Business Decision Making ADMN 2167

1. Business Decision MakingADMN 2167 Professor: Bob Carpenter Many of the slides in this presentation are from Nancy Langton and Stephen P. Robbins, Organizational Behaviour, Fourth Canadian Edition .

2. Chapter 10 Organizational Culture

3. Chapter Outline • What Is Organizational Culture? • Reading an Organization’s Culture • Creating and Sustaining Culture • The Liabilities of Culture • Changing Organizational Culture

4. Henry Mintzberg on Culture • “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.”

5. Organizational Culture • The pattern of shared values, beliefs, and assumptions considered to be the appropriate way to think and act within an organization. • Culture is shared. • Culture helps members solve problems. • Culture is taught to newcomers. • Culture strongly influences behaviour.

6. Layers of Culture Material Symbols Artifacts of Language Organizational Rituals Culture Stories Beliefs Organizational Culture Values Assumptions

7. Levels of Culture • Artifacts • Aspects of an organization’s culture that you see, hear, and feel. • Beliefs • The understandings of how objects and ideas relate to each other. • Values • The stable, long-lasting beliefs about what is important. • Assumptions • The taken-for-granted notions of how something should be in an organization.

8. Characteristics of Organizational Culture • Innovation and risk-taking • The degree to which employees are encouraged to be innovative and take risks. • Attention to detail • The degree to which employees are expected to exhibit precision, analysis, and attention to detail. • Outcome orientation • The degree to which management focuses on results or outcomes rather than on technique and process. • People orientation • The degree to which management decisions take into consideration the effect of outcomes on people within the organization.

9. Characteristics of Organizational Culture • Team orientation • The degree to which work activities are organized around teams rather than individuals. • Aggressiveness • The degree to which people are aggressive and competitive rather than easygoing. • Stability • The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

10. Contrasting Organizational Cultures

11. Culture’s Functions • Social glue that helps hold an organization together. • Provides appropriate standards for what employees should say or do. • Boundary-defining. • Conveys a sense of identity for organization members.

12. Culture’s Functions • Facilitates commitment to something larger than one’s individual self-interest. • Enhances social system stability. • Serves as a “sense-making” and control mechanism. • Guides and shapes the attitudes and behaviour of employees.

13. Do Organizations Have Uniform Cultures? • Organizational culture represents a common perception held by the organization members. • Core values or dominant (primary) values are accepted throughout the organization. • Dominant culture • Expresses the core values that are shared by a majority of the organization’s members. • Subcultures • Tend to develop in large organizations to reflect common problems, situations, or experiences.

14. Reading an Organization’s Culture • Stories • Rituals • Material Symbols • Language

15. How Organizational Cultures Form Top management Philosophy of Organization's Selection organization's culture criteria founders Socialization

16. Creating and Sustaining Culture: Keeping a Culture Alive • Selection • Identify and hire individuals who will fit in with the culture. • Top Management • Senior executives establish and communicate the norms of the organization. • Socialization • Organizations need to teach the culture to new employees.

17. Socialization Model Socialization Process Outcomes Productivity Prearrival Encounter Metamorphosis Commitment Turnover

18. Entry Socialization Options • Formal vs. Informal • Individual vs. Collective • Fixed vs. Variable • Serial vs. Random • Investiture vs. Divestiture Sources: Based on J. Van Maanen, “People Processing: Strategies of Organizational Socialization,” Organizational Dynamics, Summer 1978, pp. 19-36; and E. H. Schein, “Organizational Culture,” American Psychologist, February 1960, p. 116.

19. High Networked Communal Sociability Low Fragmented Mercenary Low High Solidarity Four-Culture Typology Source: Adapted from R. Goffee and G. Jones, The Character of a Corporation: How Your Company’s Culture Can Make or Break Your Business (New York: HarperBusiness, 1998), p. 21.

20. The Liabilities of Culture • Culture can have dysfunctional aspects in some instances. • Culture as a Barrier to Change • When organization is undergoing change, culture may impede change. • Culture as a Barrier to Diversity • Strong cultures put considerable pressure on employees to conform. • Culture as a Barrier to Mergers and Acquisitions • Merging the cultures of two organizations can be difficult, if not impossible.

21. Changing Organizational Culture • Have top-management people become positive role models, setting the tone through their behaviour. • Create new stories, symbols, and rituals to replace those currently in vogue. • Select, promote, and support employees who espouse the new values that are sought. • Redesign socialization processes to align with the new values.

22. Changing Organizational Culture • Change the reward system to encourage acceptance of a new set of values. • Replace unwritten norms with formal rules and regulations that are tightly enforced. • Shake up current subcultures through transfers, job rotation, and/or terminations. • Work to get peer group consensus through utilization of employee participation and creation of a climate with a high level of trust.

23. Summary and Implications • What is the purpose of organizational culture? • Organizational culture provides stability and gives employees a clear understanding of “the way things are done around here.” • How do you read an organization’s culture? • Artifacts, such as stories, rituals, material symbols, and language, can be used to help read an organization’s culture.

24. Summary and Implications • How do you create and maintain culture? • An organization’s culture is derived from the philosophy of its founders. It is communicated by managers and employees are socialized into it. • Can organizational culture have a downside? • A strong culture can have a negative effect, including “pressure-cooker” cultures, barriers to change, difficulty in creating an inclusive environment, and hindering mergers and acquisitions. • How do you change culture? • It is important to change the reward structure and to work carefully to change employee beliefs.