1HR, 1 CULTURE?
CULTURAL CHANGE IN CHANGING THE WAY OF HR SERVICE
DELIVERY AT AKZONOBEL NETHERLANDS
Master thesis, MSc BA, specialization Change Management University of Groningen, Faculty of Business and Economics
August, 2010 Raymond Fafié Student number: 1531891 Ruisvoorn 47 3892 HR Zeewolde Tel.: +31 (0)36-5222123 E-mail: raymondfafie@hotmail.com
Supervisor/ university: Supervisor/ field of study:
1st supervisor: Dr. K. S. Prins J.W. Rossing
2nd supervisor: Dr. B.J.M. Emans AkzoNobel B.V., Arnhem
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 3
ABSTRACT
This research is conducted to define the preferred culture for the new way of delivering HR services in the Netherlands for AkzoNobel and describe the way to get there. Therefore, both perceptions of current culture and the preferred culture are identified. Furthermore, cultural change mechanisms are identified to influence the cultural change that is needed: leadership, communication, involvement, selection/recruitment and reward systems. A survey and interviews were used for this. The framework of Handy and model of de Caluwé were central, and made clear that the culture should be a mix of role and task culture with a blue/green tint. The mechanisms are used to give advice in changing towards the preferred culture.
Keywords: organizational culture, cultural change, leadership, communication, involvement, selection/recruitment, reward systems.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 4
ABSTRACT
2
1. INTRODUCTION
6
1.1 HR Shared Services Centers ... 7
1.1.1 Features of an HR shared service center. ... 7
1.2 New organization of human resources at AkzoNobel NL ... 8
1.3 Central Research Question ... 9
2. THEORY
10
2.1 Organizational Culture ... 102.1.1 Types of culture. ... 12
2.2 Cultural Change ... 14
2.2.1 Integrating subcultures. ... 15
2.2.2 Thinking about change in five different colors. ... 15
2.2.3 Changing to an HR Shared Service Center and Culture... 16
2.3 Managing Organizational Culture Change ... 18
2.3.1 Leadership. ... 20
2.3.2 Communication. ... 21
2.3.3 Involvement. ... 22
2.3.4 Recruitment and selection. ... 22
2.3.5 Reward systems. ... 23
2.4 Conceptual model ... 24
3. RESEARCH METHODS
25
3.1 Current organizational culture. ... 253.2 Preferred organizational culture ... 27
3.3 Cultural change mechanisms ... 28
4. RESULTS
30
4.1 Current Culture ... 30Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 5
4.3 The five different change mechanisms ... 33
4.3.1 Leadership. ... 33
4.3.2 Communication. ... 34
4.3.3 Involvement. ... 35
4.3.4 Selection and recruitment ... 35
4.3.5 Reward Systems ... 36
5. DISCUSSION AND RECOMMENDATIONS
37
5.1 Discussion ... 375.2 Recommendations ... 41
5.2.1 In what way can leadership be used in the change to the preferred culture for the new HR organization? ... 41
5.2.2 In what way can communication be used in the change towards the preferred culture for the new HR organization? ... 42
5.2.3 In what way can involvement be used in the change towards the preferred culture for the new HR organization? ... 43
5.2.4 In what way can recruitment and selection be used in the change towards the preferred culture for the new HR organization? ... 43
5.2.5 In what way can reward systems be used in the change towards the preferred culture for the new HR organization? ... 44
5.3 Conclusion ... 45
5.4 Limitations and reflection ... 45
REFERENCES
47
APPENDICES
49
APPENDIX A: The way future employees think about change in general ... 51APPENDIX B: Survey ... 52
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 6
1. INTRODUCTION
In the past years, a major increase has been noticeable in the development of HR shared services within all industry sectors. In 2009, AkzoNobel decided to implement an HR shared service center in the Netherlands in order to perform the main part of the non-business specific HR activities centrally. The main reason for this intended change is the current fragmentation of the organization which hinders common ways of working in different Business Units across the Netherlands, making administration complex and expensive. The introduction of an HR shared service center is seen by management as the way to reduce costs and bring HR performance of AkzoNobel Netherlands up to industry standards.
In preparing the transition, four main parts of the change process were identified by AkzoNobel: IT, structure, people and culture. Especially this last part has not been subject to thorough analysis. Cultural change is an important aspect within structure changes, since organizational culture needs to match or be appropriate to the structure of an organization (Burnes, 2009). Next to this, Cameron and Quinn (2006) mention that neglecting an organization’s culture is the most cited reason given for failures in changes. With these reasons in mind, the management of HR Services NL of AkzoNobel Netherlands is interested in knowing what organizational culture will support the future way of working in the new structure that the shared service concept brings along. Thereby, the difference between the current and preferred cultural situation will be subject to investigation in this research paper. It goes without saying that procedures and ways of working will change by adapting the concept of shared services. This confirms the need for research on organizational culture, since organizational culture influences behavior, norms and values (Burnes, 2009). The focus will be on change mechanisms in changing towards the preferred culture.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 7 1.1 HR Shared Services Centers
Traditionally, strategic HR issues are decided upon at the corporate level while the more operational HR issues are transferred to the business unit level, where often a small on-site HR department is situated for support (Cooke, 2006). After swinging between the centralization and decentralization of HR activities for years, many organizations are moving to shared services models for delivering particular human resource functions. These HR service delivery models are becoming more common around the world (Mercer, 2008).
A shared service center can be defined as a centrally located part of the company which provides support services to the business units of that company in a certain area (Davis, 2005). Differently stated, shared services refer to the sharing of services by different units within an organization (Mercer, 2008). Within HR, the services that are shared mostly are administrative services like payroll, salary and training.
In the case of AkzoNobel, the shared service center takes into account the strategic direction that is determined at the corporate level, but forms a ‘supplier-customer partnership’ with business units of the organization, which is a familiar type of shared service centers (Davis, 2005). Cooke (2006) calls this type of internal service delivery internal outsourcing; delivering well-defined services for the internal customer.
1.1.1 Features of an HR shared service center.General features of an HR shared services center
are the offering of common service provision and clients specifying the level and nature of the service (Reilly in Cooke, 2006). In the case of delivering services, client satisfaction is thus important. Walkinshaw et al. (2009) confirm this by stating that customer excellence programs are important to make sure that clients are satisfied with the delivered services. Additionally, shared service centers rely profoundly on IT and technology development, which is confirmed by different authors (Cooke, 2006; Mercer, 2008; Walkinshaw et al., 2009; Davis, 2005; Keith and Hirschfield, 1996; Roberts, 2007).
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 8 centers and strategic business unit partners (see figure 1) to deliver high quality HR services to satisfy client needs.
FIGURE 1
The three building blocks in HR transformation
Since the first companies have been adopting HR shared services in the early 1990’s, the service delivery model has proven its worth to many organizations (Roberts, 2007).
In the next section the new way of HR service delivery at AkzoNobel NL is discussed. 1.2 New organization of human resources at AkzoNobel NL
The change at AkzoNobel is perceived as desired and necessary for a couple of reasons, with the improvement of quality of the HR services while decreasing the costs, as the overarching reason. In this way, the value of HR to the success of the business will increase.
Additionally, AkzoNobel clearly states it wants to be a Talent Factory. The change of delivering HR services in a different way will contribute to more room for HR professionals within AkzoNobel to pay attention to talent development, organizational development and change management. Excellence in people development and HR capability is a goal the new way of HR service delivery will contribute to.
Direction in achieving this, have also been given by Success Factors, which are values that define the way people should operate both internally and externally. These Success Factors are formed by the following main values (see figure 2):
Strategic Business Unit Partners Centers of Expertise for Deep and
Policy Development Centralized Shared Services
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 9 FIGURE 2
Success factors of AkzoNobel
These values are standards that are being measured and form the basis of self-improvement. In this way, these values also form a part of the desired culture at AkzoNobel.
The new HR service structure will be characterized by the existence of three main bodies, of which HR Services NL and the Expertise Center are the parts of the organization that are most important for this research. The other body is formed by the HR Business Partners; without them the HR services could not be delivered according to the model that is used by AkzoNobel. This view corresponds with the view that can be found back in figure 1.
HR Services NL and the Expertise Center will be situated at one physical location in Arnhem, Netherlands. This will be the part of the organization of AkzoNobel this research focuses on.
1.3 Central Research Question
With the new way of HR service delivery a culture has to be created that supports the quality of the service delivery. This new and preferred culture must be explored and compared to the existing perceptions of present cultures within AkzoNobel in the Netherlands. Within this thesis, both the present cultures and preferred culture will be defined. Furthermore, the main focus will be on the change that has to be made to create a culture that supports the new way of HR service delivery. This leads to the following main question:
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 10
2. THEORY
In this section the research question will be elaborated on, explained en justified by the use of different insights from literature. Firstly, literature on organizational culture will be discussed. Secondly, cultural change will be discussed and finally different ways of managing organization culture when changing. In this chapter also sub-questions are formulated that will give guidance in how to change culture into the preferred culture for the new HR service delivery.
2.1 Organizational Culture
Nowadays, the status of organizational culture is the same as those of structure, strategy and control (Hofstede et al., 1990). According to Cameron and Quinn (2006) all presently leading firms developed an organizational culture which is distinctive and clearly identifiable by employees of an organization. Culture is valuable because when an organizations culture fits to the strategy, commitment by employees will increase (O’Reilly, 2000).
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 11 For any organization to change it is thus important to consider the problems culture may create. Cameron and Quinn (2006) draw attention to advantages of a strong, unique organizational culture, which for example realizes a common interpretation system for organizational members and the creation of continuity by perpetuating key values and norms across generations of members. However, a strong culture is not always effective, especially not in change situations (Schein, 2004; Burnes, 2009).
Next to these advantages of a strong and unique corporate culture, Cameron and Quinn (2006) stress the results of empirical research which show that organizational culture is positively related to organizational performance and effectiveness. Additionally, organizational culture is not only determined by one general set of values. Within organizational subunits or teams, subcultures may exist, as well as the differences in culture that individuals reflect.
According to Schabracq (2007), next to a functional approach to study culture which study’s how a culture functions, the structural approach’s aim is to study how an organizational culture is structured. The four-layer culture model of Cummings and Huse (in Burnes, 2009) is a good example of a structural approach to organizational culture (based on the model of Schein, 1983) (see figure 3).
FIGURE 3
The elements of culture according to Cummings and Huse
Basic assumptions Values
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 12 What is missing in this model according to Schabracq (2007) is what he calls ‘everyday reality’. This so called ‘everyday reality’ makes the members of an organization doing the things they do and this makes culture a steady circumstance within an organization. Nevertheless, an organizational culture can be changed effectively according to different authors (Burnes, 2009). Cameron and Quinn (2006) even state that without changes in organizational culture, efforts to improve performance by changing are not hopeful. When values, orientations, definitions and goals stay constant and employees are not stimulated, organizations are likely to return to their status quo.
2.1.1 Types of culture. In time, different types of culture are identified by different authors.
Most mentioned throughout literature are the cultural typologies of Quinn and McGrath presenting the Competing Value Framework, and the typology of culture in which Handy presents four kinds of cultures.
Within the Competing Value Framework, the following cultures exist: Market, in which the focus is on the external environment and transactions; Adhocracy, which is characterized by adaptability, creativity, flexibility, individuality and risk-taking; Hierarchy, in which formalization, structure, stability and rules are important; Clan, characterized by consensus, care for others and overall participation (Cameron and Quinn, 2006).
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 13 FIGURE 4
The characteristics of Handy’s types of culture
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 14 2.2 Cultural Change
Organizational culture is important in changes: culture is often seen as the key subject of changes or as an element that is fundamental to take seriously in order to make change possible (Alvesson and Sveningsson, 2008). This view can be linked to that of different authors which see culture as at the heart of competitive advantage, especially when it comes to sustaining high performance as Rogers et al. state (in Burnes, 2009). This is the main thought of a thinking stream called the Culture-Excellence approach. The Culture-Excellence approach is supported by authors like Peters and Waterman who concluded that the soft factors staff, style, shared values and skills are key to business success (Peters and Waterman, 2004).
Next to Peters and Waterman, Kanter and Handy are famous supporters of the Culture-Excellence approach. However, this approach is advocating a one best way for all organizations. In literature it is questioned if cultural change has to be in line with other organizational characteristics to lead to successful performance. Handy (1988) himself states that not all cultures are suitable for all purposes or people. O’Reilly (1989) also discusses ways in which culture can be changed or managed according to different circumstances and goals within an organization. This is an optimistic view, and therefore, a view wherein culture cannot be changed as a whole but is changeable in some key aspects, is called realistic. This latter view is also supported by the model of Cummings and Huse in which the basic assumptions cannot (easily) be changed. This has to do with the level of awareness in the different levels of this model.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 15
2.2.1 Integrating subcultures. The existence of subcultures within organizational subunits is
mentioned by different authors (Cameron and Quinn, 2006; Schein, 2004). For changing organizational culture, the distinction between the overarching organizational culture and subcultures has to be taken into consideration (Tharp, 2009). Subcultures are always related to the overarching organizational culture. According to Cameron and Quinn (2006) problems can come into existence when difficulties arise in coordinating and integrating processes or activities within organizations. Culture clashes can have a negative influence on the level of performance within an organization.
Ionescu and Bratosin (2009) bring up the statement that when structures change, the implementation of desired organizational culture is conditioned by both the existing cultures and the perception of the ideal desired culture. In this view, subcultures are important as well as the desired culture for supporting changed ways of working. Additionally, Yaniv and Farkas (2005) emphasize on differences between imposed cultures and how cultures in practice are. This can influence the performance of organizations, so a need for congruence might be necessary between diverse cultures desired by diverse groups within organizations.
2.2.2 Thinking about change in five different colors.One way of looking at change is the way
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 16 FIGURE 5
5 Ways of thinking about change
The characteristics that de Caluwé and Vermaak (2003) linked to the colors can, besides from being used in change situations, also be used to say something about an organizational culture. De Caluwé and Vermaak confirm this by stating this in a way that a model like Handy’s is a perfect tool for diagnosing organizational culture, and within the found existing culture a colored tint exists. For example, a culture could be described by being a role culture with a green tint. Characteristic for the model of de Caluwé and Vermaak is that one single color can possibly stand out within organizations and people’s minds, but mixtures of colors are far more common than one specific color.
2.2.3 Changing to an HR Shared Service Center and Culture.Theoretical insights make clear that
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 17 managing change. Within doing so, they discuss the roles of technology, the thought that HR changes for the better and the challenges of losing momentum in this change process.
Different authors mention that a culture that fits well with shared service centers is a so called customer-service culture or service culture (Strikwerda, 2004; Curtis & Upchurch, 2008; Flynn, 1988; Opheij and Willems, 2004). One of the main factors Strikwerda (2004) discusses is the service orientation of shared service centers. Strikwerda also mentions that the culture within a shared service center may not contradict the organizational culture. The service culture within a shared service center should be both market-oriented and innovative, as well as oriented at functionality.
Opheij and Willems (2004) state that the focus within shared service centers should be on customers and results. According to Curtis and Upchurch (2008) the process of creating a service culture is a management process. Management should help develop service quality to internal customers. The created service culture should realize that employees are continuously encouraged to act customer conscious. Regular information and feedback is then necessary for the employees. Employees are only able to deliver services in a consumer-oriented way when stakeholder relationships are defined well, so the focus within a service culture should not solely be on customers but also on other stakeholders (Flynn, 1988).
Within a service culture, the relationships between service providers and service receivers are important. Next to that, services grow by adding to established practices. To realize this, Flynn mentions four key demands that are important for a service culture:
Consistent customer treatment style Contact staff training
Sharing of organizational messages The possibility to redesign services
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 18 technical quality of services (outcome) and the image quality of services. Quality is thus important in service cultures.
According to Dohmen et al. (2005), in changes towards shared service centers, too much emphasis is put on process descriptions and the supportive tooling of these processes; however, this is important to realize acceptable results. In the model of de Caluwé this emphasis can be linked to the color blue. On the other hand, there is too less emphasis on the development of knowledge and skills of management and employees. Dohmen et al. conclude that it is necessary to keep on learning because this will eventually lead to shorter handling times. The need for learning matches the color green in the model of de Caluwé, and results in development of maturity, quality, knowledge and skills according to Dohmen et al. In combination with blue thinking, green thinking will lead to a higher customer and employee satisfaction. De Caluwé and Vermaak (2003) make clear that constant control and monitoring is important in every change process. This “steering” is necessary during the whole change process, and is characterized by the colors blue for the controlling and planning, and the color green for feedback and feed-forward cycles. The preferred culture for a shared service center would thus be a combination of blue and green, according to different authors.
It is still the question if future employees of the organization agree on this topic with theorists. That is why the following sub questions are important for this research:
How can the current culture of AkzoNobel as perceived by future employees be characterized?
How can the preferred culture of AkzoNobel as perceived by future employees be characterized?
After answering these questions, it will be clear what change needs to be made and how this change could be managed. The next section discusses managing change.
2.3 Managing Organizational Culture Change
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 19 culture. They argue that managing culture “may be seen as a dynamic process which could involve attempts to establish a new culture or cultures, preserve an existing culture, modify the existing culture or discard the existing culture”, (Ogbonna and Harris, 2002: 676).
To manage or change an organizational culture, different authors created guides to be followed. For example, Dobson (in Burnes, 2009) created a guide to change culture in which communication, recruitment, selection, redundancy policies and rewards and appraisal are mentioned. In this line, Cummings and Worley (2005) also introduced a plan with different steps for cultural change. They mention the following steps:
1. The formulation of a clear strategic vision with the purpose and the direction for cultural change.
2. Displaying top management commitment. 3. Communicate culture change at all levels.
4. Modify the organization to support organizational change.
5. Select and socialize newcomers and terminate deviants. Entry is the best moment for socialization according to Cummings and Worley (2005).
6. The development of ethical and legal sensitivity.
The steps that are mentioned in both previous plans to change culture, are not all aimed at the soft side of the organization, like the four S’s Peters and Waterman mentioned to be most important for excellence. Changing culture is not a soft process at all according to Burnes (2009) and could also entail directive and coercive elements. Additionally, choice and power are important elements within changes. Burnes concludes by stating that these kind of outthought plans only influence behavior, which is an important part of culture, but the culture does not necessarily changes by that.
O’Reilly (1989) also discusses different mechanisms for developing and managing culture. He recognizes common characteristics in successful organizations, namely strong norms, clear guidance and the providence of appropriate attitudes and behavior. O’Reilly states that four mechanisms are used to accomplish this:
1. Systems that provide for participation.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 20 3. Information from others: communication has to be consistent by the minimization of
contradictory interpretations.
4. Comprehensive reward systems: this is not solely about monetary rewards.
According to O’Reilly (1989) these factors together influence the shared set of expectations. In his vision the leaders or managers are the ones that have to guide this process.
In all the mentioned ways to manage cultural change, certain elements become clear. These elements all put emphasis on a couple of subjects that are important when changing an organizational culture, namely: leadership, communication, participation/involvement of employees, recruitment and reward systems. To build or develop a new culture, the will to transform elements of a culture into forces that support instead of subvert the organizations goals is important (Barth, 2002). The mentioned elements will now be discussed as mechanisms for cultural change.
2.3.1 Leadership. Leadership is an important feature in organizations which contributes to the
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 21 FIGURE 6
How leaders embed organizational culture
It is clear that within the ways to embed organization culture in actions, leaders make use of the various mechanisms that can be used in general to influence the development of an organizational culture. This leads to the following question:
In what way can leadership be used in the change to the preferred culture for the new HR organization?
2.3.2 Communication.According to Giffords (2003) communication is key in helping employees
adapting and creating support. Communication in cultural changes is mostly top-down, so it is essential for the manager to communicate clearly. Thereby it is important that information is communicated on regular basis, in multiple and consistent ways during different stages of a cultural change (Giffords, 2003). Prior to the transition, communication is important to overcome resistance (Kotter and Schlesinger, 2008). Afterwards, communication is needed to share vision, goals and information. Appelbaum (2000) also discusses the importance of communication in the adaptation of new cultures and the positive relation between communication and organizational trust (2004). As Holman (2000) states, commitment to sharing information and communicate increases the success of cultural change.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 22 Kotter and Schlesinger (2008) see as a result, Beer (1980) sees this form of communication as the critical factor in making people feel psychological owner of the change. Because people cannot not communicate, communication has to be the red line in every change program and intervention, since miscommunication will lead to misperceptions and misinterpretations (de Caluwé and Vermaak, 2003). However, in discussing communication within the change process, Ford and Ford (1995) argue that there are different types of conversations, all applicable to different stages in the change process. Key message is that different styles of communication are applicable to different colored groups, when linking the ways of communication to the model of de Caluwé and Vermaak. This leads to the following question:
In what way can communication be used in the change towards the preferred culture for the new HR organization?
2.3.3 Involvement.According to Kotter and Schlesinger (2008), involvement of employees also
minimizes resistance. When the change effort is participative, employees are heard and their advices are used in changing the culture. Especially since culture is something that cannot be changed right away, the involvement of employees in creating a culture is important. Besides that, participation and involvement will result in commitment (Kotter and Schlesinger, 2008). Holman states that high levels of involvement or participation lead to better results in most change situations (2000). Kauffman (2010) confirms this by stating that success largely depends on the empowered role people take in shaping culture, since people want to contribute to the success of the firm they work for. The importance of involvement is also recognized by Allen (1985). He emphasizes on the importance of the necessity to give all employees the chance to be involved in the change. This leads to the following question:
In what way can involvement be used in the change towards the preferred culture for the new HR organization?
2.3.4 Recruitment and selection.The recruitment and selection policy of organizations directly
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 23 culture often changes too slowly (van den Berg and Drost, 2010). Therefore, it is important to link the change in culture to recruitment and selection. Timmerman (2010) discusses the way people create culture, and argues that when a customer-oriented service culture should be created, people who get intrinsic enjoyment of helping people should be recruited. Timmerman agrees on recruitment being a good way to influence culture. Schneider et al. (1994) also mention recruitment in a way of only hiring people with the personal attributes that contribute to the desired culture. This leads to the following question:
In what way can recruitment and selection be used in the change towards the preferred culture for the new HR organization?
2.3.5 Reward systems.Managing a culture has a lot to do with the controlling of behaviors and
attitudes of employees. According to Kerr and Slocum (2005), reward systems are a primary method of achieving the control that is necessary to manage cultures. Reward systems are systems that “define the relationship between the organization and the individual member by specifying the terms of exchange: it specifies the contributions expected from members and expresses values and norms to which those in the organization must conform, as well as the response individuals can expect to receive as a result of their performance”, (Kerr and Slocum, 2005). So, performance and rewards are both important for reward systems. A reward system will contribute to the goals when it is congruent with strategy, structure and processes within an organization. Kerr and Slocum also mention that reward systems can be used to communicate desired behavior to organization members by rewarding this kind of behavior. However, a reward system must thus be promoting the desired values, beliefs and actions of employees. This is also confirmed by Allen (1985), which states that the institution of reward systems is necessary to realize the desired change. This leads to the following question:
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 24 2.4 Conceptual model
The instruments stated in chapter 2.3 are considered to be appropriate for use in changing culture, as showed by the theoretical statements of different authors. However, the way in which these instruments have to be used is totally dependent on the current culture and the culture that is desired for AkzoNobel’s new way of delivering HR services in the Netherlands, that’s why the questions mentioned at the end of chapter 2.2 are important to answer first. Then the instruments should be suitable to the extent they are able to contribute to the cultural change in a particular situation. The way in which the desired culture can be achieved is depicted in figure 7, and can be linked to the different research questions in the theoretical section.
FIGURE 7
The model makes clear that the mechanisms all contribute to the change process towards the desired culture for AkzoNobel’s new way of delivering HR services. However, the way in which these instruments should contribute is next to dependence on the current perceived and desired culture, also dependent on how future employees think about change in general. Instruments that match the way people see changes being most successful are assumed to be more useful than instruments people think of as unusable.
Change process from current towards the preferred organizational
culture
Leadership Selection and recruitment
Involvement Reward systems
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 25
3. RESEARCH METHODS
In this section, the methodology used for answering the research question is explained. Firstly, attention is paid to the current and preferred organizational culture. Clearly defining these was a part of this research and important to AkzoNobel, so the recommendations on the change mechanisms would eventually be better adaptable.
3.1 Current organizational culture.
Data collection: The current organizational culture was assessed by using the framework of Handy in a survey (see Appendix B). Participants answered twelve questions on items that represent work aspects according to Handy’s framework, leading to different types of culture. The questions were distracted of the culture type identification questionnaire of Handy.
To specify the current organizational culture, an instrument was added to the model of Handy. In consultation with the organization, the choice has been made to distract the most characterizing elements from the color types out of the model of de Caluwé and Vermaak, in order to say something about which color is most characteristic for the current culture. This is done by presenting thirty sentences in the second part of the survey: six of each color of the model that were mixed in the survey, that entail characteristics of the organization that can be linked to one color and could be answered ranging from ‘totally agree’ to ‘totally disagree’. Eventually, the current culture is made up by a type of Handy’s culture types with a tint from the model of de Caluwé and Vermaak.
In the third part of the survey, questions about how employees look at change in general were being asked. The questions were directly derived from twynstragudde.nl, and the results were used to get a view on how the employees generally think about change, so interventions could be adapted to their view if necessary. Since results were expected and did not influence the change process, these results can be found back in Appendix A.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 26 the director of the Netherlands, has been sent out to all respondents. With the survey, an introduction in form of a cover letter was sent, which briefly repeated the reason of the research, why the respondent was selected to participate, a justification why the respondent should complete the survey and explanation of how the results were used. Anonymity was guaranteed by not having to fill in personal information.
A reminder was sent one week before the closure date, with an incentive mentioned in it, and again two days before the closure date. With the previously mentioned instruments, high levels of non-response were prevented. The survey was also tested beforehand by an employee, to check the understandability and time needed to respond. Respondents had two weeks for filling in the survey.
After two weeks, 40 surveys were filled in by the future employees, which resulted in a response rate of 93%. The results of the survey are discussed in the results part.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 27 FIGURE 8
After deleting questions that were not sufficient enough to make the measurement of a color reliable (see figure 8), composite measures were created.
3.2 Preferred organizational culture
Data collection: The preferred culture for AkzoNobel’s new way of delivering HR services has been subject to research through qualitative analysis of documents on the intranet, as well as an interview with one of the project leaders, because the project leader represents the project team and has to give guidance within the change situation.
The documents contain announcements, presentations, conferences and question & answer files, and access was granted via the intranet of AkzoNobel.
During the interview with the project leader different questions about the expectations of the new way of HR service delivery were asked. The questions were thus used to verify results from the intranet analysis and to recover additive information. Results are given in a single overview in which different elements are linked to a color and a culture type.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 28 became clear if the culture that resulted from the document analysis was in line with the direction the project team aimed on for changing.
3.3 Cultural change mechanisms
Data collection: In the theoretical section, five different mechanisms were identified that can be used to influence the cultural change process. Next to the theoretical information about how to use these mechanisms, six different future employees were interviewed face-to-face to gain information about how they view the usage of these mechanisms. These employees were chosen in a way that all parts of the current organization were represented by a participant (IT, Recruitment, Communication, Administration). The questions were about the different cultural change mechanisms, and after the introduction per change mechanism, questions were being asked about the current usage, the preferred usage in the new HR organization and the overall influence on culture. All questions were open in order to provide answers that could be used for further questions about the same topic. The answers were promised to be treated confidentially and in an anonymous way, so interviewees would not hide valuable information. The participants to this interviews were asked right beforehand and participation was voluntary. There were no problems with finding participants, probably because of the pressure on participation in this research by the letter of the CEO that was send to all employees at the start of this research, and the convincement by employees that they could contribute to a new preferred culture.
Furthermore, two interviews were done with a project leader from Corus which changed the way of HR service delivery in a similar way and a consultant from Right Management which is experienced in organizations changing towards shared service centers. In these interviews questions were being asked, in order to find out how cultures at different organizations changed, as well as questions about the effectiveness of change plans that were used. These questions were also asked per change mechanism.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 29 Data analysis: In answering the sub-questions of this research, only the common answers and outstanding answers perceived useful are mentioned. Answers were compared to each other and to theory, to find differences and similarities. With the answers the situation at AkzoNobel was found out, as well as opinions about how the employees would like to see the mechanisms being used in the future. Most important answers were used to make visible the gap between the current situation and theories.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 30
4. RESULTS
Before something can be stated about the mechanisms used in the cultural change, first the current culture and the preferred culture have to be discussed. The results discussing these two parts are first elaborated on, than the results about the change mechanisms are discussed. 4.1 Current Culture
In this part of the results, the current organizational culture as perceived by the new employees is measured. The results of the survey can be found in figure 9.
FIGURE 9
Currently perceived culture
The results show that the future employees of the new HR organization perceive the current culture they work in as a task culture. Almost half of the participants perceived their current culture this way.
However, the power and role culture are also represented with around 20% each in the results.
Now the type of culture became clear, the current color tint according to the model of de Caluwé will be shown.
0 10 20 30 40 50
Power Role Task Person
% 22 17 49 12
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 31 The results for the color tint are shown in figure 10.
FIGURE 10
The results show that blue characteristics predominate, together with the white tint, which indicates the complexity and the limited predictability in the current organizational culture. Furthermore, it is noticeable that power, which is connected to the color yellow, is clearly present in the current culture.
4.2 Preferred Culture
In this part of the results, results are shown of an analysis that has been made of the demands that are required in delivering the HR services in the future situation. The preferred
culture would then be a culture that supports the way of HR service delivery.
Yellow Blue Red Green White
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 32 Table 1
Expectations at the Business Units for the new HR service delivery.
The role culture is most appropriate for the new way of delivering HR services, since the role culture is most likely to realize the way the HR services are promised to be delivered, according to the model of Handy.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 33 Conclusively, the preferred culture is a role/task culture with a blue/green tint, in which blue is the predominant color. This culture will be most ideal to support the new way of HR service delivery. The project leader agrees on this; however, she favors the task culture because of the emphasis on teamwork and flexibility. She thereby states that results are most important, but flexibility is important in achieving those, especially because there will be different areas like recruitment and the expertise centre, in which differences in preferred culture are likely. Conclusively, she favors a mix of the role and task culture, with a blue/green tint. In her view this is realizable, because there already is a task culture with much attention for the blue color according to her. Within the change, culture isn’t explicitly taken care of by the project team. However, there are all kind of activities that implicitly can be linked to culture, like team building activities and new open workspaces.
The mechanisms as discussed in the theory section will be discussed now. 4.3 The five different change mechanisms
4.3.1 Leadership. In leading the change, the importance of leadership is recognized by different
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 34 leadership skills. In changing to the new way of HR service delivery, the most important managers are made member of the project team. Finally, leaders are expected to communicate in such a way that the employees are reached well. The leader within the organization has influence on almost everything that takes place within an organization and has to be able to delegate responsibilities and give trust, which is already done to a satisfying extent in the current situation. Additionally, according to the different consultants, leaders should positively guide the change process by celebrating successes. In the current situation, not all successes in change are celebrated, only main successes like the opening of the new offices.
Finally, after the transition, the managers could be coached by project leaders until the change is successful, which has been successful in different comparable organizations.
4.3.2 Communication. The interviewees all see communication as a very important, even
essential, mechanism to use for cultural changes. One of the consultants experienced a target-group-oriented approach to be successful. In this approach, communication was cascaded, which could also be a pitfall when communication gets “colored”. He adds the importance of timely communication. In the content of communication, a lack of uniformity is recognized by current employees. The project leader confirms this by stating that nowadays AkzoNobel has the tendency to implement many communication layers, and also returns to decisions that have been taken in the past. Newcomers aren’t learning desired ways of communication, so they influence culture by the way they are used to communicating. Nowadays, employees mostly experience clear communication within their department because within departments the same communication is used. One employee even stated that AkzoNobel is sometimes characterized by weak communication. Overall, the cultural change process has not been subject to communication since there is no explicit attention to the cultural change. What has been done to improve communication in the change to the new HR organization, is the creation of a stakeholder analysis and the creation of a communication events plan.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 35 represented to communicate all experienced casualties. In this way the barrier to communicate becomes smaller, which will be positive to the level of communication.
4.3.3 Involvement. In a cultural change process, involvement is important according to different
interviewees. However, involvement in decision making is mostly based around one’s own job. Involvement in concretely determining the culture has not yet been experienced, although the employees realize that with the way they work they all constitute to the organizational culture. Nowadays there is no resistance to changing towards the new way of working; however employees would like to be more involved on changes in their own area of working. In this way they gain more influence on the procedures that have to be followed, which influences their behavior. Employees are invited to events and large meetings. However, employees are not all asked for their ideas or best practices and recognize the offered participation, but feel like they could be of much more worth to the organization when did. Some employees recognize a feeling of being passed by to have influence in the change situation, and feel like just having to move with the organization in the change situation. On their turn, the project team and management are involving the employees by sending them newspapers regularly during the change, and provide the employees with question and answer files etcetera.
A more general experience increasing the involvement of employees is to show them how the whole organization functions. After these kind of experiences, people tend to be more involved, according to one of the interviewees. It is good for employees to be involved; however, the time of involvement has to differ between different stakeholder groups according to one of the consultants. Critical people have to be followed well by management; too much negativism should be prevented. Thereby, attention should be paid to passive resistance. Problems should always be discussable, and the employees should feel free to discuss best practices and eye-openers.
4.3.4 Selection and recruitment. According to employees, selection and recruitment is also an
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 36 management as being important to the organization, while the male/female-distribution is like 80/20%, and only around 10% of the workforce consists out of foreigners. Employees see room for improvement in recruitment and feel the need for more active recruiting. This is also why the need for a clear desired culture is felt, however this felt need hasn’t been shared yet with management. The fit between persons and the culture can be sought for during the recruitment process. Thereby, it is important that change minded people are recruited, which is currently not paid much attention on. These people have to be able to easily get used to the preferred culture, but also have to be aware that they will be starting to work in the current culture. Conclusively, in the current recruiting the headlines on which the preferred culture aims are missing.
4.3.5 Reward Systems. The interviewees also confirm that reward systems are a helpful
instrument in cultural changes. However, it immediately becomes clear that they mainly talk about the intrinsic rewards. The project leader confirms this by stating that there are no extra extrinsic rewards being used in the change project, which is common within AkzoNobel. Compliments are given when good work is done, but not for behavior. However, instruments are used like P&D dialog to evaluate the performances on different fields. Pride, status and development options are seen as the most important rewards. What is worth mentioning in the context of rewards is the good social plan that gave employees the choice of wanting to join the organization in changing towards the new organization.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 37
5. DISCUSSION AND RECOMMENDATIONS
In this section the research questions will be discussed and recommendations will be given. The results will be discussed as well as the limitations and possibilities for further research.
5.1 Discussion
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 38 desired characteristics for the new organization, which are aimed at learning and development. Looking at the model of the Caluwé, the color green suits this aim the most. However, critically looking at this model, we might say the color blue is more typical for work content, while the other colors are more typical for how people behave and act within their work. This makes clear that colors from the model cannot be used separately. Though, if the focus should be on in what way employees can deliver a higher valued customer service, the color green stands out. Changing and learning together to improve customer service. Nevertheless, to reach an optimal synergy between organization goals and employees, there might also be focus on the red color. And without the right balance in power and hierarchy, people will not be motivated to learn and improve. This all leads to the insight that the different colors can’t be used separately to get to the preferred cultural situation. Table 1 does not represent this view. The focus in table 1 is on the most appropriate colors and characteristics for supporting the new way of HR service delivery. This does suit the view of de Caluwé and Vermaak, stating that although organizations should focus on the dominance of one leading color that is most suitable to the organizations goals, however keeping the other colors in mind. This research paper doesn’t explicitly keep the other colors in mind and is thus more focused on the leading colors. However, I think the change mechanisms discussed in the next area, are not solely aimed on these leading colors, and also relate to the whole range of colors. Altogether, the results on current and preferred culture are highly valuable to the organization since they now have a starting point and a destination point to change to. However, culture still seems like a subject that can be analyzed till satisfactory levels. It’s worth discussing if a culture can be fully analyzed without missing any parts, since the subject is intangible for a large part. In the next part, the worth of the results on the change mechanisms is discussed.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 39 leaders or managers could pay more attention to. But it is questionable if the new way of working will lead to less hierarchical distance. While managers expect a decrease in distance, more standardization could lead to more rules which counteract this decrease in hierarchical distance. On the other hand, the new setting with open workspaces might help. Hierarchical distance will always exist in healthy organizations to some degree, but managers could learn to be more open to the employees. This could work out well, so might be a valuable thing to pay attention to. On the other hand it might not be necessary for the overall leader, if employees have the feeling of being led by the manager on their own department. To be a role model, leaders might also learn more skills and participate in trainings (Fry, in Kavanagh and Ashkanasy, 2006). Leaders within the organization might invest more in themselves; this might pay out in more recognition by employees. When leaders invest in their own development, they might be better able to lead their employees, so good leadership will be perceived.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 40 Involvement: Since theory stressed the importance of involvement in changing culture, it was expected that employees would agree. The fact that employees aren’t involved in explicitly determining a culture could be due to the fact that AkzoNobel didn’t pay a lot attention to cultural change within the change project. But by addressing that they feel passed sometimes the employees make clear they are willing to be more involved. This could be a choice of the project team, but the project team could also focus on other priorities. The first is more likely in my opinion. Too much involvement could lead to deviation from the plans, slowing the change down. However, Zammuto, Gifford and Goodman (2000) also state that individuals need to be involved in order to verify the new culture and to examine the consequences, before contributing in the change effort and new ways of working. It is good to know that employees understand they cannot be involved in every decision. It could be of high worth to the organization to try involving all employees for decisions in their own working area.
Selection and recruitment: To discuss on how selection and recruitment can be used in the change towards a preferred culture, AkzoNobel might be more conscious about the link between recruitment demands and the desired culture. Aiming at culture, hired people should fit into the cultural plan. However, work demands should be most important, so it is also dependent on the supply of workforces, which makes recruitment hard. It is remarkable that employees feel like recruitment could be more in line with the culture characteristics they pretend to have as an organization. When results are in line with reality, AkzoNobel might want to have a look at their workforce again if it wants to practice what it preaches. These results might be valuable in a way that the demands on recruitment and selection and the link to the culture AkzoNobel preaches, could be revised.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 41 rewards. With the P&D dialog, a system exists for the intrinsic rewards, but the organization could pay more personal attention to individual and team performances outside of the P&D dialog. This does raise the question if it is still to be called a reward system then.
5.2 Recommendations
The five change mechanisms will now be discussed, in a way that recommendations are given as a consequence to the results in this research. Therefore, recommendations will be connected to the blue and green print thinking patterns, because this is in line with the preferred.
5.2.1 In what way can leadership be used in the change to the preferred culture for the new HR organization? The results show that leadership is connected to almost all other mechanisms.
Top-management as well as middle-management and project-teams are important in during the whole change process.
The first recommendation to the management team of the new HR organization is to enhance a clear cultural vision. To be able to do this well, managers or leaders first have to change their selves. In this way they can be the role model for employees. The cultural vision has to be subject in meetings to secure the change process and keep the vision clear for everyone. This vision could be developed in consultation with management, by defining culture in specified terms.
Evidentially, leaders have to protect the processes as well: in the beginning they have to accept small mistakes and errors, and let the employees learn from this. This is also well compatible to the preferred culture. Managers must sponsor the initiatives and have to be facilitators, organizers as well as participants (de Caluwé and Vermaak, 2003).
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 42 be a facilitator and an expert in communication and interaction. In this way help is offered in the hardest phases of cultural change.
Furthermore, I would recommend managers to decrease the hierarchical distance and be approachable for the employees. Managers also should be persistent, especially when employees keep being negative. So also a strong personality is needed. Finally, the managers should celebrate successes; this will create a feeling of pride among the employees of the organization.
5.2.2 In what way can communication be used in the change towards the preferred culture for the new HR organization? According to de Caluwé and Vermaak (2003), communication needs
to be an integral part of every change intervention. Without communication common insights and language will not develop.
The first recommendation is to communicate organizational decisions target-group-oriented. This has to do with time. Within the new HR organization communication should be understandable by all, which is easily possible by the standardization and new procedures. To make this clear, visibility together with face-to-face communication is important. For example, posters that clarify new behavior, norms and values could become well accepted and help forming the preferred culture.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 43 5.2.3 In what way can involvement be used in the change towards the preferred culture for the new HR organization? The first recommendation is to involve the employees in the way they
perform their work, by explaining their best-practices and views on how to perform the work. In this way they also learn, so this has to be featured by writing down the best-practices as a blue tinted intervention, and giving them room to be involved by communication. For further involvement, the manager should plan a meeting with the employees to talk about how they would like to be involved in cultural change; the increase in involvement will lead to an increase in commitment and minimal resistance. Some more empowerment within sections of the new organization is in line with the flexibility; however, standardization seems the red line in changing. People which show negativism should also be heard, but a line has to be drawn with employees that keep being negative and negatively influence the cultural change. To stimulate the cultural change and create a sense of service-orientation, involvement in general could be stimulated by visiting some parts of AkzoNobel that make use of the new HR organization.
5.2.4 In what way can recruitment and selection be used in the change towards the preferred culture for the new HR organization? The recruitment function is a very straightforward
mechanism to influence an organization’s culture. It has to be used to select and recruit people that already possess the preferred norms and values to a high degree. It is recommended to recruit and select people that fit with the preferred culture. The vision of the preferred culture thus has to be translated into requirements. Even within the new HR organization there are different functions, so when recruiting and selecting people, attention has to be paid to both work qualifications/requirements and personality. It is thus recommended to create a clear view of what people are needed on the different functions. Next to that, the future employees have to believe in the preferred culture, but also have to realize that they first have to work in the present culture. In this way, people have to be change-minded.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 44 culture. Finally, the key functions have to be fulfilled by employees who could serve as a role model. In this way the newcomers could also be guided well with role models as mentors in the “new” organization.
5.2.5 In what way can reward systems be used in the change towards the preferred culture for the new HR organization? Reward systems are identified valuable by defining the relationship
between the organization and the employees by terms of exchange. For performance, clear goals and competencies have to be developed that are in line with the new tasks. These have to be well measurable for linkage with rewards, especially with monetary rewards. The monetary rewards could be higher for persons that perform in a way that is stimulating the cultural change, however, as already stated this should also be due to the phases in the change process.
Presently, employees are evaluated in the P&D dialog. The recommendation for all HR employees is to set goals on the two success factors/values that can be linked to the blue and green tint. Next tot focusing on our customer’s future first which is unmistakably important in delivering HR services, personal goals have to be set on deliver results (embrace entrepreneurial thinking, blue) and dare to improve (the courage and curiosity to question, green). In this way the preferred culture will be reached earlier.
Furthermore, intrinsic rewards are important. It is up to the managers to intrinsically reward the employees. Next to that, it is recommended to share and celebrate successes. For example by celebrating the 1000th, 5000th client helped and so on.
Conclusively, reward systems must promote the desired beliefs, values and behavior for the new way of working.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 45 5.3 Conclusion
In this research different change mechanisms were discussed that can help changing organizational culture. Cohesion among the change mechanisms is visible in the result part as well in the discussion part. As could be seen in this rapport, theorists provide the world with all kind of steps in cultural change. Without detracting the published work, I prefer looking at cultural change out of an integral perspective. It is clear that there is a lot of cohesion between leadership, communication and involvement, as well as between recruitment and reward systems. This research is most valuable and applicable to AkzoNobel, when the recommendations are taken into consideration and executed in the way and order the organization sees them as most valuable. Furthermore, many of the interventions and recommendations should be executed at the same time. Although attention must be paid to this process, this is possible. So the advice is to create a cultural change plan after discussing the outcomes of this research. Within this change plan there should be room for additional mechanisms like training, to create an integral approach to guide the cultural change. This research made clear the direction of the needed cultural change, and the way mechanisms could be used to change in this direction. It is expected that when starting to change culture at the upper levels in the model of Cummings and Huse, the cultural change will eventually penetrate in the lower levels of culture.
5.4 Limitations and reflection
Generally, culture is hard to understand. In the view that is enhanced in this research, culture is also about underlying assumptions that can’t be measured easily. This research is not comprehensive enough to focus on these assumptions, and mainly focused on the upper levels out of the model of Cummings and Huse (1989). Additionally, culture could be measured on more dimensions. However, the chosen methods are recognized and used in consultancy work, so they are tested as valuable.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 46 features were measured on only three questions. This is a statistical limitation that does not disqualify the research, in a sense that every researcher has to deal with these quantitative limitations.
Furthermore, the new organization will exist out of different parts, for which the preferred culture might be different. Besides that, not everyone filled in the survey completely, and only seven future employees, a project leader and three consultants were interviewed. This might be an important limitation because of the questionable validity and reliability.
Another limitation is the choice made in change mechanisms. Already found out in the interviews, there are mechanisms like training that could be used well in cultural changes.
Finally, this research is focused on the new HR organization at Arnhem. Within the change at AkzoNobel Netherlands, even more might change at the Business Units. Therefore, research should be done at the Business Units to understand how the culture needs to change there. Without the right culture at the Business Units, it can be expected that the change in delivering HR services will be disappointing in its outcomes.
Master Thesis Change Management Raymond Fafié – 1HR AkzoNobel 47
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