Chapter 4 Organizational Culture

1. 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

3. 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

4. Chapter Overview • Introduction • Levels of Organizational Culture • Functions of Organizational Culture • Dysfunctions of Organizational Culture • Diagnosing Organizational Culture

5. Chapter Overview (Cont.) • Organizational Culture and Organizational Performance • Creating, Maintaining, and Changing Organizational Culture • International Aspects of Organizational Culture • Ethical Issues in Organizational Culture

6. 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 organization’s history • Defines the content of what a new employee needs to learn to become an accepted member of an organization

7. 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

8. 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

9. 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

10. Introduction (Cont.) • Divides into multiple subcultures • Departments, divisions • Different operating locations • Occupational groups • Workforce diversity • Global environment Jargon, different social backgrounds, different local cultures

11. 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.

12. Introduction (Cont.) Definition of organizational culture "[A]ny 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.

13. 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

14. Levels ofOrganizational Culture (Cont.) Artifacts/physicalcharacteristics High visibility Values(Espoused;In-use) Basicassumptions Low visibility Text book figure 4.1

15. Functions ofOrganizational Culture (Cont.) • Adaptation to the organization’s external environment • Consensus about mission • Identify with the organization • Clear vision • Consistent image to markets, customers, clients

16. 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

17. 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

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

19. 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

20. 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

21. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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.

37. 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

38. 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

39. Creating, Maintaining, and Changing Organizational Culture (Cont.) • Changing organizational culture (cont.) • Successfully managing the change process (cont.) • Example: FBI perceives itself as the world’s 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

40. 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

41. 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 insured’s home in Taiwan • Electronic bank transfers in Hong Kong

42. 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

43. 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

44. 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

45. 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

46. 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

47. 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

48. 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

49. 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

50. 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