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Effective Executive Magazine:
Organizational Culture : The Difficult Act of Managing Change
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When Larry Bossidy took over the reigns of Allied signal in 1991 as CEO, the company was in mess. He was expected to salvage the company from extinction. He did this superbly. When he left Allied signal in 1999, after its merger with Honeywell, the operating margins were nearly triple that of 1991 levels. Return on equity jumped from nearly 10% in 1991 to 28%. There was a ninefold return to shareholders. Earnings-per-share was 13% or more for 31 consecutive quarters. Allied signal was transformed from a decaying organization into one of the world's most admired companies.

Just two years after he left the organization the merged entity was again deep in trouble. Honeywell, the merged entity, was not delivering the results as expected. Stock price was gravitating down. Most of the bright people left the organization or were looking forward to leave. Discipline of Execution, the pride of Allied signal during Bossidy's tenure, were nothing more than lip service.

According to Edgar H Schein of MIT, Organizational Culture is the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to these problems.

Culture is influenced by unconscious assumptions. These assumptions determine how a group perceives, thinks, and feels. Assumptions which are taken for granted were actually learned responses. Members of the group learned to react this way according to need of the situation. These learned responses were in turn espoused values1 at some point of time in the past.

 
 

Organizational Culture, Difficult Act, Managing Change, changing organizational culture, companies, leadership, change management, admired companies, invented, discovered, Discipline of Execution, Bossidy's tenure, basic assumptions, external adaptation and internal integration, unconscious assumptions, Earnings-per-share, Honeywell, operating margins.