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

!T

he world

of the 1980s poses

lenges

for

organizations.

which

exists

extreme

The

chal-

turbulence,

in all sectors -economic

and

technical,
political and cultural
tinue for some time, requiring

-will
conindividuals

and organizations

to manage

to learn

how

under such conditions.

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

WORLD FORCES IN THE 1980s

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

nical

(which

includes

nological

change),

pressures.

Some

U.S. organizations
following:
??

economic
political,

of those

and
and

that

tech-

cultural

will

affect

in the 1980s include

the

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

ductivity,

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

arising

59

from

the

uneven

distribution

of

wealth

worldwide, lack of integrative mechanisms

for resolving worldwide disputes, pluralism

growth in-

(haves vs. have nets), conflicts arising from

on productivity

government

The way out of these problems is not to ap-

policy and regulation,

mocratization
??

and de-

of the workplace.

demographic changes as an older workforce

and the nontraditional

expectations

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

troublesome.

Almost a decade ago Robert

Heilbroner warned us in his An inquiry Into

the Human Prospect that:
The long era of industrial
its final

stages

mencement

and

and if population
sharing

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
computer

memory

devices,

leading

expansion

we must

is now entering

anticipate

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-

cycles

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

growth

among nations

continues

or an equitable

has not yet been attained,

per head in the advanced

to convulsive

the comtotal output

nations

de-

...

change.

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 Heilbroners scenario.
Furthermore,

the

conditions

needed

to

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

60

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

changes

in the United

tionary

and

States are more evolu-

pragmatic

in nature,

union-management

cooperation

involvement

about

come

that

is,

and worker

through

trial and

error. The trend, however,

toward greater
democratization
will continue,
thus providing an opportunity
willing

for organizations

to get ahead

the trend

that are

of the wave to manage

to their advantage.
The

undergoing

cultural

environment

changes.

what all the shifts mean-nor,

the actual

trends

is also

It is not entirely

clear

in fact, what

are and what

the aberra-

tions are. Much has been said about

the de-

clining work ethic, hedonistic trends, changing sexual and family mores, new definitions
of equity,

and other

and somewhat
shifts occurring
Alvin

Toffler

changes.

One popular

utopian view of the cultural

in the United States is that of

The Third Wave.

in his book

He feels that we are:

Noel Tichy is un associate professor of

organizational behavior at the University of
Michigans Graduate School of Business
Administration
Institute

und a faculty ussociute at the

for Sociul Reseurch at the University

of Michigan. Formerly un associate professor at

the Gruduute School of Business, Columbia
University, he launched und directed the
Advunced Program in Organization Development
and Human Resources Munugement.

He is the

director of The Michigan Business Schools Advanced Humun Resources Program. He holds u
Ph.D. from Columbia University and u B.A.

. . . creating a new civilization in our midst with its

from Colgute University. He is the editor of the

own jobs, life styles, work ethic, sexual attitudes,

University of Michigan journal, Human Re-

. . . if we begin now we and our

sources Management. The author of seuerul

and concepts of life

children can take part in the exciting reconstruction

books, including Organization Design for

not merely of our obsolete political structures but of

Primary Health Care (Prueger Special Studies,

civilization itself.

1977) and Managing Strategic Change: The

...

Technical, Political and Cultural Dynamics

Whether
opportunity

one

presented

less positive

ones,

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.

can be attribII baby

boom

to have its im-

pact on the workforce.

In 1982 the leading
edge of this group is 36 years old, and it
trails off at age 18. This large grouIj has been
reared in an affluent environment,
is highly
educated,
and individual
group members
have great expectations
about what they
can achieve in terms of career, economics,
and life style. The group is ideally suited to a
fast-growth
economy in which there is a tremendous
amount
of opportunity;
instead,
they face a slow-growth
economy with lim-

(Wiley-Interscience,

1982), he has also written

numerous articles on organization theory, development,

and change that appeared in vur-

ious journals-

including Journal of Applied

Behavioral Science, Organizational Dynamics,

Administrative Science Quarterly, Human Relations, and Columbia Journal of World Business. Dr. Tichy consults widely in the business
and public sectors.

ited opportunities
fanned
competition
of their peers,

by the intense
who are equally

talented
and also have high expectations.
This group was trained to be leaders but
will, for the most part, end up being stuck as
followers on the lower rungs of many corporate ladders. The result, if not managed,
will be unmet expectations
leading to disillu-

61

sionment,

frustration,

and

dissatisfaction.

examination,

most of the 1980s.

sions and strategies

Shifts in societal

values

are complex,

subtle

processes

very slippery

ground

for making

tions and predictions.

extent

to which

has given
values.

way

generaliza-

the Protestant
to a more

for the way

manage

The
forces

twined.

work

ethic
set of

implica-

organizations

a workforce.

technical,

political,

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. One shift that warrants

and

cul-

are inter-

for society is to evolve

a more satisfactory
alignment of these three
sets of factors. It will not be easy, because
we are increasingly
context

having

of a zero-sum

to do so in the

economic

setting.

by using money. This luxury doesnt appear

to be feasible in the near future. Thus we are
faced with
ter Thurow

the dilemma described by Lesin his book The Zero Sum Socie-

ty. None of our major economic

whether

high interest

ty, scarce energy,

solved

without

rates,

making

problems

many

-can

and revamping
production,

will result
and major

in new misrestructuring

of the financial,

and human

The organizations

marketing,

resources

political

flected by who gets ahead,

systems.

systems,

as re-

how they get re-

warded, and who has the power to make decisions, will also need a major overhaul. Organizations
complex

cultures

and subtle,

fluence

on their

change

will require

are perhaps

the most

yet most pervasive,

effectiveness.
addressing

Thus

in-

major

the issue of

organizational
members values and beliefs.
This article provides a framework
for managing
strategic change and a set of
practical guidelines for its application,
with
particular emphasis on the role of human resources management.

TPC

THEORY

The technical, political, and cultural UPC)

systems mentioned above represent three fundamental
attention

problems that require continuous

in organizations.
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,

but are con-

stantly adjusted over time. Not only does

each area require attention
on its own, but

worse off, thus requiring a political process

that can make zero-sum decisions. His prognosis is that we cannot make such decisions;

problems

instead, we will have to prevent decisions

from being made, and hence we will become

ceptual framework,
the TPC Theory, provides a framework for sorting out and managing basic dilemmas facing organizations.

paralyzed and drift into the future that is out

of control. Thus a society whose organizations are in a predictably
troubled time faces
a major challenge.

BACK TO BASICSFOR ORGANIZATIONS

62

nature and purpose. 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, organizations

must return to basic questions
about their

problem

of all three are interdependent,

solving

must be coordinated

them. To help address

these problems

so

among
a con-

Technical Design Problems

All organizations
face production
problems
-that
is, in the context of environmental
threats and opportunities,
people, money,
and technical resources must be arranged to
produce some desired output. Thus management engages in goal setting, strategy for-

mulation, organizational design, and management systems design-all

to solve the
technical problems.
Political Allocation Problem

Similarly, all organizations face the problem

of allocating power and resources. The uses
to which the organization will be put, as well
as who will reap organizational benefits,
must be determined. Decisions about these
issues are reflected in the resolution of compensation problems, career decisions, budget
decisions, and decisions about the organizations internal power structure. Unlike the
technical area, in which there are such formalized tools as strategic planning and organization design, the political area has less
formal and often less overt concepts and language. Nonetheless, much management time
and attention must be given to strategic political issues-for
example, the activity before and after the advent of a new chief executive officer or other key executive, or after
a major acquisition, or when relationships
between unions and management change.
Cultural Problem

As social tools, organizations are held together, in part, by a normative glue-that is,
by the sharing of certain important beliefs by
its members. Hence the organization must
determine what norms and values should be
held by its members. Furthermore, decisions
must be made concerning what values
should be held by what parts of the organizational population. For example, it may not
be critical for blue-collar workers to share
the values and commitment held by the organizations professional
and managerial
members.
organizations
deNevertheless,
velop cultures that reflect their members
dominant norms and values. As in the political area, the culture may evolve informally,

not explicitly and overtly. Examples of strategic cultural shifts include the shift at
AT&T, which is moving into the competitive communications field out of the regulated telephone monopoly. In this shift,
which is discussed at length in Conversation
with Charles L. Brown, chairman of the
board of AT&T, and Managing Transitions
to Uncertain Future States by David A.
Nadler, both in the Summer 1982 issue of
Organizational
Dynamics,
the operating
companies of the Bell system will be divested, and the new AT&T will be fully
competitive with such companies as IBM.
This will call for a new culture that values
competition, innovation, and making a profit
in the market place - all three values alien to
the old AT&T. Another major cultural shift
is occurring at Westinghouse, which has
launched a massive productivity improvement effort based on a participative-management approach.
The Strategic Rope

These problem areas can be visualized as

three intertwined strands of rope, each of
which represents one of the three environments - technical, political, or cultural - that
have an impact on the organization. The
metaphor of the rope is used to underscore
several points.
First, from a distance, individual
strands are not distinguishable. That is, a
casual observer cannot distinguish an organizations technical, political, and cultural
systems. However, the strands are there and
to understand the organization one needs to
understand each strand.
Second, each major strand of a
rope is made up of substrands; upon close
examination one can distinguish multiple
substrands. The same is true of the strategic
rope. Upon close examination of an organization one will find not one but many technical systems, many political subsystems as

63

represented
power

by various

centers,

tural systems
timers,

old-boy

and many

such as (1) young

Turks

(2) male and female,

divisional

cultures,
Third,

and when
When

become

tion or conflicting
certainty
in any

value systems. When unof these systems is per-

ceived,

is triggered,

and manage-

attention

is invested

unravelled.

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, I would like to present a
concrete

organizations

perpetually

and

changes,

they

their strategic tasks for the 1980s. 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.

the three systems.

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. Thus

technical, political, and

that organizations

must

attempt to reduce or manage uncertainty.

Three types of uncertainty
need management - technical, political, and cultural. 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. The strategic techfacing

cultural cycles in all organizations,

and organizations vary, over time, in the amount of
energy invested in making adjustments
in
these cycles.
It is argued

the strategic

orga-

is unconscious,

political,

tural (TPC) cycles concept.

First, the executives

and consciously

effective

of the technical,

by

that there is alignment within each system technical, political, and cultural -and across

64

In 1981 presidents

are

flwc, undergoing

ment

case illustration.

or division
presidents
of 15 major U.S.
chemical companies were interviewed
about

Organizational Cycles

continually

or in figur-

on by techni-

vironment .

Because

the uncertainty

is the pro-

the rope together

and cultural

a response

and reward

ing out how to cope with it.

weakened.

management

demands

cal, political,

the organi-

cess of keeping
of changing

and cultural uncertainties

about
value systems for the organiza-

and cultural

greatly

succession

allocations;
appropriate

political,

Strategic

and innova-

about

or

at cross-purposes,

becomes

capability,

uncertainties

power distributions,

weakened.

can also become

work

zation

unravelled

production

tion; political
candidates,

or old

(3) functional

they do, they become

their technical,

strands

cul-

and so forth.

ropes

Organizations

markets,

networks,

and so forth,

raw

from

a picture

in which

of an industry

it will have to re-

processes

because

it must

Most

changes

materials.
shifting

from

almost

total

on gas and oil to a mix of raw

material
(feedstocks)
that includes greater
use of coal and biomass (fermentation).
1. The specific changes identified
by these executives as critical technical system changes in the 1980s were:
?? Technology
changes. Feedstock and the
production
processes will have to be altered
to enable them to use coal and biomass; this
will require totally new plants and technologies .
?? Structure
changes. Because of the slow
growth in U.S. and European markets, there

will be increasing
markets

that

design

expansion

will necessitate

changes

to make

more multinational.

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;
more-especially
cals to avoid
who

will

will

dominate

the

end of the business

of oil and gas feedstocks.

exception

bought

might

an oil company

part of the strategy

tivity

DuPont,

- Conoco.)

wont

ing out the kinds

will take
ager,

of changes

outlined

hands-on

type

a more

one who

will have

that

their

control

numbers

boards

of
that

would

over the company.

that there would be in-

of external

takeover

Other political issues. These

of

at-

included
to new or-

and to new managerial

3. Strategic
changes

structures

resistance

styles.

(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.

?? Management
changes. Effectively

creasing

ganization

Finally,

are squeezed

indicated

Also, many indicated

??

which

will be increased

as profit margins

the companies

be

because

changes

the 1980s.

such things as political

low-value-added

their control
The

chemi-

and OPEC,

commodity

argued

tempts.

diversify

into more specialty

the oil companies

It was

External control issues. Many of the ex-

exert increasing

To be more effective

environment,
the execufor more effective stra-

decisions

shift because

technological

will occur during

ecutives

in a more turbulent
tives see the need

the company.

the tremendous
??

sive to demand.
??

running

over strategic

that this was a reasonable

the organizations

centralization

power

much

countability.

values. 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.

Decision-making

values. Managers

will

have to take a longer view in their decisions.

manage across different cultures. The 1980s

will be a decade requiring
a great deal of

In addition,

management

?? People-orientation
values. These executives indicated that people will be an increas-

development.

2. Strategic
systems

changes

in

for the 1980s were reported

political
to in-

decisions

decentralized

ingly

important

competitive

clude:

among

them.

Promotion/succession
issues. All the
executives
identified
significant
personnel

dustry

is very

changes

ital, technology,
the key difference

??

at the top.

?? Reward
issues. In several of the companies, executives
reported
that the bonus

system

would

be adjusted

to open

it up to

more people. All of them indicated that rewards were going to have to be more explicitly and closely linked to performance
for
all employees.
?? Shifts in power center issues. It was generally felt that the technical people rather
than those in financial and marketing would

companies

Even though

advantage

the chemical

capital-intensive,

in-

the major

are all quite equal in terms of cap-

their people.
will become

will have to be more

and quicker.

They

and products;
therefore,
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.
This may sound paradoxical, 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,
not to everyone.

65

??

Management

become

much

proactive

style. They
more

see a need to

entrepreneurial

in their style. This is also reflected

in a more proactive
vironment,

stance

especially

toward

the

The key to managing

their en-

regulatory

en-

vironment .

making

was asked to draw

strategic

an organization

an organizations
and strategy,

Each respondent

components

its structure,

sources-within

systems

of these

with

interesting

ample,

relatively

certain

decade in terms of the tech-

that is, only

no major alteration
ganization

these two foresaw

in markets,

design, production

products,

or-

processes,

and

so forth. Most executives, on the other hand,

saw the decade as one of increasing technical
uncertainty

as they gear up for new produc-

tion processes,
and so forth.

new products,

The political
executives
was

these

One executive
political
tally

turbulence;

the way

he envisioned

executives

retirement

of a group

the cultural

all

and valwith
of key

reorganization.

Again, a couple of executives predicted

tive political stability in the 1980s.
Finally,

from

quality

more

rela-

cycles for the

decade tended to trail the technical cycles.

The executives talked about the kind of culture needed to make the organization
work
in the 1990s. TSey were very conscious
of
the need to alter the norms and values of
their organizations
over the next ten years.
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. We are concerned with helping
managers
of change develop concepts and
skills for managing each of the three cycles.

For ex-

the U.S. automoin pretty good

with stiffer competi-

fuel-efficient

Japanese

and

and European

higher

cars to cut

into the sales volume of U.S. automobiles.

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. Very often a peak was associated

the scheduled

crisis, which combined

that a tosystem,

re-

polit-

and to align each

were generally

These

reward

technical,

strategic alignment.
Then change was triggered in the technical
area by the energy

plement.

by much infighting

Others

bile companies

- its mission

the others.

up until the 1970s

as one of

be put in place over the

accompanied
along.

the decade

structure,

and so forth would

decade,

cycles depicted
by
quite idiosyncratic.

viewed

new power

new markets,

systems

and

is to align

and its human

the three

ical, 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. It is

nical cycle;

66

STRATEGICALIGNMENT

and

changes,

cultural

the relationship
agement
-for

representative
AMC is trying

changes.

between

is undergoing

example,

in turn,

Politically,

union

massive

Chrysler

triggered

now

and

man-

readjustment
has a union

on its board
of directors,
to negotiate with workers to

get them to lend parts of their cost-of-living

increases

to

the

company,

and

General

Motors and Ford are implementing

quality
of work life programs for their workers. A
great deal of weeding out is going on in the
managerial

ranks,

and there is great uncer-

tainty about what it will take to get promoted in the future. Finally, the industry
needs a culture that values quality,
efficiency, and participative
management
to support the new strategies.

inculcating TPC Theory into the

Strategic-Planning Process
Given the challenges facing organizations
in
the 198os, a more complete strategic-plan-

ning process will be called for than those de-

jobs,

veloped in the 197Os, which tended to be

overly technical in nature, left out political

future

wards-both

and cultural concepts, and underemphasized

strategy implementation.
Thats 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.

The first step in the process

their

predictions

forces

a great

over the next

execu-

Once the in-

scenario.

This dialogue

deal of back-to-basics

work.

People are forced to share their normally

about

ly those concerning
sues.

The

second

make

the picture

the future,

political
step

The strategic

management

the three systems.

resources

sion and strategy

will

processes

row of the

of mainstream

and writing

management

spends

are
man-

and the tasks

considerable

time. The first set of managerial

tools,

mis-

sion and strategy, includes such traditional

management
tasks as assessing the envir-

mission
combines

with a focus on

organization

structure,

management.

The mis-

setting

goals

and it includes

all

processes
necessary
Structure is broadly

to
de-

fined to include the organizations

tasks, the
way in which people are grouped and coordinated to accomplish
those tasks, 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.
Technical system.

onmental

tools used to align

strategy,

should

management

threats

and

opportunities

facing

the organization,
assessing
organizational
strengths
and weaknesses,
and defining

matrix

area entails

of the managerial
make that happen.

organization

senior

pare managers
the following

of control,

informa-

tion, and so forth needed to make the structure work. The human resources management tools include
staffing/selection
and
placement
of people both from outside the
organization
and from the internal
labor
market, 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,

and developing

is-

Matrix

three sets of managerial

and human

especial-

and cultural

a bit more complex.

a focus on the three systems

mission

im-

in the process

Strategic Management

their

for the firm to be successful.

have drawn their cycles,

together,
as a group, to

plicit assumptions

where

quired

company

and
of re-

financial and nonfinancial.

Managers are given the task of de-

of the organiza-

tives did in the case illustration.

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,

of current

potential,

individual-

is to have a team of top managers

ly draw

appraisal

resources.

the way in which the

will be fit together

to ac-

the mission.
The second managerial

tool is orga-

nization structure.
Here, management
faces
the traditional
organization
design dilemma
of how

to differentiate

the organization-

that is, how to divide it into such work roles

as production,

marketing,

finance,

research

and development
(R&D), and so forth. Once
labor has been divided or differentiated,
organizational
structure determines how to integrate

the organization-that

is, it deter-

mines the mechanisms

that integrate
roles
into departments,
divisions, regions, and so
forth. Another
organization
design issue is
how to align the organizations
structure or
design with its strategy. (For example, functional organizations
fit best with single-line
businesses. )
The third tool for dealing

with the

67

System

Cultural

System

Political

System

Technical

Managerial
Areas

threats

121

I31

I41

I51

I21

I31

I41

151

111

[21

131

141

[Sl

Developing culture aligned with

mission and strategy.

strategy.

philosophy on mission and

Managing influence of values and

111

around strategic decisions.

Managing coalitional behavior

and strategy.

Who gets to influence the mission

I11

sources to accomplish it.

and weaknesses.
Defining mission and selecting re-

Assessing organizational strengths

and opportunities.

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.

[41

151

[II

I21

131

141

is1

Managing rewards to shape and

reinforce the culture.
roles (production culture, R&D
culture, and so forth).
Integrating subcultures to create

Selecting people to build or reinforce culture.

111

how).

(who is appraised by whom and

and how).
Managing the politics of appraisal

reward system (who gets what

Designing and administrating

gets ahead, how they get ahead).

Managing succession politics (who

ill

(present and future).

Staffing and developing to fill roles

Measuring performance.

Specifying performance criteria for

roles.

Developing (socialization) to mold

organization culture.

151

Human Resources Management

151

Fitting people to roles.

(41

political structure.
Developing subcultures to support

aligned with technical and

Developing managerial style

III

so forth).

keting, production vs. R&D, and

roles (for example sales vs. mar-

Balancing power across groups of

structure.

Distributing power across the role

[ll

and so forth.
Aligning structure to strategy.

departments, divisions, regions,

Integration: recombining roles into

and so forth).

into roles (production, marketing,

Differentiating:

Organization Structure

Managerial Tools

121

Procedure: For each cell on the matrix, indicate the amount of change you feel is required over the next five years for your organization to be successful.
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

technical

system

is the

human

tasks: One is determining

resources

who gets to influ-

management
system. This involves properly
matching people and jobs, fitting people to

ence the organizations

mission and strategy.
The technically
focused textbooks and con-

their

sulting

roles,

specifying

for measuring

performance

performance

tems,

and

tional

roles, and staffing

proaches

so forth)
to filling

for different

and future

egy, organization
structure,
sources management -should
system.

aproles.

and strat-

and human rebe used together

technical

problems.

Tasks identified

vision

management
time and resources.
not be topics for management

They may
committee

agement

meetings

the major

decision

topics
cussions

of lunch,

are certainly

cocktails,

in individual

sions plenty of
whos going to
tion, what group
get to influence

and private

dis-

offices. In such discus-

time is spent talking about

be promoted
to what posiis in power, whos going to
the strategic decisions, how

the budgets are going to be allocated across

businesses or divisions, what the balance of
power

between

different

functional

areas is,

the actual

process.

how to
strategic

Its never

have equal power?

go off and make

by himself

decisions

dealing

they

vis-a-vis

presidents

the chairman

frequently talked about openly, 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, should all the di-

mission

row of the matrix

often

But they dont identify

decision-making

are the least

the political

groups

strategically.
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.
The second set of political
tasks
with mission and strategy is the manof coalitional

tegic decisions.

behavior

No matter

is, imbedded

ical outcomes

around

stra-

what the strategic

in it are a set of polit-

that result

in the creation

of

coalitions-that
is, decisions to enter new
businesses or markets,
to invest more in a
startup business, to sell a dog business-that
will impact

some peoples

careers

adversely

and further other peoples careers. These decisions imply the movement of resources and
budgets

and will inevitably

tions taking

different

result

positions.

Obvious-

and the political nature of the allocation

of
bonuses and rewards. The problem is that in

ly, the management

most organizations,
to call decisions in these
areas political is to be guilty of heresy: In

ical system activity for management.

The second area in which manage-

reality,

rial tools are used to manage the political

system is the design of the organization,
or

these

are

all allocation

decisions;

hence they are political. The real issue is not

whether we call them political but whether
theyre done in a way that is perceived as fair
and equitable
to the organizations
greater

around

strategic

its structure.

of coalitional

in coali-

decisions

The technical

behavior

is a critical

polit-

issues are how to

rationally
differentiate
and integrate the organization.
The political issue relates to the
distribution
of power across the role struc-

needs. Examples of specific managerial

tasks
associated with the political system are presented in Figure 1.
Mission and strategy provide
the

ture. That is, 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 organizations
political system. 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

70

that individuals have over budgets, and how

much power they have over peoples careers
further down in the organization. A second
organization-design political issue is how the
balance of power takes place across groupings; that is, whats the relative power position of sales versus marketing, or production
versus R&D, 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, in the political system area,
human resources systems need to be adjusted. The first issue is managing succession
politics. It must be decided who gets ahead
and how they get ahead. Whenever there are
succession issues, given the pyramid shape
of organizations and the fact that organizations tend to produce more candidates than
there are positions, there are going to be
win/lose decisions. Therefore, there will be
Organizations
vary
succession politics.
widely in how they handle this. On one end
of the spectrum are fairly strong and institusuch as General
tionalized
practices,
Electrics slate system, 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.
Managers can fill those positions only from
those on the formal slate. This is in marked
contrast to the majority of U.S. corporations, 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. 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.

The second political human resources

issue is the design and administration of reward systems-who
gets what and how they
qualify for it. Again, there are many variations in reward systems. One example of a
political issue that needed resolving occurred
in a plastics company where the lions share
of the bonus was being allocated to the top
three executives. This created a very unhappy senior management group below that
level, 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.
Finally, an important political issue
in organizations, because of its importance
in making decisions about pay and promotion, is the managing of the politics of the
appraisal process. 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.
Appraisal research has found that,
from a technical point of view, subordinates
and peers have a better, more valid understanding of an individuals performance than
his or her boss has. 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.
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. However, 99 percent
of U.S. corporations could not politically
tolerate having peers and subordinates appraise the boss-even though, from a technical point of view, that would provide better
data. This is an example of where political
logic outweighs technical logic- creating a
dilemma that has to be managed in the politics of appraisal.

Cultural Systems. As with the technical and political systems, there are three
categories of management tools that can be
used to address the cultural system.
Within the first management tool
area, mission and strategy, there are two issues that management must attend to. One is
managing the influence of values and philosophy as they impact the organizations
mission and strategy. Because of the uncertain and complex nature of business strategy, the organizations mission is greatly influenced by the personal values of the key
decision makers. As a result, 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.
Management must be able to recognize value positions and develop ways of addressing them as value issues instead of technical issues. Running technical analyses
when someone takes a value position against
something is like comparing apples with
oranges. The second mission and strategy
concern related to culture is developing a
culture that aligns with the organizations
mission and strategy. That is, to be successful a companys culture needs to support the
kind of business the organization is in and its
strategy for handling that business. For example, AT&Ts changed mission and strategy, which moved it from solely a regulated
telephone monopoly into a competitive information business, will require a culture
that supports innovation, competition, and
profit.
The second area that needs to be
addressed to manage the culture is organization structure and design. Here, 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. For example, a

company that has moved from a functional

organization to a matrix organization requires a very different managerial style. The
matrix organization is very different from a
functional organization,
both technically
and politically. In it power is balanced on
two dimensions-such
as product and function; therefore it calls for a management
style that uses negotiated, open confrontation of conflict rather than a more traditional, chain-ofcommand management style.
A second cultural issue is the development of subcultures to support the various
subcomponents of organization design, For
example, there should be a different culture
for production than for R&D. R&D should
be longer-term, more innovative, and more
supportive of entrepreneurial idea generation. Production should be more cost-conscious and efficiency-driven. And, as a result, the organization needs to foster subcultures consistent with the subunit. This leads
to a third cultural problem-that
is, the extent to which there are mechanisms for integrating subcultures to create a company culture. If the subcultures are too strong, then
R&D, production, sales, finance, and so
forth are working at odds, and they dont
have any wider identification with the company. Some companies go to great extremes
to create identity with the company-for
example, IBM and Exxon have very definitive
company cultures that transcend any of their
subcultures.
Human resources management systems provide the final tool for managing the
culture. It is in this area that Japanese management has been more sophisticated and
more attentive than U.S. management. They
have used human resources systems very
skillfully to shape and reinforce cultures that
provide strong employee commitment to the
organizations technical outcomes. One of
the first human resources tools for accom-

71

plishing

this is the selection

cifically,
tivity

the selection

of people-spe-

of people

to how they fit with and reinforce

organizations

dominant

that use the human

cultural

culture.

resources

tool spend

Companies
systems

as a

reasons-

that is, they

on the basis

of the ques-

tion, 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.S. firms that William
G. Ouchi
would

characterize

as

being

Theory

organizations.
A second

human

resources

about

the strategies

tool for

of the matrix

as a dynamic

the turbulent

environmental
in this article.

then,

should

include

the strategies

cells of the strategic

management

heavily

in training

of such training
culcated
culture.
many
find

invest

and development.

Much

is aimed at getting people in-

with
Thus,

of IBMs training

plicit goal and form

search

in the

matrix.
reto

strategic management
will be carried out, It
is already becoming apparent that many organizations

are giving

a great deal of atten-

resources

management.

the most underdeveloped

It is

and least strategic

tool areas-and,

as

a result, it is not contributing

technically,
politically,
or culturally in a manner necessitated by the pressures

programs
constitute

you will
a very

a very explicit

Japanese

firms

ex-

of the 1980s.

THE Focus ON HUMAN RESOURCES

MANAGEMENT

part of

do this,

too;

The

technological,

they put a high premium on development,

much of which is on-the-job and aims at get-

graphic

ting people to internalize

resources

the organizations
agement

and tech-

the organizations
dominant
for example, if you review

that IBM values

the program.

culture

outplans,

Over the next several years

and application
of this approach

of the three management

to shape

Strategic

to make adjustments

ized; again, organizations

systems

on some of

pressures

earlier

designed

adjustment.

depends

tion to human

that use the human

the nine cells

and

lined

nologies

and
units;

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 organizations

culture is the way
in which people are developed
and socialresources

of rewards

culture.

values important
Finally,

obviously

to

the man-

can be used to

shape and reinforce the culture-that

is, people whose values fit the organizations
dominant values are the ones who are promoted
and more highly compensated.
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,

They involve many

process; they screen

out people for cultural

in Japanese

the

a great deal of effort on

the selection process.

people in the interview
assess candidates

tegic task now becomes

with sensi-

and political systems.

The analysis of the strategic management matrix leads to a better understanding of the basics of management.
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, the long-run
competitiveness
of U.S. industry will require
considerably
more sophisticated
approaches
to the strategic role of human resources management
in organizational
performance.
Thus the three human
resources management cells in the matrix (Figure 1) warrant a
great deal of attention.
The 1980s is a decade in which TPC
theory will have increasing relevance to human resources management
issues.

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.
Identifying major priorities.
Specifying major programs
and policies.

Strategic Level

Determining what people

are needed to run future
businesses.
Ensuring that policies and
programs for long-term
human resources fit
world conditions and organization strategy.

Setting the parameters by

strategy.
Acquiring resources for
monitoring acquisition.

Managerial Level
Having effective human resources function for acquisition, retention, and
development of people
within strategic umbrella.

Operational Level

Operational Level

Executing tasks on
day-to-day basis.

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,

and

frequently

conflicting

systems.
management
systems

that

address the human resources dimensions

of
the firms strategic, managerial,
and operational tasks. Most current personnel
functions in U.S. industry provide highly sophisticated human resources support for operational tasks. However, managerial and strategic tasks are largely driven by unsystematic,

While this is so partially because of

the complex and changing nature of human
resources, 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.
Figure 2 diagrams the relationship

73

between

the business

functions

that have to

them,

identifying

major

priorities,

and specifying major programs and developing policies to achieve them. On the human

be addressed:
1. What
activities

specific

are required

human

to support

ness at each level?

2. 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,

within

social and cultural

which the objectives

The strategic

gets reflected

in the establishment

aries

the human

have the

to work,

perform,

and are evaluated

warded.

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, what the
long-term
human resources pool should be
for this particular

organization.

In addition,

commitments.

The Human Resources Management

dimensional

rewarding,
to achieve

selection,

and developing human resources

the strategic goals.
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,
such
as staffing, compensation,
appraisals,
and
development?
At the strategic level the business
side is concerned with determining
the business or businesses
the organization
is and
should be in, 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,
appraising,

from outside to develop

needed in the medium

the

dialogue

space, and other scarce resources,

and the
implications
of the organizations
alternative

strategic plan and developing procedures for

measuring and monitoring
performance.
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. The major focus
is on acquiring resources for carrying out the

dialogue

concerns

concerns.

the strategic link discusses the tradeoff between the human, financial,
informational,

make it work effectively.

level,

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.

of
between

is ensuring

policies

for the long-term

developresources for the future busi-

ness, and the appropriate

context

to run the busi-

the specific

day-to-day
tasks, the ongoing
production
process. On the human resources side the
job skills they need to do their work,

74

viewing

be performed and the corresponding

human
resources tasks. Two critical questions must

framework

3. Each of the human

looked

appraisal

presented
resources

and

at from a technical,

in Figure
functions-

rewards
political,

tural perspective
and sliced
managerially,
and operationally.

-can

be

and cul-

strategically,
The goal of

an effectively
managed
organization
is to
manage the whole cube. Most organizations
are working only on the technical and operational human resources issues, 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, if it is to survive in the strategic arena and actually deliver in new areas of the human resources

cube

and perform

when

challenged,

senior

executives must begin to recognize and understand the managerial

nature of its activities and their importance
fectiveness.
by

my

Mary

for managerial

Figure 3
THEHUMANREWJRCES
MANAGEMENT
CUBE
Human Resources Functions

ef-

The steps to this end being taken

colleagues,

Anne

Charles

Devanna,

Forbrun

and

and me with several

organizations
are listed below,
1. Design u corporate philosophy/
culture, Decide what the critical
strategic
nization
plan.
zation

thrust of the

plan will be, and what kind of orgawould best follow through on the

Whether

the critical

will adhere

ity, organization
or employee

values

to involve
growth,

satisfaction,

the organi-

product

customer

qualservice,

they should be spe-

cific enough to represent an organizing

cultural principles for the company.
2. Design

human

set of

resources

sys-

tems that reflect the corporate culture. If

the corporate
culture involves
treating its
employees as members of a family, then job
security should be a key reward for performance.

Such a value

should

be reflected

in

all of the human resources systems; it should

be stressed as a recruitment
criterion, tied to
compensation,
and built in as an assumption
of development
clearly

programs.

Another

important

articulated

corporate

sure consistency

across

reason
culture

the human

for

is to enresources

Woven
together
profit, customers,
people,

are seven objectives

for
fields of interest, growth,

management,

ship. Associated
clearly articulated
is known

and corporate

citizen-

with each objective

are
policies that reflect what

as the HP way.

when it comes to customers

stresses cooperation
among

For example,
the HP way
different sales

teams dealing with the same customer.

is not a mere platitude,
but a deeply
value in the HP culture.

Hewlett-Packard

This
held
be-

functions so that staffing, development,

appraisal, and reward activities are mutually

lieves that growth

retain high-caliber

reinforcing.
The kinds of individuals
who
are recruited, the basic stance the organiza-

The most interesting objective from

a strategic human resources point of view is
their people objective, which is To help

tion takes
velopment

toward retention,
uses, and deof its human resources, all stem

from a basic set of values that in most organizations

remain implicit. Whether implicit
or explicit, it is this culture that provides the
cohesion between
sources systems.
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.

HP people

share

is essential
people.

to attract

in the companys

and

success,

which they make possible; to provide job security based on performance;

to recognize
individual
achievements;
and to help gain a
sense of satisfaction and accomplishment
for
their work. This translates into such practices as a single worldwide
profit-sharing
program for all employees, which is 12 percent of profits divided according
to base
pay.

There

are no special

management

in-

75

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?

0.2 (

Performance

Appraisal

Accurately
differentiates

Using the scale to the right as a guide, indicate your response to each
question listed below by writing the number of your answer in the
brackets [ ] shown in the diagram above.

Not at all
effective
Ill

Very
effective
Dl

131 141 151

1. How effective is the selection process in assuring that people are placed in appropriate
2.
3.
4.
5.
6.

7.
8.
76

positions?
Explain.
How effective is the appraisal process in accurately assessing performance? Explain.
How effective are rewards (financial and nonfinancial) in driving performance? Explain.
How effective are the training, development, and career planning activities in driving performance?
Explain.
How effective is the appraisal process in differentiating performance levels for justifying reward allocation decisions? Explain.
How effective is the appraisal process in identifying developmental needs of individuals to guide training, development, and career planning? Explain.
How effective are the training, development, and career planning activities in preparing people for
selection and placement into new positions in the organization? Explain.
Overall, how effectively are the five components integrated and mutually supportive?
111 121 I31 I41 151 Explain.

centives

and

Packard

is a company

Clearly,

Hewlett-

to determine

in which

the cor-

activities

few perks.

porate

culture

closely

and

explicitly

and

the political

the technical

system.

woven

system

together

the target. The objective

of injecting

resources

into

management

is not to enhance

tional

personnel

staff.

the way managers

cisions.

Thus

the behavior

the major
of line

them to consider
they

think

illustrates
some of the diagnostic
for the strategic level of analysis.

of tradi-

it is to alter
and make de-

change

must

be in

management,

human

about

they attempt

human

the status

getting

resources

future

issues as

strategies

to implement

and

them.

as

The first

re-

is undertaken

the managerial

strategic

set priorities

process

process

the

Rather,

operational

by the human

sources systems. Managers

are then asked
what changes would provide more support.
A similar

3. Make the management

arena

is

with

how well business

are supported

and strategic

at

levels. Figure 5
questions

5. Design targeted information systems. 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.
Management
must begin
by identifying, in cooperation with the human
resources

management

staff,

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,
resources

financial,
technical,
inputs. 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. Determine

the appropri-

expanded

ate operational,

and

strategic

pressure

for each

This is because

of the human
velopment,

managerial,
resources
resources

appraisal,

activities
areas-staffing,

and rewards.

deThe set

data

making.

they

The hu-

not excessively
complex,
but simple and
pragmatic.
6. Grow system over time. The organization
should start only by modifying

ues and a political system to back them up.

4. Identify the portfolio of human

level of human

resources

decision

some rudimentary

resources

corporated

systems.

and made
builds

These

be

only

as

more complex

from management
the systems

into

strategic
should

for more.

must become

the cultural

and

in-

political

with

systems
of the organization
in order to
work.
They are not plug-in
appliances.

line managers,
of the business needs at each
of the three levels-operational,
managerial,
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.
The analysis includes

tage. The system

clearly demonstrate

of tasks are determined

by an analysis,

human

re-

an audit

of

should expand as they

utility in the strategic

arena and as new needs can be met.

what the company is currently providing in

the way of services at each level and in each
human resources area, as well as of what is
needed. At the operational
level, the man-

7. Design the corporate human resources strategy. The final part of the process is to figure out the organization
strategy, structure, and internal human resources

agers are presented with a variety of diagnostic questions,

samples of which are presented in Figure 4. These questions attempt

systems for the human resources function.

The most fundamental
change involves cultural change on the part of both line manage-

77

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
cl.3

El

Allocates
rewards to
motivate
performance.

Strategic

Selection/

Placement

Selects
to place
performers.

employees
good

Activities

Q.2

Appraisal

Accurately
differentiates
levels of
performance

k.

Using the scale to the right as a guide, indicate your response to each
question listed below by writing the number of your answer in the brackets [ ] shown in the diagrum above.

very
little

111

Moderate

Dl

[31

Very
great

[41

[51

To what extent. . .
1. . . .are key people selected for their positions based on their ability to act strategically? Explain.
2. . . .are key people evaluated on their strategic activities? Explain.
3. . . .are key people rewarded for their strategic activities? Explain.
4. . . .are key people trained for their positions to function strategically? Explain.
5. * . .does the appraisal of strategic activities affect the rewards key people receive for strategic performance? Explain.
6. . . .does the appraisal of key peoples strategic activities affect the training and development they receive for strategic performance? Explain.
7. . . .does the training, development, and career planning key people receive prepare them for placement
into their positions and the strategic activities required in it? Explain.
8. . . .Overall, is the human resources cycle -as an integrated unit -supportive of strategic activities?

78

[I1

121 [31

141 [51 Explain.

ment

and

the human

resources

staff.

Line

management
must stop thinking about personnel as green eyeshades or bean counters
-in

short, second-class

citizens-and

1,ook at them as valued

agement

members

begin to
of the man-

team. At the same time, the human

resources

staff has to stop thinking

ly. The human

resources

executive

come a general manager.

training

human

the financial,
mensions
concepts

marketing,

reactive-

function.

sive training
agers several

General

strategic outlook
role in it. There

agers and employees.

sonnel

This general

manager

of strategies for the marketplace,

the distribution mechanisms
to use, ways of organizing
ways

to deliver

of staffing

delivery.

Because

these

services,

the function
most

human

and

for effective
resources

staff grew up on the staff side of the organization,

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.

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,
namely its various manorientation

managers.

of the business.
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.

To change this orientation,
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. First, the technical system must be
totally

redesigned

so that human

resources

will become strategic. Second, the political

dynamics
are fierce as strategic human resources
system.

issues hit at the guts of the political

Namely, political strategy must aim

at changing

the way key people get selected,

bination
of development
and selection
is
called for. Moving some key executives with
line experience
into the human
resources

promoted,
appraised,
and rewarded.
The
forces around these issues do not easily bend
to rational technical arguments. The cultural

function promotes change and has been an

increasing trend for a number of companies,
including
IBM,
Aetna,
and
Hewlett-

system is also fundamentally

altered,
as
most organizations
have not managed people strategically.
It requires changing prior-

Packard. 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,
production,
or marketing
ones.
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. Now, high potentials
are being
rotated into the function.
Another way to alter the function
over the long term is on the input side. Several companies,
such as Pepsico, Citibank,
and Exxon, are now hiring MBAs from the
better business
schools to staff their personnel function.
This will fill the pipeline
with a more managerially
focused group of
professionals.
Developmentally,
tivities can be undertaken.

a number of acThe first involves

cess represent
theory

a current

as related

application

to human

resources

of TPC
man-

agement
issues. The process takes about
three years but, if successful, it results in a
major organizational
transformation.

SUMMARY
Managing strategic change is increasingly
a
way of life for organizations
faced with the
turbulent

economic,

political,

and cultural

79

forces of the 1980s.

To manage

such change,

tance

organizations
and their managers will have
to confront basic questions regarding the organizations

technical,

political,

The technical
questions
inbusiness(es)
should we be in?

How should

we be organized

do we
devel-

oped, 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 organizations

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.
Once this is determined,
specific change
strategies are developed to alter the targeted
cells of the matrix. 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.

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.

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,
Strategic Change:

The Technical,

Managing

Political and

Cultural Dynamics (Wiley-Interscience,

1982).

The book that triggered the most intellectual activity for this article was Graham Allisons The Essence of Decision (Little, Brown &
Company, 1971), which provides an analysis of
the Cuban missile crisis. In that book he analyses
the events through three distinct frames of reference: (1) the rational actor, (2) organizational
processes, and (3) government politics, and he
shows that for each frame of reference different
questions get asked and different interpretations
of events occur. I was challenged by trying to develop a conceptual

framework

that integrated

multiple frameworks rather than just putting them

side by side. Nonetheless, the stimulus was Allisons excellent work.
A very good description

of strategic

changes that includes a sensitivity to organizational culture and politics is found in James Brian
Quins Strategies for

Change

(Richard

Irwin,

INO), 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,
and should there be an overarching
corpo-

and cultural

a culture

management

to accomplish

our strategy? What kinds of people

need, and how will they be acquired,

strategy

and evolve

and cultural

foundations.
clude: What

and

to such change,

that supports
the strategic
human resources.

ganizations change.
Richard Beckhard and Reuben Harriss
book,
Complex

Organizational

Transitions:

Change (Addison-Wesley,

Managing
1979), pro-

tionally been the most neglected area on a

strategic level, 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.

and

issues addressed in the later part of the article are

political
changes in organizations.
A
for changing
an organizations
process
human resources management
includes steps
designed to provide a new technical human
resources system, overcome
political resis-

The

human

resources

management

further elaborated in an article by Noel Tichy,

Charles Fombrun, and Mary Anne Devanna,
Strategic Human Resource Management in the
Sloan Management Review (Winter 1982).