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The conceptual framework and illustrations presented here

are designed in the interest of . . .

Managing Change
Strategically: The Technical,
Political, and Cultural Keys
Noel M. Tichy


he world

of the 1980s poses










in all sectors -economic


political and cultural
tinue for some time, requiring


and organizations

to manage

to learn


under such conditions.
This article provides
a framework
and guidelines for strategically
managing change.


A number of external forces affect organizations. These fall into three categories-tech-








U.S. organizations


of those







in the 1980s include


Technical pressures:
falling U.S. prointense world competition,


tainty because of inflation or deflation, fluctuating interest rates, low capital investment
in the United States, low investment
in research and development
in the United States,
a shift to a service economy,
and high-technology changes, particularly
in communications and computer technology.

Political pressures: problems

Organizational Dynamics, Autumn 1982. 0 1982, AMACOM Periodicals Division,
American Management Associations. All rights reserved. 0090-2676/82/0015-0059/$02,00/O









worldwide, lack of integrative mechanisms
for resolving worldwide disputes, pluralism

growth in-

(haves vs. have nets), conflicts arising from

on productivity


The way out of these problems is not to ap-

policy and regulation,


and de-

of the workplace.

demographic changes as an older workforce
and the nontraditional


of those

born during the World War II baby boom.
Evidence that the world is changing
rapidly in the technical area is illustrated by

The world political scene is equally

Almost a decade ago Robert

Heilbroner warned us in his An inquiry Into
the Human Prospect that:
The long era of industrial
its final




and if population

claim to the highest standard of living in the

clining output

ped from first to fifth place and, in early
1982, to eighth place. Bent under the burden
of exorbitant energy costs, double-digit inflation (until quite recently), and increasing
pressure from world competitors in automobiles, steel, consumer electronics, machinery





we must

is now entering


of a new era of stationary

the fact that for the first time since World

world. In a matter of a few years it has slip-


but to revamp systems.

War II the United States has currently lost its

and, recently,

growth over the long term.

ply pressure on the self-perpetuating

decline in the work

Cultural pressures:

ethic, pressure for fulfillment at work, less
entrepreneurialism and risk taking, and such


among nations


or an equitable

has not yet been attained,

per head in the advanced

to convulsive

the comtotal output





His scenario for world political adjustment is a very violent one as he argues
that we do not have the processes in place to
resolve political differences. Events since
1974 have supported Heilbroner’s scenario.





change this are not in sight. Thus organiza-

the United States faces massive challenges in

tions can expect to have to function

the decade ahead.
It is beyond the scope of this article

volatile world where political risk analysis is

and my own personal competence to explain
causes and consequences of the pressures
listed above; therefore this discussion of
these pressures-necessary
to provide an important context for the balance of this article
-will be brief and admittedly superficial.
One critical insight relevant to environmental
forces is their systemic and hence self-reinforcing or self-perpetuating nature. For example, the declining rate of productivity
growth in the United States is caused by such
multiple and interrelated factors as a reduced


actions to declining productivity

clude tighter controls and more short-term
pressure, reinforcing the downward pressure

capital-to-labor ratio, shifts of money from
the private sector to the military sector, increased alienation of workers, and so forth.
These factors are tied into a management
process that has a short-term focus; thus re-

in a

as important as economic risk analysis when
conducting multinational operations.
A political trend that will affect
large organizations in Western countries is
the democratization of the workplace. In Europe this is reflected in several decades of
laws providing for codetermination, which
have resulted in workers’ serving on boards
of directors and a move toward union ownership of significant voting shares of companies in such countries as Sweden. The
same trend toward greater democratization
of the workplace is happening in the United
States, yet the path taken is and will probably continue to be distinctive. In the United
States there is not, and probably will not be,
any government intervention by enactment
of codetermination laws. In addition, the

and change that appeared in vur- ious journals- including Journal of Applied Behavioral Science. Tichy consults widely in the business and public sectors. One popular utopian view of the cultural in the United States is that of The Third Wave. new definitions of equity. can be attribII baby boom to have its im- pact on the workforce. ited opportunities fanned competition of their peers. the actual trends is also It is not entirely clear in fact. what are and what the aberra- tions are. The group is ideally suited to a fast-growth economy in which there is a tremendous amount of opportunity. The trend. including Organization Design for not merely of our obsolete political structures but of Primary Health Care (Prueger Special Studies. Organizational Dynamics. 1982).. University of Michigan journal. Much has been said about the de- clining work ethic. union-management cooperation involvement about come that is. they face a slow-growth economy with lim- (Wiley-Interscience. from Columbia University and u B. in his book He feels that we are: Noel Tichy is un associate professor of organizational behavior at the University of Michigan’s Graduate School of Business Administration Institute und a faculty ussociute at the for Sociul Reseurch at the University of Michigan. civilization itself. work ethic. creating a new civilization in our midst with its from Colgute University. . Technical. and individual group members have great expectations about what they can achieve in terms of career.A. . The result. what all the shifts mean-nor. life styles. changing sexual and family mores. . he launched und directed the Advunced Program in Organization Development and Human Resources Munugement. Administrative Science Quarterly. however. 1977) and Managing Strategic Change: The . He is the director of The Michigan Business ‘School’s Advanced Humun Resources Program. and it trails off at age 18. Formerly un associate professor at the Gruduute School of Business. Columbia University. . if we begin now we and our sources Management. sexual attitudes. and life style. by the intense who are equally talented and also have high expectations. one accepts the utopian by Toffler must acknowledge that we are still faced with cultural One set of pressures uted to the post-World group War that is just beginning or some pressures. Dr. for the most part. end up being stuck as followers on the lower rungs of many corporate ladders. toward greater democratization will continue. and worker through trial and error. . He holds u Ph. he has also written numerous articles on organization theory.changes in the United tionary and States are more evolu- pragmatic in nature. This group was trained to be leaders but will. The undergoing cultural environment changes. and other and somewhat shifts occurring Alvin Toffler changes. development. He is the editor of the own jobs.D. In 1982 the leading edge of this group is 36 years old. economics. The author of seuerul and concepts of life children can take part in the exciting reconstruction books. thus providing an opportunity willing for organizations to get ahead the trend that are of the wave to manage to their advantage. will be unmet expectations leading to disillu- 61 . Human Relations. and Columbia Journal of World Business. if not managed. This large grouIj has been reared in an affluent environment.. instead. Human Re- . is highly educated. Political and Cultural Dynamics Whether opportunity one presented less positive ones. hedonistic trends.

organizations must return to basic questions about their problem of all three are interdependent. solving must be coordinated them. thus requiring a political process that can make zero-sum decisions. One shift that warrants and cul- are inter- for society is to evolve a more satisfactory alignment of these three sets of factors. His prognosis is that we cannot make such decisions. making problems - many -can and revamping production. resources political flected by who gets ahead. political. as re- how they get re- warded. provides a framework for sorting out and managing basic dilemmas facing organizations. fluence on their change will require are perhaps the most yet most pervasive. Thus management engages in goal setting. with particular emphasis on the role of human resources management. TPC THEORY The technical. will also need a major overhaul. This article provides a framework for managing strategic change and a set of practical guidelines for its application. examination. It will not be easy. Thus we are faced with ter Thurow the dilemma described by Lesin his book The Zero Sum Socie- ty. BACK TO BASICSFOR ORGANIZATIONS 62 nature and purpose. but are con- stantly adjusted over time. most of the 1980s. frustration. Organizations’ complex cultures and subtle. systems. subtle processes very slippery ground for making tions and predictions. and human The organization’s marketing. To help address these problems so among a con- Technical Design Problems All organizations face production problems -that is. The fundamental character of their technical systems will need re- The cultural pressure is built into the demographics and will exert itself throughout To manage in turbulent times. strategy for- . in the context of environmental threats and opportunities. solved without rates. because we are increasingly context having of a zero-sum to do so in the economic setting.sionment. addressing Thus in- major the issue of organizational members’ values and beliefs. systems. but worse off. Thus a society whose organizations are in a predictably troubled time faces a major challenge. None of our major economic whether high interest ty. in the environment The challenge is the hedonistic in which and motivate we must attention Such a shift has profound tions tural and norms that provide Nonetheless try. the TPC Theory. paralyzed and drift into the future that is out of control. and who has the power to make decisions. way generaliza- the Protestant to a more for the way manage The forces twined. and technical resources must be arranged to produce some desired output. problems instead. money. will result and major in new misrestructuring of the financial. Not only does each area require attention on its own. scarce energy. and dissatisfaction. people. work ethic set of implica- organizations a workforce. technical. political. sions and strategies Shifts in societal values are complex. and hence we will become ceptual framework. by using money. and cultural UPC) systems mentioned above represent three fundamental attention problems that require continuous in organizations. we will have to prevent decisions from being made. These problems or dilemmas low productivi- or unemployment which In the past we had an expanding economic pie that allowed us to solve our problems simply be Americans are never solved. effectiveness. This luxury doesn’t appear to be feasible in the near future. extent to which has given values.

which is discussed at length in “Conversation with Charles L. many political subsystems as 63 . Second. Nonetheless. or cultural . and management systems’ design-all to solve the technical problems. or when relationships between unions and management change. As in the political area. The uses to which the organization will be put. This will call for a new culture that values competition. and decisions about the organization’s internal power structure. The same is true of the strategic rope. each major strand of a rope is made up of substrands.” chairman of the board of AT&T. organizational design. Furthermore. which is moving into the competitive communications field out of the regulated telephone monopoly. must be determined. velop cultures that reflect their members’ dominant norms and values. The Strategic Rope These problem areas can be visualized as three intertwined strands of rope. it may not be critical for blue-collar workers to share the values and commitment held by the organization’s professional and managerial members.mulation. Hence the organization must determine what norms and values should be held by its members. much management time and attention must be given to strategic political issues-for example. the operating companies of the Bell system will be divested. the political area has less formal and often less overt concepts and language. The metaphor of the rope is used to underscore several points. by a normative glue-that is. organizations deNevertheless. innovation. and cultural systems. political. and making a profit in the market place . a casual observer cannot distinguish an organization’s technical. career decisions. from a distance. However. Unlike the technical area. the activity before and after the advent of a new chief executive officer or other key executive. and the new AT&T will be fully competitive with such companies as IBM. and ‘Managing Transitions to Uncertain Future States” by David A. political. each of which represents one of the three environments . individual strands are not distinguishable.technical. Another major cultural shift is occurring at Westinghouse. decisions must be made concerning what values should be held by what parts of the organizational population. organizations are held together. First. budget decisions. not explicitly and overtly. Brown. in which there are such formalized tools as strategic planning and organization design. Decisions about these issues are reflected in the resolution of compensation problems. in part. as well as who will reap organizational benefits. upon close examination one can distinguish multiple substrands. Examples of strategic cultural shifts include the shift at AT&T. which has launched a massive productivity improvement effort based on a participative-management approach. by the sharing of certain important beliefs by its members. Cultural Problem As social tools. Upon close examination of an organization one will find not one but many technical systems. That is.all three values alien to the old AT&T. Political Allocation Problem Similarly. all organizations face the problem of allocating power and resources. For example. the strands are there and to understand the organization one needs to understand each strand. or after a major acquisition. the culture may evolve informally. Nadler. both in the Summer 1982 issue of Organizational Dynamics. In this shift.that have an impact on the organization.

can also become work zation unravelled production tion. ?? Structure changes. or division presidents of 15 major U. Strategic and innova- about or at cross-purposes. old-boy and many such as (1) young Turks (2) male and female. The specific changes identified by these executives as critical technical system changes in the 1980s were: ?? Technology changes. undergoing ment case illustration. shifting from almost total on gas and oil to a mix of raw material (feedstocks) that includes greater use of coal and biomass (fermentation). I would like to present a concrete organizations perpetually and changes.S. weakened. the executives and consciously effective of the technical. they their strategic tasks for the 1980s.S. The strategic techfacing cultural cycles in all organizations. political. Three types of uncertainty need management . and manage- attention is invested unravelled. Thus technical. this will require totally new plants and technologies . Examples include technical uncertainties about changes and cul- were asked to in TPC systems that they expect will occur within their companies during the 1980s. and that organizations must attempt to reduce or manage uncertainty.technical. political. Because of the slow growth in U. by that there is alignment within each system technical. management demands cal. appropriate political. tural (TPC) cycles concept. uncertainties power distributions. the three systems. political. political candidates. and when When become tion or conflicting certainty in any value systems. 1. Feedstock and the production processes will have to be altered to enable them to use coal and biomass. Adjustment can be conceptualized there are continuous nical changes present a decade to the extent vamp production change basic will result dependence in the three systems in cyclical terms. strands cul- and so forth. in the amount of energy invested in making adjustments in these cycles. and European markets. rial problem-solving either in reducing brought in the face A Case Illustration changes in the en- Before I delineate the concepts needed to manage each cycle. raw from a picture in which of an industry it will have to re- processes because it must Most changes materials. When unof these systems is per- ceived. political. tural systems timers. is triggered. It is argued the strategic orga- is unconscious. First. - the organi- cess of keeping of changing and cultural uncertainties about value systems for the organiza- and cultural greatly succession allocations. becomes capability. Third. ropes Organizations markets. and organizations vary. The results of some of these interviews illustrate the ap- be aligned internally and plication shifts must with their external environment. may be made the organization quite and as an evolutionary of organizational the aligned nizations unconsciously process ecology they are explicitly or the process are deemed in This align- its members viewed Whether be identify and by some advocates. political.represented power by various centers. and cultural. networks. Because the uncertainty is the pro- the rope together and cultural a response and reward ing out how to cope with it. divisional cultures. weakened. chemical companies were interviewed about Organizational Cycles continually or in figur- on by techni- vironment . there . and so forth. they become their technical. and cultural -and across 64 In 1981 presidents are flwc. over time. or old (3) functional they do.

This may sound paradoxical. All the executives identified significant personnel dustry is very changes ital. ?? running over strategic that this was a reasonable the organizations centralization power much countability. (Note: ?? cultural system in the 1980s were predicted Performance-related produc- of the organization because driven be able to pass feed- stock costs on to customers. Many of the ex- exert increasing To be more effective environment. In several of the companies. in- the major are all quite equal in terms of cap- their people. These of at- included to new or- and to new managerial 3. the tremendous ?? sive to demand. will be in the quality of indicate that the culture less “nice guy” and more perfor- mance-oriented with an emphasis on teamwork and delegation. commodity argued tempts. exception bought might an oil company part of the strategy tivity DuPont. Managers will have to take a longer view in their decisions. These executives indicated that people will be an increas- development. ?? Reward issues. Strategic changes a structures resistance styles. technology. values. Decision-making values. 2. executives reported that the bonus system would be adjusted to open it up to more people. . therefore. ?? Management changes. Strategic systems changes in for the 1980s were reported political to in- decisions decentralized ingly important competitive clude: among them. Promotion/succession issues. that there would be in- of external takeover Other political issues. All of them indicated that rewards were going to have to be more explicitly and closely linked to performance for all employees. but what they were referring to was the end of an era in which mediocrity was tolerated and a shift to one that emphasizes being “nice guy” only to those who perform. manage across different cultures. more-especially cals to avoid who will will dominate the end of the business of oil and gas feedstocks. such things as political low-value-added their control The chemi- and OPEC. are squeezed indicated Also. diversify into more specialty the oil companies It was External control issues.will be increasing markets that design expansion will necessitate changes to make more multinational. The culture is going more to be: to have by performance This is in contrast to be and acto the cur- carry- rent culture that many of the executives painted as being quite comfortable and quite above tolerant of man- to be trained to ?? of mediocre performance. ?? Shifts in power center issues. not to everyone. Effectively creasing ganization Finally. have greater to other world and organization- There will be more de- to get product their markets and make lines closer to them more respon- Strategy changes. companies tegic planning. many indicated ?? which will be increased as profit margins the companies be because changes the 1980s. of changes outlined ‘hands-on” type a more one who will have that their control numbers boards of that would over the company. the execufor more effective stra- decisions shift because technological will occur during ecutives in a more turbulent tives see the need the company.Conoco. The 1980s will be a decade requiring a great deal of In addition. the key difference ?? at the top. 65 . will become will have to be more and quicker. They and products. management ?? People-orientation values.) won’t ing out the kinds will take ager. It was generally felt that the technical people rather than those in financial and marketing would companies Even though advantage the chemical capital-intensive.

The uncertainty in the technical area required massive changes structure and human resources in corporate management that will take five or more years to fully imand saw peaks or with a planned tion political leys. Finally. only no major alteration ganization a these two foresaw in markets. cultural the relationship agement -for representative AMC is trying changes. re- polit- and to align each were generally These reward technical. new products. from quality more rela- cycles’ for the decade tended to trail the technical cycles. and participative management to support the new strategies. and cultural to note that only two predicted change effective his view of how each of the three cycles would play out over the coming decade. Again. cycles depicted by quite idiosyncratic. Politically. Each respondent components its structure. and there is great uncer- tainty about what it will take to get promoted in the future. This is also reflected in a more proactive vironment. Most executives. The political executives was these One executive political tally turbulence. and so forth. or- processes. and so forth would decade.S. The executives talked about the kind of culture needed to make the organization work in the 1990s. and General Motors and Ford are implementing quality of work life programs for their workers. We are concerned with helping managers of change develop concepts and skills for managing each of the three cycles. a couple of executives predicted tive political stability in the 1980s. For ex- the U. saw the decade as one of increasing technical uncertainty as they gear up for new produc- tion processes. Finally. making was asked to draw strategic an organization an organization’s and strategy. which combined that a tosystem. It is nical cycle. A great deal of weeding out is going on in the managerial ranks. the industry needs a culture that values quality. They more see a need to entrepreneurial in their style. on the other hand. in turn. between is undergoing example.?? Management become much proactive style.S. to negotiate with workers to get them to lend parts of their cost-of-living increases to the company. by much infighting Others bile companies . automoin pretty good with stiffer competi- fuel-efficient Japanese and and European higher cars to cut into the sales volume of U. systems and is to align and its human the three ical. TSey were very conscious of the need to alter the norms and values of their organizations over the next ten years. and so forth. union massive Chrysler triggered now and man- readjustment has a union on its board of directors. Whether these projections are going to make their companies effective is open to a great deal of debate and will not be our concern here. 66 STRATEGICALIGNMENT and changes.its mission the others. strategic alignment. stance especially toward the The key to managing their en- regulatory en- vironment . production products. the way he envisioned executives retirement of a group the cultural all and valwith of key reorganization. a more complete strategic-plan- . sources-within systems of these with interesting ample. up until the 1970s as one of be put in place over the accompanied along. viewed new power new markets. the decade structure. inculcating TPC Theory into the Strategic-Planning Process Given the challenges facing organizations in the 198os. Then change was triggered in the technical area by the energy plement. Very often a peak was associated the scheduled crisis. efficiency. relatively certain decade in terms of the tech- that is. design. automobiles.

research and development (R&D). veloped in the 197Os. People are forced to share their normally about ly those concerning sues. together. functional organizations fit best with single-line businesses. organizational structure determines how to integrate the organization-that is. and defining matrix area entails of the managerial make that happen. onmental tools used to align strategy. That’s why I advo- ciding cate using TPC theory as part of the strategic- vest its limited planning rating each of the nine cells of the matrix process. have drawn their cycles. of current potential. The first step in the process their predictions forces a great over the next execu- Once the in- scenario. divisions. the way in which people are grouped and coordinated to accomplish those tasks. individual- is to have a team of top managers ly draw appraisal a resources. should management threats and opportunities facing the organization. The human resources management tools include staffing/selection and placement of people both from outside the organization and from the internal labor market. finance. and so forth. Once labor has been divided or differentiated. and so forth. and underemphasized strategy implementation. includes such traditional management tasks as assessing the envir- mission combines with a focus on organization structure. The first set of managerial tools. Technical system. informa- tion. it deter- mines the mechanisms that integrate roles into departments. development of people to perform well in their current jobs as well as in future that The strategy major fits organizational identifies resources complish The three tool areas are and strategy. to plicit assumptions where quired company and of re- financial and nonfinancial. This dialogue deal of back-to-basics work. assessing organizational strengths and weaknesses. (For example. The second managerial tool is orga- nization structure. The second make the picture the future. and the managerial training on which re- To pre- Managers in the technical are the subjects agement (see for this task they are given background on the strategic told that items matrix in- time by of change management matrix. how to divide it into such work roles as production. which tended to be overly technical in nature. as a group. management faces the traditional organization design dilemma of how to differentiate the organization- that is. political step The strategic management the three systems.ning process will be called for than those de- jobs. a focus on the three systems mission im- in the process Strategic Management their for the firm to be successful. agree on a common performance determination 1) as to the amount just as the chemical dividual managers they are brought and Figure tional cycles for their company decade. the way in which the will be fit together to ac- the mission. regions. Another organization design issue is how to align the organization’s structure or design with its strategy. Managers are given the task of de- of the organiza- tives did in the case illustration. ) The third tool for dealing with the 67 . marketing. organization senior pare managers the following of control. mis- sion and strategy. resources sion and strategy will processes row of the of mainstream and writing management spends are man- and the tasks considerable time. and developing is- Matrix three sets of managerial and human especial- and cultural a bit more complex. management. The mis- setting goals and it includes all processes necessary Structure is broadly to de- fined to include the organization’s tasks. left out political future wards-both and cultural concepts. and so forth needed to make the structure work. Here.

and weaknesses. and so forth). regions. Aligning structure to strategy. Differentiating: Organization Structure Managerial Tools 121 Procedure: For each cell on the matrix. A Great Deal of Change Moderate Change Circle the number below each box to indicate: No Change Required Required Required STRATEGICTASKS FOR THE SUCCESSFULMANAGEMENT OF YOUR ORGANIZATION Figure 1 . strategy. marketing. into roles (production. Developing (socialization) to mold organization culture. R&D. mar- Balancing power across groups of structure. Defining mission and selecting re- Assessing organizational strengths and opportunities. divisions. indicate the amount of change you feel is required over the next five years for your organization to be successful. Managing the politics of appraisal reward system (who gets what Designing and administrating gets ahead. philosophy on mission and Managing influence of values and 111 around strategic decisions. Managing succession politics (who ill (present and future). Assessing environmental Mission and Strategy 111 [31 organizing work [21 (31 141 I51 121 I31 (41 121 131 [41 I51 01 131 I41 151 111 [21 131 company culture. keting. Staffing and developing to fill roles Measuring performance. 111 how). [41 151 [II I21 131 141 is1 Managing rewards to shape and reinforce the culture. Developing subcultures to support aligned with technical and Developing managerial style III so forth). Integration: recombining roles into and so forth). and roles (for example sales vs. departments. Distributing power across the role [ll and so forth. Specifying performance criteria for roles. roles (production culture. Who gets to influence the mission I11 sources to accomplish it. (41 political structure. Integrating subcultures to create Selecting people to build or reinforce culture.System Cultural System Political System Technical 1 Managerial Areas threats 121 I31 I41 I51 I21 I31 I41 151 111 [21 131 141 [Sl Developing culture aligned with mission and strategy. (who is appraised by whom and and how). how they get ahead). 151 Human Resources Management 151 Fitting people to roles. R&D culture. Managing coalitional behavior and strategy. production vs.

to call decisions in these areas political is to be guilty of heresy: In ical system activity for management. Mission and strategy provide the ture. specifying for measuring performance performance tems. how to strategic It’s never have equal power? go off and make by himself decisions dealing they vis-a-vis presidents the chairman frequently talked about openly. in individual sions plenty of who’s going to tion. The real issue is not whether we call them political but whether they’re done in a way that is perceived as fair and equitable to the organization’s greater around strategic its structure. what group get to influence and private dis- offices. and staffing proaches so forth) to filling for different and future egy. This involves properly matching people and jobs. rial tools are used to manage the political system is the design of the organization. organization structure. fitting people to ence the organization’s mission and strategy. These decisions imply the movement of resources and budgets and will inevitably tions’ taking different result positions. allocate organiza- All of these tool areas-mission Political sys- and developing present to solve organizational criteria (appraisal Should the strategic or herself? Thus a set of must be made on who influences and strategy. of coalitional in coali- decisions The technical behavior is a critical polit- issues are how to rationally differentiate and integrate the organization. to sell a dog business-that will impact some people’s careers adversely and further other people’s careers. In this area there are at least two major should the allocation of power be across the organization structure? This can get reflected in the scope of decision-making authority 69 . That is. hence they are political. Tasks identified vision management time and resources. how much power should a department head or division head have in relationship to his or her subordinates? What first set of managerial tools that can be used to work with the organization’s political system. and strat- and human rebe used together technical problems. the management most organizations. imbedded ical outcomes around stra- what the strategic in it are a set of polit- that result in the creation of coalitions-that is. In such discus- time is spent talking about be promoted to what posiis in power. The second set of political tasks with mission and strategy is the manof coalitional tegic decisions. The second area in which manage- reality. should all the di- mission row of the matrix often But they don’t identify decision-making are the least the political groups strategically. what the balance of power between different functional areas is. the actual process. Obvious- and the political nature of the allocation of bonuses and rewards. Examples of specific managerial tasks associated with the political system are presented in Figure 1. not be topics for management They may committee agement meetings the major decision topics cussions of lunch. aproles. are certainly cocktails. sources management -should system. The political issue relates to the distribution of power across the role struc- needs. The problem is that in ly. how the budgets are going to be allocated across businesses or divisions. who’s going to the strategic decisions. decisions to enter new businesses or markets.technical system is the human tasks: One is determining resources who gets to influ- management system. behavior No matter is. to invest more in a startup business. and tional roles. or these are all allocation decisions. The technically focused textbooks and con- their sulting roles. yet they frequently absorb a major portion of senior but power decisions in spell out how to plan made clear what levels of the organization should be involved: For example.

Appraisal research has found that. or production versus R&D. Who is appraised by whom and by what criteria? Herein lies an interesting conflict between the logic of a political system and the logic of a technical system. This created a very unhappy senior management group below that level. from a technical point of view. human resources systems need to be adjusted. . that is.creating a dilemma that has to be managed in the politics of appraisal. which have very informal processes for determining candidates and a great deal of informal political behavior by managers either to move their own person in or to politically maneuver so they can get a shot at the job. what’s the relative power position of sales versus marketing. Electric’s slate system. is the managing of the politics of the appraisal process. This is an example of where political logic outweighs technical logic. there are going to be win/lose decisions. an important political issue in organizations. The second political human resources issue is the design and administration of reward systems-who gets what and how they qualify for it. Finally. Managers can fill those positions only from those on the formal slate. there are many variations in reward systems. and they began to put political pressure on the top three to open up the bonus system to fuller participation further down in the organization.70 that individuals have over budgets. corporations could not politically tolerate having peers and subordinates appraise the boss-even though.S. However. from a technical point of view. Therefore. This finding has been replicated in a variety of ways in industrial settings where peers and subordinates provide a better indicator of current and future performance than does a boss or a supervisor. because of its importance in making decisions about pay and promotion. It must be decided who gets ahead and how they get ahead. or the controller versus the human resources group? These decisions are political because they balance the allocation of power in the organization and often balance the allocation of money across different parts of the organization. Finally. there will be Organizations vary succession politics. 99 percent of U. given the pyramid shape of organizations and the fact that organizations tend to produce more candidates than there are positions. A second organization-design political issue is how the balance of power takes place across groupings.S. in the political system area. One example of a political issue that needed resolving occurred in a plastics company where the lion’s share of the bonus was being allocated to the top three executives. more valid understanding of an individual’s performance than his or her boss has. Again. This dates back to a line of research from World War II that showed that peers were better able than instructors to predict who would be successful pilots. Whenever there are succession issues. and how much power they have over people’s careers further down in the organization. This is in marked contrast to the majority of U. A formal system to identify candidates for key positions and a political system to ensure that formally identified succession candidates are actually appointed are generally missing in industry. that would provide better data. corporations. The first issue is managing succession politics. in which a strong human resources staff works with line management to establish a slate of candidates for positions among the top 600 people in GE. widely in how they handle this. On one end of the spectrum are fairly strong and institusuch as General tionalized practices. subordinates and peers have a better.

there are two issues that management must attend to. and so forth are working at odds. They have used human resources systems very skillfully to shape and reinforce cultures that provide strong employee commitment to the organization’s technical outcomes. Because of the uncertain and complex nature of business strategy. Human resources management systems provide the final tool for managing the culture. which moved it from solely a regulated telephone monopoly into a competitive information business. and profit. Some companies go to great extremes to create identity with the company-for example. It is in this area that Japanese management has been more sophisticated and more attentive than U. to be successful a company’s culture needs to support the kind of business the organization is in and its strategy for handling that business. As a result. sales. The second area that needs to be addressed to manage the culture is organization structure and design. both technically and politically. entering certain markets or businesses is often influenced as much by a value position as by a technical analysis of whether it would make money or be a successful business decision.Cultural Systems. Management must be able to recognize value positions and develop ways of addressing them as value issues instead of technical issues. open confrontation of conflict rather than a more traditional. management. and they don’t have any wider identification with the company. And. finance. Running technical analyses when someone takes a value position against something is like comparing apples with oranges. Within the first management tool area. IBM and Exxon have very definitive company cultures that transcend any of their subcultures. then R&D. For example. as a result. If the subcultures are too strong. AT&T’s changed mission and strategy. the issues that become paramount are the development of managerial styles that will align with the kind of technical and political structures created in the organization. One of the first human resources tools for accom- 71 . there should be a different culture for production than for R&D. For example. For example. competition. there are three categories of management tools that can be used to address the cultural system. mission and strategy. This leads to a third cultural problem-that is. and more supportive of entrepreneurial idea generation. will require a culture that supports innovation. more innovative. In it power is balanced on two dimensions-such as product and function. the extent to which there are mechanisms for integrating subcultures to create a company culture. The second mission and strategy concern related to culture is developing a culture that aligns with the organization’s mission and strategy. That is. Here. therefore it calls for a management style that uses negotiated. Production should be more cost-conscious and efficiency-driven. the organization needs to foster subcultures consistent with the subunit. One is managing the influence of values and philosophy as they impact the organization’s mission and strategy. A second cultural issue is the development of subcultures to support the various subcomponents of organization design. production. R&D should be longer-term. chain-ofcommand management style. a company that has moved from a functional organization to a matrix organization requires a very different managerial style. the organization’s mission is greatly influenced by the personal values of the key decision makers. As with the technical and political systems. The matrix organization is very different from a functional organization.S.

culture outplans. depends tion to human that use the human the nine cells and lined nologies and units. if you review that IBM values the program.plishing this is the selection cifically. The analysis of the strategic management matrix leads to a better understanding of the basics of management. Thus the three human resources management cells in the matrix (Figure 1) warrant a great deal of attention. the most underdeveloped It is and least strategic tool areas-and. they put a high premium on development. then. politically. many find invest and development. it is not contributing technically. Ouchi would characterize as being “Theory Z” organizations. values important Finally. they on the basis of the ques- tion. organizations systems on some of pressures earlier designed adjustment. they screen out people for cultural in Japanese the a great deal of effort on the selection process. people whose values fit the organization’s dominant values are the ones who are promoted and more highly compensated.S. the long-run competitiveness of U. firms that William G. THE Focus ON HUMAN RESOURCES MANAGEMENT part of do this. The stra- changes organizations ductivity ularized economic. and demo- of the 1980s are pressuring to use more management. effective While human sagging pro- and worker alienation have popsuch management tools as quality circles and profit-sharing plans. or culturally in a manner necessitated by the pressures programs constitute you will a very a very explicit Japanese firms ex- of the 1980s. how will this person fit in? This is true firms where workers have a large role in the selection decision as well as in those U. too. They involve many process. obviously to the man- can be used to shape and reinforce the culture-that is. industry will require considerably more sophisticated approaches to the strategic role of human resources management in organizational performance. again. The 1980s is a decade in which TPC theory will have increasing relevance to human resources management issues. . tivity the selection of people-spe- of people to how they fit with and reinforce organization’s dominant that use the human cultural culture. A second human resources about the strategies tool for of the matrix as a dynamic the turbulent environmental in this article. of IBM’s training plicit goal and form search in the matrix. Much is aimed at getting people in- with Thus. The technological. Over the next several years and application of this approach of the three management to shape Strategic to make adjustments ized. as a result.S. should include the strategies cells of the strategic management heavily in training of such training culcated culture. resources tool spend Companies systems as a reasons- that is. Using the human resources systems to reinforce the cultural adherents is a very powerful tool for aligning the culture system with the technical 72 talking rather. people in the interview assess candidates tegic task now becomes with sensi- and political systems. It is already becoming apparent that many organizations are giving a great deal of atten- resources management. reto strategic management will be carried out. jigsaw puzzle re- attention adjustment merely business on managing ongoing How much than of businesses for the strategic it focuses quiring more a portfolio shaping the organization’s culture is the way in which people are developed and socialresources of rewards culture. much of which is on-the-job and aims at get- graphic ting people to internalize resources the organization’s agement and tech- the organization’s dominant for example.

Acquiring resources for monitoring acquisition.Figure 2 RELATIONSHIP BETWEEN BUSINESSFUNCTIONS AND HUMANREWJRCESFUNCTION Human Resources Functions Business Functions Strategic Level Time Resources Organizationai I Horizon Required Impact Long-run Large Quantity A High Deciding what business(es) the organization is in. r Strategic Level Determining what people are needed to run future businesses. Operational Level Operational Level Executing tasks on day-to-day basis. and development of people within strategic umbrella. Most current personnel functions in U. While this is so partially because of the complex and changing nature of human resources. Supporting business with human side of the organization on a daily Managerial Level V Small Quantity Short-run Beyond Operational Services Resources Management Effective human means designing resources organizational for Human Low idiosyncratic. industry provide highly sophisticated human resources support for operational tasks. managerial and strategic tasks are largely driven by unsystematic. and operational tasks. management systems that address’ the human resources dimensions of the firm’s strategic. retention.S. managerial. Specifying major programs and policies. it is reinforced by a perspective that views human resources management as a staff function rather than an integral part of line management. My position is that it must be a responsibility built into the management process. and frequently conflicting systems. Figure 2 diagrams the relationship 73 . Ensuring that policies and programs for long-term human resources fit world conditions and organization strategy. Managerial Level Having effective human resources function for acquisition. Setting the parameters by strategy. Identifying major priorities. However.

the strategic link discusses the tradeoff between the human. such as staffing. On the human resources side the concern is with around and This the busi- ness side is under the umbrella of the strategic thrust of the business. Most organizations are working only on the technical and operational human resources issues. from outside to develop needed in the medium the dialogue space. tural perspective and sliced managerially. informational. within social and cultural which the objectives The strategic gets reflected in the establishment aries the human have the to work. The major focus is on acquiring resources for carrying out the dialogue concerns concerns. What activities specific are required human to support ness at each level? 2. The Human Resources Management dimensional rewarding. commitments. of between is ensuring policies for the long-term developresources for the future busi- ness. appraising. The operational between the day-to-day come and re- link is the interface activities of the busi- resources around of bound- resources context for strategic planningthat is. 74 viewing be performed and the corresponding human resources tasks. Building a managerial link requires such issues as: Do we hire the human resources term? How do we meet the needs of the internal markets for human resources services? What are the strategies for each of the subfunctions. and are evaluated warded. and the appropriate context to run the busi- the specific day-to-day tasks. and development? At the strategic level the business side is concerned with determining the business or businesses the organization is and should be in. The goal of an effectively managed organization is to manage the whole cube. Each of the human looked appraisal presented resources and at from a technical. In addition. financial. On the human resources side the job skills they need to do their work. appraisals. compensation. to achieve selection. if it is to survive in the strategic arena and actually deliver in new areas of the human resources . and developing human resources the strategic goals. On the human be addressed: 1. level.between the business functions that have to them. what the long-term human resources pool should be for this particular organization. perform. choosing the objectives and re- Cube Our work with human resources management and TPC theory has led to the three- developing an effective and efficient human resources system for acquiring. identifying major priorities. What is required link between human the business resources side the key issues are to determine resources the kinds of people the busi- ness in the long to forge functions the and the resources function at each level? At the operational level the bus- iness side is concerned with the execution and programs ment of human needed term. Two critical questions must framework 3. and other scarce resources. and the implications of the organization’s alternative strategic plan and developing procedures for measuring and monitoring performance. and are thus undermanaging the vast majority of human resources. If the human resources management function is to move out of the doldrums of operational servicing. and specifying major programs and developing policies to achieve them. the ongoing production process. make it work effectively. in Figure functions- rewards political. business that and ness and the human resources systems are designed to facilitate this process At the managerial human the link calls for dialogue concern that employees are like- ly to succeed. -can be and cul- strategically. and operationally.

and deof its human resources. by my Mary for managerial Figure 3 THEHUMANREWJRCES MANAGEMENT CUBE Human Resources Functions ef- The steps to this end being taken colleagues. and what kind of orgawould best follow through on the Whether the critical will adhere ity. the basic stance the organiza- The most interesting objective from a strategic human resources point of view is their “people objective. it should be stressed as a recruitment criterion. which is 12 percent of profits divided according to base pay. the “HP way” different sales teams dealing with the same customer. tied to compensation. to attract in the company’s and success. and reward activities are mutually lieves that growth retain high-caliber reinforcing. Another important articulated corporate sure consistency across reason culture the human for a is to enresources Woven together profit. satisfaction. Design u corporate philosophy/ culture. uses.” which is “To help tion takes velopment toward retention. people. they should be spe- cific enough to represent an organizing cultural principles for the company. There are no special management in- 75 . Design human set of resources sys- tems that reflect the corporate culture. is not a mere platitude. which they make possible. are seven objectives for fields of interest. then job security should be a key reward for performance. and built in as an assumption of development clearly programs. Forbrun and and me with several organizations are listed below. management. the organi- product customer qualservice. senior executives must begin to recognize and understand the managerial nature of its activities and their importance fectiveness. appraisal. customers. growth. 1. but a deeply value in the HP culture. Decide what the critical strategic nization plan. development. zation thrust of the plan will be.“ when it comes to customers stresses cooperation among For example.cube and perform when challenged. HP people share is essential people. all stem from a basic set of values that in most organizations remain implicit. Associated clearly articulated is known and corporate citizen- with each objective are policies that reflect what as the “HP way. organization or employee values to involve growth. it is this culture that provides the cohesion between sources systems. and to help gain a sense of satisfaction and accomplishment for their work. Hewlett-Packard This held be- functions so that staffing. If the corporate culture involves treating its employees as members of a family. to provide job security based on performance. 2. Whether implicit or explicit. Such a value should be reflected in all of the human resources systems. ship. to recognize individual achievements. Anne Charles Devanna. Perhaps the four generic human one of the most re- striking examples of the integration of culture with both business objectives and human resources activities is that of Hewlett-Packard. The kinds of individuals who are recruited.” This translates into such practices as a single worldwide profit-sharing program for all employees.

4. How effective is the appraisal process in identifying developmental needs of individuals to guide training. 8. 7. development. How effective are the training.Figure 4 OPERATIONAL INTEGRATION OF THE HUMANRESOURCE SYSTEMS To what extent are the components of the human resources system integrated at the operational level to provide effective services? 0. development. development. 3. indicate your response to each question listed below by writing the number of your answer in the brackets [ ] shown in the diagram above. How effective are rewards (financial and nonfinancial) in driving performance? Explain. 6. . How effective is the appraisal process in differentiating performance levels for justifying reward allocation decisions? Explain. How effective is the appraisal process in accurately assessing performance? Explain. How effective are the training. Not at all effective Ill Very effective Dl 131 141 151 1. and career planning activities in preparing people for selection and placement into new positions in the organization? Explain.2 ( ) Performance w Appraisal Accurately differentiates 1 I Using the scale to the right as a guide. 5. 76 positions? Explain. and career planning activities in driving performance? Explain. Overall. How effective is the selection process in assuring that people are placed in appropriate 2. and career planning? Explain. how effectively are the five components integrated and mutually supportive? 111 121 I31 I41 151 Explain.

managerial. the man- 7. managerial. of the business needs at each of the three levels-operational. At the operational level. and rewards. and strategic pressure for each This is because of the human velopment. woven system together the target. as The first re- is undertaken the managerial strategic set priorities process process the Rather. what the company is currently providing in the way of services at each level and in each human resources area. Hewlett- to determine in which the cor- activities few perks. The system clearly demonstrate of tasks are determined by an analysis. Design the corporate human resources strategy. porate culture closely and explicitly and the political the technical system. and made builds These be only as more complex from management the systems into strategic should for more. These questions attempt systems for the human resources function. human about they attempt human the status getting resources future issues as strategies to implement and them. Grow system over time. A sure way to remain operational irrelevant in the human resources ment area is to develop sophisticated terized systems without and managecompu- the involvement of line management. A similar 3. operational by the human sources systems. and strategic-and an analysis of how these Growing them allows for managing the cultural changes and for dealing with such political dynamics as resistance and sabo- needs can be met by different sources services. Managers are then asked what changes would provide more support. The most fundamental change involves cultural change on the part of both line manage- 77 .centives and Packard is a company Clearly. and internal human resources agers are presented with a variety of diagnostic questions. Management must begin by identifying. The analysis includes tage. activities areas-staffing. They are not plug-in appliances. technical. human re- an audit of should expand as they utility in the strategic arena and as new needs can be met. samples of which are presented in Figure 4. structure. The final part of the process is to figure out the organization strategy. resources resources appraisal. Thus the behavior the major of line them to consider they think illustrates some of the diagnostic for the strategic level of analysis. the type and step in developing a strategic human resources function therefore calls for a careful format analysis man resources function needs to be prepared with some basic data and analyses that are of the management process company to understand marketing. inputs. they The hu- not excessively complex. of tradi- it is to alter and make de- change must be in management. must become the cultural and in- political with systems of the organization in order to work. in cooperation with the human resources management staff. but simple and pragmatic. The objective of injecting resources into management is not to enhance tional personnel staff. line managers. Make the management arena is with how well business are supported and strategic at levels. Identify the portfolio of human level of human resources decision some rudimentary resources corporated systems. Determine the appropri- expanded ate operational. 6. deThe set data making. Design targeted information systems. 4. the way managers cisions. resources financial. The change viously managers involves of the the interplay new among and human strategy ob- technical skills for as well as a new set of cultural val- of the human need for strategic and developing human resources activities. The organization should start only by modifying ues and a political system to back them up. as well as of what is needed. Figure 5 questions 5.

4. development. 2.does the appraisal of strategic activities affect the rewards key people receive for strategic performance? Explain. 3. .Figure 5 STRATEGICINTEGRATION OF THEHUMANRESOURCES SYSTEMS To what extent do the components of the human resources system reinforce each other to provide integrated services at the strategic level? Rewards I I cl. . 8. . . . . employees good Activities Q.3 ( El Allocates rewards to motivate performance. . . . . . * .are key people rewarded for their strategic activities? Explain. . indicate your response to each question listed below by writing the number of your answer in the brackets [ ] shown in the diagrum above. .are key people trained for their positions to function strategically? Explain. Strategic Selection/ Placement ) \ Selects to place performers. Using the scale to the right as a guide. . . 5. .does the appraisal of key people’s strategic activities affect the training and development they receive for strategic performance? Explain. . . very little 111 Moderate Dl [31 Very great [41 [51 To what extent. is the human resources cycle -as an integrated unit -supportive of strategic activities? 78 [I1 121 [31 141 [51 Explain. . . .Overall.does the training. . 1.are key people selected for their positions based on their ability to act strategically? Explain. 7. and career planning key people receive prepare them for placement into their positions and the strategic activities required in it? Explain. .are key people evaluated on their strategic activities? Explain.2 ( ) Appraisal r Accurately differentiates levels of performance I k. 6. . .

if successful. Line management must stop thinking about personnel as “green eyeshades” or ‘bean counters” -in short. a number of acThe first involves cess represent theory a current as related application to human resources of TPC man- agement issues. political. To change this orientation. production. namely its various manorientation managers. Because these services. The human resources executive come a general manager. Several companies. SUMMARY Managing strategic change is increasingly a way of life for organizations faced with the turbulent economic. The cultural function promotes change and has been an increasing trend for a number of companies. the distribution mechanisms to use. and Hewlett- system is also fundamentally altered. are now hiring MBAs from the better business schools to staff their personnel function. the technical system must be totally redesigned so that human resources will become strategic. and cultural 79 . sonnel This general manager of strategies for the marketplace. They also need and tools for looking at their own must be- He or she must think resources have not been taught about strategic planning and are weak in their understanding of as managers do and act in an entrepremode. Second. and Exxon. This will fill the pipeline with a more managerially focused group of professionals. At the same time. or marketing ones. leads to a focus on development the function Many effort for its personnel manyears ago to give them a more of running a service organization with a definite marketplace. Now.ook at them as valued agement members begin to of the man- team. a com- This process of working through these seven steps involves the application of a great deal of TPC theory as outlined in this article. Moving some key executives with line experience into the human resources promoted. such as Pepsico. high potentials are being rotated into the function. First. bination of development and selection is called for. the human resources staff has to stop thinking ly. Citibank. Developmentally. training human the financial. political strategy must aim at changing the way key people get selected. including IBM. it results in a major organizational transformation. of the business. ways of organizing ways to deliver of staffing delivery. Aetna. the political dynamics are fierce as strategic human resources system. the function most human and for effective resources staff grew up on the staff side of the organization. tivities can be undertaken. as most organizations have not managed people strategically. There agers and employees. issues hit at the guts of the political Namely. appraised. The process takes about three years but.ment and the human resources staff. second-class citizens-and 1. mensions concepts marketing. It requires changing prior- Packard. reactive- function. sive training agers several General strategic outlook role in it. general neurial it is unusual for them to think and production di- Electric began an aggres- staff on the business and their is a need to help the per- think entrepreneurially about their function. This stands in stark contrast to the days when the personnel department fre- ities and elevating people issues at the expense of some other issues such as financial. Another way to alter the function over the long term is on the input side. and rewarded. The forces around these issues do not easily bend to rational technical arguments. The seven steps in this change pro- quently was used as a dumping ground for a line manager who could not make it anywhere else.

and (3) government politics. The technical questions inbusiness(es) should we be in? How should we be organized do we devel- oped. the stimulus was Allison’s excellent work. A very good description of strategic changes that includes a sensitivity to organizational culture and politics is found in James Brian Quin’s Strategies for Change (Richard Irwin. The area that will be getting SELECTED BIBLIOGRAPHY much more fully and are accompanied by case illustrations and practical guidelines for their application in a book by Noel Tichy. Richard Beckhard and Reuben Harris’s book. I was challenged by trying to develop a conceptual framework that integrated multiple frameworks rather than just putting them side by side. A for changing an organization’s process human resources management includes steps designed to provide a new technical human resources system.forces of the 1980s. and how will they be acquired. Managing 1979). . This is counter to the traditional practice of talking primarily in technical terms and leaving the political area to informal settings and totally excluding the cultural area. in which he develops his concept of logical incrementalism as the process through which or- much attention in the 1980sis human resources management-not only because it has tradi- 80 of The concepts presented in this article are explored is strategy? What subcultures are desirable. but also because it will be central to implementing the needed cultural vides an excellent practical guide to the actual transition process in large organizations. that supports the strategic human resources. tance organizations and their managers will have to confront basic questions regarding the organization’s technical. ganizations change. INO). pro- tionally been the most neglected area on a strategic level. and Mary Anne Devanna. clude: What and to such change. (2) organizational processes. Managing Political and Cultural Dynamics (Wiley-Interscience. and he shows that for each frame of reference different questions get asked and different interpretations of events occur. To manage such change. specific change strategies are developed to alter the targeted cells of the matrix. Complex Organizational Transitions: Change (Addison-Wesley. Managers must be willing to talk openly and explicitly about the six cells of the matrix that deal with political issues or else run the risk of the strategic rope becoming unravelled. strategy and evolve and cultural foundations. and should there be an overarching corpo- and cultural a culture management to accomplish our strategy? What kinds of people need. Nonetheless. and issues addressed in the later part of the article are political changes in organizations. 1982). Once this is determined. Strategic Change: The Technical. 1971). Charles Fombrun. The book that triggered the most intellectual activity for this article was Graham Allison’s The Essence of Decision (Little. In that book he analyses the events through three distinct frames of reference: (1) the rational actor. “Strategic Human Resource Management” in the Sloan Management Review (Winter 1982). which provides an analysis of the Cuban missile crisis. political. Brown & Company. overcome political resis- The human resources management further elaborated in an article by Noel Tichy. and rewarded? The political questions include: Who gets to influence the mission of the organization? power allocated both vertically tally across the organization? moted to what key positions? questions include: What are necessary to support How and horizonWho gets proThe cultural values and beliefs the organization’s rate culture? How should the human resources system shape and mold the culture? Strategic change is managed by clearly diagnosing what areas of the nine-cell strategic-change matrix need alignment.