The relationship between organizational culture and organizational change is distinct and works both ways. An organization's specific culture can make change easier or harder, can affect the way change is communicated and can impact the overall effectiveness of change. Significant organizational change can also have a profound affect on an organization's culture.
Organizational culture is the way that a company operates. It refers not to specific processes, such as when the fiscal year ends or what type of software is used, but rather to atmospheric and relational aspects of how an entity does business. For example, one company might be quite strict about start and end times while another might be more lenient or flexible. One company might offer on-site daycare and encourage employees to visit their children throughout the day, while another might expect that personal life be kept strictly separate. Other areas of cultural difference can be seen in how information is communicated within the company; how management styles vary; and the way employees are encouraged to treat vendors, clients and colleagues.
When there is significant change within a company or organization, this is referred to as organizational change. The term generally refers to changes with a high level of impact. This might be a merger with another company, a major relocation, a transition from private company to public corporation or a change in leadership, for instance.
Perhaps the most direct link between organizational culture and organizational change is adaptability. Some companies embrace change — they constantly look for ways to improve operations and remain on the leading edge of innovation. Other companies are more traditional and prefer to continue to conduct business as they always have, regardless of market changes. Traditional companies do not generally adapt well to change; they may resist until well after the change is necessary and may fail to implement change effectively.
Another cultural factor affecting change is the effectiveness of communication channels. Companies who are set up to quickly, clearly and effectively communicate change and change strategies to employees, clients and vendors are likely to have more effective change initiatives. In addition, a company that encourages employee feedback is likely to experience less worker stress during times of change.
The relationship between organizational culture and organizational change also is reflected in how change affects culture. This is especially relevant when the change involves leadership, either due to a sale or acquisition or because top leadership leaves the company. When this happens, the new leadership, or new governing company, is likely to change the culture of the company significantly.