Master thesis by David Schrijver May, 2009
Structural and cultural differences and their influence on
Organizational change
Structural and cultural differences and their influence on
organizational change
Structural and cultural differences and their influence on
organizational change
- A case study at an IT-services firm -
Master thesis by David Schrijver Student number: 1336339 Msc Business Administration Change management Utrecht, 6 May 2009 Dr. M.P. Mobach
Supervisor University of Groningen
Dr. K.S. Prins
Reviewer University of Groningen
University of Groningen
Faculty of Economics and Business Postbus 800
Summary
Purpose - The aim of this research is to determine structural and cultural differences
between two departments at Company X. More specifically, how do structural and cultural differences influence the change readiness at these two departments of Company X. The two investigated departments are both working with Business Intelligence (BI) products. And are influenced by an acquisition in this BI-market. The intention of Company X is that in the future the two involved departments should closely cooperate. That is why this research can be viewed as an advance towards an organizational change.
Design/Methodology/Approach - A quantitative research has been conducted to determine
the structural and cultural differences between two departments at Company X. The research consisted of a questionnaire that was constructed around the structure and culture of two departments. Furthermore, statistical analysis was used to determine whether there are differences/similarities on structure and culture between the two departments.
Findings – The findings show that there were differences between the structure and culture
of both departments, although these differences are minor. Similarities were found on centralization, formalization and, vertical and horizontal differentiation. In contrast, the research on professionalism, specialization, collaboration and proaction show differences between the two departments. Especially, the familiarity with the other departments is relatively low and needs improvement. These differences have a negative influence on the change readiness of the organization towards an organizational change. Because change readiness is achieved when there is alignment between the beliefs and cognitions between the individuals of both departments. Several recommendations are given to overcome the differences and make the organization more ready for organizational change.
Keywords: Business Intelligence, Challenges, Change Management, Change Readiness,
Table of contents
Chapter 1: Introduction ... 7
1.1 Reason for research ... 7
1.2 Company X ... 7
1.3 Case ... 8
1.4 Business Intelligence (BI) ... 9
1.5 Integration SAP – BO ... 11
1.6 SAP – BO at Company X... 12
Chapter 2: Conceptual ... 13
2.1 The aim of this research ... 13
2.2 Research question ... 13 2.3 Conceptual model ... 13 2.4 Sub questions ... 15 2.5 Structural differences ... 15 2.6 Cultural differences ... 15 2.8 Change readiness ... 16
Chapter 3: Research methodology ... 17
3.1 Research design ... 17
3.2 Data collection method ... 17
3.3 Data analysis ... 19
Chapter 4: Organizational structure ... 21
4.1 Specialization ... 23 4.2 Functional differentiation ... 24 4.3 Professionalism ... 25 4.4 Formalization ... 27 4.5 Centralization ... 28 4.6 Vertical differentiation ... 30 4.7 Conclusion ... 30
Chapter 5: Organizational culture ... 32
5.1 Collaboration ... 36
5.2 Proaction ... 37
5.3 Conclusion ... 38
6.1 Determining Change Readiness ... 41
6.2 Department management ... 42
6.3 Sector management ... 43
6.4 Conclusion ... 44
Chapter 7: Conclusion and discussion ... 45
Chapter 1: Introduction
People in organizations can be either the key to achieving effective change, or the biggest obstacles to success (Smith, 2005). This thesis contains a case study of an organizational change at a large IT-services firm, in which two departments are involved. The departments and the individuals at these departments will be subject of this research.
This chapter will show all the relevant deals with some concepts that are important for understanding this research. In particular, the context of current literature and the case organization will be elaborated on. The case organization for this research is Company X Nederland, which is why important information and core numbers about Company X will be part of this chapter. It helps to understand what this research is about. Furthermore, a complete overview of the case is given; text figures and facts are used to illustrate this case.
1.1 Reason for research
This research started with the need of Company X to gain insight about the changed situation on the Business Intelligence (BI) market and how to profit from this change. Company X wants to change its organization around the changed situation on this market. This research will lead to an advice that shows in which degree the organization of Company X is ready for such a change.
1.2 Company X
Company X is a French company that operates in 36 countries all over the world and employs more than 86.000 people. Company X helps clients deal with changing business and technology issues. The Company X group consists of two firms: Company X and Sogeti. This research is conducted at Company X Nederland in Utrecht, which is part of the Company X group. Company X Nederland employs more than 10.000 people and consists of three sectors. Figure 1.1 shows where this research is conducted.
1.3 Case
This research is constructed around a case at Company X; the case is about software company SAP, that took over Business Objects (BO); another software company. SAP is a German software company that specializes in business software solutions. SAP has several modules; one of them is SAP BI that is a part of a group of SAP products that is called SAP Netweaver. SAP BI is a so-called “data warehouse system”, in which firms can store their data. SAP BI can also be called an Enterprise Resource Planning (ERP) system; this kind of system helps a company in giving direction to all its processes by providing information. Important decisions are often based on these systems. SAP employs more than 50.000 employees over more than 50 countries worldwide. Its growth strategy was to facilitate further growth with obtaining small medium enterprises (SAP, 2007). However, in 2008 SAP deviated from this strategy with the acquisition of Business Objects, a French Business Intelligence (BI) company, this acquisition costs SAP almost 5 billion euro. Business Objects is also a software company; that specializes in BI solutions.
In the strong growing BI-market with expected annual growth-rates of 12% until 2011 (Wahl, 2008), SAP believes that with the acquisition of Business Objects it has, “the clearest vision and the strongest products to lead this market in the next wave of innovation with business performance optimization” (SAP, 2008).
IT-services firms, which deliver services around SAP and Business Objects to their customers ,are affected by this acquisition. Especially, companies who work with both of these services. Company X Nederland is such a company; it delivers services for and SAP and Business Objects solutions to their customers. Company X is an official partner of both SAP and Business Objects. Company X Nederland has one department that is responsible for SAP BI and another department that works with Business Objects as BI-tool, as shown in the next figure.
1.4 Business Intelligence (BI)
Managers of organizations in all levels are dependent on detailed and accurate information when making decisions. Every company gathers data and most of these companies store these data in large IT-systems called data-warehouses. This data is translated into information in order, to profit from this data. This can be done by; people, procedures, hardware and software. It is called information when specific meaning can be given to data (Boddy et al., 2005). The process of translating data into information is also called Business Intelligence (BI).
More specifically: BI can be defined as “business information and business analyses within
the context of key business processes that lead to decisions and actions” (Williams &
Williams, 2007). Another widespread, and almost similar definition of BI is: “information or
knowledge about the business (internal and external) that predisposes people towards action, based on the analysis and interpretation of this information” (van Beek, 2004).
BI is not a single product, nor a technology, nor a methodology. BI combines these three to organize key information that management needs to improve profit and performance (Williams & Williams, 2007. The definitions by Williams & Williams will be the foundation for the understanding of BI in this research.
The BI-market has high potential and its volume increases every year. The expected growth untill 2011 is approximately twelve percent (Wahl, 2008). This makes the BI-market interesting for many IT-firms. Large IT-firms like SAP, Oracle, and IBM increased their market share in the BI-market. These firms were participating in the BI-market, however they were not “leading” companies. These organizations became industry leaders due to a couple of acquisitions of BI software firms. Oracle was the first firm to move, it acquired Hypernion in 2007, SAP followed with the acquisition of Business Objects and furthermore, IBM acquired Cognos (Hickins & Taft, 2007).
An evolution of the BI-market is expected due to three important factors: characteristics of newer technologies like Service-Oriented Architecture (SOA), new ways of obtaining information and mergers and acquisitions (Ferguson, 2007). With rapidly growing revenue expectation and a technology that is still financially sound, it is easy to understand why companies enter the BI-market. The acquisitions by IBM and SAP are found to be defensive since they followed Oracle when it acquired Hypernion. The expectations for the BI-market are that this market will consolidate. The consequences of a consolidating BI-market are twofold (Hickins & Taft, 2007):
1. Advantage of consolidation; Cognos and others can focus on innovation because they don’t have to deal with rationalization or product overlap;
2. Disadvantage of consolidation; all new BI-players (SAP, Oracle, IBM and Microsoft) have to focus on product integration, potentially pulling recourses away from and reducing priorities of new functional development.
Besides the consolidation of the market, there are also other expectations for the BI-market in the near future (Agosta 2008):
Conventional wisdom will be wrong in 3 ways:
o Data warehousing architecture will be rationalized; o The acquisitions will reduce vendor risk;
o “Data warehousing made simple” becomes even simpler.
The convergence of BI and Business Process Management will accelerate; The end of the beginning for the Data Warehousing Appliance;
Real-time and near real-time update of the Data Warehouse Advances.
1.5 Integration SAP – BO
Business Objects is a vendor of enterprise BI platforms. Business Objects is compatible with several data warehouse systems, for example SAP and Cognos. During the takeover by SAP, Business Objects remained operating as a stand-alone-unit within the SAP group. However, expectations of experts from Company X and SAP are that this will be temporary and that Business Objects will replace the front-end BI-solution of SAP (SAP roadmap). Technically, it is already possible to integrate SAP and Business Objects, although both solutions can also be integrated with other products, and is by that means not exclusive to each other. Business Objects can be integrated with other data warehouses as well. However expectations of experts are that SAP-BO will present a combined product in the near future that should penetrate the market.
One important aspect of the agreement between SAP and Business Objects was that Business Objects continued operating as a standalone unit within the SAP group. Although there is a small overlap (about fifteen present, Farber 2008) in the product portfolio of the two companies, they claim that they complement each other and that they find themselves a perfect match (Wahl, 2008). The next figure is extracted from the SAP – BO roadmap that was made by SAP. It shows what the functions and possibilities are of both systems and how they complement each other.
Analysts Task Workers
Portal
Composition Environment
Analytic Engine & In-Memory
Data Warehouse
Master Data Management
Best connectivity to SAP
SAP Netweaver
Knowledge Workers & Business Users
Enterprise Reporting & Dashboards
Ad-hoc Query, Analysis & Reporting
Text Analysis
Semantic Layer
Data Quality
Data Integration open to any source
Business Objects
+
Figure 1.3 Compatibility of SAP and Business Objects
This figure shows that SAP Netweaver is focused on the storing and design of data, for example: data warehouse and master data management are functions that are concerned with the management of data. Business Objects on the other hand contains functions such as text analysis, enterprise reporting, and dashboards are concerned with the front-end part of data. Business Objects delivers more visible output for companies than Sap Netweaver does. SAP Netweaver and Business Objects complement each other for the largest portion on their functionality (Wahl, 2008).
1.6 SAP – BO at Company X
Chapter 2: Conceptual
Company X is interested in thorough insights around the current situation of SAP and Business Objects. Furthermore, they look for ways how to use this changed situation on the BI-market to improve its own position on this market. The current level of information around this subject is low and, in debt information would benefit Company X. This need for information is translated into words in the following section.
2.1 The aim of this research
The aim of this research is to determine structural and cultural differences between two departments at the organization of Company X. Because the differences between the two departments may cause barriers and advantages in strengthening the cooperation between P42 and P70 in a possible organizational change. Furthermore, it will be investigated in what way these differences will determine the readiness of the two departments for an organizational change. This will lead to an advice about the differences on structure and culture between the two departments and in which way this determines the readiness for an organizational change.
2.2 Research question
In order to achieve the aim of this research the following research question was constructed:
What are the structural and cultural differences between the departments P42 and P70 and how do these differences determine the change readiness of this organization?
This research question will be further explained by the conceptual model, which will be elaborated upon in the following section.
2.3 Conceptual model
into a new form of cooperation on the field of BI. Change readiness is an important variable in this process and will return in the conceptual model of this research.
Figure 2.1 Change model
The structural and cultural differences that exist between the departments P42 and P70 are investigated by performing a quantitative research among the BI-consultants of both departments. Second part of this research will be if these differences affect the change readiness of an organization. Ultimately, the degree of change readiness indicates the possibilities for a transformation towards the situation in which Company X combines the strengths of both BI-departments into a new organizational form.
Figure 2.2 Conceptual model
2.4 Sub questions
This research will focus on the structural and cultural differences between P42 and P70 and the impact it has on change readiness. This thesis can be seen as a research that leads to a transformation.
The following sub questions are constructed on order to explain the relationships in the conceptual model:
1. What structural variables can be distinguished and what are the differences on organizational structure between P42 and P70?
2. What cultural variables can be distinguished and what are the differences on organizational culture between P42 and P70?
The answers on sub questions 1 and 2 will explain which differences between P42 and P70 exist.
3. How do the structural and cultural differences between P42 and P70 influence the change readiness of the organization for a transformation towards a new organizational form?
The answer on this sub question will relate the first two sub questions with the subject of change management and in what way the organization is ready for a transformation.
2.5 Structural differences
First of all, this research will focus at the structural differences between the departments P42 and P70. Literature will be presented about organizational structure and its variables. Authors like Mintzberg, Daft and Child will be an important input for the literature research on organizational structure. That is because, their theories are viewed as leading by many theorists.
2.6 Cultural differences
2.8 Change readiness
Chapter 3: Research methodology
This aim of this research is to determine the structural and cultural differences between the departments P42 and P70 and link these with the change readiness of the organization with regard to this case. The method for achieving these results will be described in this chapter.
3.1 Research design
A quantitative research method was chosen to research the structural and cultural differences between the departments P42 and P70. Due to the fact that the subject is very complex and the experts on this subject are the BI-consultants, these were asked for their expertise. Six experts were interviewed about this subject. These “explorative” interviews gave input on which questions to ask in the quantitative research part. Furthermore, these interviews gained insight in the vision of the management view on this subject and these findings will also be used in this research.
3.2 Data collection method
The method for researching structural and cultural challenges in organizational change that is used in this research is based on an existent method. It is based on the method of a research that was proposed by Hofstede et al. (1990). Hofstede et al. did some explorative interviews to determine how the quantitative research was going to be shaped. The used method in this research can thereby be classified as a qualitative research (exploratory) that determines the quantitative part of this research.
These explorative interviews were unstructured and were focused on the view and experience of the interviewees. Unstructured interviews were chosen to give the interviewees all the room for coming up with expectancies themselves. When these kinds of interviews are structured it will produce answers that are steered by the researcher (Gubrium and Holstein, 2001). Hence, an unstructured interview gives freedom to the interviewees and gives the opportunity to get one layer further than with structured interviews (Gubrium and Holstein, 2001).
3.2.1 Quantitative research
carefully constructed in consultation with Company X. The questions that were constructed are focused at the specific situation of this case. Group mailing through the secretaries of both departments was used to spread the questionnaire, and after a week all recipients were individually approached by mail or telephone for a remembrance.
The questionnaire consists of two parts; structural and cultural questions; as can be seen in appendix 1. Appendix 1 includes the questionnaire that was sent out to all the consultants from P42 and P70. A questionnaire of 48 questions has been sent out to 73 BI-consultants from the departments P42 and P70 at Company X. Except the questions about professional experience, all questions of the other categories contained a Likert-scale and had to be filled in with a value from 1 to 5. These values rate to what extent the recipient agrees or disagrees with the statements or questions (Likert, 1932).
Measuring culture is a difficult matter, because the variables of culture and the interpretation of these variables are more subjective than those of organizational structure. Measuring culture is a field of study that also appears often in sociological studies. Gross and Rayner (1985) presented a method to measure culture in social organizations. The method for measuring structure and culture was almost similar to that of organizational structure. The method focuses on researching the presence of the variables from the “onion model” by Hofstede.
3.2.2 Respondents
The group of organization-members that received this questionnaire is; the BI consultants of the departments P42 and P70. In total 73 consultants were asked to fill in this questionnaire. These BI-consultants were reached by mailing and a by newsletter that both departments make and send to their consultants.
P42 P70
Number 24 20
Male 23 15
Female 1 5
Grade for content of the work. (Mean) 7,67 7,5
Grade for content of the work. (Std. Deviation) 1,31 1,05
Figure 3.1 Key numbers of respondents
What is remarkable about these key numbers is the high and almost similar appreciation of the content of the work. Furthermore, both departments are characterized by a high percentage of men, however this characteristic can be explained with the highly masculine IT-business where this research is conducted.
3.3 Data analysis
Chapter 4: Organizational structure
What structural variables can be distinguished and what are the differences on organizational structure between P42 and P70?
Many books and academic articles have been written about the topic of organizational structure, it is a topic that is elaborated on thoroughly in literature. This has as consequence that there is also high diversity in findings about the understanding of organizational structure. Several definitions about structure can be identified, some leading definitions are:
”The structure of an organization can be defined simply as the sum total of the ways in which its labor is divided into distinct tasks and then its coordination is achieved among these tasks.” (Mintzberg, 1983)
“Structure is the consisting of formal reporting relationships, including the number of levels in the hierarchy, the span of control of managers and supervisors, and the communication within the organization across departments.” (Daft, 1989)
The definition by Daft really looks like a definition that was defined earlier by Hage and Aiken (1967); “structure refers to an organization’s internal pattern of relationships,
authority, and communication.”
The definitions used by Daft (1989) and Hage & Aiken (1967) added the element of communication, and almost have the same content. All these authors pose that communication plays an important role in the structure of an organization. The definitions that Daft and Hage & Aiken propose will be leading for this research, because they explicitly name the element of communication in their definition. And because of the nature of this research (research that involves two departments), communication is an understanding that is very important and needs to be included. Now that is defined what organizational structure is, the next step is to show what the content of the concept is and how organizational structure can have an impact on its organization.
organization, it also influences the behavior of the individual employee (Dalton et al., 1980). In fact, that seems logical, because it is imaginable for example that the level of hierarchy in an organization affects the way of working by an employee. However, this also includes that if a structure is not appropriate for the organization, an employee cannot perform at a hundred percent. Organizational structure is by this means an important matter for an organization and its performance (Child, 1972).
Structural variables form together the structure of an organization. To give a complete overview, the following characteristics of organizational structure will be elaborated on:
specialization, functional differentiation, professionalism, formalization, centralization
and vertical differentiation (Damanpour & Gopalakrishnan 1998, Daft 2001 and Pugh & Hickson 1968).
Figure 4.1 shows which structural variables will be paid attention to and also shows which elements of these variables will be measured. The table is made in perspective with the possible differences between the two departments at Company X that will be researched.
Structural variable To be measured
Specialization Representation of different specializations within each division.
Functional differentiation Number of divisions in organization, in this case functional differentiation is
supposed to be the same at the two departments.
Professionalism Average number of years of education and working experience.
Formalization Level of documentation, descriptions and prescriptions.
Centralization Power at one single point or at more points
Vertical differentiation The level of vertical differentiation is arranged at the top of the organization. In
this case vertical differentiation is supposed to be the same at the two departments.
Figure 4.1 Measurable structure variables
P42 and P70. In fact, departmental structure is going to be measured. For this reason the variables; functional and vertical differentiation will not be measured, because these variables are in particular measurable for the organization as a whole and are regulated by the general management of Company X. Nevertheless, both variables will be described to give the most complete view of the organizational structure at the two departments.
4.1 Specialization
Specialization can be defined as: “the degree to which organizational tasks are subdivided into separate jobs” and is also called; division of labor (Daft, 2001). Adam Smith was one of the first to describe the division of labor in his well-known book “The wealth of nations” (Smith, 1776). In the wealth of nations, Smith states that even the production of the most commonplace goods such as pins or nails need a combination of a very large number of tasks and processes.
Smyth and Lo (2000) describe two types of division of labor. The first one is the detailed division of labor as defined by Adam Smith. This kind of division has most to do with organizational control and levels of hierarchy. The second type is the social division of labor; this type originated in the work of Karl Marx. The social type is strongly related with organizational learning, the more soft side of organizational structures.
This variable is expected to differ among the two divisions in this research. Specialization has to do with the individual and will also be measured at the individual level. The expectations are however that from the individual level, conclusions can be drawn for the divisional level.
4.1.1 Results specialization
The level of specialization at both departments was expected to differ from each other. The expectations were that P42 is focused only at SAP while P70 would focus on more than 1 BI-tool, which would cause a higher level of specialization at P70. Five questions were asked to find out about the level of specialization at both departments. The following table shows the outcomes of these questions by the percentages that the questionnaire has generated for both departments.
Question z p-value Difference Mean
Rank-score I am specialized in more than 1 BI-tool. -2,32 0,01 P42 ≤ P70 P42 17,98
P70 26,63 My practice colleagues are specialized in more than 1
BI-tool.
-2,06 0,02 P42 ≤ P70 P42 18,96 P70 26,75 When I need help on the subject of SAP –
BO there are always enough practice-colleagues who are able to help me.
-2,04 0,02 P42 ≤ P70 P42 18,98 P70 26,73
Figure 4.2 Results on Specialization
The lower the level of specialization, the more specializations a consultant has. Between the two departments exist several differences on the level of specialization. Only the three last questions of this variable generate a significant difference between the two departments. P70-consultants are specialized in more than 1 BI-tool, this is logical, because P42 focuses only at SAP while P70 focuses at a wider range of BI-tools. Furthermore, consultants of P70 characterize their practice colleagues as better capable to give help on the topic of SAP – BO that also implies a lower level of specialization. It can be concluded that three of the five questions about specialization are significant higher rated by the consultants of P70.
4.2 Functional differentiation
organizational employees (Daft, 2001). Functional differentiation is in particular measurable for the organization as a whole and less suitable at a divisional level. Functional differentiation is one of the 6 variables of organizational structure, however not an interesting one in this case. Because functional differentiation is present as an entity, there is no room in this variable for perception. That is why functional differentiation is assumed to be equal within the departments of this organization.
Functional differentiation within the organization of Company X is the same and is divided by functions as was explained in figure 1.1. The level of functional differentiation is also supposed to be the same within the departments of P42 and P70. There are three levels of consultants; consultant, senior consultant en management consultant, who are specialized in one or more areas. Furthermore, there are interest groups that represent such an area of specialization within the department. And furthermore there are so-called service-lines that combine similar specialization-areas between the departments of Company X. The functional differentiation among departments is the same, however the amount of experts and the number of specializations are different, however not relevant for this case, because we take a specific look at two departments. It can be concluded that there are no differences between the two departments P42 and P70 on functional differentiation.
4.3 Professionalism
The term professionalism reflects professional knowledge of organizational members, which requires both education and experience. A certain level of professionalism can be determined with the requirements for holding a position in the organization. These requirements can be seen as a certain level of professionalism that the organizations expect from their employees. The further development of the level of professionalism can be reached by training. Training can be defined as the process by which job-related skills and knowledge are taught (Mintzberg, 1983). Professionals are trained over long periods of time, before they ever assume their positions.
functions are represented and which knowledge is present at each department. How professional are both departments and in what way does the professional level at both departments differ and complement each other?
In this research is chosen to divide professionalism in two “sub-variables”: experience and knowledge, because experience and knowledge need to be measured on two different scales. Experience is going to be measured in years and knowledge on a Likert scale (Likert, 1932).
4.3.1 Results professionalism
Explorative interviews showed that there are differences expected on the level of professionalism as well. Especially in the knowledge and experience that consultants at both departments have. To measure this variable, consultants of both departments were asked about how much experience they had in different fields of profession and about the knowledge they obtained about SAP and Business Objects. That is why measuring the variable of professionalism is divided in two “sub-variables” in this research; experience and knowledge. Experience is measured in years and knowledge on a Likert scale. Eight questions were constructed in total to measure professionalism, five for measuring the level of experience and three for measuring the knowledge the consultants obtain, figure 4.2 show the results on the experience-level of the BI-consultants.
Question Mean
Rank-score
Standard deviation For how many years do you have experience in
working? (in years)
P42 9,65 8,18 P70 5,95 6,94 For how long have you been working for Company
X? (in years)
P42 5,74 7,28 P70 3,68 5,09 For how long have you been working on your field of
specialization? (in years)
P42 4,38 3,3 P70 4,42 4,38 For how many years have you been working in
Front-end BI? (in years)
P42 3,15 2,53 P70 1,62 1,93 For how many years have you been working in
Back-end BI? (in years)
P42 2,82 2,63 P70 0,81 1,65
The average of years of working experience at P42 is much higher than at P70, respectively 5,15 and 3,3. That means that the level of seniority at P42 is higher than that of P70. Furthermore the results of questions 4 and 5 are remarkable, because it shows that P42-consultants are much more experienced in Front-end and Back-end BI than their colleagues of P70. That is a remarkable fact, because the expectations were that both departments would complete each other on these variables. Because Front-end experience was supposed to be present at P70 and Back-end at P42, however this research has showed that this is not the case.
Question z p-value Difference Mean
Rank-score I have enough knowledge about SAP. -4,27 0 P42 ≥ P70 P42 29,92
P70 13,6 I know what to advice the customer regarding their SAP -
BO strategy.
-2,76 0,003 P42 ≥ P70 P42 27,25 P70 16,8
Figure 4.4 Results on Professionalism (knowledge)
The outcome on experience is in line with the outcomes on measuring the level of knowledge (figure 4.4), P42 scores also higher than P70 does. If experience is higher at P42 it is a logical cause that the knowledge-level is also higher.
There are also some notable outcomes if we look at the separate questions. P42-consultants do find that they have much more knowledge about SAP than their P70-colleagues. The second significant difference is on the last question. P42-consultants know better what to advice the customer regarding their SAP-BO strategy, at least in their perception. The conclusion can be drawn from this variable that both departments do have enough knowledge about their own tools. However, to get a better grip on this situation it is probably necessary to map all the specific BI-tools and match these with the required tools that are specified by both departments.
4.4 Formalization
procedures and elaborate forms and written documents to justify any and all actions. And low formalization implies many verbal discussions and approval on major issues and perhaps little discussion on minor issues (Reynolds, 1986).
Formalization can simply be measured by counting the number of pages of documentation within the organization. However more detailed results ask for a different approach. The level of formalization says something about how much in an organization is written down or is recorded. Accordingly it says something about how bureaucratic an organization is. That is why a machine bureaucracy (Mintzberg 1983) has a high level of formalization.
Perception plays an important role in measuring the formalization within two divisions. When formalization is measured in pages it does not say anything about the perceptions that individuals have about the level of formalization.
4.4.1 Results Formalization
The level of formalization at both departments was also measured in the questionnaire. The consultants were asked if they report work that they have done and to whom they do this. The results of five questions about the level of formalization are presented in the appendix, and not here because the outcomes did not deliver any significant differences. The higher the scores, the higher the perceptions of formalization at both departments are.The overall level of formalization between the two departments does not differ much between the two departments. There is no significant difference on any of the questions that determine the level of formalization. That means that in this case the level of formalization at both departments cannot be proved different.
4.5 Centralization
The power perspective is another important feature of organizational structure. Who is in charge in the organization, who has control over the resources? Literature distinguishes a continuum on which organizations can be placed according to the power perspective.
Figure 4.5 Continuum of centralization
When all the power for decision-making rests at a single point in the organization, we shall call the structure centralized (Mintzberg, 1983). The centralized organizational structure is characteristic of the classical school of management, which is represented by the work of Taylor. In the most extreme centralized form all decisions are transmitted through a top-down pattern.
With the evolution of organizational theories that differentiated themselves from the classical school of management came also the appearance of decentralization as a new understanding in organizations. Decentralization is the opposite of centralization and holds that the power of decision-making rests at more than one point in the organization. Decentralization is an understanding that is most popular in smaller organizations. The introduction of decentralization was according to Mintzberg (1983) driven by three conditions:
1. Not all decisions can be understood in one brain
2. The organization can respond quickly to local conditions 3. Stimulus for motivation
The understanding of decentralization has become popular in the last decades. An organization can be placed on the continuum of centralization. The more the power is at less points in the organization, the more centralized the organization is. Centralization is not only a structure variable, but it is also by some described as a cultural variable (Reynolds, 1986) that is what makes this variable very interesting for this research. The centralization variable will in this research be viewed as a structural variable that is strongly related to the organizational culture.
4.5.1 Results Centralization
around the subject of SAP – BO. Important decisions about SAP – BO can only be taken by a few people in both departments.
4.6 Vertical differentiation
Vertical differentiation represents the number of levels in an organization’s hierarchy. Here literature distinguishes two strands of hierarchy. The one that proposes that organizations should be designed as large hierarchies where decisions flow from the top through the organization (Conger, 2000). And the other strand, which proposes that hierarchies need to be flat and participative (Bennis, 2000), or that hierarchies should not be present in organizations at all (Peters, 1992).
Information handling plays an important role in organization structure that is highlighted by an article of Buckland (1989). He states that the more effective information is handled, the flatter the organizational hierarchy and the bigger the centralization of control. This variable correlates strong with the variables functional differentiation and centralization as is demonstrated in the findings of Buckland. The hierarchy of the departments at the organization of Company X is determined by Company X. This means that both departments do have the same hierarchy and will also be viewed as having the same level of hierarchy in this research.
The level of hierarchy is determined by the design of the whole organization of Company X. This means that both departments do have the same hierarchy level. Figure 1.1 has already demonstrated the vertical differentiation in the organization of Company X. Within the departments the structure is also equal. Every department has a so-called practice manager that is the leader of its practice. Furthermore, there are interest group leaders and managers of assignation. Furthermore there is also a level of hierarchy between the consultants, from management consultant till consultant. This vertical differentiation is the same within the departments of P42 and P70 and that is why in this research vertical differentiation is assumed to be equal.
4.7 Conclusion
structure at the two departments at Company X: specialization, professionalism, formalization and centralization.
We can conclude from this chapter that the structure of both departments at Company X differ on several points from each other. However four out of the six variables were not proved to be different at all. Functional differentiation and vertical differentiation were assumed as being equal at both departments, and were described for this case. Centralization and formalization were measured through a questionnaire and the questions on both variables did not process any significant differences between the two departments. The variable specialization did however deliver some significant differences. There exists a difference on the level of specialization, P70 consultants are specialized in more tools than their colleagues of P42. The only logical solution to solve these differences is by the education and training of both departments. Because both departments have their own specific specialization, education and training needs to be specified for both departments. Measuring professionalism generated also significant differences. Consultants of department P42 obtain more experience than the consultants of department P70. Especially the overall level of experience is higher. Furthermore, the experience in front-end and back-end at P42 is also higher than that of P70. These differences can be viewed as a barrier in a transformation, however can also be viewed as a match between the two departments, they can benefit from each other and turn these differences into an advantage in a possible transformation.
Chapter 5: Organizational culture
What cultural variables can be distinguished and what are the differences on organizational culture between P42 and P70?
Culture is a concept that is “relatively” new, the term organizational culture entered the United States academic literature with an article of Pettigrew in 1979 (Hofstede et al. 1990). Many articles and books have been written about organizational culture, Williams (1983) stated: “culture is one of the three most complicated words in English language.” Furthermore Alvesson (2002) states: “culture is, however, a tricky concept as it is easily used
to cover everything and consequently nothing”. These statements make clear that the
understanding of organizational culture is complex. To show the diversification in definitions of organizational culture, three different definitions will be given:
“How things are done around here.” (Drennan, 1992)
The collective mental programming of organizational members. (Kamann, 1996) Culture contains especially “the meanings” and “symbolism” and less an
understanding as “values”. (Alvesson, 2002).
The First two definitions show that culture is especially the general understanding of its own organization within the organization, standards and values. In contradiction the last definition is different than the others, because it states that value is not part of organizational culture. These three definitions are only a few examples of the many definitions there are, there is no real consensus among experts about a definition of organizational culture (Hofstede et al. 1990). Nonetheless, the three definitions will give the reader an idea. It is more interesting to dive deeper into the content of organizational culture, because the three mentioned definitions are rather abstract. Culture is according to Daft (2001) also one of the contextual dimensions of organizational structure. This section will give ground for measuring organizational culture at the involved departments at Company X.
of culture. The “onion-model” of Hofstede (2004) shows 4 culture layers in which culture can be determined, from visible (symbols) till less visible aspects (values).
Figure 5.1 Hofstede’s culture model (2004)
Culture is not the overt behavior or visible artifacts one might see when visiting the company (Schein, 1983). It is more about the assumptions that underlie the values and determine behavior patterns and also visible artifacts. Organizational culture is about how organizational members see and interpret their organization. The understanding of organizational culture is strongly related with the understanding of corporate identity; both understandings are often mistakenly misused. Organizational identity is focused at the internal part of the organization, how members of the organization see their own organization.
The introduction in this paragraph has made clear that there is no general agreement on the definition of organizational culture. That makes it difficult to define or choose variables to measure organizational culture, because there is no general agreement on the cultural variables amongst theorists. Organizational culture is hard to express in variables, because meanings are widespread. The most comprehensive understanding of organizational culture is reflected by a definition of Schein (1988): “a pattern of basic assumptions, invented,
discovered, or developed by a given group, as it learns to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid
Visible
Less visible
and, therefore is to be taught to new members as the correct way to perceive, think and feel in relation to those problems.” Culture is a property of a group, in this research the two
departments represent two groups, and in fact focuses this research at two groups within the organization of Company X.
To complete the definition and modeling of organizational culture the following model of Schein (1988) divides culture into three levels:
Figure 5.2 Levels of Culture (Schein 1988)
The middle box is the one that is going to be measured in this research, the upper box has a strong link with organizational structure. The bottom box is very hard to determine, because underlying assumptions are former values that are now incorporated into the soul of the organization and are thereby very hard to measure. Values are also according to the “onion model” of Hofstede less visible. This research will give the reader an insight in variables of culture on a value-level, measured at two departments at Company X.
Figure 5.3 Eight dimensions of organizational culture (Saxena & Shaw 2008)
The model presents eight cultural dimensions/variables, which together determine the organizational culture of a firm. In this research is chosen to pick two out of the eight dimensions and focus on these dimensions. The qualitative research raised questions about collaboration within the department and between the departments (collaboration). The level of collaboration is important to determine whether there exists collaboration on BI within the departments and if there is ground for a further collaboration between the two departments. Furthermore the level of collaboration is researched to determine to what extent both departments are in the adaptation towards the new BI-situation. Compared to the structure of both departments the explorative research did not generate possible differences between the two departments. It highlights the need for measuring these two variables to see if there is ground for a further collaboration on the new BI-situation. With these two dimensions a complete as possible view of the culture of both departments will be given in the light of the Company X-case.
5.1 Collaboration
Collaboration is the first cultural variable that was measured. Collaboration is about giving help to, and asking help from others (Saxena & Shaw, 2008). It means working together (both individuals and groups) to solve problems and developing team spirit. Managers and colleagues determine the level of collaboration and encourage: team working, group cohesiveness, appropriate resource sharing among the members, proper use of leadership, mentoring, and coaching in order to build the culture of collaboration and to help them get over the feeling of lack of adaptability (Saxena & Shaw, 2008).
In the Company X case two kinds of collaboration are apparent. Collaboration within the own department and with colleagues of the other department. That is why the variable of collaboration is split-up for this case.
5.1.1 Results Collaboration
Collaboration is divided into collaboration within the own department and collaboration with the other department. So if P42 had to fill in this part of the questionnaire, they gave their opinion about P70 colleagues and vice versa.
Question Z p-value Difference Mean
Rank-score I spoke with practice-colleagues about SAP - BO. -2,25 0,01 P42 ≥ P70 P42 25,71
P70 17,32
Figure 5.4 Results on Collaboration within the own practice
Figure 5.4 shows the only significant difference out of the 4 questions that the consultants were asked about collaboration within their own department. The overall mean rankings of both departments on this sub variable are close to each other (see appendix 2). Only the first question contains a significant difference in answers between the two departments. The questionnaire proved that the subject of SAP-BO is much more discussed than in department P70, a mean rank of respectively 25,71 and 17,32. Moreover, we can conclude that the collaboration within both departments is highly appreciated and that the other three questions did not generate a significant difference between the two departments.
collaboration with the other department. However, before these questions were asked, the BI-consultants were asked to fill in these questions only if they were familiar with the other practice. Otherwise they could proceed to the next pair of questions about another variable. Eight consultants of P42 (33,33%) and ten consultants of P70 (50%) responded that they were not familiar with the other practice. This is an important result in the analysis of the structural and cultural differences between the two departments. This is also an explanation why there are no significant differences between the two departments, there are too little results to determine whether there are significant differences or not. Furthermore if we take a look at the mean rank-scores we see that these are relatively low. The conclusion that can be drawn from these findings is that are very little BI-consultants that are familiar with the other department and if they are, the subject of SAP and Business Objects is underexposed.
5.2 Proaction
Proaction is the second variable picked out of the model of Saxena & Shaw that is going to be measured in this case. Proaction means taking initiative, pre-planning, taking preventive action, and calculating the pay-offs of an alternative course before taking action (Saxena & Shaw, 2008). An important part of proaction is the support of the culture of the organization for starting initiatives. Management of the departments play an important role in this support; they must encourage and support their employees, by generating a stimulating environment/culture within their department. The employees must also be aware of this stimulus and must act towards it. In this case the level of proaction of both departments towards a changed BI-situation is subject of the research. The variables collaboration and pro-action will be measured in the quantitative part of this research.
5.2.1 Results Proaction
his/her knowledge on the SAP – BO tasks I have to execute” were given to the consultants to answer these questions.
Question z p-Value Difference Mean Rank-score
1. There is a concrete planning in SAP trainings. -3,28 0 P42 ≥ P70 P42 27,44 P70 15,13 2. Practice management supports me with its knowledge
on the SAP - BO tasks that I have to execute.
-1,77 0,04 P42 ≥ P70 P42 24,88 P70 18,37 3. The manager of my assignation supports me with
his/her knowledge on the SAP - BO tasks that I have to execute.
-1,71 0,05 P42 ≥ P70 P42 24,75 P70 18,53 4. I can develop myself on the area of SAP - BO in a
satisfying way.
-2,38 0,01 P42 ≥ P70 P42 25,9 P70 17,08 5. My practice facilitates me when I want to learn more
about SAP.
-2,79 0,00 P42 ≥ P70 P42 26,58 P70 16,21
Figure 5.5 Results on Proaction
Eleven statements about the variable proaction were given to the BI-consultants of both departments. The outcomes on five of these statements turned out to be significantly different between the two departments and on all these five questions P42 scores higher than P70. That implies that P42 is further in preparing for the new situation. A significant higher score on question 1 and 5 is not remarkable, because the core-business of P42 is SAP. However a higher score on questions 2,3 and 4 needs a further analysis. P42-consultants feel more support from their practice manager and their manager of assignation. This can mean two things: P42-consultants get more support, or they need more support that causes a higher appreciation. Also are P42-consultants more satisfied with their development on the area of SAP – BO (25,9 against 17,08). The outcomes on this variable shows that there are many large differences in perception of the status of both departments in the process towards an adaptation of the new BI-situation, it is likely that this will cause a challenge in an organizational change.
5.3 Conclusion
The results of the research showed that there is high collaboration within both departments and only 1 significant difference on the statements about this variable. A remarkable outcome was that there is low knowledge about what the other department does and a low level of contact, which causes low mean rank-scores on these questions (appendix 2). This can cause serious challenges and if a further cooperation is planned this forms a serious point of attention, because there is low ground for collaboration.
Chapter 6: Change Management
How do the structural and cultural differences between P42 and P70 influence the change readiness of the organization for a transformation towards a new organizational form?
The actions that were already taken in this case are mainly orienting steps; talking about possible options for the future of both departments by a few people. The positioning of this case in the transformation cycle is done by the most traditional model of organizational change; Lewin’s Change Model (Lewin, 1947). This model is the foundation for almost all contemporary change models. This model of Lewin is used for showing in which phase the change at Company X is at this moment.
Figure 6.1 Change model by Lewin (1947)
The step of unfreezing usually involves reducing those forces maintaining the organization’s behavior at its present level. By introducing information that shows discrepancies between behaviors desired by organization members and those behaviors currently exhibited, members can be motivated to engage in change activities (Cummings & Worley, 2005). The case of Company X can be positioned in this step, in particular because Company X is searching for discrepancies between behaviors desired by organization members and those behaviors currently exhibited. Backer (1995) explained that resistance to change is directly related to not providing an effective unfreezing process before attempting a change. He stated that the unfreeze element of the change theory of Lewin (1947) is a major element of readiness for change. If proper and complete unfreezing or readiness is not done, long-term successful change shall fail.
Based on this theory of Lewin, researchers have tried to outline a set of actions that could be taken by change agents to reduce resistance and move organizations and individuals through these stages. Now that it is made clear in which phase of the change management cycle the case is positioned it is necessary to take a better look at what this research will
Refreezing Movement
contribute to this case in perspective of the change management cycle. Cummings & Worley (2005) have made clear that four contingencies have to be considered in a transformation:
- Readiness for change; the organization being ready for change;
- Capability to change; the specific knowledge and skills that organizational members must have to change;
- Cultural context; the national culture in which the organization is embedded;
- Capabilities of the change agent; the change management has to be capable to implement the change.
If organizational change is announced, then organizations and the people who work in them must be ready for such transformation. People within the organization are the ones who will either embrace or resist change (Smith, 2005). If creating change readiness is done properly, there would be less resistance to overcome. The investigation of structure and culture differences between P42 and P70 will research the readiness of the two departments and its people towards a transformation.
Linking the case with the models of Lewin (1947), has made clear that it is in the first phase/step of the cycle of change management; unfreezing. There is awareness in the organization of Company X that a change is necessary, to gain benefit from the acquisition of Business Objects by SAP. However clear direction and plans are not made yet, the organization is unfreezing the current situation. Change readiness is an important step in unfreezing the current situation (chapter 2).
6.1 Determining Change Readiness
Figure 6.2: The relationship between content, process, context, and individual attributes with readiness (Holt et al., 2007)
This importance of individual attributes is highlighted by Madsen et al. (2005). They state that organizational change interventions can only be successful if individual change takes place. In addition they state that individual change cannot effectively occur unless employees are prepared and ready for it. Furthermore, van de Ven & Poole (1995) argue that if the change is directed by management, organizational members’ beliefs and cognitions needs to be aligned with those of the leaders. This in line with Madsen et al. (2005), who argue that people and processes must be in tight alignment in order to support goals. Individual attributes do not only have to align with the other contingencies in the model of Holt et al., they also needs alignment within the individual attributes itself. That is why in addition to the quantitative research, interviews with involved managers were held to investigate whether the organizational members’ belief and cognitions are in line with that of the management.
6.2 Department management
P42 P70
Specialization 1 tool – more specialized Solution – less specialized
Functional differentiation Equal
Centralization Centralized Decentralized
Formalization More documentation, prescriptions Less documentation, almost nothing is
de- or prescribed
Professionalism High level of seniority Low level of seniority
Vertical differentiation Equal
Figure 6.3 View on structure of P42 & P70
Furthermore, the explorative interviews gave insight in the culture of both departments, it was hard to determine after the interviews what kind of culture exists in both departments. However, what became clear was that both departments are expected to have a specific culture and that this would cause trouble when they have to cooperate. Another expectation was, that BI-consultants are reluctant to change because they see the other departments as a group that is totally different from their own department, in the way of working and the way of working together.
6.3 Sector management
Both departments are a department of Company X Technology Services, this is one of the three parts of Company X Nederland. Technology Services consists of four sectors, Public, Finance, TTU and Products. The departments P42 and P70 are a part of the sector Products. The four sectors within Technology service do have a large level of authority. That is why the sector management of Products is responsible for the direction of its departments.
organization is going to be made, because organizational changes at Company X are mostly characterized as a multiplier-effect. This kind of change probably needs another large change to start. Bottom-line is that the sector manager shares the view that an organizational change is probably necessary to benefit the most from the changed situation on the BI-market, however he does not expect as many challenges as the practice managers do. That is because probably challenges exist mainly in the heads of the managers and not in the heads of the BI-consultants.
6.4 Conclusion
BI-consultants do have ground for transformation of both departments. There are little structural and cultural differences. There is much alignment between the consultants of both departments, and the differences that do exist can be solved or used as an advantage for organizational change. Department management is aware of the need for change, however does see a lot of differences between the two departments that can form a barrier in an organizational change. They expect more differences than actually are present, according to the interviews that were held. Sector management is also aware of the need for change, and sees that there are also differences between the two departments. However they do not see these differences as a barrier in a possible organizational change. We can conclude that there are some differences in perceptions about organizational structure and culture between the consultants and the department managers. And there are also differences between the beliefs and cognitions of both departments. Literature has proved that there needs to be alignment amongst these cognitions and beliefs for an organizational change to become successful (van de Ven & Poole, 1995).
Chapter 7: Conclusion and discussion
The aim of this research was to determine structural and cultural differences that challenge a possible organizational change and in which way this determines the readiness for an organizational change. A quantitative research was used to achieve this goal.
The research question that was constructed:
What are the structural and cultural differences between the departments P42 and P70 and how do these differences determine the change readiness of this organization?
7.1 Findings
To determine a model to measure organization structure and culture at a department, literature and explorative interviews/conversations were used. Many variables of structure and culture are suitable for a measurement at departmental level. Because, structure and culture were measured at two departments at Company X on a specific situation, the method that was going to be used, needed to be constructed precisely. The questions about these subjects were constructed in a questionnaire (appendix 1).
7.1.1 Organizational structure
7.1.2 Organizational culture
Measuring organizational culture gave also some interesting results. It showed that BI-consultants of both departments work together in a good way within their own department and only 1 significant difference on the statements about this variable was found. Measuring collaboration with the other departments did not generate significant differences however, low scores on the collaboration with the other department were measured. This implies that there is much improvement to be made within the variable of collaboration with the other department.
The last significant differences were found within the variable of proaction. On all these questions P42 scores higher than P70 and seems better prepared for the changes on the BI-market. Conclusions drawn from measuring culture are that there is low familiarity between the two departments, and consultants of both departments do have a different perception about the status of adaptation of the own department towards the changed situation at the BI-market. For a shared vision within this future transformation it is important that both departments have the same level of proaction towards a transformation.
7.1.3 Change management
In order to be ready for change the individuals and leaders of the two departments need to align their beliefs and cognitions about organizational structure and culture. On many points exists alignment between the consultants of both departments. Department management is aware of the need for change, however does see many differences between the two departments that can form a barrier in an organizational change. Sector management is also aware of the need for change, and sees that there are also differences between the two departments. It is concluded that there are some differences in the perceptions of organizational structure and culture between the consultants and the department managers.
