ORGANIZATIONAL CULTURE & CLIMATE

1. ORGANIZATIONAL CULTURE & CLIMATE

2. OC & Climate • OC is the accepted and followed way of life or manner of performing day to day activities in an organization. • The basics of OC are core values, assumptions, norms and procedures that are followed in an organization. • Sometimes an organization forms sub-culture due to the presence of individuals from different cultures and backgrounds. • Sub-culture is valuable to an organization because it leads to deviations from the norms and thereby give rise to alternatives to the existing practice, which in turn may be found to be useful for the organization. • For survival of the organization, the new culture should be adapted smoothly. • But if the organization go beyond its core beliefs, it may have negative effect on organization. • The intensity of core values of an organization determines the strength of an organizational culture. • The major objective of organizational culture are internalization of the core values and norms and strengthen bonds between the members of the organization.

3. CHARACTERISTICS OF OC • There are 7 primary characteristics that an organization should cultivate. They are: • Outcome orientation • Innovation and risk taking • People orientation • Aggressiveness • Attention to detail • Stability • Team orientation

4. Seven Primary Characteristics 1- OUTCOME ORIENTATION • The business model of any organization should decide whether thrust should be given on the outcome or the processes. • This defines outcome orientation of the business 2- INNOVATION AND RISK TAKING • Risk and returns are two elements that always go hand in hand. • Risk also depends upon innovation which brings better results. • Therefore innovation and risk taking are one of the main characteristics of organizational culture.

5. 3- PEOPLE ORIENTATION • Some organizations are employee oriented while others are production oriented. 4- AGGRESSIVENESS • When there is fierce competition, then aggressiveness is visible among the employees of an organization 5- ATTENTION TO DETAIL • Attention to detail defines the amount of importance a company allots to accuracy and details in the workplace. • The management defines the degree of attention to be given to details

6. 6-STABILITY • Organization that have to deal with stabilizing operations and other needs are more focused on making themselves and their operations more stable. • Ensuring stable growth is the objective of such companies 7-TEAM ORIENTATION • Synergistic teams help give better results as compared to individual efforts. • So the company lay more emphasis on synergy between different teams and in forming a well balanced team for results.

7. DEVELOPING & CHANGING OC • An OC is formed over years of interaction between the participants in the organization • The organizational culture is formed due to the following reason: • The current OC could match the style and comfort zone of the current leaders. Culture echoes the prevailing management style. Since managers tend to hire people like themselves, the establishment of OC get reinforced by new hires also. • People consider cultural change only when some significant event occur in the organization. Eg. Bankruptcy, loss etc. • Such events force people to realize and recognize that their current OC needs to transform to support the organization. • Culture change is possible and this requires understanding, commitment and tools.

8. STEPS IN OC CHANGE • There are three steps involved in this. • Understand the current culture or the way things are now. • What organizational culture needed to support success and what vision does the organization should have for its future. • Decision by the staff to change their behavior to create the desired OC.

9. ACTION REQUIRED FOR CREATING DESIRED CULTURE • We cannot change the organizational cutlure without knowing: • Where we are now and where we want to be • What elements of the organization supports success and what is not

10. PROCES OF CHANGING OC • It is more difficult to change culture than creating a culture to a new organization • For changing the existing culture, people should unlearn old values, assumptions and behaviors before they learn new ones. • TWO IMPORTANT ELEMENTS FOR CREATING OC CHANGE • Executive Support • Executives must show behavioral support for cultural change. They must lead the change. • Training • Cultural change depends on behavioral change. Members of the organization must clearly understand what is expected of them, and must know how to do the new behaviors and for this training should be given to the staff

11. ADDITIONAL WAYS OF CHANGING OC 1. Creating value and belief statements • Use employee focus group, by department, to put the mission, vision and values into words that state their impact on each employee’s job • This exercise will give all employees a common understanding of the desired culture that actually reflect the actions they must commit to their own jobs. 2. By practicing effective communication • Keep all employees about the OC change process that ensures commitment and success. 3. By reviewing the organizational structure • Changing the physical structure of the organization to align it with the desired cultural change is necessary. 4. Redesign the approach towards rewards and recognition • There may be a need to change the reward system to encourage the behaviors that is vital for OC 5. By reviewing all work systems • Work systems such as employee promotions, pay practices, performance management and employee selection etc should be reviewed to make sure that they are aligned with the desired culture.

12. OC ASSESSMENT • Robert Quinn and Kim Cameron researched about the factors that makes an organization effective and successful. • Based on the Competing Value Framework, they developed the Organizational Culture Assessment Instrument (OCAI) • OCAI distinguishes four culture types. They are: • Control (Hierarchy) • Compete (Market) • Collaborate (Clan) • Create (Adhocracy) • Each organization or team will have its unique mix of culture types. • By assessing the current culture and preferred culture, the gap and direction to change can be made visible. • These different types reflect the range across two dimensions given above. • Each of these four types represents those features which a company feels is the most suitable way to operate. • None of the regions is intrinsically better than another.

13. THE COMPETING VALUES FRAMEWORK FLEXIBILITY DISCRETION DYNAMIS INTERNAL FOCUS INTEGRATION UNITY EXTERNAL FOCUS DIFFERENTIATION RIVALRY STABILITY ORDER CONTROL

14. 1. CONTROL (HIERARCHY) • For those companies which put lot of emphasis on control, are defined by SOLIDITY & CONTROL and INTERNAL FOCUS & INTEGRATION. • They value SET PROCESSES, STANDARDIZATION, CONTROL and a well defined STRUCTURE FOR AUTHORITY, POWER and DECISION MAKING. • Effective leaders in hierarchical structures are those that can organize, coordinate and monitor people and processes. • Example: McDonalds, Ford Motor Company (17 levels)

15. II. COMPETE (MARKET) Q4 • Compete (Market) is similar to control (hierarchy) where stability and control is emphasized but with external orientation and value differentiation over integration. • This is mainly because of the competitive challenges from overseas • With outward focus, these organizations are focused on relationships – more specifically, transactions – with suppliers, customers, contractors, unions, legislators, consultants, regulators etc. • Through effective external relations, they feel that they can best achieve success • While control organizations optimize stability and control through rules, standard operating procedures, and specialized job functions, Compete (Market) organizations are concerned with competitiveness and productivity through emphasis on partnership and positioning. • Their corporate culture was highly competitive where performance results speak louder than process.

16. III- COLLABORATE (CLAN) • This is similar to Control (Hierarchy) in that there is an inward focus with concern for integration. • However, Collaborate (Clan) emphasize flexibility and discretion rather than the stability and control of Control (Hierarchy) and Compete (Market) Organizations. • The classical example of such organizations are Japanese firms in the late 1970s and 1980s where their Collaborate (Clan) organizations operated more like families. • They valued cohesion, a humane working environment, group, commitment, and loyalty. • Example: Tom’s of Maine. The founder Tom Chappell, grew the company to respect relationship with co-workers, customers, owners, agents , supplier, the community and the environment. It is like an extended family.

17. IV-CREATE (ADHOCRACY) • It is similar to Collaborate (Clan) in aspects like emphasizing on flexibility and discretion. But they do not share the same inward focus. They are like Create (Adhocracy) in their external focus and concern for differentiation. • This is a new approach based on Information Age to meet fast paced and volatile business environment. • Social, economic and technological change has made older corporate attitudes and tactics less efficient. • Success depends upon innovation and creativity

18. TYPES OF OC • Researcher Jeffrey Sonnenfeld identified four types of cultures: • Baseball Team Culture • Employees are “free agents” who have highly prized skills • They are high in demand and can rather easily get jobs elsewhere • This type of culture exists in fast paced, high-risk organizations such as investment banking, advertising etc • Club Culture • The most important requirement for employees in this culture is to fit into the group. • Employees start at the bottom and stay with the organization • The organization promotes staff purely on the basis of seniority

19. 3. Academy Culture • Employees are highly skilled and tend to stay in the organization, while working their way up the ranks. • The organization provides a stable environment in which employees can develop and exercise their skills. Eg. Universities, hospitals etc 4. Fortress Culture • This explains a culture where opportunities for timely, organized and specialized capabilities are used appropriately. Eg. Car manufacturers

20. OC & EFFECTIVENESS • OC contributes to organizational effectiveness • Ways of effectiveness are displayed in popular theories like TQM, Continuous Quality Improvement (CQI) and Organizational Efficiency.

21. FOUR ACADEMIC MODELS FOR OE • There are various models developed to explain organizational effectiveness (OE) • One of the models uses production, commitment, leadership and interpersonal conflicts to measure OE. • Production is defined as flow of output from organization, Commitment was established as a component to measure the degree of attachment to the organization, Leadership was defined as a degree of influence and personal ability and interpersonal conflict refers to the degree of misunderstanding between supervisors and subordinates.

22. Another model explains interrelated organizational process and was developed as a tool for management consultants. • This model uses organizational survival and maximizing returns as key variables of effectiveness along with self regulation which is responsible for making a balance between eight other minor variables such as including internal-external boundary permeability, sensitivity to status and change, contribution to constituents, transformation, promoting advantageous transactions, flexibility, adaptability and efficiency.

23. A third model chose six selected indicators of OE including management experience, organizational structure, political impact, BOD involvement, volunteer involvement and internet communications. • A fourth model was used to compare profit and non-profit OE and is termed the competing values framework. • This model used four quadrants representing (i)human relations (ii)open systems (iii) rational goals and (iv)internal process.

24. The human relations side stressed participation, discussion and openness as ways to improve morale and achieve commitment • The open system side relates insight, innovation and adaptation as a path towards external recognition, support, acquisition and growth. • The internal process side sees internal processes as measurement, documentation, and information management as methods to achieve stability, control and continuity. • The rational goal side seeks profit and productivity through direction and goals.

25. DEAL & KENNEDY’S MODEL OF CULTURE • This model is based on four types of organizations • These organizations are characterized based on how quickly they provide FEEDBACK and REWARD to employees after they have done something and the LEVEL OF RISK that employees take.

26. DEAL & KENNEDY’S MODEL OF CULTURE • Deal and Kennedy’s model is based four characteristics type of organizations. • This characterization is based on how quickly they provide feedback and reward employees after they have done some thing which is risky. • So risk and feedback are the two dimensions used in this categorization.

27. DEAL & KENNEDY’S MODEL OF CULTURE • Feedback and Reward • A major driver in any company is feedback and rewards that tell the employees are that they are doing a good or bad job. • If feedback is immediate or frequent, it will quickly correct any ineffective behavior which leads to a consistent culture • If it is delayed or infrequent, it leaves mistakes uncorrected, but people look further out into future. • In either way, there can be some substitute activity to keep things on track

28. DEAL & KENNEDY’S MODEL OF CULTURE • Risk • Uncertainty and risk are something that some people hate and some people like. • It can be a motivating force that that leads people to focus on managing it. • High risk companies more likely to include people who enjoy the friction of taking a gamble.

29. DEAL & KENNEDY’S MODEL OF CULTURE RISK LOW HIGH WORK-HARD. PLAY-HARD CULTURE TOUGH-GUY MACHO CULTURE FEEDBACK & REWARD SLOW RAPID PROCESS CULTURE BET-THE-CO CULTURE

30. DEAL & KENNEDY’S MODEL OF CULTURE • WORK-HARD, PLAY HARD-CUTLURE • Does not take lot of risks, but if does, will receive fast feedback. • This is seen in big companies that depends on strong customer service • This OC is characterized by multiple team meetings, specialized jargon, buzzwords etc • Rapid feedback/reward and low risk leads to: • Stress come from quantity of work than uncertainty • High speed action lead to high-speed recreation • Eg: Restaurants, software companies

31. DEAL & KENNEDY’S MODEL OF CULTURE • Tough-Guy Macho Culture or Macho Culture • Quick feedback and high rewards/ Risk high • Applicable in finance sector such as currency trading, brokerage etc • This leads to: • Stress coming from high risk and potential loss/gain of rewards • Focus on present than on longer future • Eg. Police, surgeons, sports etc

32. DEAL & KENNEDY’S MODEL OF CULTURE • Process Culture • No feedback or very slow feedback • People are so obsessed with the process of how things are done and the focus is lost on goal • This is synonymous with bureaucracy and seen in public sector • This leads to: • Low stress, plodding work, comfort and security. Stress can occur from internal politics and stupidity of system. • Bureaucracy develops to maintain status quo. • Focus on security – past and future • Eg. Banks and insurance companies

33. DEAL & KENNEDY’S MODEL OF CULTURE • Bet-The-Company Culture • Feedback/rewards slow and risk is high • Huge decisions are taken over high stake endeavors • End result will not be available sometimes in near future • Companies that engage in experimental projects or researches • This leads to: • Stress comes from high risk and delay in feedback • Long view is taken and major part of the work is done to make sure things to happen • Eg. Aircraft manufactures, oil companies