Organizational Culture

1. Organizational Culture In any organization, there are the ropes to skip and the ropes to know. -- R. Ritti and G. Funkhouser

2. Environment and Corporate Culture GENERAL ENVIRONMENT ECONOMIC SOCIAL OPERATING ENVIRONMENT NEW ENTRANTS SUPPLIER INTERNAL ENVIRONMENT PRODUCTION TECHNOLOGY STRUCTURE INPUTS SUBSTITUTES POLITICAL CULTURE COMPETITION TECHNOLOGY CUSTOMER LEGAL

3. What is Organizational Culture? • A system of meaning shared by the organization’s members • Cultural values are collective beliefs, assumptions, and feelings about what things are good, normal, rational, valuable, etc.

4. Examples of Organizational Culture • Innovation and risk taking (3M) • Outcome orientation (Bausch & Lomb) • Aggressiveness (Microsoft) • Continuous learning and innovation (Nokia)

5. Characteristics of Organizational Culture Observed behavioral regularities Philosophy on treatment of employees/ customers Norms Rules of employee behavior Organizational Culture Dominant values Organizational climate

6. Physical Structures Rituals/ Ceremonies Stories Language Beliefs Values Assumptions Elements of Organizational Culture Artifacts of Organizational Culture Organizational Culture

7. Artifacts: Organizational Stories • Social prescriptions of desired behavior • Demonstrate that organizational objectives are attainable • Most effective stories: • Describe real people • Assumed to be true • Known throughout the organization • Are prescriptive

8. Artifacts: Rituals and Ceremonies • Rituals • programmed routines • e.g., conducting meetings, employee forums, x-mas parties • Ceremonies • planned activities for an audience • e.g., award ceremonies • Heroes • Figure who exemplifies character and deed • E.g. founders as Tom Watson of IBM, Bill Gates of Microsoft

9. Artifacts: Organizational Language • Words used to address people, describe clients, etc. • e.g. sir/ma’am, first name calling • Leaders use phrases and metaphors as cultural symbols • e.g.. General Electric’s “grocery store” • Language also found in subcultures • e.g.. Whirlpool’s “PowerPoint culture” • Slogans • E.g. Nokia Connecting People

10. Organizational Subcultures • Located throughout the organization • Can support or oppose (countercultures) firm’s dominant culture • Two functions of countercultures: • provide surveillance and evaluation • source of emerging values E. M. Samelson/Orlando Sentinel

11. Artifacts: Physical Structures/Space Oakley, Inc.’s protective and competitive corporate culture is apparent in its building design and workspace. The building looks like a vault to protect its cherished product designs (eyewear, footwear, apparel and watches). Courtesy of Oakley, Inc. Courtesy of Oakley, Inc.

12. Artifacts - Industry Information technology Advertising and Media Call Centers

13. How Organizational Cultures Form Top Management Philosophy of the Organization’s Founders: Bill Hewlett & Dave Packard John Gokongwei Bill Gates Organizational Culture Selection Socialization

14. Do Organizations Have Uniform Cultures? Subcultures Dominant Culture Core Values

15. Stories Rituals How Employees Learn Culture/ How it is “reinforced” Language Material Symbols

16. Benefits of Strong Corporate Cultures SocialControl Strong Organizational Culture SocialGlue AidsSense-Making

17. Organizational Culture Functions Liabilities • Controlling behavior • Defining boundaries • Conveying identity • Promoting commitment • Blocking mergers • Inhibiting diversity • Inhibiting change • Blocking acquisitions

18. Managing, Changing, and Merging Cultures • Managing through stories, heroes, symbols and ceremonies • Culture often need to be changed to ensure organizational success • Merging cultures through symbolic leaders

19. Adaptive Organizational Cultures • External focus -- firm’s success depends on continuous change • Focus on processes more than goals • Strong sense of ownership • Proactive --seek out opportunities AP/Wide World

20. Bicultural Audit • Part of “due diligence” in merger • Minimizes risk of cultural collision by diagnosing companies before merger • Three steps in bicultural audit: 1. Collect artifacts 2. Analyze data for cultural conflict/compatibility 3. Recommend solutions

21. Merging Organizational Cultures Assimilation Acquired company embraces acquiring firm’s culture Deculturation Acquiring firm imposes its culture on unwilling acquired firm Integration Both cultures combined into a new composite culture Separation Merging companies remain separate with their own culture

22. Strengthening Organizational Culture Foundersand leaders Strengthening Organizational Culture Selection and socialization Culturally consistent rewards Managing the cultural network Stable workforce

23. Intensity of Core Values Commitment to Core Values (widely shared) Strong Versus Weak Cultures High Behavioral Control Low Employee Turnover

24. Studies show that culture is closely related to the effectiveness of organizations.

25. Effectiveness depends on . . . • the core values and beliefs of the members of the organization. • the policies and practices used by the organization. • the success in translating the core values and beliefs into policies and practices. • the match between values, beliefs, policies, practices, and the organization’s environment.

26. Effectiveness is related to . . . • involvement = participation. • consistency = shared beliefs and values. • adaptability = ability to recognize the need for change and the willingness to change • mission = shared purpose.

27. Model of Organizational Culture Types

28. Four Culture Types

29. Studies on Culture Types • Deshpande, Farley, and Webster (1993) found that competing values of the market culture outperform those of the clan culture. • Those of the adhocracy culture outperformed those of the diagonally opposing hierarchy culture. • The speed of response to environmental changes which determine a higher performance is thus culturally dependent.

30. EXERCISE-Organizational Culture Assessment Instrument (OCAI)

31. Adhocracy Clan 5 4 3 2 1 1 2 3 4 Hierarchy 5 Market B A D C

32. Adhocracy Adhocracy Clan Clan 5 5 4 4 3 3 2 2 1 1 1 1 2 2 3 3 4 4 Hierarchy Hierarchy 5 5 Market Market Case Study: Organizational Culture and Performance

33. Recognizing the need for change Diagnosing and planning change Managing the transition Measuring results Maintaining change Cultural Change • Conduct a cultural analysis to identify cultural elements needing change • Make it clear to employees that the organization’s survival is legitimately threatened if change is not forthcoming • Appoint new leadership with new vision • Introduce new stories and rituals to convey new vision • Change the selection and socialization process and reward systems to support new values From “Management” by Robbins and Coulter

34. Motivation andOrganizational Culture Types

36. The learning organization approach to managementis the management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. • Environmentin the millenium • Information and electronic age • Information and knowledge is going to be readily available to us all • Information speed through Internet • The future is going to be dominated by our need to understand systems. The Learning Organization:Management Approach in New Millenium

37. Adhocracy Clan 5 4 3 2 1 INTERNAL EXTERNAL 1 2 3 4 Hierarchy 5 Market Learning Organization Culture • Has a culture that values sharing knowledge to adapt to the changing environment and continuously improve • From “Management Fundamentals” by Lussier

38. When Companies Seek to Foster Certain Culture Types • Clan culture needs the five leadership practices • Adhocrarcy culture needs enabling others to act and encouraging the heart • Hierarchy culture should not use enabling others to act and encouraging the heart; • Market culture should consider alternatives to leadership practices.

39. ORGANIZATIONAL CHANGES REINVENT INVENT ORGANIZATIONAL CHANGES Culture and Organization Growth Stages

40. Adhocracy Clan 5 4 3 2 1 1 2 3 4 Hierarchy 5 Adhocracy Clan Market 5 4 3 2 1 1 2 3 4 Hierarchy 5 Market Case Study: Culture and Organization Growth Stages PLDT Acquires Smart NTT Docom of Japan Invests in Smart Continuous innovation Expand geographic coverage

41. The need for achievement(nAch)— the desire to do something better or more efficiently than it has ever been done before. The need for power(nPower) — the desire to control, influence, or be responsible for others. The need for affiliation(nAff) — the desire to maintain close, friendly, personal relationship. Culture and Motivation 10

42. What is the Organizational Culture in the Philippines?

43. Adhocracy Clan 5 4 3 2 1 1 2 3 4 Hierarchy 5 Market Philippine Organizational Culture • Espouses a reorientation in the organization to three values, namely: • kaugnayan (identity), • karangalan (pride) • katapatan (commitment). • To accentuate these core values, corporate leaders emphasize • paternalism (pagbabahala and pananagutan), • personalism or pakikipagkapwa (treating a person as a fellow human being), • familism (giving importance to the family as a social unit).

44. End