Organizational Culture

1. Organizational Culture

2. What People Say… “It was a good job, but I just didn’t fit in.” “The company’s values weren’t my values.” “Everything was just too ___________.” • formal • chaotic • competitive • These all involve the organization’s culture.

3. What is organizational culture? • Organizational Culture – A system of shared meanings and beliefs in a organization that influence how employees act • Levels of culture • Artifacts – visible organizational structures and processes • Espoused values – strategies, goals, philosophies (espoused justifications) • Basic Assumptions – unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings (ultimate sources of values and actions). Levels of culture from:, E. Schein, 1999, The Corporate Culture Survival Guide, Jossey Bass.

4. Where does culture come from? • Often reflects a founder’s values and vision • Is built from shared experiences and success. • Has been called the “residue of success” – reflects social learning about what works • Also reflects the industry, national and societal culture

5. Influence of culture on managers • Culture directs and constrains managerial behavior • Filters what managers see, how they interpret it, what they can do to take action. Much like a perceptual filter like selectivity. • Planning - degree of risk that plans should contain • Organizing - degree of autonomy given to employees • Leading – what leadership style is appropriate • Controlling – what performance measures are appropriate • Once established, culture tends to be very stable • Can be changed, with difficulty, in times of crisis by strong leaders

6. How culture constrains managers: Streamlining Atari • Atari: king of the hill in the early days of the computer game wars. • New CEO brought in, marketing background. His cultural background said run a company by creating individual incentives and career systems. • He is shocked to discover a loosely organized bunch of engineers and programmers – you couldn’t even tell who to reward for what! • He institutes clear personal accountability, an individualistic, competitive reward system, symbolized by “engineer of the month.” • Organization becomes demoralized, some of the best engineers leave. • CEO did not understand a basic assumption of the culture: That only through extensive informal interaction could an idea come to fruition. A successful game was a group product where no one could remember who contributed what. The new systems were incompatible with the culture.

7. Common Types of Organizational Cultures • Some combinations of beliefs about the dimensions arise fairly commonly, often when one or a few elements rise above the rest to dominate the culture as a whole. These are “types” of cultures such as: • Bureaucratic • Clan • Entrepreneurial • Market

8. Bureaucratic culture(“Command and Control”) • Formalization, rules, SOPs, hierarchical coordination

9. Clan culture • Tradition, loyalty, personal commitment, extensive socialization, teamwork

10. Entrepreneurial culture • High levels of risk taking, dynamism, and creativity

11. Market culture • Achievement of measurable and demanding goals, especially those that are financial and/or market-based; very contractual arrangement

12. Describing Culture – 7 underlying dimensions

13. Strong vs. Weak Cultures • Strong cultures: Key components of culture are intensely held and widely shared • Strong cultures are associated with • Greater influence on employees • More committed employees • But strong cultures aren’t always good • Cults!

14. External vs. Internal cultural orientation • Internal orientation – focus on issues internal to the firm rather than what is going on outside the firm. • Success leads managers to act arrogantly, politically, bureaucratically, to protect what they have. • Competitive changes mean a strong cultural drummer prevents managers from mobilizing action to respond to change. • External orientation – focused on the several key constituencies and on the external environment: • Stockholders, AND employees, AND especially customers. • Key managers are willing to initiate change when the environment changes or constituent’s needs change. • A strong cultural drummer helps firms adapt to change.

15. Examples: Cultures & Performance • Xerox • Success => strong, internally-oriented culture • Invented many of the initial components of computers but is Xerox a computer company? • Strong internal focus resulted in missed opportunities. • Intel • Strong entrepreneurial culture • “Only the paranoid survive” = external • Shifts from memory to microprocessors • SWA • Strong internal culture – employees first! • Faced with hard times, strong culture enabled cost cutting through employee effort