Chapter 4 Organizational Culture

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Chapter 4Organizational Culture
2
Learning Goals

• Discuss the concept of organizational culture
• Understand the effect of organizationalculture
  on you as an individual
• Describe the different levels at which we
  experience an organization's culture
• Discuss the functions and dysfunctions of
  organizational culture

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Learning Goals (Cont.)

• Diagnose an organization's culture
• Understand the relationship between
  organizational culture and organizational
  performance
• Explain the issues involved in creating,
  maintaining, and changing organizational culture

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Chapter Overview

• Introduction
• Levels of Organizational Culture
• Functions of Organizational Culture
• Dysfunctions of Organizational Culture
• Diagnosing Organizational Culture

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Chapter Overview (Cont.)

• Organizational Culture and Organizational
  Performance
• Creating, Maintaining, and Changing
  Organizational Culture
• International Aspects of Organizational Culture
• Ethical Issues in Organizational Culture

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Introduction

• Organizational culture an ideology and a set of
  values that guide the behavior of organization
  members
• Includes ceremonies, rituals, heroes, and
  scoundrels in the organizations history
• Defines the content of what a new employee needs
  to learn to become an accepted member of an
  organization

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Introduction (Cont.)

• Key aspects of organizational culture
• Sharing of values
• Structuring of experiences
• Different sets of values can coexist
• Although values differ, members of each group can
  share a set of values
• If you have traveled abroad, you have already
  experienced what it is like to enter a new,
  different, and "foreign" culture

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Introduction (Cont.)

• All human systems that have endured for some
  time, and whose members have a shared history,
  develop a culture
• Specific content of an organization's culture
  develops from the experiences of a group
• Adapting to its external environment
• Building a system of internal coordination

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Introduction (Cont.)

• Each human system within which you interact has a
  culture family, college or university,
  employer, sororities, fraternities
• Can make different and conflicting demands on you

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Introduction (Cont.)

• Divides into multiple subcultures
• Departments, divisions
• Different operating locations
• Occupational groups
• Workforce diversity
• Global environment

Jargon, different social backgrounds, different
local cultures
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Introduction (Cont.)
Organizational culture and organizational
socialization
OrganizationalCulture(Chapter 4)
OrganizationalSocialization(Chapter 6)
What a newemployee needsto learn.
The process by whicha new employeelearns the
culture.
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Introduction (Cont.)
Definition of organizational culture

• "Any organizational culture consists broadly of
  long-standing rules of thumb, a somewhat special
  language, an ideology that helps edit a member's
  everyday experience, shared standards of
  relevance as to the critical aspects of the work
  that is being accomplished, matter-of-fact
  prejudices, models for social etiquette and
  demeanor, certain customs and rituals suggestive
  of how members are to relate to colleagues,
  subordinates, superiors, and outsiders, and . . .
  some rather plain 'horse sense' regarding what is
  appropriate and 'smart' behavior within the
  organization and what is not."
• Organizational culture is both the glue holding
  the system together and the motor moving it
  toward its goals.

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Levels ofOrganizational Culture (Cont.)

• Artifacts behavior, language, architecture,
  attire, décor. High visibility
• Values guides to behavior. Hard for newcomer
  to see, but can learn them
• Espoused values what people say
• In-use values what people do
• Basic assumptions like values but often
  unconscious to veteran members

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Levels ofOrganizational Culture (Cont.)
Artifacts/physicalcharacteristics
High visibility
Values(EspousedIn-use)
Basicassumptions
Low visibility
Text book figure 4.1
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Functions ofOrganizational Culture (Cont.)

• Adaptation to the organizations external
  environment
• Consensus about mission
• Identify with the organization
• Clear vision
• Consistent image to markets, customers, clients

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Functions ofOrganizational Culture (Cont.)

• Coordination of internal systems and processes
• Measurement of results
• Rewards and sanctions
• Common language
• Social relationships
• Status relationships (stratification)
• Ideology heroes, folklore

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Dysfunctions ofOrganizational Culture

• Culture constrains strategy
• Merging cultures culture clash
• Upjohn Kalamazoo, Michigan
• Pharmacia Sweden
• Resistance to change holding to existing values
• Conflict among subcultures
• Communication failures subculture jargon

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DiagnosingOrganizational Culture
Visible artifacts
Publicdocuments
Physicalcharacteristics
Behavior
See textbook Table 4.1
infer Invisible artifacts
Basic assumptions
Values
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DiagnosingOrganizational Culture (Cont.)

• Two perspectives
• An outsider considering a job with an
  organization
• An insider after you have joined an organization
• Use the Organizational Culture Diagnosis
  Worksheet, text book Table 4.1

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DiagnosingOrganizational Culture (Cont.)

• As an outsider
• Physical characteristics of organization site
  visit or photographs
• Read about the organization annual reports,
  press accounts, Web sites
• Site visit How are you treated?
• Talk to present employees

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DiagnosingOrganizational Culture (Cont.)

• As an insider
• Stories and anecdotes
• Organization heroes
• Basis of promotions and pay increases
• Observe behavior in meetings status differences
• Focus of meetings what is discussed?

22
Organizational Culture and Organizational
Performance

• Theoretical and empirical research shows a
  relationship between organizational culture and
  organizational performance
• Different theoretical views of the
  culture-performance link

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Organizational Culture and Organizational
Performance (Cont.)

• Organizations have a competitive advantage when
  their culture is valuable, rare, and not easily
  imitated
• Value guidance it gives to direct people's
  behavior toward higher performance
• Rarity features of a culture not common among
  competing organizations

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Organizational Culture and Organizational
Performance (Cont.)

• Competitive advantage (cont.)
• Not easily imitated hard for competitors to
  change their cultures to get the same advantages
• Difficulty of imitation follows from the rare
  features of some cultures and the difficulties
  managers have when trying to change a culture

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Organizational Culture and Organizational
Performance (Cont.)

• The environment-culture congruence theoretical
  view
• Organizations facing high complexity and high
  ambiguity require a cohesive culture widely
  shared values and basic assumptions
• Organizations facing low uncertainty and low
  complexity can use more formal control processes
  such as organization policies, rules, and
  procedures

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Organizational Culture and Organizational
Performance (Cont.)

• Trait theory of organizational culture. Four
  traits
• Involvement degree of participation of
  employees in organizational decisions
• Consistency degree of agreement among
  organization members about important values and
  basic assumptions

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Organizational Culture and Organizational
Performance (Cont.)

• Trait theory (cont.)
• Adaptability ability of the organization to
  respond to external changes with internal changes
• Mission core purposes of the organization that
  keep members focused on what is important

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Organizational Culture and Organizational
Performance (Cont.)

• Some empirical research results
• Involvement and adaptability related to
  organizational growth
• Consistency and mission traits related to
  profitability
• Strong, widely dispersed cultures help high risk
  organizations maintain high reliability. Nuclear
  submarines, nuclear aircraft carriers

See text book for more detail.
29
Creating, Maintaining, and Changing
Organizational Culture

• Managers face three decisions about their
  organization's culture
• Create a completely new culture, usually in a
  separate work unit or in a new organization
• Maintain existing organizational culture
• They believe it is right for their environments
• Change their culture to a new set of values,
  basic assumptions, and ideologies

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Creating organizational culture
• A deliberate effort to build a specific type of
  organizational culture
• Happens when an entrepreneur forms an
  organization to pursue a vision or when managers
  of an existing organization form a new operating
  unit

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Creating organizational culture (cont.)
• The new culture needs an ideology that is
  understandable, convincing, and widely discussed
• Ideology is a key tool for getting commitment to
  the vision from organization members

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Maintaining organizational culture
• A dilemma
• Keep successful values of the past
• Question whether those values are right for the
  environment the organization now faces
• Requires managers to be aware of what
  organizational culture is and how it manifests
  itself in their organization

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Maintaining organizational culture (cont.)
• Requires knowing the existing artifacts, values,
  and ideologies
• Can become familiar with their culture by doing
  the culture diagnosis described earlier
• Managers want to maintain commitment of
  organization members to key parts of that culture
• Strengthen key values so they are widely held
  throughout the organization

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Maintaining organizational culture (cont.)
• Keep the good part of the organization's culture
• Requires managers to carefully examine new
  practices for consistency with their culture
• Example introducing drug testing in an
  organizational culture built on trust

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Changing organizational culture
• Breaking from some features of the old culture
  and creating new features
• Size and depth of change varies depending on
  degree of difference between the desired new
  culture and the old
• The change reaches deep into the cultural fabric
  of the organization over many years

Changing the culture of an organization that has
ahomogeneous workforce to one that values
diversity
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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Changing organizational culture (cont.)
• Successfully managing the change process
• Choosing the right time for change
• Act when the times seem right for culture change
• Situation clearly demands change

Pursue favorable new markets. The organization is
performing poorly and facesclear threats to its
viability.
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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Changing organizational culture (cont.)
• Successfully managing the change process (cont.)
• Managers should not assume everyone in the
  organization will share their view of the need to
  change
• Senior executives play leadership roles
• Managers move forward with confidence,
  persistence, and optimism about the new culture

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Changing organizational culture (cont.)
• Successfully managing the change process (cont.)
• The change effort focuses on many aspects of the
  organization's culture ideology, values,
  symbols
• Managers should know the roots of their
  organization's culture and maintain some
  continuity with the past

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Creating, Maintaining, and Changing
Organizational Culture (Cont.)

• Changing organizational culture (cont.)
• Successfully managing the change process (cont.)
• Example FBI perceives itself as the worlds
  finest law-enforcement agency. Move to Quality
  Management is consistent with that view
• This approach also lets managers say what will
  not change as a way of offering familiarity and
  security to veteran employees

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International Aspects ofOrganizational Culture

• Effects of national cultures on multinational
  organizations
• Local cultures can shape the subcultures of
  globally dispersed units
• National culture, local business norms, and the
  needs of local customers can affect the
  subcultures of such units

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International Aspects ofOrganizational Culture
(Cont.)

• Effects of national cultures (cont.)
• Example the multinational insurance firm AIG
  follows local practices in collecting monthly
  premiums
• At each insureds home in Taiwan
• Electronic bank transfers in Hong Kong

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International Aspects ofOrganizational Culture
(Cont.)

• Multinational organizations
• Employees from many countries working side by
  side
• They do not shed their national cultural values
  when they come to work

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International Aspects ofOrganizational Culture
(Cont.)

• Multinational organizations (cont.)
• Strong chance of subcultures forming along
  national lines
• Research evidence suggests that instead of
  masking local differences with organizational
  culture, multinational cultures may increase ties
  people have to their native cultures

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International Aspects ofOrganizational Culture
(Cont.)

• Multinational cultural diversity
• Managers may refuse to recognize cultural
  differences and insist on the home culture way of
  doing business
• The cultural synergy view sees multinational
  cultural diversity as a resource

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International Aspects ofOrganizational Culture
(Cont.)

• Multinational cultural diversity (cont.)
• Use combinations of cultural differences for the
  strategic advantage of the organization
• Get better product ideas for culturally diverse
  markets and better communication with culturally
  diverse customers

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Ethical Issues inOrganizational Culture

• What moral action should managers take in
  managing the cultures of their organiza-tions?
• An analysis with different ethical theories gives
  different answers

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Ethical Issues inOrganizational Culture (Cont.)

• Utilitarian analysis
• The moral action is the one that gives the
  greatest net benefit to the greatest number of
  people
• Cultural values supporting such action are
  morally correct
• Managers are morally correct in changing or
  creating cultures in that direction

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Ethical Issues inOrganizational Culture (Cont.)

• Rights-based analysis
• People must have the right to make free and
  informed choices about what affects them
• Fully disclose values and basic assumptions to
  new employees

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Ethical Issues inOrganizational Culture (Cont.)

• Rights-based analysis (cont.)
• Fully inform employees about proposed changes to
  the organization's culture
• Managers can have difficulty honoring a
  rights-based ethic because veteran employees
  often are not consciously aware of basic
  assumptions

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Ethical Issues inOrganizational Culture (Cont.)

• Justice analysis
• A culture is unethical if it prevents employees
  from freely voicing their opinions
• A culture is unethical if all employee groups do
  not have an equal chance for advancement

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Ethical Issues inOrganizational Culture (Cont.)

• A moral dimension of organizational culture
• Require an ethical dialogue in management
  decision processes
• Make ethical dialogue an explicit part of the
  organization's ideology
• Goal The discussion of moral issues in
  decisions is a comfortable, desired, and required
  part of every manager's job