliefs, values, and assumptions, organizational folklore, consistent role models, and rewards that reinforce behaviours that are consistent with the goals and culture of the organization. Institutionalized socialization tactics should also be used. 7. Describe how you would design a new-employee orientation program. Be sure to indicate the content of your program and what knowledge and information employees will acquire from attending the program. What are some of the outcomes that you would expect from your orientation program? Answer: Employee orientation programs should be designed to introduce new employees to their job, the people they will be working with, and the organization. The main content usually consists of health and safety issues, terms and conditions of employment, and information about the organization. The orientation program should make newcomers feel a part of the organization, learn about the organization’s language, traditions, mission, history and structure, and better understand the organization’s basic workplace practices. In addition, the orientation program should clarify the psychological contract, ensure that newcomers have realistic expectations, and instruct them on how to cope with stressful work situations. Orientation programs can have a lasting effect on the job attitudes and organizational commitment of new hires and lower turnover. 8. What does it mean to be proactive during the socialization process and what are the different ways that newcomers can be proactive? To what extent have you used each of the proactive behaviours described in the chapter (see Exhibit 8.6) in a current or previous job and what effect did it have on your socialization? Answer: Proactive socialization refers to the process in which newcomers play an active role in their own socialization through the use of a number of proactive socialization behaviours. Two of the most important proactive behaviours are feedback seeking and information seeking. Other proactive behaviours include general socializing, relationship building, boss-relationship building, networking, and job change negotiation. Students should indicate the extent to which they have used any of the proactive behaviours and which ones they have used the most. Ask them to also indicate the results of their proactive efforts and if it helped their socialization. Then ask students if they would use any of the proactive behaviours in a future job and which ones they would use and why. You might want to refer to an article on this topic in which students indicated their intentions to be proactive when they begin a new job (how likely they would do each proactive behaviour when they begin a new job). The mean scores on a 5-point scale for each proactive behaviour were as follows: feedback seeking = 3.84; information seeking = 4.09; general socializing = 4.03; boss relationship building = 3.70; networking = 3.53; and job change negotiation = 2.85. The study found that personality was related to students’ intentions to be proactive. Proactive personality was positively related to feedback seeking, boss relationship building, networking, and job change negotiation; extraversion was positively related to general socializing and networking; agreeableness was positively related to general socializing. Source: Gruman, J. A., & Saks, A. M. (2011). Socialization preferences and intentions: Does one size fit all? Journal of Vocational Behavior, 79, 419-427. 9. What are the main functions performed by mentors and what effect do they have on protégés? Do you think organizations should implement formal mentoring programs or should they remain informal? What are the advantages and disadvantages of each approach? Answer: The main functions performed by mentors are career functions (sponsorship, exposure and visibility, coaching and feedback, and developmental assignments) and psychosocial functions (role modeling, providing acceptance and confirmation, and counseling). Mentored individuals have been found to have higher objective career outcomes (compensation and the number of promotions), as well as higher subjective outcomes (greater satisfaction with one’s job and career and greater career commitment), and they are more likely to believe that they will advance in their career. Mentoring tends to be more strongly related to subjective than the objective career outcomes. The psychosocial function is more strongly related to satisfaction with the mentoring relationship while the career function is more strongly related to compensation and advancement. Both functions are just as important in generating positive attitudes toward one’s job and career. Formal mentoring programs are organizationally sponsored mentoring programs that recruit seasoned employees as mentors and match them with protégés. Research on formal mentoring programs has found that they are just as beneficial as informal mentoring relationships and more beneficial than not having a mentor at all. Thus, organizations should implement formal mentoring programs. However, formal mentoring programs are most effective when the mentor and protégé have input into the matching process and when they receive training prior to the mentoring relationship, especially training that is perceived to be of a high quality. Formal mentoring programs can also help to ensure that all newcomers have the same opportunities to have a mentor. With informal mentoring, some newcomers might not have the same opportunities. A possible disadvantage with formal mentoring is if the match between the mentor and protégé does not work for the mentor or the protégé. This is why formal mentoring programs are most effective when the mentor and protégé have some input into the matching process. Formal mentoring programs can ensure that women as well as minority group newcomers have equal opportunities for mentoring which has not always been the case with informal mentoring. 8. What is the difference between a traditional orientation program and a Realistic Orientation Program for Entry Stress (ROPES)? What is the difference between a realistic job preview (RJP) and ROPES? Why and when would you use each of these during the socialization process (traditional orientation program, ROPES, and realistic job preview)? Answer: Traditional employee orientation programs are designed to introduce new employees to their job, the people they will be working with, and the organization. The main content of most orientation programs consists of health and safety issues, terms and conditions of employment, and information about the organization, such as its history and traditions. Most orientation programs take place during the first week of entry and last one day to one week. A Realistic Orientation Program for Entry Stress (ROPES) instructs newcomers on how to use cognitive and behavioural coping techniques to manage workplace stressors. Ideally, they would be used after a traditional orientation program to prepare employees for the stressors of their particular job. Realistic job previews provide a balanced, realistic picture of the positive and negative aspects of a job to applicants who may have unrealistic and inflated expectations. They should be used during anticipatory socialization so that applicants can determine if the job is a good fit and to lower unrealistic expectations. SAMPLE ANSWERS TO INTEGRATIVE DISCUSSION QUESTIONS 1. What are the implications of social cognitive theory for social influence and socialization? Discuss the practical implications of each component of social cognitive theory (i.e., observational learning, self-efficacy, and self-regulation) for the socialization of new organization members. Describe how you would design an orientation program for new employees based on social cognitive theory. Consider the implications of social cognitive theory for mentoring. What does social cognitive theory say about why mentoring is important and how to make it effective? Answer: There are a number of important implications of social cognitive theory for socialization. First, new hires learn a great deal by observing the behaviour of other members of the organization. They are particularly likely to model behaviour that is associated with positive consequences. Also, an important proactive socialization behaviour is observational learning. Therefore, experienced organizational members should be sure to model appropriate behaviour when they interact with newcomers. Self-efficacy has also been shown to be important for socialization. Newcomers with stronger self-efficacy are more likely to experience a successful socialization. Therefore, organizations should try to strengthen the self-efficacy of newcomers. This can be done through orientation and training programs. Finally, self-regulation is an example of a proactive socialization behaviour that can also aid new hires in their socialization. Research has found that newcomers who engage in self-regulation have lower anxiety and stress. Social cognitive theory also has some important implications for the design of employee orientation programs and mentoring. For example, they should be designed to strengthen newcomers’ self-efficacy by providing encouragement, lowering anxiety, and providing successful role models. Senior co-workers should participate in the orientation program as they can serve as role models for new hires. Finally, the orientation program can be used to instruct newcomers on self-regulation and how they can manage their own behaviour by monitoring their own and others’ behaviour, setting goals, practicing new behaviours, and reinforcing themselves for goal accomplishment. Social cognitive theory also has implications for mentoring. Mentors are important role models for their protégés who will observe their behaviour and imitate them. Mentors also have an important role to play in strengthening the self-efficacy of their protégés by providing them with work experiences in which they experience task mastery, by lowering their anxiety and physiological arousal, and providing them with positive feedback and encouragement. Finally, mentors can instruct protégés on how to manage their own learning through the use of self-regulation. Thus, social cognitive theory provides a solid foundation to understand the role and importance of mentoring and what mentors can do to be most effective. 2. Refer to the work-related values that differ across cultures presented in Chapter 4 (i.e., work centrality, power distance, uncertainty avoidance, masculinity/femininity, individualism/collectivism, long-term/short-term orientation) and consider how the culture of an organization in Canada might lead to conflicts in a country with different work-related values. Give some examples of the kind of organizational culture that might conflict with the various work-related values in other countries. What are the implications of this for Canadian companies that wish to expand abroad? Answer: The culture of an organization can conflict with the culture of a country. Thus, it is worth considering how the culture of a Canadian organization might conflict with the culture of countries in which they might want to operate in. Below are some potential conflicts that stem from the work-related values that differ across cultures. Another way to approach this question is to ask students to think of how the culture of an organization they have worked for might conflict with some of the work-related values that differ across cultures. Work Centrality. Value differences across cultures are reflected in differences in the centrality of work in one’s life. People for whom work is a central life interest tend to work more hours. A company with a culture that thrives on long hours and in which work is a central life interest with have difficulties in cultures that are more laid back and focus more on life than work. Of course, a company with a culture that is less focused on work as a central life interest might find it difficult to operate in a country where work is more central to people’s lives. However, it is probably more likely that a Canadian company that is hard driving and very focused on work will find it difficult to operate in those countries where the culture is less focused on work. Power distance. Power distance is the extent to which an unequal distribution of power is accepted by society members. In small power distance cultures, inequality is minimized, superiors are accessible, and power differences are downplayed. In large power distance societies, inequality is accepted as natural, superiors are inaccessible, and power differences are highlighted. In many Canadian companies, equality is emphasized and superiors are very accessible. This kind of culture is likely to encounter problems in cultures where large power distances are highlighted and inequality is accepted. Employees in these cultures will have a difficult time because they don’t perceive themselves as equal to superiors. Uncertainty avoidance. Uncertainty avoidance is the extent to which people are uncomfortable with uncertain and ambiguous situations. Strong uncertainty avoidance cultures stress rules and regulations, hard work, conformity, and security. Cultures with weak uncertainty avoidance are less concerned with rules, conformity, and security, and hard work is not seen as a virtue. However, risk taking is valued. A Canadian company that leans more towards a bureaucratic orientation might have difficulty in a culture in which there is weak uncertainty avoidance and there is less concern with rules, formality, and conformity. Similarly, a more organic culture that places less emphasis on rules and regulations and formality might have problems in a country where uncertainty avoidance is high and people prefer to have rules and regulations and are willing to conform. Masculinity/femininity. More masculine cultures clearly differentiate gender roles, support the dominance of men, and stress economic performance. More feminine cultures accept fluid gender roles, stress sexual equality, and stress quality of life. A Canadian company with a culture that emphasizes gender equality and in which many females are in management and leadership roles will probably have difficulties in masculine cultures where the dominance of men is the norm and women are not treated as equals. Individualism/collectivism. More individualistic cultures stress independence, individual initiative and privacy. More collective cultures favour interdependence and loyalty to family or clan. Many Canadian companies focus on individual achievements and performance. A company culture that emphasizes individual goals, performance, and success is likely to have difficulties in collectivist cultures that focus more on loyalty to the group. Long-term/short-term orientation. Another cultural value that differs across cultures is known as long-term/short-term orientation. Cultures with a long-term orientation tend to stress persistence, perseverance, thrift, and close attention to status differences. Cultures with a short-term orientation stress personal steadiness and stability, face-saving, and social niceties. Canadian companies that focus on immediate goals and outcomes and focus on equality rather than status differences are likely to conflict with cultures that have a long-term orientation and prefer persistence, perseverance, and attention to status differences. Companies that intend to operate in foreign countries need to understand how their culture might conflict with the culture of the country and the people they intend to employ. Thus, they might need to make some changes to corporate culture upon learning about potential areas of conflict with the country’s culture. SAMPLE ANSWER TO ON-THE-JOB CHALLENGE QUESTION: CN RAIL Explain how the culture at CN Rail can contribute to collisions and derailments. How can safety be influenced by an organization’s culture? How important is it for CN to change its culture? What do they need to do to change the culture and improve safety? Answer: The culture of CN has been described as a “culture of fear and discipline” which is counter to an effective safety management system. The culture has been described as being at the heart of safety problems at CN Rail. According to an advisory panel created by the federal minister of transportation in 2007 to review railway safety: “CN’s strict adherence to a rules-based approach, focused largely on disciplinary actions when mistakes are made, has instilled a ‘culture of fear and discipline’ and is counter to an effective safety management system. CN needs to acknowledge this openly and take concrete steps to improve.” CN’s goal is to be the best transportation company in North America. Of course, becoming the best means that you have to focus on safety and in the case of CN, it also means that a culture change is required to improve safety. The panel report recognized Via Rail as having a safety culture in which safety management is important to all employees and where there is openness and trust between managers and employees. According to the article that this question is based on (Vu, U. 2008, July 14. Culture of fear rules safety at CN. Canadian HR Reporter, 21(13), 1, 20), employees at Via Rail are observed at regular cycles and corrective coaching takes place immediately when errors are observed. By contrast, safety is managed at CN Rail by an “antecedent, behaviour, and consequences” process which according to the panel is a traditional rule and discipline model. The article provides a quote from United Transportation Union leader Sylvia Leblanc who says CN’s attitude towards safety “seems to be blame and punish” instead of educate and correct. It goes on to say that employees are blamed for errors without follow-up or investigation and then punished without any corrective action to prevent reoccurrences. According to the panel, a management culture that relies on discipline or threat to enforce rules has “a tendency to instill fear, and to stifle employee participation and reporting. A significant mistrust of management develops. People stop communicating – and that can have a detrimental impact on safety.” What is required is a culture in which employees trust management so that there is communication and information sharing about safety problems and how to take corrective action. The culture needs to encourage and reward employees for communicating problems and taking corrective action to prevent accidents. If employees fear discipline and punishment, they are less likely to trust management and report problems for fear of being disciplined. The culture should encourage employees to report problems and to learn how to take corrective action. It is worth noting that a book called Switchpoints was published in 2008 about culture change at CN Rail. The book describes how CN became North America’s top-performing railroad by changing the culture. In the book, the following seven steps were part of the process of changing the culture: 1. Clarify the vision. 2. Choose the right switchpoints (how to change the culture into one of an engaged and committed workforce). 3. Select the tools for change. 4. Align the switches. 5. Assess switchpoints’ impact. 6. Spike the switches. 7. Learn from the journey. A key part of the culture change was a new vision and the following five guiding principles: 1. Service 2. Cost control 3. Asset utilization 4. Safety-100 percent compliance 100 percent of the time 5. People These guiding principles were the pillars for the cultural change. In the book, safety is described as part of the culture change, one of the five guiding principles, and the foundation of the company’s success: “We could not progress as a company if we failed to keep employees healthy and injury-free” (p.150). The book also states: “The key to making our improved safety culture is to constantly reinforce safety behaviours” (p.151). The development of a safety culture included shift hurdles (team leads meet with their teams at the beginning of every shift), safety walkabouts (group leaders regularly walk the rail yard looking for employees engaging in safe behaviours and discussing how to make them safer), safe observations (working with front-line employees and providing feedback). Students should understand that this is a good example of how the culture of an organization has implications for how employees behave and that a change in culture is often required to change behaviour. When discussing this question, it might help to review the steps in Exhibit 8.8 (page 286) and described on pages 286-287. The use of symbols, rituals, and stories can also be considered for changing the culture at CN Rail. Of course, a key factor in changing the culture are new beliefs and values that strongly support safety and reward employees for identifying risks and hazards and taking corrective actions. EXTRA ESSAY QUESTIONS 1. Discuss the relevance of information and effect dependence for socialization and culture. Answer: Information Dependence: This refers to the need for individuals to rely on information from others to make informed decisions and adapt to new environments. In socialization, information dependence helps newcomers understand the norms, expectations, and behaviors that are valued within a culture or organization. It plays a critical role in how individuals learn and internalize the values and practices of their new social context. Effect Dependence: This involves how individuals’ behaviors are influenced by the reactions and feedback from others. In socialization, effect dependence affects how newcomers adjust their behaviors based on the responses they receive from others in their new environment. Positive reinforcement or acceptance can encourage adherence to cultural norms, while negative reactions can lead to changes or withdrawal. Both types of dependence are crucial for effective socialization as they guide newcomers in aligning their behaviors with the cultural expectations and norms of their new environment. 2. Compare and contrast compliance, identification, and internalization. Answer: Compliance: • Definition: Compliance occurs when an individual conforms to a request or expectation because of external pressures or incentives, without necessarily agreeing with the underlying values or beliefs. • Motivation: Driven by external rewards or avoidance of punishment. • Behavior: Often superficial and may not lead to lasting change in attitudes or beliefs. • Example: An employee follows a company policy to avoid reprimand but does not genuinely believe in the policy. Identification: • Definition: Identification happens when an individual conforms to the expectations of a group or authority figure because they want to be associated with or liked by that group. • Motivation: Driven by a desire for acceptance or approval from others. • Behavior: The individual may adopt behaviors and attitudes that align with the group, but the change may be more about fitting in rather than deep personal conviction. • Example: A new employee adopts the dress code of their office to fit in with their colleagues, even if it differs from their personal style. Internalization: • Definition: Internalization occurs when an individual adopts the values and norms of a group or authority figure as their own, resulting in a genuine change in beliefs and attitudes. • Motivation: Driven by a true belief in the values and norms, not just external pressure or desire for acceptance. • Behavior: The change is deep and enduring, reflecting a genuine alignment with the adopted values. • Example: An employee who internalizes the company’s commitment to sustainability will make eco-friendly choices in their personal and professional life. 3. What is likely to happen in the long term if conformity is initially due to simple compliance? Answer: In the long term, if conformity is initially due to simple compliance, it is likely that the behavior may not be sustained if the external pressures or incentives that prompted the compliance are removed. Over time, the individual may revert to previous behaviors or attitudes if they do not genuinely internalize the underlying values or find intrinsic motivation. Without deeper engagement or personal conviction, compliance-driven behaviors are often temporary and may not lead to lasting cultural alignment or commitment. 4. Discuss the socialization process and explain the importance of proximal and distal socialization outcomes. Answer: Socialization Process: • Definition: Socialization is the process through which individuals learn and adopt the values, norms, and behaviors of a new social environment or organization. • Stages: Includes anticipatory socialization (preparation before joining), encounter (initial entry and adjustment), and change/acquisition (ongoing adaptation and integration). Proximal Socialization Outcomes: • Definition: Proximal outcomes are immediate, short-term effects of the socialization process. • Examples: Understanding job roles, learning procedures, building relationships with colleagues. • Importance: They help newcomers quickly adapt to their roles and start functioning effectively within the organization. Distal Socialization Outcomes: • Definition: Distal outcomes are long-term effects of the socialization process. • Examples: Development of organizational commitment, long-term job satisfaction, career progression. • Importance: They reflect the depth of integration and the long-term alignment of the individual with the organization’s culture and values. Both proximal and distal outcomes are crucial for ensuring that socialization is effective and leads to successful integration and long-term success. 5. Discuss the pros and cons of institutionalized versus individualized socialization. Answer: Institutionalized Socialization: Pros: • Consistency: Ensures that all newcomers receive the same information and experiences, leading to uniform understanding and expectations. • Efficiency: Streamlined processes and procedures can be more cost-effective and time-efficient. • Clear Structure: Provides a clear framework for learning and adapting to the organization’s culture. Cons: • Lack of Personalization: May not address the specific needs or learning styles of individual newcomers. • Reduced Flexibility: Can be rigid and less adaptable to individual differences or changing circumstances. • Potential for Disengagement: Newcomers may feel like they are just another number rather than valued individuals. Individualized Socialization: Pros: • Personalization: Tailors the socialization process to the individual’s needs, background, and learning style. • Flexibility: Allows for adaptation to specific circumstances and evolving needs. • Enhanced Engagement: Can make newcomers feel valued and supported, leading to higher satisfaction. Cons: • Inconsistency: Can lead to varied experiences and understandings among newcomers, potentially causing inconsistencies in culture and performance. • Resource Intensive: Requires more time and resources to provide tailored experiences. • Potential for Bias: May introduce biases based on the relationships between the newcomer and their mentors or supervisors. 6. Compare and contrast the career and psychosocial functions of mentoring. Which function is most important for a new member’s socialization? Answer: Career Functions: • Definition: Career functions involve helping the mentee advance professionally and achieve career goals. • Examples: Providing job-related advice, career planning, sponsorship, and networking opportunities. • Importance: Helps newcomers understand career pathways and gain skills and experiences necessary for career advancement. Psychosocial Functions: • Definition: Psychosocial functions focus on personal development, emotional support, and building self-confidence. • Examples: Providing emotional support, role modeling, offering encouragement, and helping with self-identity. • Importance: Helps newcomers feel integrated, supported, and confident, which is essential for overall job satisfaction and well-being. Most Important for Socialization: • Psychosocial Functions: While career functions are crucial for professional growth, psychosocial functions are often more critical for initial socialization. They help newcomers adjust emotionally, build relationships, and feel a sense of belonging, which can facilitate smoother adaptation to the organization’s culture and norms. 7. Describe the socialization tactics used by strong cultures. Answer: Socialization Tactics Used by Strong Cultures: 1. Formalization: Strong cultures often use formal, structured processes for socialization, such as orientation programs and training sessions. 2. Social Integration: Emphasis on integrating newcomers into the culture through group activities, mentorship programs, and team-building exercises. 3. Consistent Messaging: Clear and consistent communication of cultural values, norms, and expectations. 4. Role Modeling: Leaders and established employees actively demonstrate and reinforce cultural values and behaviors. 5. Feedback and Reinforcement: Regular feedback and reinforcement of desired behaviors to ensure alignment with cultural expectations. These tactics help newcomers quickly understand and adopt the strong cultural values and norms of the organization. 8. Describe some proactive socialization behaviors that new hires can use to improve their socialization. How can each proactive behavior help to socialize newcomers? Answer: Proactive Socialization Behaviors: 1. Seeking Feedback: • Description: Actively requesting feedback from supervisors and colleagues. • Benefit: Helps newcomers understand performance expectations and areas for improvement, facilitating faster adjustment to the role. 2. Building Relationships: • Description: Initiating conversations and networking with colleagues and mentors. • Benefit: Enhances integration into the team, builds support networks, and helps understand informal norms and dynamics. 3. Learning About the Organization: • Description: Taking the initiative to learn about the company’s culture, history, and values. • Benefit: Provides a deeper understanding of the organization, aiding in alignment with its culture and expectations. 4. Asking Questions: • Description: Inquiring about job responsibilities, processes, and expectations. • Benefit: Clarifies roles and responsibilities, reducing uncertainty and aiding in effective role performance. 5. Demonstrating Enthusiasm: • Description: Showing a positive attitude and eagerness to engage in new tasks and projects. • Benefit: Signals commitment and willingness to contribute, which can help in building rapport and gaining acceptance. 9. Compare and contrast the different methods of organizational socialization. How do they differ in terms of when they are used, their purposes, and their effects on newcomers? Answer: Methods of Organizational Socialization: 1. Formal Orientation Programs: • When Used: At the beginning of employment. • Purpose: To provide structured information about the organization, role expectations, and policies. • Effects: Offers a comprehensive introduction, but may lack personalization. 2. On-the-Job Training: • When Used : Continuously during initial role performance. • Purpose: To teach job-specific skills and processes through hands-on experience. • Effects: Practical and relevant, but may be less systematic and can vary in quality. 3. Mentoring Programs: • When Used: Throughout the early stages of employment and beyond. • Purpose: To provide guidance, support, and career advice from experienced employees. • Effects: Facilitates deeper integration, offers personalized support, and helps in navigating the organization’s culture. 4. Peer Socialization: • When Used: Informally, throughout the socialization period. • Purpose: To allow newcomers to learn from colleagues through day-to-day interactions. • Effects: Provides real-time insights into organizational norms and practices, but can be inconsistent and less structured. Comparison: • Formal Orientation Programs provide structured and uniform information but may lack depth in practical integration. • On-the-Job Training offers practical skills but may not cover broader cultural aspects. • Mentoring Programs offer personalized support but may be resource-intensive. • Peer Socialization provides informal learning but may lack consistency. 10. Discuss the difference between informal and formal mentoring programs and their effectiveness. Answer: Informal Mentoring Programs: Characteristics: • Spontaneous: Develop naturally through personal relationships. • Flexible: Less structured and may vary in scope and focus. • Relationship-Driven: Based on mutual interests and personal connections. Effectiveness: • Pros: Can provide personalized and relevant support, fosters organic relationships, and can be more adaptable. • Cons: Lack of structure can lead to inconsistent experiences and may not address all developmental needs systematically. Formal Mentoring Programs: Characteristics: • Structured: Organized and planned with specific goals and guidelines. • Assigned: Mentors and mentees are paired based on criteria such as expertise and needs. • Programmatic: Includes training for mentors and regular evaluation. Effectiveness: • Pros: Provides systematic support, ensures coverage of key developmental areas, and offers accountability. • Cons: May lack the personal touch of informal mentoring, and relationships may feel less authentic. Comparison: • Informal Mentoring tends to be more flexible and personalized, while Formal Mentoring provides a structured and consistent approach to development. The effectiveness of each depends on the specific needs of the mentee and the organizational context. 11. Describe a Realistic Orientation Program for Entry Stress (ROPES) and explain how and why it should be used as part of the socialization of new hires. Answer: Realistic Orientation Program for Entry Stress (ROPES): Description: • Definition: ROPES is designed to provide new hires with a realistic preview of the job and the organizational environment, including both positive and negative aspects. • Components: Includes detailed job previews, exposure to potential challenges, and information about the work culture and expectations. How and Why It Should Be Used: • Reduces Unrealistic Expectations: By presenting a balanced view of the job, ROPES helps prevent disillusionment and ensures new hires have realistic expectations. • Prepares for Challenges: New hires are better prepared for potential difficulties and can develop coping strategies in advance. • Facilitates Adjustment: By addressing potential stressors upfront, ROPES can help new hires adjust more smoothly and reduce initial anxiety. • Enhances Job Satisfaction: Realistic previews can lead to higher job satisfaction by aligning expectations with actual job experiences. Incorporating ROPES into the socialization process helps new hires better understand their roles and the work environment, leading to a more effective and less stressful adjustment period. TEACHING NOTES FOR THE SOCIALIZATION PREFERENCES AND EXPERIENCE EXPERIENTIAL EXERCISE This exercise is designed for students to learn more about the following six socialization tactics: Collective versus individual, formal versus informal, investiture versus divestiture, sequential versus random, serial versus disjunctive, and fixed versus variable. The purpose of this exercise is for students to learn about how they have been and/or would like to be socialized when they join an organization. In addition, by comparing their socialization preferences to their most recent socialization experience, they can better understand how socialization can influence their job attitudes and behaviour. You have three options for how to use this scale and exercise. First, students can just complete Part 1 on their socialization preferences and class discussion will focus on the tactics that students most prefer when they are socialized. Second, you can have students just complete Part 2 about their socialization experience on their current or most recent job/organization. The focus of class discussion will be on the tactics they experienced and the effect they had on their attitudes and behaviours. A third option is to have students complete Parts 1 and 2 and then calculate a difference score by subtracting their socialization experiences from their socialization preferences for each tactic. If you do this then you can not only focus on their socialization experiences and preferences, but you also can discuss how different their socialization experience was from what they would have preferred and how this influenced their attitudes and behaviours. To calculate scores on each tactic, students must first subtract their responses to questions 3, 9, 15, 17, 19, 20, 27, 29, 39 from 6. For example, if they gave a response of 5 to question 3, their score will be 1 (6 minus 5). To calculate scores for each socialization tactic, students should add their responses as follows: Collective versus individual tactic: Add answers to questions 1, 7, 13, 19, and 25. Formal versus informal tactic: Add answers to questions 2, 8, 14, 20, and 26. Investiture versus divestiture tactic: Add answers to questions 3, 9, 15, 21, and 27. Sequential versus random tactic: Add answers to questions 4, 10, 16, 22, and 28. Serial versus disjunctive tactic: Add answers to questions 5, 11, 17, 23, and 29. Fixed versus variable tactic: Add answers to questions 6, 12, 18, 24, and 30. For each scale the total score should be somewhere between 5 and 25. Higher scores reflect the institutionalized end of the scale (collective, formal, investiture, sequential, serial, and fixed). Students can also calculate a total score for all of the tactics by adding their responses to all 30 questions. Total scale scores should fall between 30 and 150. Higher scores reflect a preference for institutionalized socialization. To calculate the socialization experience score, follow the same procedures but this time use the answers from Part 2. To compare socialization preferences to one’s socialization experience, have students calculate a socialization difference score by subtracting their socialization experience score from their socialization preference score for each tactic. For example, if the collective–individual socialization preference score was 25 and the socialization experience score was 10, the difference would be 15. A small difference indicates greater congruence between one’s socialization preference and experience. Large differences indicate a discrepancy between how one prefers to be socialized and the way they were socialized. To facilitate class discussion and student understanding of socialization tactics, form small groups and have them consider the following questions. Note that some of the questions are for socialization preferences (#1) and others are for socialization experiences (#2). 1. Each group member should present their preference score of each socialization tactic. They should consider the group average for each tactic. For each of the six tactics, do most group members prefer the institutionalized or individualized end of the continuum? Each group member should explain their preference for each tactic. Try to see if there is a trend as to what tactics students find especially important for their socialization. 2. Each group member should present their experience score of each socialization tactic. They should consider the group average for each tactic. For each of the six tactics, have most group members experienced institutionalized or individualized socialization? Each group member should explain how they were socialized and what effect it had on them. Try to see if there is a trend as to what tactics students have experienced and the effect that the tactics had on them. You might also ask students to try and explain why they think their organization used certain tactics and not others. 3. Each group member should present their socialization preference–experience difference score for each tactic. Group members should consider the largest and smallest differences across the six dimensions. Do some members have larger differences than others? Students should then compare and contrast the scores for group members who have large and small difference scores and the effect of this on their learning, job attitudes, and behaviour. In particular, they should consider if those group members who had larger difference scores had a less successful socialization and how it made them feel as well as the effect it had on their attitudes and behaviours. Did students with larger difference scores feel less socialized and did they have negative attitudes? 4. Students should consider how an understanding of their socialization preferences can assist them in their future jobs. They should think about how organizations can improve the socialization process by understanding the socialization preferences of new hires. 5. Finally, ask students about the implications for organizations that do not consider the socialization preferences of new hires? What are the potential consequences for new hires and the organization? By the end of this exercise, students should have a better understanding of how they have been socialization in a current or previous job as well as how they prefer to be socialized in future jobs and organizations. Students should understand that organizations make choices about how to socialize new hires and that the tactics they choose to use will affect the attitudes and behaviours of new hires. Students should also understand that the best way to socialize new hires depends on the organization and their new hires. Some additional questions to consider for class discussion: 1. What are socialization tactics and why are they important for the socialization and adjustment of new hires? Answer: Socialization tactics refer to the various methods and strategies organizations use to integrate new employees into the workplace. These tactics help new hires understand their roles, responsibilities, and the organizational culture. Effective socialization tactics are crucial because they: • Facilitate Adjustment: They help new hires adapt to their new roles and environment, reducing anxiety and increasing their comfort level. • Enhance Performance: Proper socialization can lead to better performance by clarifying job expectations and providing necessary resources and support. • Increase Retention: Effective socialization can reduce turnover by improving job satisfaction and organizational commitment. • Build Relationships: Socialization tactics help new hires establish connections with colleagues and supervisors, fostering a sense of belonging. 2. What are the different socialization tactics and what effect do they have on new hires? What is the difference between institutionalized and individualized socialization tactics? What is the difference between context, content, and social tactics? Answer: Different Socialization Tactics: • Collective vs. Individual: • Collective: New hires are grouped and socialize together, which can build a sense of team and shared experience. • Individual: New hires are socialized individually, which can allow for more personalized attention but may lead to isolation. • Formal vs. Informal: • Formal: Structured programs with specific training and orientation activities. • Informal: More ad-hoc and less structured, relying on informal interactions and learning. • Investiture vs. Divestiture: • Investiture: New hires are confirmed in their existing identities and skills. • Divestiture: New hires are expected to shed their previous identities and conform to the organization's norms and values. • Sequential vs. Random: • Sequential: Clear, predetermined steps and stages for the socialization process. • Random: The socialization process is less structured, with no clear sequence of stages. • Serial vs. Disjunctive: • Serial: Experienced employees (mentors) guide new hires through the socialization process. • Disjunctive: New hires must navigate the process independently without formal guidance. • Fixed vs. Variable: • Fixed: Set timelines for socialization and transition periods. • Variable: Flexible timelines that vary based on individual progress. Institutionalized vs. Individualized Socialization Tactics: • Institutionalized: These tactics involve structured, standardized processes designed to socialize groups of new hires in a consistent manner. They tend to be more formal and predictable, providing clear guidance and support. Examples include formal orientation programs and standardized training. • Individualized: These tactics involve tailored, flexible approaches that adapt to the needs and preferences of individual new hires. They often rely on informal interactions and customized support. Examples include personalized mentoring and informal on-the-job training. Context, Content, and Social Tactics: • Context Tactics: These refer to the environment and setting in which socialization occurs, such as the organizational culture and physical workspace. • Content Tactics: These involve the specific information and skills that are conveyed to new hires, such as job responsibilities, organizational policies, and performance expectations. • Social Tactics: These focus on the social aspects of socialization, including building relationships with colleagues, understanding social norms, and integrating into the team. 3. What socialization tactics are most important and why? Answer: The importance of socialization tactics can vary depending on the organization and the specific needs of new hires. However, generally: • Formal Tactics: Important for providing structured guidance and clear expectations, especially in complex or highly regulated environments. • Sequential Tactics: Useful for ensuring that new hires follow a clear path and acquire necessary skills and knowledge in a structured manner. • Investiture Tactics: Valuable for making new hires feel accepted and validated in their existing skills and identities. • Serial Tactics: Beneficial for providing mentorship and guidance from experienced employees, which can help new hires navigate their roles effectively. These tactics are important because they address different aspects of the socialization process, from structured learning to social integration. 4. What tactics should organizations use to socialize new hires? Answer: Organizations should consider using a combination of the following tactics based on their specific needs and goals: • Formal Tactics: For structured onboarding and clear communication of job roles and expectations. • Collective Tactics: To foster a sense of teamwork and shared experience among new hires. • Serial Tactics: To provide mentorship and guidance from experienced employees. • Investiture Tactics: To validate the new hires' existing skills and help them feel welcomed. • Sequential Tactics: To provide a clear and organized path for learning and development. Organizations should tailor their approach based on the complexity of the job, the organizational culture, and the specific needs of the new hires. 5. When should an organization use institutionalized socialization tactics? When should an organization use individualized socialization tactics? Answer: Institutionalized Socialization Tactics: • When a Standardized Approach is Needed: In organizations with large numbers of new hires or in highly regulated industries where consistent training and compliance are crucial. • When Roles and Responsibilities are Clearly Defined: For roles with clear, predefined expectations and processes. • When Efficiency is Important: For quickly integrating new hires into a standardized workflow. Individualized Socialization Tactics: • When Customization is Beneficial: For roles requiring personalized learning or in dynamic environments where flexibility is key. • When Individual Needs Vary: In cases where new hires have diverse backgrounds and experiences requiring tailored support. • When Building Strong Relationships is Critical: In roles where personal connections and networking are important for success. Organizations may use a mix of both approaches to balance the need for structured processes with the flexibility to accommodate individual differences. You might also want to mention to your class a study that asked students about their preference for each of the socialization tactics. They were asked to indicate the extent to which they would like each of the tactics to happen when they start a new job on a 7-point Likert scale. The results were as follows with higher scores indicating a preference for the institutionalization end of the scale: context tactics = 5.01; content tactics = 5.43; and social tactics = 5.46. These mean scores indicate a preference for institutionalized socialization tactics. The study also found a relationship between personality and socialization tactics preferences. Agreeableness was positively related to a preference for institutionalized tactics (context, content, and social); openness to experience was positively related to the social tactic; and proactive personality was negatively related to the social tactic. Source: Gruman, J. A., & Saks, A. M. (2011). Socialization preferences and intentions: Does one size fit all? Journal of Vocational Behavior, 79, 419-427. TEACHING NOTES FOR THE REALITY SHOCK CASE INCIDENT 1. Explain how Jason’s anticipatory socialization might be contributing to his disappointment and job attitudes. How might this situation have been prevented? Answer: Jason’s appears to have had a less than successful anticipatory socialization and as a result, he is having difficulty in the encounter stage of socialization. The main problem is that his expectations about the job are inflated and unrealistic. He expected things like challenging work, great co-workers, and training and development opportunities. Not only have these expectations not been met, but his early work experiences have been spent alone reading about the organization. Not surprisingly, he is feeling dissatisfied and thinking about quitting. This situation might have been prevented if he had developed more realistic expectations about the job either by asking others about the job or if he had received a realistic job preview. Of course, the situation might have also been prevented if the organization had shown more interest in Jason’s socialization. 2. Explain how unrealistic expectations and the psychological contract can help us understand Jason’s situation. Answer: Jason’s situation is a classic case of unrealistic expectations and the experience of unmet expectations and reality shock. He had expected things like great co-workers, training and development programs, and challenging work. However, his expectations for these things have not been realized. Thus, Jason’s expectations appear to have been inaccurate or just unrealistically high. Of course, it is also possible that he was told that he would receive all of these things as part of his psychological contract. That is, the organization might have promised him these things in return for obligations and promises he made to the organization. In this case, Jason is experiencing a breach of his psychological contract as his organization has failed to fulfill some of their promised obligations. As a result, Jason is feeling anger and betrayal that has resulted in negative attitudes and intentions to quit. 3. Comment on the use of socialization tactics in Jason’s socialization. What tactics do you think were used and what effect did they have on Jason? Answer: Jason’s socialization is primarily individualized in that it consists of individual, informal, random, variable, and disjunctive tactics. The final tactic is probably more investiture than divestiture. Clearly, this is not a formalized or structured socialization program. Jason is pretty much left on his own to sink or swim. He is not part of a group of new hires (collective tactic), he is not exposed to a formal learning experience (formal tactic), there does not appear to be a clear sequence of steps or stages of his socialization (sequential tactic), there is no time table for when he assumes his new role (fixed tactic), and he is not exposed to experienced organization members who can show him the ropes (serial tactic). It is not clear if his socialization is investiture or divestiture but there is no indication that it is divestiture. This socialization experience leaves Jason in a state of uncertainty and as indicated by the research on socialization tactics, he has formed negative attitudes about his job and the organization and is thinking about quitting. 4. Given Jason’s current situation, is there anything the organization can do to prevent him from quitting? What should Jason do? Is there anything the organization should do so other new hires don’t have the same experience as Jason? Answer: There are a number of things that the organization should do to help Jason and improve his socialization. Institutionalized socialization might be helpful here because Jason probably needs some structure to help him learn and make sense of the organization. This might involve some formal training programs with other new hires, working with more senior organizational members, and a timetable of some sort that indicates what type of working and training experiences he can expect in the short and long-term. Jason needs to begin working and interacting with other members of the organization and other new hires. He should be assigned to some tasks that over time become more interesting and challenging. It might also help if he is assigned a mentor who can assist with career and psychosocial functions. In the future, the organization should ensure that job applicants receive a realistic job preview and new hires attend an employee orientation program that introduces them to the organization and its members. Jason also needs to engage himself in some of the proactive socialization behaviours described in the chapter such as feedback seeking, information seeking, networking, general socializing, and relationship building. TEACHING NOTES FOR EMPLOYEE ENGAGEMENT AT MODERN APPLIANCES INC. CASE STUDY 1. Describe the culture at Modern Appliances. What values, norms, and behaviours are associated with the culture? How has the culture contributed to Modern’s success? Answer: As described in the case, the culture at Modern Appliances was very formal and bureaucratic with its very strict and comprehensive costs controls. Supplies were ordered centrally and the purchasing department negotiated very good prices and central supply contracts. This is a culture in which employees do only what they are supposed to do and they must follow the rules and formality associated with a culture that revolves around rules and formalization. The culture has clearly been a key to the success of Modern Appliances. The company has been in business for some 75 years and has sales in excess of $2 billion. As indicated in the case, one way that Modern has managed to stay competitive all these years was through its control systems. 2. What are some of the concerns that James Bradshaw has about Modern Appliances? To address these concerns, he believes that a change in culture is needed. Do you agree that the culture should be changed? Explain your answer. Answer: This case helps to show how changes in an organization’s environment can require changes in its strategy and culture. As indicated in the case, in recent years Modern Appliances has faced severe competitive pressure from a number of sources such as Chinese manufacturers that were learning to compete effectively outside their home markets and were importing products into Modern’s traditionally strong North American markets. European companies were also threatening with innovative designs. Bradshaw believed that Modern could compete with these new entrants if the workforce was fully engaged in creating a superior value proposition for its customers and then sustaining it through everything they did to manufacture the product and market it through their trade channels. Bradshaw was also concerned that Modern had become complacent with its position as the market leader. Design had become old fashioned and there were issues with costs and quality. Bradshaw also believed that management was to blame for employees that were not sufficiently engaged in understanding the business and in participating in the development of changes to the way that business was done. Bradshaw felt that costs were higher than they should be, there were too many low-value-added processes in the company, and people did not do the right things in the right way the first time. Costs were also driven up due to the need to re-work poor quality production. As a result, after-sales service and warranty costs were unacceptably high. Although a number of programs and interventions had been tried over the years to make changes, they had not resulted in a change in culture. In effect, people always went back to doing things the way they had always been done. All this suggests that real change is needed in the way that people think and behave. Thus, it is probably the case that real change in how things are done at Modern will require a change in the company’s culture and a change in the way things have been done for so long at Modern Appliances. 3. What kind of culture does Bradshaw want to create and how does it differ from the existing culture? Do you think this new culture will improve customer service? Explain your answer. Answer: The existing culture is very bureaucratic and mechanistic in terms of its control systems, work role specialization, formalization, and centralization. In his mind, Bradshaw wants to create a culture similar to what Jack Welch created at General Electric. As described in the case, Welch changed GE’s vast bureaucracy to an agile, fast-paced innovative company. Like Welch, he wants to speed up the way things are done and create a culture of change, innovation, and engagement among employees. Like Welch and GE, Bradshaw is aiming for a permanent culture change rather than just a series of “improvement events” which seems to have been the nature of previous interventions. The new initiative, ModernIzation, is a drive to change Modern Appliance’s traditional top-down, management-driven company to one in which every employee will be engaged in finding ways to achieve organizational goals. In terms of some of the material covered in other chapters of the text, what Bradshaw is suggesting is a change from a culture based on the classical view and bureaucracy to one that is more akin to the human relations movement (see Chapter 1) as well as a move away from a culture that is more mechanistic to one that is more organic (see Chapter 14). In effect, he wants to loosen the bureaucracy and excessive controls that have been part of the culture since its beginnings, to a culture that gives employees more input, control, autonomy, and decision making in how they perform their jobs and in the operation of the organization. In effect, Bradshaw wants to create a culture that empowers employees (see Chapter 9 on empowering leadership, and see Chapter 12 on empowerment). The new culture would focus on customer service. Bradshaw makes it clear in the September workshop that after-sales service is very important to the customer’s buying decision process. He further states that he wants to make Modern Appliances the best customer-service oriented company in the country and a great example of a customer service company. Being truly excellent in customer service is the basis for the new culture that Bradshaw wants to create. A culture that empowers employees to focus on providing excellent customer service should improve customer service at Modern Appliances. 4. Describe the ModernIzation workshop process. Do you think that this is an effective way to change the culture of an organization? Refer to the material in the chapter on contributors to culture and Exhibit 8.8 and describe what else might be required to change the culture of Modern Appliances. Answer: Bradshaw’s plan to change the culture is to have a series of workshops modelled on the GE Work-Out! Process. The idea is to commit to continue the workshops and to follow up on every recommendation. All employees in the company would be given an opportunity to participate in the workshops. This would be accompanied by a fundamental redefinition of the roles of managers, different measurement systems that would be aligned with a changed culture, and establishing and maintaining an engaged workforce which would be considered as important as achieving financial goals. Employees would be involved in identifying the need for change as well as recommending the specific actions to be taken. They would also be involved in driving the proposed changes through to completion. The role of managers would change from being overseers or bosses to trainers, coaches, problem solvers, process enablers, and resource acquirers. When Bradshaw presented his ideas to the management team, they were sceptical about whether such events would actually create a culture change and whether the changes would be profound or just cosmetic. In effect, their reactions are not all together unfounded. Clearly, changing an organization’s culture will require much more than workshops. While the workshops will certainly play an important role in getting employees more involved and engaged in the identification of problem areas and possible solution, much more will be required. As described in the text and in Exhibit 8.8, a change in culture will also require: Careful selection of new employees who will be suitable for the new culture of empowerment and customer service; a rigorous socialization process; training in the trenches so that employees learn their jobs and roles and understand how the organization works; rewards and promotions that reinforce the new culture so that employees who demonstrate excellent customer service in their performance are rewarded and recognized; exposure to core culture (continuously communication and reinforce the new culture’s focus on providing excellent customer service and provide guidance so that employees know how they should behave); organizational folklore (expose stories that reinforce the new culture; the story presented in the workshop about the poor customer service might also be used to demonstrate very bad customer service that is unacceptable); and role models (identify employees who have provided excellent customer service and whose actions and views are consistent with the new culture; they can serve as role models to other members of the organization). Thus, there is much more that must be done in order to continue to develop and maintain the new culture. After all, the old culture has been around for a very long time and some members of the organization will have a difficult time letting go of the tight control systems that they are used to and accepting the looser controls and empower employees to do things and make decisions that were once the responsibility of management. 5. Compare and contrast the current warranty process at Modern Appliances to the team’s recommendation for how to change the process. Describe how these two processes differ in terms of organizational values, norms, and employee behaviours. Do you think the new warranty process will contribute to a change in culture and improve customer service? Explain your answer. Answer: The current warranty process at Modern Appliances is very much a product of the bureaucratic and control oriented culture. Although the warranty itself was considered to be very good and in fact an industry standard, the problem is with the implementation of the warranty process was a major source of customer dissatisfaction. This was due to the warranty claims process being very time-consuming and gave the impression that Modern did not care about the customer experience. In effect, the warranty process was very much a product of the culture. It was bureaucratic and time-consuming and it involved many steps and checks along the way which resulted in a process that is very long and upsetting to customers (see Exhibit 2, The Warranty System at the end of case in the text, page 302). The process required a customer to contact a customer service representative at Modern who then passed on the information to the customer service manager. The customer service manager then dispatches a customer service technician who is then able to fix the problem. When a customer reports food that has been spoiled, the customer service technician records it and then hands it over to the customer service manager. The information is then keyed into the computer system and a copy is sent to the customer service representative who then must call the customer to check on the claim for spoiled food. If there is a discrepancy between the report filed by the technician and the customer’s report, a meeting is held with the customer service manager and the customer service technician. They then agree on the correct figure. The customer service representative then contacts the customer to acknowledge the claim and that compensation will be provided. An electronic form is then sent to accounts payable at Modern which can take some time before it is acted on. An accounts payable clerk then sends a cheque requisition to the accounts payable manager who must then sign the requisition which will then lead to a cheque being sent to the customer. As the example in the case demonstrates, it can take months before the customer is compensated. The result of this very bureaucratic and time-consuming process is bad publicity about Modern’s warranty process and terrible customer service. The process is full of checks, controls, and approvals, and far too many people are involved all of which means that it takes much longer than it should. The team’s recommendation for how to change the warranty process would remove all of the checks and controls and speed up the process. It would also empower the customer service technician to make a decision on the customer’s claim and administer a cheque on the spot. The customer service representatives would also be empowered to dispatch the service technicians who would be issued chequebooks and empowered to settle any claim under $300. This will not only substantially reduce the time it takes to settle a claim, but it will also lower the claim amount because there will be less time between the customer reporting the problem and the problem being fixed which means that the amount of the claim due to spoiled food will be less. Most importantly, the customer will be satisfied at the quick response time and this will prevent the badmouthing of Modern’s and its terrible warranty process. A key difference between the old and proposed warranty process is that the new process would empower employees to make decisions that will directly affect the customer and improve the process. This will give employees more control and autonomy in how they perform their job and it will also substantially shorten the time it takes to settle a warranty claim. The result will be a much happier and more satisfied customer. The new warranty process is also consistent with the new culture that Bradshaw is seeking – one that focuses on excellent customer service and gives employees more power, involvement, and engagement in their work. 6. What are some of the assets and liabilities of Modern Appliances existing culture and the proposed culture? Answer: As described in the text, the assets of strong cultures include coordination, conflict resolution, and financial success. The liabilities include resistance to change, culture clash, and pathology. The existing culture, with its strict and comprehensive cost controls, has helped the company obtain very good prices and central supply contracts. The control systems have helped the company to stay competitive. Thus, in terms of the assets, the existing culture has helped Modern Appliances be financially successful and probably also helped with coordination and conflict resolution. In terms of liabilities, the existing culture will be difficult to change and in fact past attempts to make changes has not resulted in a changed culture as people always went back to doing things the way they had always done them. The proposed culture with its emphasis on customer service should provide the company with a new competitive advantage and pay off in terms of financial success especially if the culture supports the mission, strategy, and goals of the company. The benefits of coordination and conflict resolution might take some time to be realized given the need to adjust to a change in managerial roles and responsibilities and the empowerment of employees. However, over time these things should work themselves out and employees will know that coordination and conflict resolution should have its basis in providing customers with excellent service. In terms of liabilities, there do not seem to be any immediate liabilities associated with a new culture that empowers employees to provide great customer service. FOLLOW-UP Additional material provided by the case author indicates that the ModernIzation initiative was deemed a success in stimulating change at Modern. They continued to run the workshops with each one producing 10 to 20 initiatives. Many people were involved in the program and in some form of change and as a result, change became “the new normal.” It broke new ground in terms of empowering employees to make change. Employees felt much more empowered. There were also a number of minor problems and negative consequences. For example, Roger Allenby, the vice-president of finance quit. He felt that Modern was moving in a direction that made him feel uncomfortable. An unfortunate incident occurred when five service technicians were found to be engaged in a fraudulent scheme on the warranty issue. They organized a ring of friends to file false claims and defrauded the company of about $200,000 before the scheme was discovered. The service technician supervisor had less to do and so his job was changed to focus less on supervising and more on training his service technicians to provide better service. After the service technicians were empowered to settle warranty claims, some of the technicians felt uncomfortable settling claims because they did not know how much food costs. A series of seminars on food cost were then provided to the service technicians. Source: Richard Ivey School of Business. Case 9B07C037 by Jeffrey Gandz. 2007. Employee Engagement at Modern Appliances Inc. (C). ADDITIONAL CASE STUDY: CHANGING THE CULTURE AT HOME DEPOT Part 1 Home Depot is one of the business success stories of the past quarter century. Founded in 1978 in Atlanta by Bernie Marcus and Arthur Blank, the company grew to more than 1100 big-box stores by the end of 2000; it reached the $40 million revenue mark faster than any retailer in history. The company’s success stemmed from several distinctive characteristics, including the warehouse feel of its orange stores, complete with low lighting, cluttered aisles, and sparse signage; a “stack it high, watch it fly” philosophy that reflected a primary focus on sales growth; and extraordinary store manager autonomy, aimed at spurring innovation and allowing managers to act quickly when they sensed a change in local market conditions. Today, Home Depot is the second-largest retailer in the United States after Wal-Mart. Home Depot’s culture, set primarily by the charismatic Bernard Marcus (known among employees as Bernie), was itself a major factor in the company’s success. It was marked by an entrepreneurial high-spiritedness and a willingness to take risks; a passionate commitment to customers, colleagues, the company, and the community; excellent customer service and respect for all people; and an aversion to anything that felt bureaucratic or hierarchical. The company’s philosophy of customer service – “whatever it takes” – emphasizes the importance of cultivating a relationship with customers. The company structure was viewed as an inverted pyramid with stores and customers at the top and senior management on the bottom. Long-time Home Depot executives recall the disdain how store managers used to view directives from headquarters. Because everyone believed that managers should spend their time on the sales floor with customers, company paperwork often ended up buried under piles on someone’s desk, tossed in a wastebasket, or even marked with a company-supplied “B.S.” stamp and sent back to the head office. Such behaviour was seen as a sign of the company’s unflinching focus on the customer. “The idea was to challenge senior managers to think about whether what they were sending out to the stores was worth store managers’ time,” says Tom Taylor, who started at Home Depot in 1983 as a parking lot attendant and today is executive vice-president for merchandising and marketing. There was a downside to this state of affairs, though. Along with arguably low-value corporate paperwork, an important store safety directive might disappear among the unread memos. And while their sense of entitled autonomy might have freed store managers to respond to local market conditions, it paradoxically made the company as a whole less flexible. A regional buyer might agree to give a supplier of, say, garden furniture, prime display space in dozens of stores in exchange for a price discount of 10 percent—only to have individual store managers ignore the agreement because they thought it was a bad idea. And as the chain mushroomed in size, the lack of strong career development programs was leading Home Depot to run short of the talented store managers on whom its business model depended. All in all, the cultural characteristics that had served the retailer well when it had 200 stores started to undermine it when Lowe’s began to move into Home Depot’s big metropolitan markets from its small-town base in the mid-1990s. Individual autonomy and a focus on sales at any cost eroded profitability, particularly as stores weren’t able to benefit from economies of scale that an organization the size of Home Depot should have enjoyed. When Robert Nardelli arrived at Home Depot in December 2000, the deck seemed stacked against the new CEO. He had no retailing experience and, in fact, had spent an entire career in industrial, not consumer, businesses. His previous job was running General Electric’s power systems division, whose multimillion-dollar generating plants for industry and governments were a far cry from $10 light switches for do-it-yourselfers. Nardelli was also taking over what seemed to be a wildly successful company with a 20-year record of growth that had outpaced even Wal-Mart—but with latent financial and operational problems that threatened its continued growth, and even its future, if they weren’t quickly addressed. Nardelli’s arrival at Home Depot came as a shock. No one had expected that Marcus (then chairman) and Arthur Blank (then CEO) would be leaving anytime soon. Most employees simply couldn’t picture the company without these father figures. And if there was going to be change at the top of this close-knit organization, in which promotions had nearly always come from within, no one wanted, as Nardelli himself acknowledges, an outsider who would “GE-ize their company and culture.” To top it off, Nardelli’s exacting and tough-minded approach, which he learned at General Electric, set him on a collision course with the freewheeling yet famously close-knit culture fostered by his predecessors, Home Depot’s legendary co-founders, Marcus and Blank. It was this culture that Nardelli had to reshape if he hoped to bring some big-company muscle to the entrepreneurial organization (which, with revenue of $46 billion in 2000, was sometimes referred to as a “$40 billion start-up”) and put the retailer’s growth on a secure foundation. Nardelli laid out a three-part strategy: enhance the core by improving the profitability of current and future stores in existing markets; extend the business by offering related services such as tool rental and home installation of Home Depot products; and expand the market, both geographically and by serving new kinds of customers, such as big construction contractors. To meet his strategy goals, Nardelli had to build an organization that understood the opportunity in, and the importance of, taking advantage of its growing scale. Some functions, such as purchasing (or merchandising), needed to be centralized to leverage the buying power that a giant company could wield. Previously autonomous functional, regional, and store operations needed to collaborate—merchandising needed to work more closely with store operations, for instance, to avoid conflicts like the one over the placement of garden furniture. This would be aided by making detailed performance data transparent to all the relevant parties simultaneously so that people could base decisions on shared information. The merits of the current store environment needed to be re-evaluated; its lack of signage and haphazard layout made increasingly less sense for time-pressed shoppers. And a new emphasis needed to be placed on employee training, not only to bolster the managerial ranks but also to transform orange-aproned sales associates from cheerful greeters into knowledgeable advisers who could help customers solve their home improvement problems. As Nardelli likes to say, “What so effectively got Home Depot from zero to $50 billion in sales wasn’t going to get it to the next $50 billion.” The new strategy would require a careful renovation of Home Depot’s strong culture. Shortly after arriving, Nardelli hired an old colleague from GE, Dennis Donovan, as his head of human resources. By placing a trusted associate in a position known for its conspicuous lack of influence in most executive suites—and by making him one of Home Depot’s highest-paid executives—Nardelli signalled that changing the culture would be central to getting the company where it needed to go. Before reading Part 2 of the case, answer the following questions: 1. Does Home Depot need to change its culture? What are the consequences it faces if it does or does not change the culture? Answer: Yes, Home Depot does need to change its culture. Consequences of Changing the Culture: • Positive Outcomes: • Enhanced Profitability: A shift towards more centralized operations and improved employee training could enhance profitability and operational efficiency. • Improved Scale Utilization: Centralized functions and better coordination could leverage the company's scale for better buying power and operational effectiveness. • Better Customer Service: Training and developing employees to provide knowledgeable advice could improve customer satisfaction and loyalty. • Increased Competitiveness: Aligning with contemporary retail practices and better adapting to market changes could help Home Depot remain competitive, especially against rivals like Lowe's. • Negative Outcomes: • Employee Resistance: Long-time employees accustomed to the old culture might resist changes, leading to morale issues and potential conflicts. • Loss of Core Values: The shift might dilute the company’s original values and entrepreneurial spirit that contributed to its early success. Consequences of Not Changing the Culture: • Operational Inefficiencies: Continued autonomy and lack of central coordination could lead to inefficiencies and missed opportunities for economies of scale. • Reduced Market Competitiveness: Home Depot might struggle to compete effectively with rivals if it fails to modernize its practices. • Talent Shortages: The lack of strong career development programs could result in a shortage of skilled managers, impacting the company’s growth and operational success. 2. Describe Home Depot’s culture and the role it has played in the company’s success. How should the culture change? What norms and patterns of behaviour need to be developed? How should the new culture differ from the old culture? Answer: Home Depot’s Culture: • Entrepreneurial Spirit: Emphasized autonomy and risk-taking. • Customer-Centric: Focused intensely on customer service with a “whatever it takes” mentality. • Decentralized: Store managers had significant autonomy, and there was little regard for bureaucratic processes. • Inverted Pyramid: Stores and customers were prioritized over senior management. Role in Success: • Rapid Growth: The culture fostered innovation and fast decision-making, contributing to the company’s rapid expansion and early success. • Customer Loyalty: Strong focus on customer service created a loyal customer base and differentiated Home Depot from competitors. How the Culture Should Change: • Increase Centralization: Introduce more structured and centralized processes to improve coordination and efficiency. • Enhance Training: Develop comprehensive training programs to improve employee expertise and service quality. • Improve Communication: Implement better communication channels and transparent performance data sharing to align store and corporate objectives. Norms and Patterns of Behavior to Develop: • Collaborative Approach: Encourage collaboration between centralized functions and store operations. • Accountability: Develop a culture of accountability for following centralized decisions and procedures. • Professional Development: Establish clear career development paths and performance standards. New Culture vs. Old Culture: • More Structured: Move from a highly decentralized to a more structured and coordinated approach. • Balanced Autonomy: Maintain a level of autonomy but within a framework that supports organizational goals and consistency. • Professional Growth Focus: Shift from informal, ad-hoc development to structured training and career advancement. 3. Do you agree with the board’s decision to hire an outsider as the new CEO, especially someone who has worked in a company in a different industry and with a very different culture? What are the advantages and disadvantages of this? Answer: Agreement: • Advantages: • Fresh Perspective: An outsider can bring new ideas and perspectives that might address underlying problems and introduce innovative practices. • Experience in Scale: Nardelli’s experience at General Electric in managing large-scale operations can be beneficial for leveraging Home Depot’s growing scale. • Change Agent: Outsiders can be more effective in driving significant cultural and operational changes without being hindered by existing biases. • Disadvantages: • Cultural Fit Issues: An outsider may face challenges in understanding and integrating with Home Depot’s existing culture, potentially leading to resistance. • Risk of Cultural Clash: The differences between the entrepreneurial culture of Home Depot and the more structured approach of General Electric could create conflict and disrupt existing employee dynamics. • Employee Morale: Employees might feel disconnected or threatened by the appointment of an outsider, impacting morale and engagement. 4. What are some of the risks and obstacles that Nardelli faces in trying to change the culture of Home Depot? What should he do to manage them? Answer: Risks and Obstacles: • Resistance to Change: Employees and managers accustomed to the old culture may resist new policies and procedures. • Loss of Core Values: There is a risk of losing the entrepreneurial spirit and customer-centric values that contributed to Home Depot’s initial success. • Implementation Challenges: Introducing new systems and processes could face practical challenges and resistance from employees who are used to the old ways. Strategies to Manage Risks: • Communicate Clearly: Articulate the reasons for change and how they will benefit the organization and its employees. • Involve Key Stakeholders: Engage influential employees and managers in the change process to gain their support and address their concerns. • Gradual Implementation: Introduce changes incrementally to allow employees to adapt and to mitigate the risk of overwhelming the organization. • Highlight Benefits: Focus on demonstrating the tangible benefits of the new culture, such as improved operational efficiency and career development opportunities. 5. How should Nardelli change the culture of Home Depot? What does he have to do, and how should he proceed? Answer: Steps to Change the Culture: • Assess the Current Culture: Conduct a thorough assessment to understand the existing culture and identify areas that need change. • Define the New Culture: Clearly define the new cultural values and norms that align with Home Depot’s strategic goals. • Communicate Vision: Share the vision for cultural change with all employees to build understanding and buy-in. • Implement Structured Changes: Introduce structured changes such as centralized processes, new training programs, and revised performance metrics. • Foster Employee Engagement: Create opportunities for employees to engage with and contribute to the cultural transformation process. • Monitor and Adjust: Continuously monitor the implementation of cultural changes and make adjustments based on feedback and outcomes. How to Proceed: • Leadership Alignment: Ensure that senior leaders and managers are aligned with the new cultural vision and are role models for the desired behaviors. • Employee Involvement: Involve employees at all levels in the change process to foster a sense of ownership and commitment. • Support Systems: Provide support systems such as coaching, mentoring, and feedback mechanisms to help employees adapt to the new culture. By taking these steps, Nardelli can effectively transition Home Depot’s culture to better support its strategic objectives while maintaining the core values that have contributed to its past success. Part 2 On January 3, 2007 Home Depot announced that the company and Nardelli had “mutually agreed” that Nardelli would resign. Dennis Donovan tendered his resignation on February 1, 2007. Although Nardelli’s departure was related to his compensation and the board’s desire to reduce his 2006 pay package, there is much more to this story and his departure. Much of it has to do with what he tried to do to the Home Depot culture. According to one writer, “his failure was rooted in his decision to take a hammer to the people-oriented culture that was the essence of the Home Depot experience.” The old Home Depot was staffed with experts who were always ready and willing to help customers. It was this personal touch that Nardelli changed. He got rid of many employees and replaced full timers with part time staff to cut costs. As a result, Home Depot’s great customer service became a place where it was hard to find help. His centralization of purchasing made the company more efficient but it eroded the entrepreneurial culture. Store managers were measured on an array of metrics such as the average hourly labour rate, none of which were related to customer service. Stores became dirty and employees surly and scarce. Some claim that what Nardelli did was ruin the Home Depot culture. People now question whether Nardelli was the right person for the job given his background at GE where front line staff are not as important. By all accounts, Nardelli seems to have GE-ized the Home Depot service culture. It has been reported that upon hearing the news of Nardelli’s departure, store workers were celebrating. This is not likely to have caused Nardelli much concern as he negotiated a $210 million retirement package upon his departure. Never mind that company earnings fell 3.1 percent in the third quarter of 2006 to $1.5 billion. Following Nardelli’s resignation in January 2007, Frank Blake became chairman and CEO of Home Depot. Blake joined Home Depot in 2002 as executive vice president, Business Development and Corporate Operations. Tim Crow replaced Dennis Donovan as vice president of human resources following Donovan’s resignation. Crow has been with Home Depot since 2002 first as vice president of Organization, Talent, and Performance Systems and then senior vice president. One of his most critical tasks will be to revive the Home Depot culture of strong customer service. This will not be easy. Over the last several years the company that was once famous for its helpful employees, has become the subject of blog rants about bad experiences with disengaged and hard to find employees. Home Depot fell eight points in seven years on the University of Michigan’s American Customer Satisfaction index, the largest drop for any retailer in the index. Crowe says he is focused on three priorities: creating a sense of ownership among Home Depot’s 330,000 associates; making sure they have the product knowledge that customers want; and aligning rewards and recognition programs to boost morale. He has introduced a new “Success Sharing” program that gives everyone in a store a cash bonus if they achieve their sales plans. The “Homer Badges” are given to associates who are recognized for “living Home Depot values.” Associates who earn three badges get a cash bonus. The “Aprons on the Floor” program invites employees to develop ways to spend more time working with customers. The company held a luncheon for the first winners of the program and each team member received a badge and a $100 gift card. 6. What do you think about the changes that Nardelli made to Home Depot? Why wasn’t he more successful? What else should he have done? What should he have not done? Answer: Nardelli's Changes: • Cost-Cutting Measures: Replacing full-time employees with part-time staff and centralizing purchasing were intended to reduce costs and increase efficiency. • Performance Metrics: Focused store managers on metrics such as labor rates rather than customer service. Reasons for Limited Success: • Cultural Clash: Nardelli's changes undermined the customer-centric culture that was integral to Home Depot's success. His cost-cutting and efficiency measures conflicted with the company's ethos of personal service and expertise. • Employee Morale: The reduction in full-time staff and the focus on cost metrics led to a decline in service quality and employee satisfaction, resulting in disengaged staff and poor customer experiences. What Nardelli Should Have Done: • Balance Efficiency with Service: While centralizing operations to achieve efficiency, Nardelli should have maintained a focus on customer service and employee engagement. • Engage Employees: Involve employees in the change process to ensure they felt valued and understood the rationale behind changes. What Nardelli Should Have Avoided: • Excessive Cost-Cutting: Replacing full-time employees with part-time staff compromised service quality, which was crucial to Home Depot’s competitive advantage. • Ignoring Culture: Failing to respect and adapt the existing culture led to significant backlash and diminished employee morale. 7. What do you think of Tim Crowe’s three priorities and some of the new programs he has introduced? What effect will they have on employees and the culture? Answer: Tim Crowe’s Priorities and Programs: • Sense of Ownership: Creating a sense of ownership among associates by involving them in decision-making and recognizing their contributions. • Product Knowledge: Ensuring employees have the knowledge needed to assist customers effectively. • Rewards and Recognition: Aligning rewards and recognition programs to boost morale, such as the “Success Sharing” program and “Homer Badges.” Effect on Employees and Culture: • Increased Engagement: By involving employees more and providing recognition and rewards, Crowe’s programs are likely to enhance employee engagement and morale. • Improved Service: Emphasizing product knowledge and customer service is expected to improve the quality of interactions with customers and restore Home Depot’s reputation for excellent service. • Cultural Revival: The new programs aim to revive the customer-centric culture that was weakened during Nardelli’s tenure, potentially leading to a more positive and supportive work environment. 8. Compare and contrast Nardelli’s initiatives to the new priorities and programs being implemented by Tim Crowe. How are they different and what are the implications of them for employees and the culture? Answer: Nardelli’s Initiatives: • Cost-Cutting Focus: Emphasized efficiency and cost reduction, including reducing full-time staff and centralizing operations. • Metrics-Driven: Measured store performance using metrics unrelated to customer service. Tim Crowe’s Initiatives: • Employee-Centric: Focuses on rebuilding the employee-centric culture by improving ownership, knowledge, and recognition. • Customer-Focused: Introduces programs to enhance service quality and employee engagement. Differences and Implications: • Focus Shift: Nardelli’s initiatives were centered on efficiency and cost-cutting, which led to service decline and employee dissatisfaction. In contrast, Crowe’s focus is on employee engagement and service quality, which aims to restore the company’s customer-centric culture. • Employee Morale: Nardelli’s approach led to poor morale due to perceived disregard for employees. Crowe’s programs, with their emphasis on recognition and involvement, are likely to improve morale and employee satisfaction. • Cultural Impact: Nardelli’s changes eroded the existing culture, while Crowe’s initiatives aim to rebuild and strengthen it, aligning more closely with Home Depot’s traditional values. 9. What should the new president and CEO Frank Blake and the new human resources vice president Tim Crow do? Should they focus on culture? How should they proceed? Answer: Focus on Culture: • Yes, Culture Should be a Focus: Given the impact of Nardelli’s changes on Home Depot’s culture and employee morale, it is crucial for Blake and Crowe to prioritize cultural revitalization. Steps for Blake and Crowe: • Assess Current Culture: Evaluate the current state of the culture and identify key areas that need reinforcement or change. • Communicate Vision: Clearly communicate the vision for cultural renewal to all employees, highlighting the importance of returning to customer-centric values. • Reinforce Core Values: Reintroduce and emphasize the core values of customer service and employee respect that were central to Home Depot’s success. • Support Programs: Continue and expand programs like “Success Sharing” and “Homer Badges” to enhance employee engagement and performance. • Provide Training: Implement comprehensive training programs to improve product knowledge and customer service skills among employees. Proceeding with the Cultural Renewal: • Engage Leadership: Ensure that senior leaders are aligned with and actively support the cultural renewal efforts. • Employee Involvement: Involve employees at all levels in the change process to build buy-in and address any concerns. • Monitor Progress: Regularly assess the effectiveness of cultural initiatives and make adjustments as needed to ensure they are achieving the desired outcomes. 10. What does this case say about the role of founders and leadership for organizational culture? What does it say about the effect of culture on employees and organizations? What does it say about building, maintaining, and changing an organization’s culture? Answer: Role of Founders and Leadership: • Founders’ Impact: Founders play a crucial role in shaping the initial culture of an organization, which can become deeply ingrained and influential. Their vision and values often set the tone for organizational practices and employee behavior. • Leadership’s Role: Leadership transitions can significantly impact organizational culture. Leaders must navigate the balance between maintaining core values and implementing necessary changes. Effect of Culture on Employees and Organizations: • Employee Engagement: A strong, positive culture can lead to high employee engagement, satisfaction, and retention. Conversely, a negative or misaligned culture can result in disengagement, high turnover, and poor performance. • Organizational Success: Organizational culture influences overall success by affecting employee behavior, customer interactions, and operational effectiveness. Building, Maintaining, and Changing Culture: • Building Culture: Establishing a strong culture requires clear values, consistent practices, and active leadership involvement from the outset. • Maintaining Culture: Maintaining culture involves reinforcing core values, recognizing employee contributions, and ensuring that practices align with the cultural vision. • Changing Culture: Changing culture requires careful planning, clear communication, and gradual implementation to avoid resistance and disruption. Leaders must actively manage the change process and engage employees to align them with the new cultural direction. This case underscores the importance of aligning leadership actions with organizational culture and highlights the complex interplay between culture and organizational effectiveness. Sources: Based on Charan, R. (2006). Home Depot’s blueprint for culture change. Harvard Business Review, 84(4), 60–70; Hollon, J. (2007, January 15). Nardelli’s tear-down job. Workforce Management, 86(1), 34; Ruiz, G. (2007, February 12). Home Depot’s new HR leader faces tall order.Workforce Management, 86(3), 4; Reingold, J. (2008, September 29). Home Depot’s total rehab. Fortune, 159; Marquez, J. (2008, July 14). Home remodel. Workforce Management, 87(12), 1, 24, 26, & 28; www.homedepot.com. TEACHING NOTES FOR CHANGING THE CULTURE AT HOME DEPOT CASE STUDY This case provides an excellent example of why organizations sometimes need to change their culture, the difficulty of culture change, and how to proceed in implementing a cultural change program. In relating the case to the material in the chapter, you might want to point out how Home Depot is a good example of the strong culture concept in that there were very intense and pervasive beliefs, values, and assumptions that are supported by the majority of members throughout the organization. It also demonstrates the assets of strong cultures with respect to the old Home Depot culture – coordination, conflict resolution, and of course financial success. And it also demonstrates an important liability of a strong culture – resistance to change. A key point here is how the strategy of an organization can change in response to external pressures and a strong culture that was appropriate for past success might not support the new strategy. This is clearly the case with respect to Home Depot. It is also the case that the strong culture was very resistant to change. Along these lines, you might want to refer to some of the material in Chapter 16 on organizational change. In particular, the material on the change process (unfreezing, change, and refreezing) is especially relevant as is the section on issues in the change process. You might want to discuss the causes of resistance and dealing with resistance and how they played out at Home Depot. This case also demonstrates the role of founders and leaders in building, maintaining, and changing organizational culture as well as what happens when a change in culture has some negative effects on employees and the organization. The first part of this case and teaching note are based on an article by Ram Charan (2006, April; Home Depot’s Blueprint for Culture Change, Harvard Business Review, 84(4), 60-70). For more detail, refer to the article. Part 1 Questions 1. Does Home Depot need to change its culture? What are the consequences it faces if it does or does not change the culture? Answer: For starters, Home Depot’s growth has slowed and it is experiencing financial and operational problems that threaten continued growth and its future if they are not addressed. Add to this a culture that worked when the company was small and growing but is no longer functional. As the company has matured and grown in size along with changes in the environment that have resulted in new competitors, the company’s culture is no longer appropriate. As indicated in the case, the cultural characteristics that have served the company well when it had 200 stores has started to undermine it. Core aspects of the culture such as individual autonomy and a focus on sales at any cost have eroded profitability. Changing the culture is key to moving the company ahead and preventing it from losing its competitiveness. The culture needs to change in order for the company’s growth to continue and for its very survival. As Nardelli is quoted in the case, “What so effectively got Home Depot from zero to $50 billion in sales wasn’t going to get it to the next $50 billion.” Home Depot needs a new strategy and a new strategy requires a new and strong culture. According to Ram Charan, author of the article, the last five years has seen the company’s performance put on a stable footing as it continued to enjoy robust and profitable growth and a platform has been built to generate future growth. Most importantly, he notes that “these changes in the business would not have happened without a real and observable change in the culture.” However, as indicated in the chapter, strong cultures can be resistant to change and changing the culture at Home Depot is likely to encounter considerable resistance to change. 2. Describe Home Depot’s culture and the role it has played in the company’s success. How should the culture change? What norms and patterns of behaviour need to be developed? How should the new culture differ from the old culture? Answer: Home Depot’s culture was set primarily by one of its founders, Bernard Marcus and has been a major factor in the company’s success. The culture is marked by an entrepreneurial high-spiritedness and a willingness to take risks; a passionate commitment to customers, colleagues, the company, and the community; and an aversion to anything that felt bureaucratic or hierarchical. In such a culture, store managers view directives from headquarters with disdain. It was believed that managers should spend their time on the sales floor with customers. Company paperwork was ignored in the face of an unflinching focus on the customer. Managers assumed a sense of entitled autonomy in which they were free to respond to local market conditions. The old culture was effective for a new company. However, as the company has grown and matured, some of these aspects of the culture have become problematic and need to change. Ignoring paperwork and company directives is a problem. Individual autonomy can create problems and create inconsistency throughout the organization, and prevent the company from reaping the benefits from economies of scale that a large company like Home Depot should be acquiring. So what changes are required? First, there was a desire to build on the best aspects of the existing culture such as the passionate commitment to the customer and to the company. However, there was also a need for people to rely on data rather than intuition and to assess business and marketplace conditions. There was also a need for people to coordinate their efforts and to be accountable for meeting companywide financial and other targets. People also had to deliver not just on sales growth but also other components of business performance that drive profitability. The new culture needs focus on metrics, data, accountability, collaboration, and centralization – all of the things that were not part of the old culture. 3. Do you agree with the board’s decision to hire an outsider as the new CEO, especially someone who has worked in a company in a different industry and with a very different culture? What are the advantages and disadvantages of this? Answer: For those in the company, it came as a shock that an outsider was the new CEO given that promotions were usually from within the company. Bringing in an outsider from a very different company was a big surprise. The main advantage of this is that it brings a new perspective and approach to the company. It offers the opportunity for new ideas and insights and real change that only an outsider can bring. It would be much more difficult for an insider who is part of the existing culture to actually change it. The downside of course is the resistance to the new CEO and resistance to change. Employees are more likely to resist a change that is initiated by an outsider than somebody inside the firm who has a history and experience with Home Depot. In fact, it was the Home Depot board that decided that a seasoned manager with the expertise to drive continued growth needed to be brought in to run what had become a large business. 4. What are some of the risks and obstacles that Nardelli faces in trying to change the culture of Home Depot? What should he do to manage them? Answer: The most likely risk and obstacle is resistance to change and that is exactly what Nardelli confronted. Resistance to change was fierce, especially from managers. In fact, most of the top executive team left during Nardelli’s first year. But even a year and a half after Nardelli took over there was still significant opposition to the changes he was making. Part of the problem was that people never had a chance to grieve for the old Home Depot and they were not prepared for the change and did not fully understand why it was necessary. To deal with the resistance, Nardelli made efforts to get people to see for themselves whey the new strategy and culture made sense. He also used a number of tools that were designed to ingrain the new culture into the organization including a five-day learning forum for district and store managers. Participants were asked to put themselves in Nardelli’s shoes and think about what they would do. Training programs have also been implemented in an effort to get and sustain employee commitment to the new culture. Over time, people’s attitudes slowly began to change. 5. How should Nardelli change the culture of Home Depot? What does he have to do, and how should he proceed? Answer: Nardelli used a variety of approaches and tools to change the culture. Through his own personal leadership he mixed encouragement with ultimatum in order to foster cultural norms like accountability through his own behaviour. And as indicated in the case, he also brought with him an old colleague from GE, Dennis Donovan, to head human resources. This sent a strong signal throughout the organization that changing the culture was key to getting the company to where it needed to go. He also used a number of specific tools to change the culture. According to Ram Charan, “Home Depot’s experience shows – in perhaps the best example I have seen in my 30-year career – that a cultural transition can be achieved systematically, even under less than favourable conditions, not simply through the charisma of the person leading the change but through the use of mechanisms that alter the social interactions of people in the organization.” It was these mechanisms or tools that changed people’s behaviour, beliefs, social interactions, and the nature of their decision making. The mechanisms fall into the following categories: 1. Metrics which describe what the culture values and make clear what people will be held accountable for and the new cultural priorities. Common metrics were introduced to produce company wide data in areas that had not previously been measured. The metrics showed employees that things were not going as well as people believed. They also made clear and reinforced the collaborative behaviour and attitudes that were part of the new culture. Subjective performance reviews were replaced with a standard, company wide performance management process that used quantitative criteria. Metrics were also used so people would have a better understanding of the business and be able to see the relationship among revenue, margins, inventory turns, cash flow and other measures from store to store and region to region. The company-wide metrics also encouraged collaboration and discussions about how to improve performance. 2. Processes which change how work is done and integrate the new culture into the organization. One of the first things Nardelli did was to institute a two-hour Monday morning conference call with the top 15 or so executives. The executives provide reports on the previous week’s activities. Nardelli asks questions each week and holds people accountable for what they said they planned to do the previous week. This helped to instill a culture of cooperation and accountability. On Monday afternoons a video cast goes to Home Depot stores. It focuses on the week ahead and creates a link between each store’s activities and the bigger picture. This is a shift from the old culture where memos from the head office were ignored. 3. Programs which generate support for and provide the first demonstration of the new culture’s effectiveness. Learning forums and leadership training programs were set up to help people understand the need for change and the new culture. Employees affected by a new process or system were included in the development team and provided input into the new process (e.g., bar code system to keep track of incoming goods at stores). 4. Structures which provide a framework for the new culture to grow by changing the where and how decisions are made. The decentralized approach to purchasing that involved nine divisional purchasing offices which was part of the old Home Depot’s cohesive culture had to be centralized. To make the change, 60 top executives from the nine regional divisions met at headquarters on a Saturday to discuss the details of the new purchasing function which was to be unveiled to employees, suppliers, and the media the following Monday. This signaled a major cultural change to a more centralized organization. Part 2 Questions 6. What do you think about the changes that Nardelli made to Home Depot? Why wasn’t he more successful? What else should he have done? What should he have not done? Answer: Some of the changes that Nardelli made were clearly called for given the company’s size and new competition from Lowe’s. For example, the individual autonomy at the store level and a focus on sales at any cost meant that the company could not benefit from economies of scale. Thus, the centralization of purchasing was necessary to leverage buying power and it made the company more efficient. In addition, the once autonomous functional, regional, and store operations needed to collaborate to avoid conflicts. A greater emphasis on employee training to ensure that employees had the knowledge to help customers solve home improvement problems was also a positive change. However, as indicated in the case, taking a “hammer” to the people-oriented culture was not in the best interests of the company. Clearly, key to the success of Home Depot was its close-knit culture and excellent customer service. Some have said that what Nardelli did was GE-ize the company culture. It seems that Nardelli went too far in trying to change Home Depot and in the process he changed the very culture that was key to its uniqueness and success. Replacing the loyal and committed full-time employees with part-time staff also hurt the company and its ability to provide the great customer service that it had become known for. As indicated in the case, some have said that Nardelli ruined the Home Depot culture. A drop in customer satisfaction suggests that the changes that Nardelli made did hurt customer service. Thus, his changes might have improved efficiency and lowered costs, but it hurt employee morale and customer service, two key things that he neglected. 7. What do you think of Tim Crow’s three priorities and some of the new programs he has introduced? What effect will they have on employees and the culture? Answer: One of Tim Crow’s most critical tasks is to restore the Home Depot culture of excellent customer service. He plans to do this by focusing on three priorities: creating a sense of ownership among Home Depot employees, making sure they have the product knowledge that customers want, and aligning rewards and recognition programs to boost morale. These are important changes because they focus on employees and in particular aligning employee values and goals with those of the organization. Employees are being told that they are important and they are being rewarded and recognized for “living Home Depot values.” The Aprons on the Floor program encourages employees to spend more time with customers, something that is important for bringing back the old culture of service excellence. Thus, these new programs will help to shift the culture back toward a focus on the important role of employees in providing excellent customer service. 8. Compare and contrast Nardelli’s initiatives to the new priorities and programs being implemented by Tim Crow. How are they different and what are the implications of them for employees and the culture? Answer: Nardelli’s initiatives did not focus on employees or customers. He focused more on efficiency, centralization, and metrics and did not give enough attention to front-line employees who were key to the success of the company and for providing the service that customers came to depend on. By contrast, Crow is implementing programs that focus on employee morale, attitudes, and behavour by providing recognition and rewards to employees who support the company’s values. The emphasis on employees through training and recognition and improving relationships with customers is likely to improve employee attitudes and customer satisfaction. It will also help to shift the culture more towards the old Home Depot that was more people-oriented. 9. What should the new president CEO Frank Blake and the new human resources vice-president Tim Crow do? Should they focus on culture? How should they proceed? Answer: It is pretty clear in the case that what Frank Blake and Tim Crow want to do is get employees more engaged and involved in the Home Depot experience by putting customers first. They are trying to bring back some of the key aspects of the original Home Depot culture that focused on cultivating a relationship with customers and providing excellent customer service. By giving employees a sense of ownership they can begin to feel that they are valued by the organization and that what is good for the organization will also be good for them. In addition to providing recognition and rewards for living the Home Depot values and for providing great service, Blake and Crow might also consider how socialization can be used to communicate the company values and culture to new hires. This is especially important give a recruitment target of 15,000 employees that Crow was facing soon after the change in leadership. The use of symbols, rites, and rituals can also be used for communicating and reinforcing the culture. Stories about the founders of Home Depot and past events in the company’s history would also be useful to communicate how things should be done in the organization and what is important. 10. What does this case say about the role of founders and leadership for organizational culture? What does it say about the effect of culture on employees and organizations? What does it say about building, maintaining, and changing an organization’s culture? Answer: This case provides a great example of the role of founders and leadership for organizational culture. The culture of Home Depot was largely a result of its two founders, Bernard Marcus and Arthur Blank. As indicated in Part 1 of the case, Home Depot’s culture which was a major factor in the company’s success was set primarily by Bernard Marcus. With Nardelli as CEO, the entrepreneurial and service excellence culture became a thing of the past and as a result, many employees left the company as Nardelli shifted the culture away from people and more towards efficiency, centralization, and metrics. With Frank Blake as CEO, there is the expectation that the old people-focused culture of service excellence will return. And the fact that Blake and Crow are both Home Depot insiders is a strong signal to employees that there will be a return to the old Home Depot culture. Thus, the culture of the company has been largely shaped by those at the top. There is little question that the original Home Depot culture was a result of its founders; that the change in culture was largely due to changes made by Nardelli; and a return to the old Home Depot culture will be credited to Blake. The founders and leaders have a strong effect on culture, employees, and the organization. Nardelli changed the culture in a manner that had a direct effect on employees and the way the company operated. Additional Information about the Home Depot Culture: When discussing some of the questions in Part 2, it might be helpful to refer to Home Depot values and culture which are described on the company’s website where it reads: “The Home Depot’s values guide the beliefs and actions of all associates on a daily basis. Our values are the fabric of the Company’s unique culture and are central to our success. In fact, they are our competitive advantage in the marketplace.” The website also indicates that Home Depot is still guided by the values established by its founders: Taking care of our people, giving back to our communities, doing the right thing, excellent customer service, creating shareholder value, building strong relationships, entrepreneurial spirit, and respect for all people. Solution Manual for Organizational Behaviour: Understanding and Managing Life at Work Gary Johns, Alan M. Saks 9780133347500, 9780133951622