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NotesBusiness Management HLTopic 2.5Changing organizational culture (HL only)
Back to Business Management HL Topics
2.5.314 min read

Changing organizational culture (HL only) (Business Management HL)

IB Business Management • Unit 2

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Contents

  • What a cultural clash is
  • Clashes when a business grows
  • Clashes when businesses merge or take over
  • A new leader or style, and shrinking a clash
  • Exam-style question
Two bakeries under one name: At 4 a.m. the Mill Lane bakehouse is quiet. Priti runs the night shift to the minute: every tray has its time, and the vans leave at 5 a.m. whatever happens.

At 7 a.m. the High Street shop is loud. Aisha asks her four counter staff what to put in the window, and the regulars stay to chat.

Same company, same bread. Two different ways of doing things.

In 2.5.1 you met organizational culture: the beliefs, habits and unwritten rules that decide 'how things are done here'. A business does not always have just one. A shop, a shift or a department can grow its own version (a subculture), and at Lena's Bakery the night bakehouse and the day shops have done exactly that.

When the two meet: On Saturday Aisha phones Mill Lane at 4:30 a.m. A regular wants 40 extra rolls for a party. To Aisha, saying yes is how you keep a customer. To Priti, a change at 4:30 means the tray plan slips and the vans leave late for all three shops.

Neither is being difficult. Each is doing what her part of the business values. When two ways of working meet and pull against each other, they grind (a cultural clash).

A cultural clash is the conflict that comes when people with different beliefs, values and ways of working have to work together, or when the way things are done is changed faster than people accept. It happens most often at three moments: when a business grows, when it merges with or takes over another business, and when its leader or leadership style changes.

How a clash shows up

1

Blame and conflict

Each side sees the other as the problem. 'The shops never plan.' 'The bakers never listen.' Time goes on arguing instead of baking.

2

Motivation falls

People who were proud of how they worked feel their way is being called wrong, so they do the minimum.

3

People leave

Absence rises, then labour turnover. The first to go are often the most experienced, because they can find work elsewhere.

4

Work slows and quality slips

Decisions stall while people wait to see whose way wins, and mistakes rise where two sets of habits cross.

5

Customers notice

A late van, a missing order, a grumpy counter. The clash inside reaches the queue outside.

A clash is not always a disaster: Some friction is the price of a change the business needs. A clash can drag bad habits into the open, and a business that works through it can end up with a culture that fits its new size.

The damage comes from a clash that is ignored or forced through. The longer it runs, the more people leave and the more it costs.

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The first shop: When Lena opened her first shop, she baked and served herself, and Marco ran her market stall. Every decision was made over coffee at the counter, and everyone knew what Lena wanted because they could see her.

Today Lena's Bakery Ltd has three shops, a night bakehouse on Mill Lane and 22 people on three levels. Most of them have never worked beside Lena.

Growth changes a culture whether anyone plans it or not. With one shop, the culture sat around Lena, who decided everything, much like the power culture of 2.5.1. With 22 people she cannot be in every room, so recipe cards, rotas and managers take her place, and the business starts to run more by role than by person.

Then: one shop

  • Decisions. Lena decides on the spot, over coffee.
  • Knowing what to do. Watch Lena and copy her.
  • Who you ask. Lena, always.
  • What people value. Being trusted, and the bread.

Now: three shops and Mill Lane

  • Decisions. Managers decide day to day; big ones wait for Lena and Marco.
  • Knowing what to do. Recipe cards, rotas and a stock sheet.
  • Who you ask. Your manager: Aisha, Kofi, Jonas or Priti.
  • What people value. Still the bread, and now getting every order right.
Where it rubs: Rosa has baked for Lena longer than anyone. She used to change a recipe when the flour felt different. Now the recipe card says what to do, and Priti checks it. To Rosa the card says 'we no longer trust you'. To Ade, who joined in June, the card is how he learned the job.

Same card, two readings. That is a growth clash: the people who built the old culture against the rules a bigger business needs.

Why growth brings clashes

  • New people who never knew the founder. They learn the culture from rules and managers, not from watching Lena.
  • New layers. Managers stand between the founder and the staff, and each brings a style of their own.
  • Written rules. What used to be trust becomes procedure, and the old hands can read that as a loss of trust.
  • New sites. Each shop or shift grows its own subculture, and the sites start to pull apart.
Shrinking a growth clash: Say out loud what must not change, the hand-made bread, and what has to, the cards and the rotas, and why.

Let the old hands teach the new ones, so the culture passes on through people and not only through paper. And keep the founder visible: a weekly visit to each shop and the bakehouse does more than a notice on the wall.

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Suppose Lena buys Hartley's: In 1.5.2 Frank Hartley, who is retiring, offered Hartley's Bakery for sale: three shops in Brookfield and twelve staff. Suppose Lena's Bakery Ltd buys it.

On the first Monday, two businesses that grew up in different ways become one. The shops are the easy part.
Lena's Bakery LtdHartley's Bakery
How the bread is madeBy hand, overnight at Mill LaneTwo of the shops bake from frozen dough
PayA living wageThe legal minimum
How decisions are madeManagers decide day to day and ask their staffFrank Hartley decided everything himself
RulesRecipe cards and a hygiene check every shiftFew written rules, and a hygiene fine last year
What staff are proud ofThe bread and the morning queueKnowing their regulars by name for years

Every row is a place where the two cultures can grind. Hartley's staff may welcome the pay rise and still resent being told that their loaves are not real bread. Lena's managers may see Hartley's staff as careless because of the fine. Each side judges the other by its own values.

In a merger of equals the clash can last longer, because neither side's way wins by right. In a takeover the buyer's way usually wins, and the bought side can feel conquered. Across borders, the habits of two countries are added to the habits of two firms.

Absorb: run it Lena's way

  • Hand-made bread, the living wage and recipe cards in every Brookfield shop at once
  • Gain: one standard under one name, quickly
  • Risk: Hartley's staff feel conquered, and the best of them leave
  • Fits when the bought business's own ways are the problem

Keep it separate

  • Hartley's keeps its name, its way of baking and its habits
  • Gain: little disruption, so staff and regulars stay
  • Risk: two cultures inside one company, and bread sold by Lena not made her way
  • Fits when the bought business works well as it is

Blend the best of both

  • Mixed teams: Hartley's staff train at Mill Lane, Lena's managers learn the Brookfield regulars
  • Gain: each side keeps something it values
  • Risk: slow, and it takes a lot of managers' time
  • Fits when each side has something worth keeping
The same clash, in a joint venture: Two partners in a joint venture or an alliance bring two cultures to one project. Valley Loaf Ltd (1.5.2) puts Valley Grain, a cooperative where the farmers vote, beside a company where the directors decide. If nobody agrees how decisions will be made, the first hard choice becomes a fight.

Whichever route is chosen, the people affected need to hear why, early, and from the top. A clash grows fastest in the weeks when people are guessing.
A new chief executive at Goldcrust: For ten years Goldcrust plc ran its 400 bakeries from head office: a rulebook for every task, recipes and prices sent down, managers who follow them. That is close to the role culture of 2.5.1, under an autocratic chief executive.

This year the board appoints a new chief executive. She wants bakery managers to choose some of their own products and to ask their staff for ideas: a democratic style.

It sounds like good news for the staff, and it still causes a clash, because a culture is years of habits. Managers who were praised for following the rulebook are now told to use their judgement, and some freeze. Area managers who checked the rules lose the job they knew. Counter staff who were never asked suspect that 'your ideas' means more work for the same pay.

Why a new leader or a new style causes a clash

1

Old habits were rewarded

People did well under the old style. Changing it tells them that what they were good at no longer counts.

2

Power moves

Someone gains a say and someone loses one. Those who lose it resist, openly or quietly.

3

Trust has to be rebuilt

Staff do not know the new leader yet, and until they do they read every change in the worst light.

4

The style suits some and not others

Staff who wanted a say welcome it. Staff who liked clear orders feel lost without them.

It works the other way too: At Mill Lane, when Marco timed each task and set a target for every shift (2.4.1), bakers used to judging the bread by feel and being asked their views felt they were no longer trusted.

A move towards tighter control clashes with a culture of trust. A move away from control clashes with a culture of rules. Either way, the gap between the old style and the new one is what hurts.

How a business can shrink a clash

  • Know both cultures first. Ask staff what they value and how work really gets done before changing it.
  • Explain why, and listen. Two-way communication: what will change, what will not, and why; answer the fears.
  • Involve the people affected. Let staff shape how the change is made, not only hear about it.
  • Change step by step. Try it in one bakery first, and keep the traditions that do no harm.
  • Lead by example. Leaders live the new way first; staff copy what they see, not what they are told.
  • Train and reward the new way. Training for the new skills, and praise and promotion that match the new values.
Judging a clash: How bad a clash gets depends on four things: how far apart the two cultures are, how fast the change is pushed, how well it is explained, and whether staff can see what is in it for them.

That is the judgement a long answer needs: not 'there will be a clash', but how serious, for whom, and what would reduce it.

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How this comes up: A cultural clash is usually one argument inside a long question. A business plans a takeover, a merger, a joint venture or a change of leader, and you are asked to discuss the decision or its impact, for ten marks. The clash sits beside the money, the market and the people.

Shorter questions give a situation and ask you to explain one reason a clash may happen, or one advantage and one disadvantage of a way of handling it, for two or four marks.

The ten-mark pattern

  • Name the two cultures from the case. How each side makes decisions, works and what it values.
  • Where they grind, and what that does. Two clash points, each with its effect: motivation, labour turnover, quality, customers.
  • The other side. What the change brings, and what could reduce the clash.
  • A judgement. How serious the clash is likely to be, and what it depends on.
  • A limitation. What the case does not tell you that would change your view.
Two traps: 'There will be a culture clash' and nothing more. A clash is only an argument once you say which habits collide and what that does to the business: who leaves, what slows down, what customers notice.

All doom. Some clashes are the price of a change the business needs. Weigh the damage against what the change brings and what could reduce it.
IB-style questionDiscuss[10 marks]

Discuss the likely impact of a cultural clash on Lena's Bakery Ltd after it takes over Hartley's Bakery.

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two indicators a manager could use to judge whether a culture change programme has worked. [2 marks]

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