HOW TO CREATE THE PREFEERD ORGANIZATIONAL CULTURE FOR UNIVÉ Z?

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HOW TO CREATE THE PREFEERD ORGANIZATIONAL CULTURE FOR

UNIVÉ Z?

A case study research about how to change an organizational culture

Master thesis, MscBA, specialisation Change Management University of Groningen, Faculty of Economics and Business

FINAL VERSION

January 2009

LISETTE WILLEMINA POOT Student number: 1418386 2e Saskiadwarsstraat 2 8921 CW Leeuwarden Tel.: +31 (0)6 49133451 Email: lisette.poot@gmail.com Supervisor/university 1st Supervisor: Dr. K. Prins 2nd Supervisor: Dr. C. Reezigt Supervisor/company R. Planting MBA Univé Y

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HOW TO CREATE THE PREFERRED ORGANSIATIONAL CULTURE AT

UNIVÉ Z?

A case study research about how to change an organizational culture

ABSTRACT

The objective of this research was to examine how the organizational culture of two Univé Onderlingen could be changed. These organizations, who are involved in a merger process, wanted to use this opportunity to create a new organizational culture.

Based on a literature study, six instruments are identified which together contribute to a qualitative process to change the organizational culture. The instruments are: communication, leadership, recruitment and selection, rewards, participation and training. These instruments are discussed with employees of other organizations and consultants, to relate the knowledge of the literature study about the instruments with practical experiences.

Based on the measured current culture of the Onderlingen and the preferred culture as formulated for the new Onderlinge, concludes that the needed change for the organizations is the increase of the adhocracy culture and, especially for Univé X, decrease the hierarchy culture. The six instruments are used to formulates a plan how the two organization can together develop a new organizational culture.

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1. INTRODUCTION

A competitive market, smaller profit margins and the use of new sales channels are recent developments in the insurance market. In response to these changes, two insurance companies, Univé X and Univé Y, try to find a solution that will create a better position for themselves in this changing market. This resulted in two major decisions: In February 2008, the organizations announced their merger and the organizations have the intention to develop an organizational culture that aligns with the current market.

A merger can be the necessary trigger to stimulate a cultural change (Brooks and Dawes, 1999). Although changing the organizational culture is a difficult process (Schein, 1984). The organizational culture is also an important factor in mergers, because over fifty percent of the mergers fail, more or less caused by the organizational culture (Koot & Boessenkool, 1991). Knowing this, the management of Univé X and Univé Y decided that they wanted to handle this topic carefully. They wanted to know the current organizational culture of both corporations is, named the ist situation, and the preferred organizational culture, called the sol situation. Subsequently they questioned how to realize the preferred situation. These questions of Univé X and Univé Y form the reason for this research.

This research will focus on the methodology to change the organizational culture. The thesis objectives to determine the current organizational cultures of both organizations and the organizational culture that is preferred for Univé Z, as the new organization will be named. Furthermore, this research will give more insight in instruments that can help to change the organizational culture into the preferred culture. Combining these insights can be used to generate a plan for the change process of the organizational cultures.

In this introduction the context of the research will be clarified. The background of the companies will be explained. But first the developments of the insurance market will be described, which are the cause for the planned changes and which will be taken in consideration in the development of the preferred organizational culture.

1.1 Changes in the insurance market

The insurance market is constantly developing and Univé X and Univé Y need to be aware of these developments to determine their next steps. A few of these points are essential for the preferred organizational culture.

On the first of January 2007, the Financial Supervision Act (Wet op het financieel toezicht/Wft) replaced the old laws on financial supervision. This law has three objectives: transparency, goal orientation and market focus. The implementation of the Wft leads to a new supervisory structure. The Dutch Bank and the Netherlands Authority for the Financial Market are the financial supervisors, each with their own task and no overlap. The task of the Dutch Bank (De Nederlandse Bank/DNB) is prudential supervision, meaning that the DNB is focused on the financial health of banks, insurance companies and other financial institutions. This contributes to the stability of the financial sector and guarantees that the financial input of the members or shareholders is secured. It means that the interests of the members of Univé are represented. (www.dnb.nl) The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten/AFM) aims at supervision of the market conduct, a focus on orderly and transparent financial market processes, the relationships between the market participants and the way organizations deal with their clients. It means for the clients that the AFM is focused on the quality of advice and products. (www.afm.nl) These responsibilities and the way the supervisors may act is stated in the Wft.. An insurance company must commit themselves to the DNB and the AFM.

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8 insurances is satisfied and the competition is fierce. By paying more attention on risk-identification, prevention and by severe rules on acceptation, the insurers are able to keep the damage pays within boundaries. This is needed to find a good balance with the premium volume that shows almost no growth. (Financial Annual report 2006, 2007) This trend is visible in all kinds of insurances. Looking at the fire insurance, the insurers aim to keep their market share at the same level and lower the premium to achieve this. (Financial Annual report 2006, 2007: 26). These developments make the insurers vulnerable for big incidents.

This competition will become even fiercer. The European Union is developing Solvency II, a review of the European legislation. The Solvency rules prescribe the financial resources insurers must have to cover all their risks. The rules also lay down principles on overall risk management so that insurers can anticipate better on any adverse events. Solvency II will provide legislation on the financial markets of the European Union. These rules will be more risk-sensitive and more sophisticated than the current legislation. It moves away from the ‘one-model-fits-all’ philosophy. (http://europa.eu) This will lead to one European market. Competitiveness will increase and insurers will be able to expand their business in other countries. (Country Monitor, 2007) It is intended that Solvency II will be implemented in 2012.

The another development that Univé X and Univé Y need to take into consideration is the new demands of clients. The former client had a shortage of money, choice and availability. The client of today does not possess time, attention and trust. (Abbringh, 2006) Clients have new wishes concerning opening hours and the communication channels an insurance company uses. Growth of the service economy and the technological changes lead to the development of the 24/7 economy. (Presser, 2005) Clients do now expect to reach their insurer during the evening or in the weekend. The use of internet also changes. People will not only orientate themselves on the market, using internet, but also want to ask their questions in a chat session, buy an insurance package online or change an address on the website. Because of the involvement of the client in the processes, a self serving infrastructure will develop itself (Abbringh, 2006). Buying insurances or changing personal information online, means that the client takes part of the production for own account. The client will become a producer.

Finally, the economic crisis, as the current economic state is called, will also affect the Onderlingen. (www.volkskrant.nl, www.nrc.nl) More people are unemployed (www.nrc.nl), which will lead to smaller budgets for the consumers. Besides that, the mortgages, one of the products of Univé, are becoming more expensive (www.volkskrant.nl).

1.2 The organization

Univé Insurances is one of the biggest insurance companies of the Netherlands. The organization Univé is a cooperative association, without profit goal. This means that the customers are also members of the organization.

The basis of the organization is established in 1794 in Winsum (Groningen). The aim of the organization was to spread the financial risk over the members in the case of damage by fire. The current organization, formed by several mergers in the 90’s, offers their clients all kinds of insurances. Univé and VGZ-IZA-TRIAS, three health insurance companies merged in January 2007. The first steps towards a new organization are made in 2008 and will be continued in 2009.

Currently, Univé Concern (without VGZ-IZA-TRIAS) has 4 headquarters, employing 1700 people. The concern also has 33 Univé Onderlingen, which combined represents aprroximately150 offices and 1500 employees. Onderlingen are independent companies, such as Univé X and Univé Y. An Onderlinge operates under the name Univé and sells Univé products, but is also intermediary for other insurance companies. Each Onderlinge covers a clearly defined region of the Netherlands.

The basic ideal of a cooperation is still visible in the payment of profit and premium restitution for the members-insured.

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approximately 28.000 relations. These relations are divided over the regions Westerkwartier, a part of Noordenveld and a small part of Groningen city. The

works with three regional offices, in Roden, Leek and Groningen.

Organizational chart Univé

Each office has a regional manager, consultants for the private sector and one consultant who is focused on the small and medium sized businesses. The board, the administration, the ICT and the commercial back office are placed in the headquarters in Hoogkerk.

1.2.2 Univé X. The Onderlinge Univé

the city Groningen. Univé X has roughly 30.000 relations. The six offices are located in Norg, Annen, Rolde, Vries, Paterswolde, Groningen, Zuidlaren and Assen. Each office has advisors for the private market. All telephone calls are dealt with by members o

Assen. The management, administration, ICT and Business Centre are all located in this office. Besides the insurance offices, the estate agency ‘Schonenburg Blokzijl de Witte Makelaardij’ and ‘de Hypotheekgids’, a mortgage agency, are part of Univé

organization is organised certain employees. These developments make it difficult to draw an organizational chart of Univé X.

1.3 The new Onderlinge

For organizations success, three

organizational culture, the strategy and the structure (Van Wely, 2002). For this research, which discusses the organizational culture of Univé

known.

1.3.1 The long term vision. The directors and managers of Univé group who worked on the merger and the change of the

approximately 28.000 relations. These relations are divided over the regions Westerkwartier, a part of Noordenveld and a small part of Groningen city. The organization, as can been seen in figure 1,

al offices, in Roden, Leek and Groningen.

FIGURE 1

Organizational chart Univé Y

ach office has a regional manager, consultants for the private sector and one consultant who is on the small and medium sized businesses. The board, the administration, the ICT and the commercial back office are placed in the headquarters in Hoogkerk.

The Onderlinge Univé X has over sixty employees and covers the region of Assen to has roughly 30.000 relations. The six offices are located in Norg, Annen, Rolde, Vries, Paterswolde, Groningen, Zuidlaren and Assen. Each office has advisors for the private market. All telephone calls are dealt with by members of the Service Centre, which is located in Assen. The management, administration, ICT and Business Centre are all located in this office. Besides the insurance offices, the estate agency ‘Schonenburg Blokzijl de Witte Makelaardij’ and ‘de mortgage agency, are part of Univé X. Different mergers made that the is organised certain employees. These developments make it difficult to draw an

s success, three organizational elements need to be aligned: the al culture, the strategy and the structure (Van Wely, 2002). For this research, which al culture of Univé Z, the strategy and organizational structure need to be

The directors and managers of Univé X and Univé Y formed a

who worked on the merger and the change of the organizational culture. They formulated, 9 approximately 28.000 relations. These relations are divided over the regions Westerkwartier, a part , as can been seen in figure 1,

ach office has a regional manager, consultants for the private sector and one consultant who is on the small and medium sized businesses. The board, the administration, the ICT and the has over sixty employees and covers the region of Assen to has roughly 30.000 relations. The six offices are located in Norg, Annen, Rolde, Vries, Paterswolde, Groningen, Zuidlaren and Assen. Each office has advisors for the private f the Service Centre, which is located in Assen. The management, administration, ICT and Business Centre are all located in this office. Besides the insurance offices, the estate agency ‘Schonenburg Blokzijl de Witte Makelaardij’ and ‘de . Different mergers made that the is organised certain employees. These developments make it difficult to draw an

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10 based on the changes in the market, a long term vision for the new Onderlinge. These elements of the long term vision reflect the ambitions of Univé Z and are essential points to consider when defining the preferred organizational culture.

The long term vision is:

1. To improve the ability to adapt to developments that are the results of decreasing margins, the tendencies to extensive consulting and to come to a better exploitation of all available sales channels and commercial possibilities in the working area;

2. To keep a clear profile in the work area;

3. To extend the services that will be offered to the clients, possibly based on concepts;

4. To have enough influence on the policies of Univé Concern and other suppliers of services and products to the Onderlinge;

5. The possibility to make a new arrangement for the management structure, that suits the demands of The Dutch Bank on this issue;

6. To professionalize all processes in the organization, achieving the demands that are set in the Financial Supervision Act and by the Netherlands Authority for the Financial Markets;

7. To increase professionalism on how the Onderlinge deals with prevention, acceptation and damage;

8. To have the right work capacity in the present and to secure this for the future;

9. To have the best possible working environment for the employees that work at the Onderlinge now and in the future.

1.3.2 The organization structure. The outline of the organizational structure for Univé Z is as follows:

The new organization will get three divisions: the commercial, the insurer & operations and the administration division, as can be seen in figure 2 (p.11), the organization chart.

Commercial division. The commercial division will include the regional offices, service centre, financial centre and the business centre. It is the intention that this division will be leading in the organization.

In this new structure, regional management will be used. This means that offices will be clustered and each cluster services her own region. Each cluster will get a manager, who will get more responsibilities. Each cluster will service her own market, look for the opportunities in her market and decide how her clients will be approached. The consultants in a cluster must focus on contact moments with her clients. It is the intention that the consultants will discuss the complex products as life insurance, instead of focusing on the uncomplicated insurances as the car- and fire insurance.

The retail service centre is the place where all internet questions and telephone calls enter the organization. If the client prefers, the question will be directed to the office in the clients’ region. Otherwise the employee at the service centre will serve the client. It is the intention that this service point is available to the clients from eight o’clock till six o’clock. The service centre will also be focused on the use of new technologies to help the client, for example using a chat box.

The added value an insurance company can offer to a client is good advice on complex products. Specific knowledge is needed on these products. The financial centre will develop expertise on the area of mortgages, life insurances etc.

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11 FIGURE 2

Organizational chart Univé Z

Council of Members

Supervisory Board

Management Board Legal & Compliance Secretariat & HRM

Insurer & Operations

Financial Admini-stration & Purchase Commercial Division

Marketing Valuation & Inspection

Acceptance & Control

Damage

Authorization

Reinsure

Processing policies & Mail ICT Administration Reporting Salary Administration Investments Administrative organization and internal control Facility Management Purchase Regional clusters (3) Service Centre Business Centre Financial Advice: Mortgage, Life, Pensions & Banking

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12 Insurer & Operations. The division insurer & operations will focus on the quality demands of the product, the requirements on the client and on risks. It also concerns fire prevention and taxation. The last task of the division is supporting other colleagues on issues as finding new products.

Administration. The division of administration will handle administration and finances. This also means that the employees at the cluster offices will no longer do the administration, but this will be done by the administration division. This decision is made to give the consultants the opportunity to focus on their cluster and client contact, instead of investing time in administrative tasks.

1.4 Central topic of the thesis

The culture of Univé Z has a few demands: it must align with the structure and strategy and thereby the environmental changes. Besides these elements the preferred culture must also be achieved with the cultures of Univé X and Univé Y.

Now that the context of the research is made clear, the current culture of the organizations must be explored and the preferred culture for the new organization must be determined. Subsequently the focus of the thesis will be on the change of the current situation into the preferred culture.

This leads to the following research question:

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2. THEORY

To answer the research question, the topic organizational culture must be examined. This chapter will go into the different perspectives on and definitions of organizational culture. Subsequently the possibility to change organizational culture and the influence of the merger activities on the change of culture will be discussed. Finally the possible instruments are assessed and the sub questions of this research are formulated.

2.1 Perspectives on organizational culture

Through time the views on organizational culture evolved. In times of the industrialisation, culture was not discussed. Only Fayol mentions that ‘esprit de corps’ is one of the principles, which must be applied in an organization. But other researcher of that time, such as Tayol and Weber, perceived this element as a danger for the organization (Burnes, 2004).

The Human Relation approach, rising in the first half of the twentieth century, acknowledges that organizations are social systems, and also include, besides formal structure, informal structures, rules and norms. (Burnes, 2004)

According to Burnes (2004), a new perspective on organizations was developed in the sixties and seventies. According to this perspective, the Contingency Theory approach, organizations are open systems, with informal structures formed by workers, which can be influenced.

This perspective was followed by different views. Peters and Waterman (1982) felt that soft elements were most important for the success of an organization. Their view on organizations and culture became part of the Culture-Excellence approach. The general view of this approach on culture is that only one specific type of culture can lead organizations to success. This culture is described as “open, flexible and pragmatic cultures, which help to maintain a learning environment that promotes creativity and entrepreneurship amongst all employees” (Burnes, 2004: 112).

In the same period, researchers developed the concept ‘organizational learning’, which discusses the relation between learning and success of an organization. One of the important elements for organizational learning is, according to Senge (2006), a shared vision. Cummings and Worley (2001: 520) state the following about the relation between culture and organizational learning: “Learning organizations have strong cultures that promote openness, creativity and experimentation among members”.

The postmodernist view organizational culture as in continuously movement, through which no unified culture can be established. (Hatch, 2006)

As Burnes (2004) points out, there is no consent on organizational culture. But some researchers tried to create more clarity about the different views. Allaire and Firsirotu (1984) formulated an extensive typology on these views. Their typology defines two main views: a sociocultural system and an ideational system.

An ideational system means "those cultural and social realms are distinct but interrelated" (Allaire and Firsirotu, 1984: 196). The culture is located or in the minds of the culture-bearers or in the products of minds, such as the shared meanings and symbols. Seeing the organizational culture as a sociocultural system means that "the culture is a component of the social system, manifested in behaviour (ways-of-life) and products of behaviour." (Allaire & Firsirotu, 1984: 196) According to this view, social and cultural realms are integrated.

The typology of Allaire and Firsirotu is not the only typology made to define the different perspectives on organizational culture. Smircich (1983) also distinguished two main views. First, culture as a variable and second culture as a root metaphor.

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14 describes that form this view, the organizational culture cannot be related to anything, because, everything is culture.

Mumby (1988: 8, in Darwin, Johnson & McAuley 2002: 57) explains this perspective as follows: “an organization does not have a culture, it is a culture. The socially constructed nature of organizational reality is just that - socially constructed. Organizations are not deemed to have any existence independent of the shared values and meaning systems that are generated by organization members”. Meek (1988: 470) supports this perspective, argumenting that “it (culture) is not an independent variable, nor can it be created, discovered or destroyed by the whims of management,”

Within the perspective of organizational culture as root metaphor, three different schools of thought can be distinguished (Smircich, 1983): The cognitive, symbolic and structural and psychodynamic perspective. From cognitive point of view, shared knowledge and beliefs characterise the culture. Approaching culture from the symbolic view, culture would be described in shared symbols and meanings. At last, the structural and psychodynamic view sees culture as unconscious infrastructure.

Researchers, who see culture as a variable, acknowledge that organizations have cultural characteristics, such as values, norms, verbal expressions etc. and that these aspects influence the behaviour of the staff of the organization. (Alvesson, 1993). Smircich (1983) explains that this view is based on the systems theory framework. This means that various variables, including culture, are the processes which are occurring within the organization. These variables also influence each other. This relation between variables also leads to the view that a strong organizational culture has a positive influence on the performance of the organization (Peters & Waterman, 1982). The conception that organizational culture is a variable and variables can influence other variables and can be influenced, leads to the disposition that organizational culture can be changed. (Alvesson, 1993)

In line with the view on culture as a variable is the functionalist perspective. From the disposition of the "functionalists", culture can be seen, not as just an element of the company, but as something that gives structure to the employees (Darwin, Johnson & McAuley, 2002). It is also stated that culture can be observed, revealed and the evolvement of the culture can be researched. (Hawkins, 1997)

The outline of the perspectives on organizational culture showed that these changed over time. The typologies represent the biggest difference in the view on organizational culture: seeing culture as a part of the organization or seeing the organization as a culture. There are many other opinions and views on organizational culture, but they cannot all be discussed.

2.2 Integration

As described above, there are many perspectives on organizational culture. The views evolved over time, but there are still many different views on culture. Some researchers formulated a typology, to create more insight in the different views.

The request of Univé X and Univé Y was to research how the Onderlingen could change the organizational culture towards a preferred culture. This implicates that organizational culture can be changed. A precondition hereby was that the current organizational culture would be determined. This implicates that organizational culture can be measured.

Although there are many different perspectives on organizational culture, the aim and the precondition of the research determine the perspective this research will have.

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15 In the remains on this research, the perspective on culture as measurable and changeable will be pursued. As the different views already show, within this view there are still different views to discuss. Therefore, first the definition of culture and the changeability of culture will be discussed.

2.3 Organizational culture

2.1.1 Definition. Organizational culture is defined in various ways. Schein states that culture is “the pattern of basic assumptions that the group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration and that has worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems.” (1986:30)

Organizational culture can also be defined as a communal understanding between the members and the stakeholders of the company on the daily way of work in the organization. Here ‘understanding’ means that organizational culture is rooted in the heads of people. ‘Communal’ refers to the group that together share these organizational cultural values. (Sanders & Neuijen, 1992)

The corporate culture is also described as a concept existing of four levels of awareness: 1. artefacts, the visible symbols of culture; 2. norms, which form the unwritten rules of behaviour; 3. values, prescribing the employees what is important; 4. basic assumptions, these are taken for granted and prescribing the members how to think and feel about issues. (Cummings & Worley, 2001)

The definition that will be used in this research is formulated by Eldridge and Combrie as followed: “culture is a unique configuration of norms, values, beliefs, ways of behaving and so on, that characterise the manner in which groups and individuals combine to get things done.” (1974: 78)

2.3.2 Culture types. All organizations are different and develop their own culture. But to create clarity, researchers made classifications. One of the classifications is made by Handy (1976). He identified four organizational cultural types: a power culture, a role culture, a task culture and a person culture.

Another classification is made by Cameron and Quinn (2006), defining four types: hierarchy, market, adhocracy and clan culture. This categorisation is based on the Competing Values Framework. Flexibility and discretion are opposite values of stability and control. Internal focus and integration are antipoles of external focus and differentiation. As can be seen in figure 3, this leads to the four cultural types, with its own values, aligned leader type and theory of effectiveness.

The first culture type is the clan culture, which lead to a family-type organization. According to Cameron ad Quinn clan culture is characterized by “shared values and goals, cohesion, involvement, individuality and a sense of we-ness”(2006: 41). The adhocracy culture is characterized by “ad hoc” business, meaning that the organization is dynamic and adjusts itself quickly to changing circumstances. The power is in hands of the employees, who need to anticipate on each new client. The third type is the market culture. The market culture is defined by competitiveness and productivity. Organizations with market culture are result-oriented and believe that a clear purpose and aggressive strategy will lead to profit. The last type is the hierarchy culture, based on the principles of bureaucracy. A hierarchical organization believes that clear lines in the decision-making, rules and procedures and control leads to success. (Cameron & Quinn, 2006)

According to Cameron and Quinn (2006), when an organization wants to develop a certain culture type, the elements of that culture type as mentioned above must be stimulated.

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16 FIGURE 3

Competing Values Framework and Culture Types

Source: Diagnosing and changing organizational culture by Cameron and Quinn (2006).

2.4 Changing organizational culture

With a clear definition of organizational culture in mind, the changeability of organisational culture will be assessed. The opinions of researchers differ on this issue. Most researchers agree that organizational culture can be managed, but the opinions vary on the degree of complexity of the process (Brown, 1995).

Schein (1984) for example believes that change is possible, but it is a painful process, where a lot of resistance can be experienced. If it concerns a big change, Schein expects that it might be necessary to replace the majority of employees. There is no universal model for such big changes, but it depends on the circumstances. Fitzgerald (1988) identified the same situation. For a successful cultural change, the change of structure and processes must be planned, supported by visible support of the top management, a new reward system and re-education of the staff. Even when following these points, Fitzgerald (1988) points out, unlimited resources and time are needed. Drennan (1992) points out that the main elements in transforming the organizational culture are time and patience, because each culture, also the current one, exists of habits that are developed by repetition over time.

In the previous paragraph, culture is defined as “a unique configuration of norms, values, beliefs, ways of behaving…” (Eldridge & Combrie, 1974:78), which influences the possibility to change culture. Handy addresses this issue, stating (1976:136): “getting people to change their behaviour is relatively easy compared with changing their attitudes. We are not here concerned with brainwashing or indoctrination, although these are, of course, systematic and powerful ways of changing attitudes.”

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17 and thereby a period of anxiety is needed to show that old assumptions no longer work. Sanders and Neijen (1992) support this opinion, advising to use three phases: first letting the old culture go, second being in a neutral zone and the last phase is a new start. So the employee must first accept the changes, than look at what they leave and what is coming, and in the end build the new organizational culture. The consultancy firm Berenschot developed a culture management model for managers. Berenschot claims that by influencing seven forces the cultural change will follow. The seven forces are: “disruption (makes people move), spirit (gives strength), picture (makes concrete), structures (provokes), success (makes believe), balance (makes it their own), confirmation (stabilizes situation).” (Sanders, 1992)

2.5 Merger and organizational culture

In this particular research, the change process does not concern the culture of one organization, but of two, who are going through a merger process as well. The merger of two organizations on its own is no easy task. Over fifty percent of mergers fail (Koot & Boessenkool, 1991; Bijlsma-Frankema, 2001). The human factor, meaning the organizational culture, seems to play an important role in these results. But a merger can also function as a platform for more changes (Brooks & Dawes, 1999).

Isabella (1992) describes that major events in organizations, such as a merger, relocation, new executive etc, can function as triggers for new behaviour and thoughts. This is a result of the expectations of employees for new goals, processes, career opportunities etc. (Schraeder & Self, 1993).

Brooks and Dawes (1999:199) describe the positive consequences of a cultural shock, because it creates a certain state of crisis: "Many organizations in this sector (retail financial services) are locked into an inappropriate 'current state' and need, upon merger, to seek a more vigorous 'desired state'.... It is our contention that merger activity can be used as the necessary 'crisis' to help encourage cultural development."

But the consequences of these two efforts at a similar time must not be underestimated. Sanders and Neijen (1992) state: “When a merger is announced, the employees are scared to lose their own organizational culture, which forms a base in their live”.

Appelbaum et all. (2000b) explain the emotions employees go through during a merger process. Denial, anger and bargaining will be experienced by employees, before they can accept the situation. Also a feeling of ‘them’ and ‘us‘ will be developed. These feelings influence the cooperation between employees.

Cartwright and Cooper (1993) give an example where instead of integration of two organizations, the cultures collide. This resulted in a low work moral at employees, low quality of work and decrease of financial performance.

During the merger of Daimler and Crysler, the cultures collided on different issues, such as executive compensation, work habits and styles, decision making process and the financial reporting system. The decision was made that the focus would not be on integration, but on independent operation on each business unit. Removing members of the management board had to increase the integration of the headquarters. Instead it created an unbalanced situation, because only one third of the top management of Chrysler. Points like this contributed to the failure of the DaimlerChrysler. (Badrtalei & Bates, 2007)

Several recommendations are made how to deal with the organizational culture during the merger process. Organizations are recommended to assess a research about the cultural position of both organizations and to include these results in an integration plan (Bijlsma-Frankema, 2001; Brooks & Dawes, 1999, Appelbaum et al. 2007; Schraeder & Self, 2003).

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18 others in the process (individuals, teams and departments); 4. Enhance commitment by establishing relationships and building trust; 5. manage acculturation through training, support and socialisation; and 6. respect individual and temporal aspects of the integration process." (Schraeder & Self, 1993: 516-520)

2.6 Managing organizational culture

The complexity of the change process of organizational culture as pointed out by several researchers and the difficult circumstances caused by the merger activities of Univé X and Univé Y, must be taken in consideration. It is important to find the right mix of instruments that can stimulate a qualitative cultural change.

The literature on change management that focuses on organizational culture shows that researchers have different ideas on how the organizational culture can be changed in a qualitative way. But certain instruments, as outlined in figure 4, are supported by several researchers: communication, leadership/management, rewards, recruitment and selection, participation and training (Schein, 1992; Cummings and Worley, 2001; Peters & Waterman, 1982; Sanders & Neuijen, 1992; Fitzgerald, 1988; Handy, 1986).

FIGURE 4

Instruments to change the organisational culture

To use these instruments in the change process, it is necessary to know what the researchers mean with these factors and how they can contribute to the cultural change. To answer these questions, each factor will be discussed, using the knowledge of researchers as input.

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19 cultural change process means the interaction in any form that takes place between the management, employees and other stakeholders. (Balle, 2008)

The importance of communication is explained by Appelbaum: Communication influences the employees’ ability to adopt a new culture, sustain the change process and deal with stress. (2000). Dublin goes one step further, by claiming that for a change process to be successful all people involved need to be informed and aware of the impact (2007).

These are reasons why communication is important in any change process. But communication is also important for cultural change in specific. Sanders (1991) describes that the employees will experience a kind of loss. The company, as they know it, will no longer exist. Using communication, this loss and the upcoming changes can be discussed. (Balle, 2008) After acknowledging the losses, the organization can focus on their future. As mentioned in the paragraph ‘changing organizational culture’, there can be different phases in the process: letting go, a neutral zone and building the new culture. Communication must support these phases.

Communication in the last phase ‘building a new culture’ can provide the employees with a new, shared frame of references. According to Cheney, making cultural messages known through communication develops a feeling of identity or belonging to the employees (1983). These messages can be brought in different ways, such as storytelling, exposition of role models and visualisation. Visualisation means combining old and new elements, for example the old logo with new graphics. (Balle, 2008)

2.6.2 Leadership. Leadership is defined as “influencing employees to voluntarily pursue organizational goals” (Kreitner, Kinicki & Buelens, 2002: 619).

The leaders of an organization determine the preferred culture. (DiGeorgio, 2003). The question is how the leaders can contribute to the implementation of their plan.

Researchers propose several actions a leader can use to change the organizational culture. For employees to change their behaviour and opinions, which are embedded in the organizational culture, a new clear vision must be present. It is the role of the leaders of the company to define the new vision and behave according to this vision (Cummings and Worley, 2001; Kaliprasad, 2006).

Podsakoff, Mackenzie and Bommer (1996) discovered that formulating and acting on this clear vision, are not the only contributions a leader can make to change an organization or organizational culture. The main actions a leader can take are: “articulating a vision, providing an appropriate model, fostering the acceptance of group goals, high performance expectations, individualized support, and intellectual stimulation.” Schein completes this action list with the following actions: reacting to crises, giving formal statements and telling stories, legends and myths (1992).

Besides the actions leaders can undertake, the leader also needs to have certain qualities that contribute to a successful change process. “A leader must be charismatic, highly visible to employees, very actively involved in leading culture change, and reassure employees in time of crisis.” (Phelan, 2005)

2.6.3 Rewards. Rewards and punishments are extrinsic motivators, effecting behavioural change (Sathe & Davidson, 2000), but punishment is not really effective to change employees’ behaviour (Makin and Cox, 2004).

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20 One of the considerations when designing a reward system is whether the bonuses are granted based on individual or team contribution. By basing it on team contribution, it will support the development of the values teamwork and participation. (Brown, 1995)

2.6.4 Recruitment and selection. The value of recruitment and selection to culture change is, according to Schneider, Gunnarson and Niles-Jolly that “the kind of employees recruited and selected and the kinds of orientation experiences provided for new employees send strong messages about organizational priorities” (1994: 26). Recruitment means “the process of seeking applicants for potential employment” (Noe, Hollenbeck, Gerhart and Wright, 2003: 68). Selection is the process of identifying the applicants with the right skills, knowledge etc. (Noe et al., 2003: 68).

An organization wants to attract the right people, who possess the desired skills, abilities and the values (Backhaus, 2004). By defining the values that the organization prefers in the company, new people can be attracted that fit the new organizational culture.

This leads to two methods to decide who will be admitted in the organization: selection and self-selection. The organization (in case of selection) or the individual (in case of self-selection) can decide if there is a match between the individual and the company, based on their values. (Soeters, 1991) When the match between the organization and the employees exists and the employees believe in the values of the organization, they will exceed themselves. (Swe & Kleiner, 1998)

But, using this instrument can also lead to three problems. First of all, the company shows itself of its best side and gives the applicant an overly positive view. The same process can occur the other way around, when the applicant gives wrong information about his characteristics and interests. (Soeters, 1991) The third problem is that the organization is focused only on the cultural fit, forgetting the skills, although these are still very important. (Grensing-Pophal, 1999)

2.6.5 Participation. Claus (1991) explains that changing the organizational culture effects the employees. To make a behavioural change possible, it is necessary that the employee supports the requested change. Participation can create this support of the employees. Participation means allowing the employee to help in the development of the culture. (Claus, 1991)

All employees should at least get the chance to participate in two aspects of cultural change. Participation is possible in the development of the new culture. By discussing positive and negative elements of the current culture, new goals can be set. The next phase in the change process is the implementation of the organizational culture. Setting up regular meetings, where critical issues and problems are discussed, contributes to the implementation of a new culture. (Brown, 1995)

To have a clear picture of participation, two examples can help. In the first case, a problem-solving cycle is developed. All employees are part of a team and each team is responsible for problem-solving certain problems. Each team makes an analysis of the problem, which leads to a defined solution. In this process everybody can contribute ideas and take ownership for problems ánd decisions. (Drennan, 1992) The second case of Drennan (1992) is a suggestion program. Each department forms a team that dedicates one meeting a week to find solutions on two topics. Beside the meetings, the employees will still work on their topic, making them all very involved.

2.6.6 Training. The last instrument is training, “a planned effort to facilitate the learning of job-related knowledge, skills and behaviour by employees.” (Noe et al., 2003: 68)

So the contribution of training to the process of cultural change lies in teaching the employees new behaviour. Michela and Burke (2000) state that the behaviours that are part of the new culture must be determined. Then the managers can be trained in these behaviours.

According to Drennan (1992) training has actually two goals: at first training explains employees the reason why the company wants to change and secondly how each individual can make his or her contribution to this change. To get the best result, everybody in the company must get involved, but the training must be adjusted to the tasks of the employee. This could lead to different training programs for each department, but in the end also to the best results.

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21 of the socialization and helps the new employee to adjust to the culture from the start. (Drennan, 1992)

2.7 Conceptual model

The six instruments, communication, leadership, rewards, recruitment and selection, participation and training, can contribute to the change of the current culture of two organizations into the preferred organizational culture of the new Onderlinge. The goal of the research is to show how the culture can be changed, therefore the sub questions have the same goal. The answers of the third sub question up to and including sub question eight all form parts of the change plan for Univé X and Univé Y:

1. What is the current organizational culture of Univé X and Univé Y? 2. What is the preferred culture for Univé Z?

3. How can communication contribute to the cultural change of Univé X and Univé Y? 4. In what way can leadership help in the cultural change of the new Onderlinge? 5. What rewards can help to establish cultural change and how must they be used?

6. What is important in the recruitment and selection of Univé Z that will contribute to the cultural change?

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3. METHODOLOGY

In the previous chapters the subject and the theoretical basis of this research are explained. In this chapter the methodology used in this research will be discussed.

3.1 Qualitative research

The way a research is executed can differ. Baarda, De Goede and Teunissen explain that qualitative research is characterised by the use of different data sources and emphases to ‘understand’ an individual, group or situation (2005). Quantitative research is based on numbers. (Baarda and De Goede, 2001) Based on two reasons, a qualitative research method was chosen. This research concerns a case study with no intention to generate results that can be generalized to other situations. The second reason is that the research question is how the Onderlingen can change their current culture into their preferred situation. This means that recommendations need to be made how the instruments for change can be used, resulting in a qualitative plan.

Baarda, De Goede and Teunissen explain the following about the data collection: collecting data in a qualitative research must be real and placed within context. This means that it is a practical research, based on a real problem.” (2005) This is the case in this research.

3.2 Current culture

3.2.1 Method. To determine the current organizational culture at Univé X and Univé Y, the method of Cameron and Quinn was used: the Organizational Culture Assessment Instrument (OCAI). This instrument is based on the Competing Values Framework. The framework was developed to assess indicators of effective organizations. The first dimension concerns the stability or flexibility of the organization. The second dimension looks if the organization is internally or externally focused. This Framework lead to four cultural types: hierarch, market, adhocracy and clan culture. (Cameron & Quinn, 2006)

In order to determine the organizational culture, the OCAI used six items: dominant characteristics, organizational leadership, management of employees, organizational glue, strategic emphasis and criteria of success. Each question had four answers, each answer representing a culture type. The employee had to divide one hundred points at each question among these four answers. (Cameron & Quinn, 2006)

The OCAI tested not only the current situation, but also the situation as the employee preferred in the organization. This was useful to the research, because it helped to indicate if the employees would resist to the upcoming change or if it fit the employees’ ambitions.

When selecting a method, it was important that the results this method generated were reliable and also that the method was understandable for the employees. According to Cameron and Quinn (1996: 23) “this instrument has been found to be both useful and accurate in diagnosing important aspects of an organization’s underlying culture. It has been used in more than a thousand organizations that we know of, and it has been found to predict organizational performance. Its intent is to help identify the organization’s current culture.”

The original OCAI was formulated in English. But for all employees to understand the questions, a Dutch translation was needed. The consultancy company Kikkergroep uses a Dutch version of the OCAI for their own costumers (www.kikkergroep.nl). Because of the experience the Kikkergroep had with this translation and the fact that they work together with Cameron and Quinn was enough reason to trust the quality of the translation and use it for this research.

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23 The six questions of Cameron and Quinn focused on how the employees felt about the organization in general. The seventh question was looking at the individual connection with the organization. The questionnaire can be found in the appendix.

One of the limitations of a self-administered survey is the nonresponsive error. Different actions can help to increase the response rate. (Cooper & Schindler, 2003) In this research several actions were used. To make people aware of the upcoming survey, the research was already mentioned in a digital newsletter. A week before the questionnaire was handed out, all employees received an e-mail with the specifics of the research.

Other actions to increase the responsiveness were adding a return envelope to the survey. Sending the questionnaire back in this envelope also guaranteed that the questionnaire would only be read by the researcher. Not asking the employee their name also contributed to the anonymity. The personal questions that were asked concerned: the Onderlinge the person worked at, for how long and what his or her position was.

The questionnaire existed out of seven questions, which had to be made twice (current and preferred situation) so could be made with 15 minutes. The deadline date was set two weeks after handing out the questionnaire, so the people knew what was expected of them.

3.2.2 Results. On the day of the deadline, not even 50% of the employees of Univé X and approximately 70% of Univé Y responded. In consultation with the Human Resource managers of Univé X and Univé Y was decided that the employees needed to be reminded to the importance of the research and a new deadline was set. The Human Resource managers emailed all employees to inform them that this questionnaire was their (first) opportunity to be involved in the merger process and informed them about the new deadline. On the new deadline, one week later, the final response rate was 98% for Univé Y and 75% for Univé X.

The returned questionnaires showed that many employees did not fill in the name of their position and/or how long they worked at the organization. This can mean that these people did not feel that the questionnaire would guarantee their anonymity. They probably felt that with that information it was still possible to find out who filled in the questionnaire.

Two employees wrote on their questionnaire that they found it difficult to understand all questions. Two others felt that the possible answers did not cover their opinion and left some questions open. Finally, some people did not answer the questions in a way to lead up to exact one hundred points. To create a correct picture, the incomplete answers were not included in the scores. The questionnaire is based on the ‘competing values framework’. To make the results comprehensible, associations are made between the results and the framework.

3.3 Preferred organizational culture

To determine the preferred organizational culture, it was necessary to discover what the organization wants. It had to be a realistic proposal, using the current situation of the organization as starting point (Baarda, et al., 2005). As the information on qualitative research suggested, the preferred organizational culture of the new Onderlinge was determined together with an executive, who represented the opinion of the project group.

The preferred situation was based on the information about the market developments, the designed organizational structure and the current culture. In a dialogue, this information was used to determine the desired situation. The researcher translated this conversation into a written statement on the preferred culture. The competing value framework is used as an instrument for this ‘translation’. This statement was approved by the project group.

3.4 The importance of the instruments

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24 and how these tactics must be used. Therefore ten people with different backgrounds are interviewed. Interviewing people of different organizations and in different positions was to get differentiated perspectives on the identified instruments.

Among the respondents were six employees of two Univé Onderlingen. The Onderlingen were Univé Zuid-Holland with headquarters in Delft and Univé Noord-Oost with headquarters in Stadkanaal. These Onderlinge either work or worked on a change of their organizational culture. Besides employees of Univé, also one ex-employee of the Ernst&Young business unit ‘Grants and incentives’ is interviewed, who experienced a culture conflict which was not managed. He was approached to give insight in the possible conflicts which can occur.

Besides employees, three consultants are interviewed, who all advice organizations about change of organizational culture. Two consultant, Theo Schoon and Pieter van den Ban, work at the Univé Concern and advice Onderlingen about several subjects. The last respondent is Karin Bakker who is a consultant of an independent consultancy firm, named Think Too. Think Too advices her clients about different topics.

The goal of the interviews was to determine the importance of the factors and what realization of the factor had the best impact on the employee.

It was the intention to interview people, which would help to get in depth of information and get more details. In an interview, there are more options to improve the quality of the information. (Cooper & Schindler, 2003)

One of the advantages of a personal interview is the possibility to pre-screen the respondents (Cooper & Schindler, 2003). It was the intention that the respondents worked on different departments and came from different merger partners. This would give more insight in the process. Another criteria was that the respondents were not afraid to give honest answers.

Interviews can be done by telephone or face-to-face. A disadvantage of doing the interview face-to-face is time and costs of travelling to the respondent. The advantages of face-to-face over telephone interviews are the possibility to see the non-verbal communication of the respondent and the possibility to counteract social desirable answers. (Emans, 2004)

The interviews with the employees discussed several issues: the change of organizational culture; which of the six factors were used in this process; their opinion on the effectiveness of these factors; other factors that can influence the process and how they experienced the use of these instruments. With the consultants, the same topics are discussed, but with more focus on how to use the instruments.

These are sensitive, subjective issues. Using the personal interview technique helped to ask more about certain answers and possibly get a more objective answer.

The main questions of the interview were prepared in advance, although it was not possible to prepare each question. The main questions can be found in the appendix. Follow-up questions would be used to get more insight in the answers of a respondent.

The interview of the employee respondents also included questions about their position, the organisation they worked and their general opinion about the change process. These starting questions gave insight in the impact the change efforts had on the person and from which point of view the person answered the other questions. Then the six factors were discussed. To be sure that the interviewer and the respondents talked about the same issue, the definitions as they were used in the research were given to the respondent.

To keep the focus on organizational culture, the definition as used in the research and some extra explanation about organizational culture would be given.

3.4.2 Execution. All respondents were very open about the way the process went and how they felt about it.

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25 goal of the questions and of the research was explained to the respondents of Zuid-Holland in a letter. In the list of questions, the definitions of organizational culture and the factors were given. Just two persons answered this email. Because of the distance it was difficult to stimulate more people to contribute to the research.

The intention of the interview was to learn more about the process of changing the organizational culture. When respondents Univé Noord-Oost seemed to forget this focus, a follow-up question helped to get the focus back and to get an answer which concerned the organizational culture. People, who answered the questions by email, were told that they would be approach if the researcher wanted further explanation. The rescue line is not used. The answers showed that some steps taken by the organization contributed to change of organizational culture, next to other results, such as attracting a new employee to fulfil a vacancy. The new employee can, if supported by others in the organization, stimulated competitiveness among the colleagues.

3.4.3 Criteria. Not each answer could be included in the analysis, because the answers are opinions of individuals. To create some validity-check, half of the respondents needed to have the same opinion. This means that if the answers were general remarks on the factors, certainly half of all respondents needed to have the same opinion. If the answers met these criteria, the information these answers gave, could be included in the research.

Because the respondents work at different organizations, these criteria cannot be used in organization-specific comments. The respondents of the Onderlingen Zuid-Holland and Noord-Oost are exceptions. But to make sure that important remarks are not missed, some were included in the research even if other respondents did not mention them. Being the opinion of one person, it could not have the same value as the answers that were supported by several respondents. It can give an important insight in how employees experience a change process of the organizational culture or how consultants handle certain situations. If this is the case, it is explicitly mentioned in the analysis.

3.4.3 Analysis. To analyse the information that was given in the interviews, an analysis plan of Baarda, De Goede and Teunissen (2005) was used. This means that the answers were labelled. The labels were based on the six instruments that were discussed in the interviews. As discussed above,

for information to be included in the research, it had to meet certain criteria. With all information labelled, it could be determined what information met these criteria and could be included in the

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4. THE CULTURE OF THE ONDERLINGEN

For the development of a change plan for organizational culture, the starting point must be known. This means the definition of the current organizational culture. Subsequently, the preferred culture must be determined. These two points known gives insight in the needed change, as the executives’ desire. The last important element is establishing the opinion of the employees. This piece of information gives view on the support or resistance the organizations can encounter.

These different topics will be discussed in this chapter.

4.1 Current Culture of the Onderlingen

4.1.1 Univé X. The overall results of Univé X as outlined in table 1 show that the hierarchy culture dominates the Onderlinge. But the hierarchy culture scores just three per cent higher than the clan culture. This indicates that the employees find the emphasis within the Onderlinge to be internal and on integration. The clan culture and the hierarchy culture score on each question the first or second place in the ranking. The formal rules and procedures are especially important in the management of the employees and in the criteria for success. In the dominant characteristics and the organization glue, the personal place and the teamwork and participation are essential.

TABLE 1

Current culture of Univé X

Questions Results of Clan current culture Adhocracy (in %) Market Hierarchy Dominanct characteristics 40 16 21 23 Organisational leadership 28 20 21 31 Management of Employees 24 19 17 40 Organisation glue 42 17 14 28 Strategic emphases 23 22 17 38 Criteria of success 24 17 19 40 Average Score 30.17 18.50 18.17 33.33

The scores on the market and adhocracy culture are even closer together. The results of the questionnaire combined show that these culture types score both within the 18 per cent. The staff of Univé X does not see the themes of aggressiveness and winning as elements which create cohesiveness among employees. The lowest score of the adhocracy culture is on the question about the dominant characteristics. The employees do not really experience Univé X as a very dynamic and entrepreneurial place, where people are willing to take risks.

4.1.2 Univé Y. The combined results of the questionnaire, made by the employees of Univé Y, show that the clan culture is currently leading in the organization. An overview of the results is given in table 2.

A closer look at results of the separate questions show that the clan culture always obtained the highest score, varying within 30% to 43%. The employees strongly feel that especially in the elements that keep the organization together, the clan culture is very important. The clan culture left the other culture types far behind on the question ‘organizational glue’.

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27 TABLE 2

Current culture of Univé Y

Questions Results of Clan current culture Adhocracy (in %) Market Hierarchy Dominanct characteristics 36 23 24 16 Organisational leadership 30 27 19 24 Management of Employees 32 27 17 24 Organisation glue 43 20 19 18 Strategic emphases 33 28 19 20 Criteria of success 34 15 27 24 Average Score 34.67 23.33 20.83 21.00

According to the employees, the adhocracy culture is, besides the clan culture, very present, scoring 23, 33%. This is supported by the second best score on most questions. The exceptions are the questions about dominant characteristics and criteria of success. The employees seem to feel that the culture type adhocracy is rather important in the organization. But success is not defined by adhocracy, as is shown by the lowest score of all questions.

Taking the Competing Values Framework in mind, the high results of the clan culture and the adhocracy culture indicate that Univé Y is especially focused on flexibility.

The scores on the OCAI make visible that the market culture is seen as considerably important in the dominant characteristics and as criteria for success. This indicates that competition is an important idea in the organization, but the organization is not managed according to the market culture.

The hierarchy culture is overall seen as least important, leading to the third or last position at the separate questions. Formal rules and procedures are not the elements that characterize the organization or keep the organization together.

4.2 The Preferred Organizational Culture of the New Onderlinge

The preferred organizational culture needs to be aligned with the developments in the insurance market, the long term vision and the organizational structure (Van Wely, 2002). The information on these issues will be linked with the organizational culture theory. The competing values framework that leads to the four culture types will be used to give some insight in the necessary organizational culture for the new organization.

The main goal the new Onderlinge wants to accomplish is satisfying the wishes of the client. This means full advising, especially in complex products. If it is not possible to fulfil the wishes of the client under the Univé-label, the advisors need to find another solution. Good and creative initiatives are expected of the individual consultant, but also of the entire team. Each cluster must focus on its own market. A cluster must take in consideration whether their clients live in a city or village and whether there are already many Univé clients in that area. These aspects influence the way consultants must approach their clients. Meeting the wishes of clients also means being more available, through the use of new communication channels as internet but also through the expansion of the opening hours. To fulfil these demands, the director expects that the employees will be more flexible and independent in their way of working, which are the main values of the adhocracy culture. In this situation the power, according to Cameron and Quinn, flows from task team to task team depending on which problem is addressed at the time (2006).

HOW TO CREATE THE PREFEERD ORGANIZATIONAL CULTURE FOR UNIVÉ Z?